Levy v. Liebling

• Decision Date: 30 November 1956
• Docket Number: No. 11766.,11766.
• Citation: 238 F.2d 505
• Parties: Frederick LEVY, Jr. et al., Plaintiffs-Appellees, v. Abraham M. LIEBLING, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

238 F.2d 505 (1956)

Frederick LEVY, Jr. et al., Plaintiffs-Appellees, v. Abraham M. LIEBLING, Defendant-Appellant.

No. 11766.

United States Court of Appeals Seventh Circuit.

November 30, 1956.

Soll J. Schnitz, Chicago, Ill., for appellant.

Frank D. Mayer, Chicago, Ill., Leo F. Tierney, Louis A. Kohn, James C. Mallatt, Chicago, Ill., Mayer, Friedlich, Spiess, Tierney, Brown & Platt, Chicago, Ill., of counsel, for appellees.

Before MAJOR, LINDLEY and SWAIM, Circuit Judges.

MAJOR, Circuit Judge.

The Imperial Realty Company, a corporation incorporated under the laws of the State of Kentucky (hereinafter referred to as Imperial), by resolution adopted by its Board of Directors on March 23, 1942, determined to liquidate its business, and on November 28, 1942, a Certificate of Dissolution was recorded in the office of the Clerk of the County Court of Jefferson County, Kentucky. The sole stockholders at the time of dissolution were plaintiffs, Frederick Levy, Jr., Adelaide S. Miller and Maude B. Levy, now deceased. Plaintiff, The Liberty National Bank and Trust Company of Louisville, Kentucky, has succeeded to the interest of the deceased stockholder.

On August 29, 1939, there was entered by the Circuit Court of Cook County, Illinois, a money decree against Abraham M. Liebling (defendant in the instant action), then and now a citizen and resident of Cook County, Illinois, in favor of Imperial, representing a deficiency judgment in a mortgage foreclosure suit.

On June 14, 1955, plaintiffs filed in the District Court the present suit to recover $28,862.26, the amount then owing on said deficiency judgment, plus interest thereon and costs. On September 22, 1955, plaintiffs filed an amended complaint joining Imperial as a party-plaintiff, renewing their demand for judgment against defendant in favor of the individual plaintiffs or, in the alternative, in favor of Imperial.

On November 14, 1955, defendant filed his motion to quash the summons and dismiss the amended complaint, which, on February 1, 1956, was allowed as to Imperial for want of capacity to sue but denied as to individual plaintiffs, with leave to the defendant to answer. Defendant refused or neglected to answer within the time required, whereupon the court, on March 15, 1956, upon plaintiffs' motion entered a default judgment against defendant. From this judgment defendant appeals.

The gist of defendant's contention, as shown in his statement of contested issues, is that plaintiffs as former shareholders of Imperial lacked capacity to sue and that this inevitably follows from the fact that Imperial lacked such capacity, as held by the District Court. In connection with this contention it is argued that inasmuch as the capacity of Imperial to sue or be sued must be determined by the law of Kentucky, the laws of limitation of that State must be applied in determining the capacity of plaintiffs as former stockholders to sue. Stated another way by defendant, the issue is whether Illinois, which rendered the judgment in favor of a Kentucky corporation, since dissolved, will, when a remedy is sought by its former stockholders, apply its own laws of limitation.

Plaintiffs state the sole contested issue is whether the Illinois twenty-year statute of limitations relating to actions on judgments is applicable to a suit brought in Illinois on an Illinois judgment against an Illinois resident by former stockholders of a dissolved Kentucky corporation. Defendant apparently relies upon a Kentucky statutory provision entitled "Survival of remedy after dissolution," which provides that such dissolution "shall not take away or impair any remedy available to or against such corporation, its directors, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution, if suit thereon is commenced within two years after the date of such dissolution * *." K.R.S. 271.585. It may be noted, although perhaps not material, that Illinois has a statutory provision almost identical in terminology. Smith-Hurd Illinois Statutes, Chapter 32, Par. 157.94.

As noted, Imperial filed its Certificate of Dissolution November 28, 1942, and it appears plain that under the provision just quoted any action for or against it was limited to a two-year period. On expiration of that period it became extinct for all purposes and it no longer had the capacity to sue or be sued. We are unable to agree, however, for reasons subsequently shown, that this provision had a like effect or any effect upon the rights of plaintiffs as former shareholders of Imperial. The provision by its express language applies to "any right or claim existing, or any liability incurred prior to such dissolution." It is obvious that the right or claim of Imperial in the Chicago judgment against defendant existed prior to the time of its dissolution, but it is equally obvious that the right or claim of plaintiffs in suit was not in existence prior to that time.

For some reason not disclosed by the record and with which we need not be concerned, Imperial prior to the time of its dissolution or during the following two-year period in which it might have done so, took no action to recover from defendant on account of the Chicago judgment. As a result of its failure in this respect this...