Home State Bank/National Ass'n v. Potokar

• Decision Date: 05 August 1993
• Docket Number: No. 2-92-0949,2-92-0949
• Citation: 187 Ill.Dec. 581,617 N.E.2d 1302,249 Ill.App.3d 127
• Parties: , 187 Ill.Dec. 581 HOME STATE BANK/NATIONAL ASSOCIATION, Plaintiff-Appellee and Cross-Appellant, v. Ralph POTOKAR, Defendant (Raymond Salm, Citation Respondent-Appellant and Cross-Appellee).
• Court: United States Appellate Court of Illinois

Page 1302

617 N.E.2d 1302

249 Ill.App.3d 127, 187 Ill.Dec. 581

HOME STATE BANK/NATIONAL ASSOCIATION, Plaintiff-Appellee and Cross-Appellant, v. Ralph POTOKAR, Defendant (Raymond Salm, Citation Respondent-Appellant and Cross-Appellee).

No. 2-92-0949.

Appellate Court of Illinois,

Second District.

Aug. 5, 1993.

Kirk L. Miller, Law Offices of Kirk L. Miller, Highland Park, for Ralph Potokar.

Andrew T. Freund, Valeree D. Marek, Zukowski, Rogers, Flood & McArdle, Crystal Lake, for Home State Bank/National Ass'n.

Justice QUETSCH delivered the opinion of the court:

This appeal and cross-appeal arise from orders entered during the course of supplementary proceedings in connection with a lawsuit by plaintiff, Home State Bank/National Association (the bank), against defendant, Ralph Potokar, seeking recovery on a promissory note. Raymond Salm appeals from an order of the circuit court of McHenry County that held that an assignment by Potokar to Salm of stock in MacNair Development, Inc. (MacNair), was void and directed MacNair and its corporate secretary to turn over amounts representing dividends on the stock to the bank. The bank cross-appeals from an order of the circuit court granting Salm's motion to strike the bank's request for a determination of attorney fees.

The relevant facts are as follows. The bank filed its complaint in this action on April 30, 1990, seeking recovery of amounts due under a promissory note executed by Potokar. The promissory note expressly provided that Potokar "agree[d] to pay reasonable attorney's fees, costs and expenses incurred by [the bank] in the collection and enforcement of this Note," and the bank requested an award of attorney fees and costs of suit in its complaint.

On January 7, 1991, on an oral motion by the bank, the trial court held Potokar to be in default due to his failure to appear at the law jury trial conference call. Two days later, however, the circuit court vacated the default judgment and entered an agreed order governing payment of the promissory note. Paragraph 1 of the agreed order set forth a schedule for payment of the promissory note and attorney fees and costs incurred in the litigation up to January 15, 1991. The agreed order further provided that judgment would not be entered against Potokar at that time, but that should Potokar breach the terms of the agreed order, amounts due thereunder would be accelerated and, on petition by the bank, judgment would enter in its favor for the amount outstanding. The agreed order also provided that the bank "shall be entitled to reasonable attorneys' fees and costs relating to the enforcement of the agreement herein" and that the circuit court would "retain jurisdiction over this matter until the sums stated in paragraph 1 above have been fully satisfied by Defendant."

On April 15, 1991, the bank moved for the entry of judgment against Potokar pursuant to the agreed order, on the basis that Potokar had failed to make certain payments required under the agreed order. In its motion the bank also requested attorney fees and costs. The trial court granted the motion on the same day and entered an order stating that judgment was entered against Potokar in the amount of $29,170.72 plus interest, costs and attorney fees. The April 15, 1991, order did not, however, specify the amount of attorney fees and costs, nor did it expressly reserve jurisdiction over the matter of fees and costs or schedule further proceedings relative to fees and costs.

Thereafter, the bank instituted supplementary proceedings, serving Potokar with a citation to discover assets on June 14, 1991, commanding his appearance for examination and prohibiting him from transferring or otherwise disposing of nonexempt property. During examination pursuant to the citation, Potokar indicated that he was a plaintiff in a lawsuit pending in the United States District Court for the Northern District of Illinois. Accordingly, on September 3, 1991, the bank filed a motion pursuant to section 2-1402(b)(5) of the Civil Practice Law (735 ILCS 5/2-1402(b)(5) (West 1992)) seeking an order requiring Potokar to assign it the Federal court cause of action "in order to satisfy Plaintiff's Judgment." The trial court granted the motion. Its order, dated September 3, 1991, provided that Potokar was "ordered to assign any interest or right that he may have [in the Federal court cause of action] to satisfy Plaintiff's judgment awarded herein."

Additionally, on September 19, 1991, the trial court entered an order requiring Potokar to turn over the proceeds from his Federal court lawsuit. The order further provided that it constituted a lien on such proceeds to be imposed upon the attorney for the defendants in that lawsuit. An order entered on December 30, 1991, again required Potokar to assign his interest in the Federal court action to the bank. Potokar ultimately delivered a written assignment to the bank in January 1992. After the delivery of the assignment, judgment was entered in the plaintiff's favor in the Federal court action. Potokar's share of the judgment was $360,000. The record establishes that this judgment had not been collected as of June 1992.

During the supplementary proceedings, the bank learned of Potokar's interest in and involvement with MacNair. Both Potokar and Raymond Salm had been shareholders and directors of MacNair, and Potokar had been president of MacNair since its formation. In May 1991, MacNair had directed the sale of certain real property held in a land trust for a purchase price of $782,000, payable in three installments, the second of which was in the amount of $226,000 and was due on March 20, 1992. MacNair planned to distribute the second and third installments to its shareholders as a dividend on their stock. The bank also discovered that on July 6, 1991, subsequent to having been served with the citation to discover assets, Potokar had assigned his shares of stock in MacNair to Raymond Salm as security for payment of a promissory note in the amount of $95,000.

On March 6, 1992, the bank served a citation to discover assets on MacNair's corporate secretary, and on April 14, 1992, the bank filed a "Motion for Turnover of Assets," seeking an order requiring MacNair to turn over the dividends payable on the stock assigned by Potokar to Salm. The motion asserted that the transfer of the stock constituted a fraud against the bank and was therefore void. An evidentiary hearing on the turnover motion was conducted, and, on May 12, 1992, the trial court issued a memorandum opinion finding that the assignment of Potokar's stock to Salm violated section 6(b) of the Uniform Fraudulent Transfer Act (740 ILCS 160/6(b) (West 1992)) and holding that the bank was entitled to the relief requested in the turnover motion. The trial court directed the bank's attorneys to prepare an order consistent with the memorandum opinion.

On May 26, 1992, the bank filed a petition seeking a determination of the allowable amount of interest, attorney fees and costs as awarded by the court in its order of April 15, 1991. Salm moved to strike the petition asserting, inter alia, that the trial court lacked jurisdiction to consider the request for attorney fees since more than 30 days had passed since the entry of judgment against Potokar on April 15, 1991. On June 25, 1992, the trial court granted Salm's motion in part, striking only the bank's request for a determination of attorney fees. On July 13, 1992, the court entered an order awarding the bank costs in the amount of $638.50, and directing MacNair to turn over the sum of $33,073.48 to the bank. The present appeal and cross-appeal followed.

Salm contends on appeal that the judgment against Potokar was satisfied by the assignment to the bank of Potokar's interest in the lawsuit then pending in Federal court in which Potokar was a plaintiff. In support of his argument, Salm points to certain language in the bank's motion seeking the assignment and language in the written assignment Potokar delivered to the bank, as well as certain conduct by the bank during the course of the supplementary proceedings.

Generally, the only way in which a money judgment can be satisfied is by payment in money unless the parties agree otherwise. (Heller v. Lee (1985), 130 Ill.App.3d 701, 702, 85 Ill.Dec. 896, 474 N.E.2d 856, citing ADA Enterprises Inc. v. Thompson (1965), 26 Wis.2d 269, 132 N.W.2d 244; 47 Am.Jur.2d Judgments § 985 (1969).) Whether an agreement to satisfy a judgment has been concluded is a question of fact for the trial court. (Russell v. Klein (1975), 33 Ill.App.3d 1005, 1008, 339 N.E.2d 510.) Issues of fact concerning satisfaction of judgments are best left to be resolved by the trial court. (Marks v. L.C.J. Construction Co. (1980), 89 Ill.App.3d 418, 422, 44 Ill.Dec. 661, 411 N.E.2d 1027.) The trial court's judgment will not be disturbed unless against the manifest weight of the evidence. Marks, 89 Ill.App.3d 418, 44 Ill.Dec. 661, 411 N.E.2d 1027; see also Bee Jay's Truck Stop, Inc. v. Department of Revenue (1980), 86 Ill.App.3d 7, 11, 41 Ill.Dec. 257, 407 N.E.2d 755 ("manifestly erroneous" standard is applicable in garnishment proceedings).

Salm contends that the bank agreed to accept the assignment of Potokar's cause of action in satisfaction of its judgment. Salm initially notes that the bank, in its motion seeking the assignment, requested that the court order the assignment "in order to satisfy" the bank's judgment. We do not find any indication in this language that the bank agreed to take the assignment in full satisfaction of its judgment. The motion does not state that the assignment would be taken "in satisfaction" of the judgment. The language used simply expresses the bank's purpose in seeking the assignment. Nothing in the bank's motion in any way suggests that the bank agreed to relinquish its right to obtain full payment of the judgment.

Salm also points out that, although the...