Gluth Bros. Const., Inc. v. Union Nat. Bank

• Decision Date: 29 December 1989
• Docket Number: No. 2-89-0352,2-89-0352
• Citation: Gluth Bros. Const., Inc. v. Union Nat. Bank, 548 N.E.2d 1364, 192 Ill.App.3d 649, 139 Ill.Dec. 650 (Ill. App. 1989)
• Parties: , 139 Ill.Dec. 650 GLUTH BROTHERS CONSTRUCTION, INC., et al., Plaintiffs-Appellees, v. UNION NATIONAL BANK, Defendant-Appellant.
• Court: Appellate Court of Illinois

Page 1364

548 N.E.2d 1364

192 Ill.App.3d 649, 139 Ill.Dec. 650

GLUTH BROTHERS CONSTRUCTION, INC., et al., Plaintiffs-Appellees, v. UNION NATIONAL BANK, Defendant-Appellant.

No. 2-89-0352.

Appellate Court of Illinois Second District.

Dec. 29, 1989.

Robert A. Chapski, Randy K. Johnson (argued), Law Office of Robert A. Chapski, Ltd., Elgin, for Union Nat. Bank.

James E. Berner (argued), Caldwell, Berner & Caldwell, Woodstock, for Gluth Bros. Const., Wayne E. Zimmerman, dba Wayne E. Zimmerman Const.

Justice INGLIS delivered the opinion of the court:

Defendant, Union National Bank, appeals from an order of the circuit court of McHenry County entering judgment in favor of plaintiffs, Gluth Brothers Construction, Inc., and Wayne E. Zimmerman, d/b/a Wayne E. Zimmerman Construction, in the sum of $195,609.56, plus interest and costs. Defendant also appeals from the circuit court's order denying its petition filed pursuant to section 2-1401 of the Code of Civil Procedure (Code) (Ill.Rev.Stat.1987, ch. 110, par. 2-1401). On appeal, defendant contends that: (1) the trial judge acted improperly in not recusing himself from the case given that plaintiffs' attorney was the chairman, and the attorney's wife, the treasurer, of the judge's lawyers committee (a campaign committee); and (2) it is entitled to a setoff on the judgment entered for the amounts plaintiffs received as creditors in a bankruptcy proceeding. We affirm in part, reverse in part, and remand.

The facts in this case were set out in a previous opinion issued by this court. (Gluth Brothers Construction, Inc. v. Union National Bank (1988), 166 Ill.App.3d 18, 116 Ill.Dec. 365, 518 N.E.2d 1345.) We will only set out additional facts pertinent to the issues present in this appeal.

On August 19, 1982, plaintiffs filed a two-count complaint in the circuit court of McHenry County alleging that defendant, Union National Bank, improperly set off $195,609.56 in funds deposited by Valley Engineering Company (Valley). Plaintiffs alleged that the funds were the proceeds of a joint venture comprised of plaintiffs and Valley and, as such, constituted trust funds which were beyond defendant's reach. On October 27, 1982, plaintiffs filed a motion for a change of venue, which was subsequently granted. The case was thereafter assigned to the Honorable Roland A. Herrmann. On May 21, 1985, plaintiffs were granted leave to file an amended complaint adding count III. In addition, plaintiffs requested leave to file a jury demand. On June 10, 1985, Judge Herrmann heard arguments on plaintiffs' jury demand and thereafter denied plaintiffs' request. The case proceeded to trial.

Following a bench trial, the trial court found in favor of plaintiffs and entered judgment against defendant in the amount of $334,380.86, plus $156,968.92 in interest, for a total award of $491,349.78. On appeal, this court affirmed the trial court as to liability but reversed as to damages. On remand, the trial court was instructed to enter judgment for plaintiff in the amount of $195,609.56, plus interest at the then current prime rate. Gluth Brothers, 166 Ill.App.3d at 29-30, 116 Ill.Dec. 365, 518 N.E.2d 1345.

On September 15, 1988, the appellate court mandate was filed in the circuit court of McHenry County. On October 6, 1988, defendant filed a motion for a setoff, alleging that a Federal judge in Valley's bankruptcy proceeding distributed over $180,000 to plaintiffs as a creditor of Valley. On the same day, plaintiffs filed a motion objecting to the setoff, contending that the circuit court did not have jurisdiction to deviate from the appellate court mandate.

On October 14, 1988, defendant filed a motion for a change of venue, alleging that plaintiffs' attorney had a "long-standing" relationship with Judge Herrmann and, as a result, defendant was entitled to a new trial before a different judge. On the same day, Judge Herrmann recused himself from the case, and the case was subsequently assigned to the Honorable Ward S. Arnold.

On November 29, 1988, plaintiffs filed a motion to enter judgment pursuant to the appellate court mandate. On December 2, 1988, defendant filed a petition pursuant to section 2-1401 of the Code (Ill.Rev.Stat.1987, ch. 110, par. 2-1401) to "vacate and/or refuse to enter judgment." On December 19, 1988, a hearing was held, after which the trial court denied defendant's request for a setoff and awarded plaintiffs $195,609.56, plus interest and costs. The court also denied defendant's request for a new trial, finding that defendant had failed to establish any actual prejudice as a result of the relationship between Judge Herrmann and plaintiffs' attorney. Defendant's motion for reconsideration was denied, and this appeal followed.

Defendant's first contention on appeal is that it was entitled to a new trial due to the relationship between Judge Herrmann and plaintiffs' attorney. Defendant alleges that this relationship was not disclosed to defendant before trial and, consequently, made it impossible for defendant to receive a fair trial.

It is undisputed that plaintiffs' attorney served as the chairman of the Executive Committee Lawyers For Herrmann in 1976. In addition, the attorney's wife served as the treasurer of the same committee. At no time during the trial did Judge Herrmann advise defendant of this relationship. It is on these facts that defendant based its section 2-1401 petition for a new trial.

The trial court denied defendant's petition, stating that Judge Herrmann was not required to recuse himself from the case. As such, the court held that "the motion is not well taken unless Union National Bank [defendant] can show something in conjunction with his [the trial judge's] refusal or lack of disqualification which would bolster its argument that he was not impartial or that he showed partiality to one side or the other."

Defendant contends that the trial court erred by requiring "actual prejudice" in a case in which an appearance of impropriety was present. In addition, defendant argues that, even assuming arguendo that it was necessary to show actual prejudice, such a showing was demonstrated in the present case.

Plaintiffs respond by arguing that defendant's section 2-1401 petition did not meet the statutory requirements and thus was not sufficient to obtain relief. In particular, plaintiffs allege that the petition was not supported by an affidavit and did not allege that defendant had a meritorious defense.

A section 2-1401 petition must set forth facts showing the existence of a meritorious defense and must be supported by an "affidavit or other appropriate showing as to matters not of record." (Ill.Rev.Stat.1987, ch. 110, par. 2-1401(b); In re Petition of the Village of Kildeer to Annex Certain Territory (1988), 124 Ill.2d 533, 544-45, 125 Ill.Dec. 333, 530 N.E.2d 491.) In addition, due diligence in presenting both a defense at trial and the petition to vacate must be demonstrated. (Carroll Service Co. v. Schneider (1986), 144 Ill.App.3d 38, 40, 98 Ill.Dec. 326, 494 N.E.2d 253.) Plaintiffs do not contend that defendant was not diligent; thus, we will not consider this requirement on appeal.

We disagree with plaintiffs' contention that defendant's petition did not satisfy the statutory requirements under section 2-1401 of the Code (Ill.Rev.Stat.1987, ch. 110, par. 2-1401.) Defendant attached copies of Judge Herrmann's election commission reports to the petition, thus satisfying the requirement that the petition be supported by an "appropriate showing." In addition, the allegation that defendant did not receive a fair hearing before an impartial trier of fact satisfies the requirement of a meritorious defense. In Brewer v. Moore (1984), 121 Ill.App.3d 423, 77 Ill.Dec. 57, 459 N.E.2d 1153, the court determined that a section 72 petition (the predecessor of a section 2-1401 petition) should be utilized to prevent injustice, including preventing the enforcement of an unfair or unjust judgment. (Brewer, 121 Ill.App.3d at 428-29, 77 Ill.Dec. 57, 459 N.E.2d 1153.) Furthermore, in Village of Kildeer, our supreme court stated that a section 2-1401 petition should be utilized to "avoid unjust, unfair or unconscionable circumstances." (Village of Kildeer, 124 Ill.2d at 542, 125 Ill.Dec. 333, 530 N.E.2d 491.) In the present case, defendant alleged that it did not receive a fair trial due to the trial judge's relationship with plaintiffs' attorney. With these considerations of fairness and justice in mind, it is our opinion that defendant's petition satisfied the requirements of section 2-1401 of the Code.

We next consider whether the trial court erred in denying defendant's section 2-1401 petition. Whether a section 2-1401 petition should be granted or denied lies within the sound discretion of the trial court, and its decision will not be disturbed on appeal absent an abuse of discretion. Village of Kildeer, 124 Ill.2d at 544, 125 Ill.Dec. 333, 530 N.E.2d 491; Smith v. Airoom, Inc. (1986), 114 Ill.2d 209, 221, 102 Ill.Dec. 368, 499 N.E.2d 1381.

In the case at bar, defendant argues that the trial court abused its discretion in denying its section 2-1401 petition given the fact that plaintiffs' attorney worked as Judge Herrmann's campaign manager in 1976. Thus, according to defendant, it was incumbent upon Judge Herrmann to disclose to defendant the nature of his relationship with plaintiffs' attorney, and the failure to do so created an appearance of impropriety which deprived defendant of its right to a fair trial.

At the time of trial, Supreme Court Rule 61 (103 Ill.2d R. 61) governed the standards of judicial conduct. Rule 61(c)(4) provided, in pertinent part:

"A judge's official conduct should be free from impropriety and the appearance of impropriety; * * * and his personal behavior, not only upon the Bench and the performance of judicial duties, but also in his everyday life, should be beyond reproach." (103 Ill.2d R. 61(c)(4).)

Effectiv...