General Elec. Railcar Services Corp. v. Wilmington Trust Co.

• Decision Date: 28 December 1990
• Docket Number: No. 1-90-1668,1-90-1669,1-90-1668
• Citation: 567 N.E.2d 400,208 Ill.App.3d 459
• Parties: , 153 Ill.Dec. 442 GENERAL ELECTRIC RAILCAR SERVICES CORPORATION, a Delaware corporation, Plaintiff-Appellee, v. WILMINGTON TRUST COMPANY, a Delaware corporation, Defendant-Appellant (The National Bank of Washington, a Delaware corporation, Defendant-Appellant).
• Court: United States Appellate Court of Illinois

Page 400

567 N.E.2d 400

208 Ill.App.3d 459, 153 Ill.Dec. 442

GENERAL ELECTRIC RAILCAR SERVICES CORPORATION, a Delaware corporation, Plaintiff-Appellee, v. WILMINGTON TRUST COMPANY, a Delaware corporation Defendant-Appellant (The National Bank of Washington, a Delaware corporation Defendant-Appellant).

No. 1-90-1668, 1-90-1669.

Appellate Court of Illinois First District, Fifth Division.

Dec. 28, 1990.

Rehearing Denied Feb. 8, 1991.

Mary T. Zerega, McDermott, Will & Emery, Chicago, for appellant, Wilmington Trust Co.

Damon E. Dunn, Julie L. Murphy, Levin & Funkhouser, Ltd., Chicago, for appellant, The Nat. Bank of Washington.

Hubert O. Thompson, Carney & Brothers, Ltd., Chicago, for plaintiff-appellee.

Justice MURRAY delivered the opinion of the court:

Petitions for leave to appeal an order of the circuit court of Cook County denying motions to quash service for want of in personam jurisdiction, brought pursuant to Supreme Court Rule 306(a)(1)(iii) (Ill.Rev.Stat.1990, ch. 110A, par. 306(a)(1)(iii)), were granted by this court to Wilmington Trust Company (WTC) (No. 1-90-1668) and to the National Bank of Washington (NBW) (No. 1-90-1669). The appeals have been consolidated and the only issue before this court is whether the trial court erred when it ruled that, pursuant to section 2-209 of the Code of Civil Procedure (Ill.Rev.Stat.1990, ch. 110, par. 2-209), WTC, a Delaware corporation whose principal place of business is in Wilmington, Delaware, and NBW, a Delaware corporation whose principal place of business is in Washington, D.C., were subject to the jurisdiction of Illinois courts for the purpose of defending a breach of contract action brought by General Electric Railcar Services Corporation (GERSCO), a Delaware corporation whose principal place of business is in Chicago, Illinois.

While the ultimate issue, the interpretation of section 2-209 of the Code or the so called long-arm statute, is a rather straightforward one, it is the facts of the case which complicate the matter. The facts of the case, as alleged in GERSCO's complaint, are as follows:

On May 15, 1972, a trust (Trust) was formed by WTC and NBW for the purpose of purchasing certain railroad locomotives from the manufacturers, General Motors and the General Electric Company (not GERSCO). The defendants were the beneficiaries of this Trust and WTC acted as the trustee. At the time the Trust was formed it was intended that the Trust would lease the locomotives to the Chicago, Milwaukee, St. Paul and Pacific Railroad Company (Chicago Railroad). A lease agreement (Lease), concerning this arrangement, also dated May 15, 1972, was fully executed on June 13, 1972. It provided that WTC, as trustee, would lease the locomotives to Chicago Railroad, as lessor, for a period of 15 years, expiring on December 1, 1987.

At the same time, a letter agreement (Letter), dated June 12, 1972, was entered into by WTC and NBW, in their individual capacities, with NAC Leasing Corporation, a subsidiary of North American Car Corporation (NACC), which apparently operated out of Chicago, Illinois. This Letter provided that: (a) NAC Leasing Corporation would receive compensation for the services they provided in arranging and negotiating the Lease, and (b) that, upon the termination of the Lease, NACC would attempt to renegotiate the lease, provide services in remarketing the equipment or purchase the locomotives for a guaranteed price.

On December 4, 1984, NACC filed a voluntary petition for relief under Chapter 11, Title 11 of the United States Code and on February 14, 1986, with the approval of bankruptcy court, NACC agreed to sell certain assets, including the remarketing agreement, to General Electric Credit Corporation (GECC) or its designee. GERSCO, the designee of GECC, then notified WTC and NBW on July 23, 1986, that it had acquired all rights, title and interest in the Letter, which WTC and NBW had entered into with NACC.

Apparently on April 2, 1987, WTC advised GERSCO that GERSCO's services would not be required for the remarketing of the equipment and the leased equipment was later sold. GERSCO alleged that it was due compensation under the Letter, despite the fact that it did not actually perform any remarketing services, since it always stood ready to perform.

Whether GERSCO is entitled to any compensation under the aforementioned Letter agreement it purchased from NACC is not at issue on appeal. The issue is whether WTC and NBW, foreign corporations, are subject to the jurisdiction of our Illinois courts. In response to GERSCO's complaint, both NBW and WTC filed motions to quash service and dismiss for lack of personal jurisdiction. They appeared specially to contest jurisdiction, contending that they were foreign corporations that did not transact business in Illinois. The trial court denied their motions and both defendants appeal.

Since the only issue before this court is whether the defendants, WTC and NBW, were properly found to be subject to the jurisdiction of Illinois courts, we begin our discussion with a recitation of the pertinent provisions of the so-called long-arm statute, section 2-209 of the Code, upon which jurisdiction was founded. (Ill.Rev.Stat. 1988 Supp., ch. 110, par. 2-209.) This statute provides:

"(a) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits his person, and if an individual, his or her personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any such acts:

(1) The transaction of any business within this State;

* * * * * *

(f) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him or her is based upon this Section."

As can be seen from the provisions stated above, the statute precludes Illinois courts from exercising personal jurisdiction over corporations that do not transact business in this State. We observe that, after reviewing Illinois and Federal caselaw concerning the interpretation of this statute, it might more aptly be named the short-arm statute, rather than the long-arm statute.

In any event, defendants in this case continue to argue that they did not transact business in this State within the meaning of the statute and that, even if they did transact business in this State, the present cause of action did not arise from the transaction of that business. The trial court, however, found that the Lease, which had been entered into by the Trust, was attributable to WTC and NBW individually, and that this contact with the State of Illinois was sufficient to confer jurisdiction over them in the present cause of action arising from the Letter Agreement, since the Letter and the Lease were, in essence, one transaction and could be viewed as such for purposes of jurisdiction. We agree.

In Illinois, a court's exercise of jurisdiction over a nonresident corporation not licensed in Illinois, may be founded upon (a) the fact that the corporation has been found to be "doing business" within the State, or (b) compliance with the requirements of the long-arm statute. (Cook Associates, Inc. v. Lexington United Corporation (1981), 87 Ill.2d 190, 57 Ill.Dec. 730, 429 N.E.2d 847.) If a foreign corporation has been found to "do business" within the State, it is amenable to the jurisdiction of Illinois courts even for causes of action not arising from the transaction of business within the State. (Cook Associates, Inc. v. Lexington United Corporation, 87 Ill.2d at 200, 57 Ill.Dec. 730, 429 N.E.2d 847.) In the present case the trial court ruled that the defendants were not "doing business" within the State for the purpose of asserting jurisdiction over them on causes of action not arising from a transaction of...