National Bank of Albany Park in Chicago v. Newberg

• Decision Date: 15 September 1972
• Docket Number: No. 56055,56055
• Citation: 289 N.E.2d 197,7 Ill.App.3d 859
• Parties: NATIONAL BANK OF ALBANY PARK IN CHICAGO, Plaintiff-Appellee, v. Paul K. NEWBERG, Defendant-Appellee, and Federal Savings and Loan Insurance Corporation, Garnishee-Appellee, and Eugene F. Welter, Intervenor-Appellee, and Citizens Bank & Trust Company, Intervenor-Appellant.
• Court: United States Appellate Court of Illinois

Page 197

289 N.E.2d 197

7 Ill.App.3d 859

NATIONAL BANK OF ALBANY PARK IN CHICAGO, Plaintiff-Appellee, v. Paul K. NEWBERG, Defendant-Appellee and Federal Savings and Loan Insurance Corporation, Garnishee-Appellee and Eugene F. Welter, Intervenor-Appellee and Citizens Bank & Trust Company, Intervenor-Appellant.

No. 56055.

Appellate Court of Illinois, First District, Fifth Division.

Sept. 15, 1972.

Warren L. Swanson and Donald C. Dowling, Chicago, for appellant.

Samuel Morgan and Arnold J. Karzov, Chicago, for plaintiff-appellee.

Eugene F. Welter, Chicago, for intervenor-appellee.

DRUCKER, Justice.

Citizens Bank & Trust Company (hereafter Citizens) appeals from a final order entered on March 3, 1971, in a garnishment proceeding wherein the court awarded $14,523.33 to plaintiff-garnisher, National Bank of Albany Park (hereafter Albany), and $17,003.28 to attorney Eugene Welter. An interim order of December 15, 1970, had awarded an additional $18,173.39 to Welter. Citizens and Welter were intervenors in the garnishment proceeding. Federal Savings and Loan Insurance Corporation (hereafter FSLIC) as the garnishee has taken no position in this case and has not appeared in this court.

On appeal Citizens contests the propriety of the final awards to both Albany and Welter; no issue is raised as to the interim order. Also, Albany contends that if we should find the final award to Welter erroneous, it is entitled to said fund.

The facts are essentially undisputed.

Citizens Bank became a judgment creditor of Paul Newberg for $687,247.13 on August 31, 1965. Later in 1965 supplementary proceedings to discover assets of Newberg were begun and after various extensions occurred culminated in a final order of June 26, 1969, which will be set forth in relevant part shortly hereafter.

Meanwhile Albany recovered a judgment against Newberg for $127,349.21 on January 20, 1966.

Eugene Welter entered into a contract with Newberg dated April 19, 1966. It provided that Welter represent Newberg in various pending actions in which Newberg was a defendant; payment was to be on an hourly basis. It further provided that Welter represent Newberg as plaintiff in certain other pending actions. As to these actions Welter was to receive one-third of the proceeds plus expenses.

On August 8, 1967, Newberg assigned to Welter all his rights and interest in two actions in which Newberg was plaintiff (No. 66 L 10473, a Cook County case, and No. 66 C 1222, a federal district case) as security for legal charges made and to be made.

The final order of June 26, 1969, in Citizens' supplementary proceedings to discover assets of Newberg, referred to above, reads in relevant part as follows:

IT IS HEREBY ORDERED * * *:

(1) That there be delivered or paid to (Citizens) * * *, Plaintiff-Judgment Creditor, the proceeds (exclusive of attorneys' fees, costs and expenses as allowed in paragraph (2) of this order) which said Paul K. Newberg and/or Paula Newberg are in possession or of which they may come in possession by reason of settlements arising out of or judgments entered in connection with any causes of action or claims which * * * (the Newbergs) * * *, have or may in the future acquire, described as follows: * * *

(c) Any causes of action or claims set forth which may hereafter be set forth in a certain Complaint pending in the Circuit Court of Cook County * * * bearing No. 66L--10473; and

(d) Any causes of action or claims set forth which may hereafter be set forth in a certain Complaint pending in the United States District Court, Northern District of Illinois, Eastern Division, * * * bearing No. 69C 1043;

(2) There shall be deducted from the proceeds paid to and to be paid to CITIZEN'S BANK & TRUST COMPANY, one-third (1/3) of the gross proceeds and of any other items of value obtained from any of the foregoing described sources or by reason of any of the foregoing described claims or causes of action for payment to EUGENE F. WELTER, for attorney fees in accordance with a contract of employment between said PAUL K. NEWBERG and said EUGENE F. WELTER, and which payment is secured by an assignment of his interest in said cause or causes of action by PAUL K. NEWBERG to EUGENE F. WELTER. In addition, there shall be deducted from said described proceeds the amount of reasonable costs and expenses incurred or advanced by said EUGENE F. WELTER in the prosecution of the foregoing claims or causes of action.

(3) PAUL K. NEWBERG be and is hereby ordered to assign and turn over to CITIZEN'S BANK & TRUST COMPANY, or at the direction of said CITIZEN'S BANK & TRUST COMPANY, any proceeds due personally to him from the claims or causes of action above set forth immediately upon his receipt thereof. * * *.

The order was approved by both parties, and Welter signed it as attorney for the Newbergs.

On November 9, 1970, Albany served a garnishment summons (instituting the subject proceedings) on garnishee FSLIC. An attached affidavit noted the unsatisfied judgment against Newberg for $127,349.21 and further stated Albany's belief that FSLIC was in possession of property in which the Newbergs had an interest.

On November 30 FSLIC answered, acknowledging that it possessed a check (issued November 18, 1970) for $50,000 payable to Newberg and Welter, said check being consideration for the release of claims asserted by Newberg against FSLIC in the Circuit Court of Cook County (66 L 10473) and Federal District Court for the Northern District of Illinois (69 C 1043); that Welter had acted as Newberg's attorney in these matters; that settlement thereof had been reached before service of the garnishment summons; that the terms of the settlement called for Newberg to execute a release of all claims against FSLIC in return for $50,000; that before service of the garnishment summons Newberg had executed said release but FSLIC had not paid the $50,000 to Newberg; and that also before service of the garnishment summons FSLIC had received a notice of attorney's lien and notice of assignment of said claims from Welter. ¹

In Citizens' initial pleading it prayed for the sum of $31,826.61, representing the settlement proceeds ($50,000) less one-third thereof less expenses incurred in procuring the settlement, the latter two sums to be given to Welter.

In Albany's answer to Welter's petition to intervene, it prayed for $50,000 less such sum as the court determined was due Welter.

On December 15, 1970, the court ordered the $50,000 check held by FSLIC to be endorsed by Newberg and Welter; Welter was to pay himself $18,173.39 (representing one-third of the proceeds of the settlement of 66 C 1043 and 69 L 10479 plus expenses), pay $300 to FSLIC for attorney's fees and pay the remaining $31,526.61 to the clerk of the court subject to further order.

On March 3, 1971, after a hearing, the court entered a final order stating that Albany was entitled to the remaining funds, subject only to the rights of Welter who was to be reimbursed for work done in regard to other matters pursuant to his contract of employment with Newberg. The clerk was therefore directed to pay $17,003.28 to Welter and the balance of $14,523.33 to Albany. This is the order from which Citizens as intervenor has filed this appeal.

Opinion

Attorney Welter has challenged on two grounds the efficacy of the order of June 29, 1969, entered in Citizens' supplementary proceedings to discover Newberg's assets. We first address these contentions because Citizens' claim to funds held by FSLIC is based upon said order, and it is relevant to the latter portion of this opinion dealing with the propriety of the court's award of $17,003.28 to Welter.

Welter first contends that the asset discovered in the supplementary proceedings, 'an unliquidated claim against FSLIC,' could not properly be reached in such proceedings under Section 73 of the Civil Practice Act. Ill.Rev.Stat.1969, ch. 110, par. 73. We find it unnecessary to respond to the merits of this contention since even if it were correct the order would nevertheless be operative if the court had jurisdiction over the subject matter and parties. Final orders in supplementary proceedings under Section 73 are appealable (Ill.Rev.Stat.1969, ch. 110, par. 73(7)) and an appeal from that order would have been the appropriate action to determine its propriety. The issue cannot be raised at this time. Cheevers v. Stone, 10 Ill.App.2d 39, 134 N.E.2d 32.

Welter's second contention does attack the court's jurisdiction to enter the order. The issue of jurisdiction is subject to collateral attack (Barnard v. Michael, 392 Ill. 130, 63 N.E.2d 858), and therefore we must address the merits of this contention.

Supreme Court Rule 277(f) (Ill.Rev.Stat.1967, ch. 110A, par. 277(f)) which governs the procedural aspects of supplementary proceedings under Section 73 of the Civil Practice Act provides:

A proceeding under this rule continues until terminated by motion of the judgment creditor, order of the court, or satisfaction of the judgment or decree, but terminates automatically six months from the date of service of the citation by which it is commenced. The court, however, may grant successive 28-day extensions beyond the six months. Orders for the payment of money continue in effect notwithstanding the termination of the proceeding until the judgment is satisfied or the court orders otherwise.

In the instant case the six month period for conducting supplementary proceedings expired early in 1966. Thereafter many extensions were granted to Citizens until the entry of the final order in June 1969. Some of these extensions were beyond 30 days. Welter argues that this violation of Rule 277(f) terminated the proceedings and thus the order was null and void when entered.

We deem it sufficient to say that we have reviewed the court file of the supplementary proceedings and found that any extensions greater than 30 days did not constitute harassment of the judgment debtor, the...