Skolnik v. Petella

• Decision Date: 12 June 1941
• Docket Number: No. 25768.,25768.
• Parties: SKOLNIK v. PETELLA.
• Court: Illinois Supreme Court

376 Ill. 500

34 N.E.2d 825

SKOLNIK

v.PETELLA.

No. 25768.

Supreme Court of Illinois.

April 15, 1941.

Rehearing Denied June 12, 1941.

Action by Clara Skolnik against Beatrice Petella for balance allegedly remaining unpaid on bond held by plaintiff. A judgment for defendant was affirmed by the Appellate Court, 304 Ill.App. 331, 26 N.E.2d 646, and the plaintiff appeals on certificate of importance.

Judgment of Appellate Court affirmed.

GUNN, C. J., and FARTHING and WILSON, JJ., dissenting.Appeal from Appellate Court, First District, on Appeal from Municipal Court of Chicago; Jay A. Schiller, Judge.

Maurice H. Kamm, of Chicago, (Ira S. Kolb and Harold J. Kamm, both of Chicago, of counsel), for appellant.

Joseph M. Fiore, of Chicago (Newell Mecartney, of Chicago, of counsel), for appellee.

SHAW, Justice.

This case comes to us by appeal on certificate of importance from the Appellate Court for the First District. No fact is in controversy, all determinations in the municipal court of Chicago and in the Appellate Court having been made upon the pleadings alone. In the municipal court the defendant had judgment on motion to dismiss the amended statement of claim, and this judgment was affirmed by the Appellate Court.

In 1928, John Roloff and Ethel Roloff, his wife, were the owners of certain real estate in Cook county and on that date executed and delivered ninety bonds of various denominations evidencing an indebtedness of $45,000. To secure those bonds a trust deed was executed to the Garfield State Bank, as trustee, of even date with the bonds, which was eventually foreclosed as hereinafter stated. After the execution and delivery of these bonds and this trust deed the property, subject to the lien of the trust deed, was conveyed to one Margaret Considine and thereafter by her conveyed to Ciro Petella and Beatrice Petella, his wife. In the last-mentioned deed the Petellas expressly assumed and agreed to pay the indebtedness secured by the above-mentioned trust deed. The plaintiff in this case is the owner of one of the bonds so secured and the obligation of which was so assumed by the Petellas.

After the Petellas had purchased the property, and after they had made several payments on the principal and interest secured by the trust deed, a default occurred and the trustee foreclosed for the benefit of all bondholders. The Roloffs who had signed the bonds and the Petellas who had assumed their payment were made parties defendant in this foreclosure suit, and were duly served with summons. It is admitted that the court in the foreclosure suit had personal jurisdiction over them as well as over the subject matter in issue. A decree of foreclosure was entered, a sale held pursuant to that decree and, as a result of that sale, the plaintiff in this suit, holding one of the bonds in the principal sum of $500, realized the sum of $100. Thereafter, on June 22, 1938, the circuit court of Cook county in which the foreclosure was had entered a deficiency decree against the makers of the bonds, but not against the Petellas who had assumed their payment.

This action was commenced in the municipal court against Ciro Petella and Beatrice Petella for the balance remaining unpaid on the bond held by Clara Skolnik and alleged that after giving full credit for all sums realized on the foreclosure, there remained due for principal and interest on the bond in question a sum of $610. There was a motion to strike this statement of claim setting forth the facts hereinabove disclosed and an answer to the motion to strike not questioning any of the facts, but taking the position that the foreclosure suit did not adjudicate the issues presented by this suit because, in the foreclosure proceeding, there had been no allegation either seeking or permitting any personal recovery against the Petellas, nor any allegation which would have sustained a personal judgment against them and setting forth affirmatively that Beatrice Petella was made a party to the foreclosure only for the purpose of barring her redemption rights and not to enforce any personal liability on her part by reason of the assumption agreement. Ciro Petella died pending the litigation and the cause proceeded against Beatrice alone.

It is conceded by the plaintiff ‘that had the pleadings in the foreclosure case alleged the fact that Beatrice Petella had, by the deed conveying the premises to her, assumed and agreed to pay the debt secured by the trust deed sought to be foreclosed, so that her personal liability was in issue, and then the foreclosure decree found the Roloffs, the mortgagors, personally liable, then, as to personal liability on the part of Beatrice Petella (the owner of the equity), the decree would have barred the instant suit.’ This concession is in accordance with the statutory provision (Ill.Rev.Stat. 1939, chap. 95, par. 17) giving courts of chancery the power, in foreclosure suits, to enter personal judgments for deficiency where the persons liable have been served with summons. The point for decision is, therefore, narrowed to a determination of whether the plaintiff could take advantage of this statutory provision in part, without exercising it in full against all of the persons directly and primarily liable for the payment of the debt secured by the trust deed. Conversely could the plaintiff take a personal judgment against a part of those personally liable and withhold action, pending further developments, against others who were likewise personally liable? Both the trial court and the Appellate Court held that all claims for personal liability were merged in the deficiency decree and that the plaintiff was without remedy in this suit.

It is apparent from the briefs on file that the difficulties in disposing of this case have arisen from a failure to distinguish between the rules applicable in a case of res judicata as distinguished from cases involving merely an estoppel by verdict. The appellants rely principally upon Sawyer v. Nelson, 160 Ill. 629, 43 N.E. 728, and, in addition thereto, cite Young v. People, 171 Ill. 299, 303, 49 N.E. 503,People v. Wyanet Electric Light Co., 306 Ill. 377, 383, 137 N.E. 834, and Williams v. Williams, 265 Ill. 64, 74, 106 N.E. 476. Each of these cases involves an application of the rules concerning estoppel by verdict and, as stated by them, the rule in such cases is as was held in Sawyer v. Nelson, supra, that judgment in a former suit operates as an estoppel only where it appears on the face of the record or by extrinsic evidence that the precise question in controversy was raised and determined in the former suit. Appellant's position would be well taken if this were a case of estoppel by verdict, but we cannot agree that it falls in that classification. It comes rather within those rules more precisely defined within the broader limits of the law pertaining to res judicata.

As illustrated by the cases which appellant cites, the rules of estoppel by verdict apply to some fact or issue necessarily determined by the previous litigation and make the determination of that fact or issue conclusive upon those who have once litigated it, either in the same or a different cause of action involving either the same or a different subject matter. The principles of res judicata, on the other hand, are limited to one cause of action concerning one subject matter, but are much broader in their scope, taking in not only all that was adjudicated in the prior action, but all that might have been. The United States Supreme Court pointed out the distinction in Cromwell v. County of Sac, 94 U.S. 351, 352, 24 L.Ed. 195, in the following language: ‘It should be borne in mind * * * that there is a difference between the effect of a judgment as a bar or estoppel against the prosecution of a second action upon the same claim or demand, and its effect as an estoppel in another action between the same parties upon a different claim or cause of action. In the former case, the judgment, if rendered upon the merits, constitutes an absolute bar to a subsequent action. * * * But where the second action between the same parties is upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.’

The rules applicable to res judicata have been discussed by this court many times, as, for instance, in Phelps v. City of Chicago, 331 Ill. 80, 162...