Spiller v. Continental Tube Co.

• Decision Date: 25 March 1983
• Docket Number: No. 56892,56892
• Citation: 95 Ill.2d 423,69 Ill.Dec. 399,447 N.E.2d 834
• Parties: , 69 Ill.Dec. 399 Emmy Lou SPILLER et al., Appellants, v. The CONTINENTAL TUBE COMPANY, Appellee.
• Court: Illinois Supreme Court

Page 834

447 N.E.2d 834

95 Ill.2d 423, 69 Ill.Dec. 399

Emmy Lou SPILLER et al., Appellants, v. The CONTINENTAL TUBE COMPANY, Appellee.

No. 56892.

Supreme Court of Illinois.

March 25, 1983.

Anthony C. Raccuglia & Associates, Peru, for appellants.

Louis E. Olivero, Peru, for appellee.

UNDERWOOD, Justice:

The plaintiffs in this case, Emmy Lou and Clifford E. Spiller, were the owners of two corporations, Spiller and Spiller, Inc., and L.P. Industrial Building Corporation. Emmy Lou Spiller, individually, and the L.P. corporation loaned money to Spiller and Spiller, Inc., in return for the promissory notes of the corporation. The L.P. corporation was subsequently dissolved, and its assets transferred to Clifford Spiller.

On September 1, 1974, defendant, the Continental Tube Company (Continental), entered into an "Agreement for Purchase of Assets" with Spiller and Spiller, Inc., et al., whereby defendant allegedly agreed to purchase the assets and assume the liabilities of that company. The document was signed on behalf of defendant by Henry Hofmann, then its president and also vice-president of Hofmann Industries, defendant's parent corporation. Clifford Spiller, then president of Spiller and Spiller, Inc., executed the contract on behalf of the corporation and also as "named stockholder." Among the then-existing liabilities were the several promissory notes earlier referred to.

In October 1975 judgments were confessed on the notes in the circuit court of La Salle County against Spiller and Spiller, Inc., and in favor of the plaintiffs in the amount of $64,143.45. Continental was not a party to that action, but Henry Hofmann was thereafter served with a summons to confirm the judgments by confession. He appeared specially and moved to quash the service and vacate the judgments. Plaintiffs objected that Henry Hofmann was not a party to the litigation and hence had no standing to seek the relief requested. Hofmann's motion was denied, and defendant Spiller and Spiller, Inc., was given 21 days to file any additional motions. Continental, as assignee of Spiller and Spiller, Inc., then filed a motion to vacate the confession judgments, plaintiffs objected, the motion was denied, and defendant was given 21 days to answer or otherwise plead. The record indicates that Continental then filed a motion for leave to file instanter an amended answer which alleged, as a further defense, that plaintiffs had breached certain representations in the contract regarding their compliance with environmental-protection requirements, and that had Continental been aware of such violations, it would not have executed the agreement, and was not bound thereby because of lack of mutuality of obligation and remedy. The court allowed Continental to file the amended answer, and plaintiffs moved to strike it and confirm the judgment by confession arguing that Continental's allegation concerning the breach of contract was not a defense to the obligation of Spiller and Spiller, Inc., on the notes. The trial court eventually entered an order denying all motions, striking all defense pleadings, and confirming the judgments by confession. No appeal was taken.

Plaintiffs brought the action now before us in November 1976, alleging that Continental's contractual assumption of the liabilities of Spiller and Spiller, Inc., obligated it to pay the judgments rendered on the notes. Continental answered, denying liability, and filed its counterclaim seeking indemnification in the amount of $140,000 for an alleged breach of contract involving the environmental misrepresentations earlier referred to. After dismissing the counterclaim in 1981 as a sanction for noncompliance with a discovery order, the trial court, believing the earlier confession of judgment proceedings were res judicata, entered summary judgment for plaintiffs. A divided appellate court reversed and remanded (105 Ill.App.3d 790, 64 Ill.Dec. 495, 434 N.E.2d 850), and we granted plaintiffs leave to appeal.

Between November 1976, when plaintiffs filed their complaint, and 1979, numerous motions, objections and amendments to pleadings were filed. A status conference was held on February 6, 1979, and the case was continued until May 15, 1979, at which time the parties were to advise the court on their efforts to complete discovery. On August 9, 1979, another status conference was held, and the case was set for trial on June 30, 1980. Not until some seven months later, on March 17, 1980, did plaintiffs commence discovery by filing a request to produce and 72 interrogatories. On April 9 defendant's attorney wrote a letter to plaintiffs' attorney advising him that the person most knowledgeable regarding answers to the interrogatories had retired from the company and lived out of State. An additional 30 days to answer the interrogatories were requested. On May 16 plaintiffs' attorney, having received no responses yet, wrote to defendant's attorney advising him that, given the impending trial date, unless the interrogatories and request to produce were answered in 15 days, he would move for sanctions. A few days later, on May 21, defendant's attorney again wrote to plaintiffs' attorney advising him that the answers to the interrogatories were near completion and requesting an additional 15 days to finalize them. Plaintiffs apparently received unverified answers on June 6; verified answers and several objections were filed on June 18. On June 15, plaintiffs filed a notice to take the discovery deposition of Henry Hofmann, and on June 20, plaintiffs filed the first of several motions for sanctions. In this motion, plaintiffs stated that defendant had not complied with the request to produce and that the answers to the interrogatories were inappropriate, unresponsive and incomplete. Further, plaintiffs complained that defendant had not cooperated with respect to scheduling the deposition of Henry Hofmann. Plaintiffs asked that a default judgment be entered against defendant on both the complaint and the counterclaim or, alternatively, for a less drastic sanction. Defendant responded on June 23, objecting to plaintiffs' motion on several grounds. Defendant stated that its objections to certain interrogatories were valid, that its answers were complete, that plaintiffs' appropriate remedy under this court's rules was to file a motion to compel compliance before seeking sanctions so as to allow the trial court to determine the validity of defendant's objections, and, finally, that Henry Hofmann was no longer an employee of Continental and defendant could not be held to have unreasonably refused to comply with the request since it had no obligation to produce him.

Thereafter numerous motions and objections were filed by the parties, hearings held and orders entered by the trial judge, who, it is clear, was attempting to expedite the proceedings and trial of the case. In view of our conclusion it would unnecessarily extend this opinion were we to detail those actions, and we deem it sufficient to note that both parties could have proceeded much more expeditiously than they did.

The question crucial to our disposition is whether defendant had agreed to produce Henry Hofmann for a deposition to be taken by plaintiffs in Pennsylvania. Plaintiffs concede that defendant had no duty to produce for deposition purposes an individual not affiliated with defendant or its parent corporation. (See 73 Ill.2d R. 204(a)(3).) They do not dispute defendant's assertion that Hofmann had severed all connection with defendant and with Hofmann Industries, defendant's parent corporation, although they seem to intimate that defendant in some unexplained manner retained some degree of control. It is plaintiffs' position that defendant agreed in a letter which is not in the record and in an unrecorded in-chambers conference on March 10, 1981, that it would produce two employees and Hofmann for depositions in Pennsylvania. Defendant denied making any commitment beyond producing the two employees and making a good-faith effort to produce Hofmann, and maintained that it had been unable to arrange the latter. The trial judge on March 19, indicating his recollection was that defendant had agreed in the unrecorded conference to produce Hofmann, entered a written order requiring production on March 21. He dismissed defendant's counterclaim on March 30 for violation of that order. In doing so, we believe he erred. This record contains no agreement, stipulation or promise by defendant to produce Hofmann, and defendant denies that it made any commitment beyond a good-faith effort to secure Hofmann's cooperation which it could not accomplish. In these circumstances the trial judge's recollections or impressions of the discussion in chambers cannot be relied upon to supplement a record devoid of any other evidence of such agreement. (Hartgraves v. Don Cartage Co. (1976), 63 Ill.2d 425, 432, 348 N.E.2d 457.) Similarly plaintiffs' reliance on the January 13 letter, not in the record, is misplaced, although we would observe that defendant, which contends that the letter actually supports its position, moved in the appellate court to amend the record to include this letter but its motion was denied. Although plaintiffs assert here that their objection in the appellate court to defendant's amending the record did not relate to the letter, we note they did not seek to amend the record in this court to include this document.

At a subsequent hearing on defendant's motion to reconsider the dismissal of the counterclaim, the court indicated that the counterclaim was dismissed not only because of the failure to produce Hofmann but also because the court believed that defendant "failed to in any way cooperate" with respect to discovery. Thus, plaintiffs argue here that the sanction should be upheld because of a continuous course of conduct in which defendant unreasonably refused to cooperate in complying with discovery requests. Our...