Summit Elec. Co. v. Mayrent

• Decision Date: 27 October 1977
• Docket Number: No. 76-1674,76-1674
• Citation: 11 Ill.Dec. 865,369 N.E.2d 319,54 Ill.App.3d 173
• Parties: , 11 Ill.Dec. 865 SUMMIT ELECTRIC COMPANY, Plaintiff, v. Wilbert MAYRENT, Howard Mayrent, Troy Finley, Viola Berglund, and Associated Electric Company, a corporation, Petitioners-Defendants-Appellants, and United Pacific Insurance Company, Respondent-Appellee.
• Court: United States Appellate Court of Illinois

Page 319

369 N.E.2d 319

54 Ill.App.3d 173, 11 Ill.Dec. 865

SUMMIT ELECTRIC COMPANY, Plaintiff, v. Wilbert MAYRENT, Howard Mayrent, Troy Finley, Viola Berglund, and Associated Electric Company, a corporation, Petitioners-Defendants-Appellants and United Pacific Insurance Company, Respondent-Appellee.

No. 76-1674.

Appellate Court of Illinois, First District, Fourth Division.

Oct. 27, 1977.

Arvey, Hodes, Costello & Burman, Chicago, for defendants-appellants.

Gilmartin, Wisner & Hallenbeck, Ltd., Chicago, for respondent-appellee.

DIERINGER, Presiding Justice.

This is an appeal from the circuit court of Cook County. Wilbert Mayrent, Howard Mayrent, Troy Finley, Viola Berglund and Associated Electric Company (collectively referred to as "Associated Electric") appeal from an order of the circuit court entered in a proceeding commenced by the United Pacific Insurance Company ("United Pacific") pursuant to section 72 of the Civil Practice Act. (Ill.Rev.Stat.1975, ch. 110, par. 72.) The circuit court granted the relief requested by United Pacific and vacated a default judgment theretofore entered in favor of Associated Electric upon an injunction bond issued by United Pacific. The bond had been issued in connection with a preliminary injunction obtained by Summit Electric Company ("Summit Electric") against Associated Electric. Summit Electric is not involved in this appeal.

Associated Electric contends the trial court abused its discretion in allowing the relief prayed for in the section 72 petition because the United Pacific had been served with notice of Associated Electric's proceeding on the injunction bond, and because the petition failed to allege the existence of a meritorious defense to the proceeding on the bond.

Summit Electric obtained an injunction in the circuit court of Cook County against Associated Electric's activities relating to certain electrical contracting jobs. United Pacific acted as surety on the bond required of Summit Electric to protect Associated Electric from damages in the event the injunction was found to have been wrongfully entered. (See Ill.Rev.Stat.1975, ch. 69, par. 9.) The amount of the bond was $25,000. On February 5, 1974, this court ordered the injunction be dissolved on the ground of insufficient pleadings and evidence, and the cause was remanded to the circuit court. Summit Electric Company v. Mayrent (1974), 17 Ill.App.3d 545, 308 N.E.2d 313.

Associated Electric filed a motion in the circuit court on September 2, 1975, suggesting the damages suffered by it as a result of the injunction to be in excess of $174,000. The motion alleged that Summit Electric was insolvent and no longer in business, and United Pacific was surety on the injunction bond in the amount of $25,000. The motion sought judgment against United Pacific in that amount.

The attorneys for Associated Electric and Summit Electric appeared in court on September 2, 1975, in connection with the motion, and the matter was continued to September 12, 1975, to permit counsel for Summit Electric to familiarize himself with the provisions of the injunction bond. On September 12, only counsel for Associated Electric appeared in court. He told the court he had been unable to contact counsel for Summit Electric, and he related that United Pacific had failed to appear with regard to the motion on the bond despite notice thereof served upon United Pacific weeks before. The court thereupon entered a default order on the motion against United Pacific and continued the matter for a proveup as to damages.

The matter was continued from time to time and on May 28, 1976, hearing was held on the question of damages. Counsel for Associated Electric advised the court that United Pacific had been held in default, that he had not heard from United Pacific in the matter and that he had been advised by counsel for Summit Electric the latter had been in contact with United Pacific relative to the matter. Counsel for Associated Electric also told the court United Pacific had been served with notice "according to the rules" but had neither appeared nor responded in the matter. Evidence was adduced from a representative of Associated Electric demonstrating it had suffered lost "gross profits" in excess of $195,000 and had incurred legal fees and costs in excess of $11,500 in connection with the injunction. The trial court thereupon entered judgment on the injunction bond in the amount of $25,000 in favor of Associated Electric and against United Pacific.

United Pacific filed the instant section 72 petition on August 11, 1976. The petition alleged that United Pacific, a Pennsylvania concern, had "only recently" been advised of the $25,000 judgment against it, that it had received no notice pursuant to section 9 of the injunction statute (Ill.Rev.Stat.1975, ch. 69, par. 9) that judgment was being sought on the injunction bond, that it had exercised due diligence in its attempt to secure vacatur of the judgment, that the transcript taken at the proveup on damages indicated United Pacific "may have had" defenses to the proceeding on the bond relative to the indefiniteness and speculativeness of fees and lost profits allegedly expended or incurred by Associated Electric, and that its defenses to liability under the bond which it "may have had" could only be asserted in an adversary proceeding. Attached to the section 72 petition was an affidavit by the manager of United Pacific's fidelity claims department asserting that neither he nor United Pacific had received notice of the judgment or of the intent to secure a judgment on the bond until advised by a Chicago bank on June 29, 1976, that a garnishment summons had been received by the bank relative to the judgment. Affiant immediately conferred with his subordinates, United Pacific's Chicago branch office and its legal staff, and determined that no notice of the motion or the judgment had been received. Legal counsel in Chicago was contacted on July 8, 1976, in an effort to protect its interests. Also attached to the section 72 petition was an affidavit by United Pacific's counsel in Chicago that they had been contacted by United Pacific's representative concerning the matter on July 8, 1976, that on July 18, 1976, counsel were advised by United Pacific's representative to "look into" the matter, and that counsel have since researched the matter, prepared documents and conducted conferences. Both affidavits were dated August 11, 1976.

The record also discloses that United Pacific secured a continuance of the hearing on its section 72 petition for the purpose of obtaining a deposition from the named person who allegedly filed the notice of the motion for judgment on the bond, as well as an affidavit from a representative of the Cook County circuit court clerk's office regarding its procedures relative to handling notices filed pursuant to section 9 of the injunction statute. United Pacific also secured an order upon Associated Electric to divulge the address of the named person who had filed the notice of the motion, but the record does not disclose that either the deposition or the affidavit was ever secured by United Pacific.

Counsel for Associated Electric was permitted to file...