Williams v. Illinois State Scholarship Com'n

• Decision Date: 18 October 1990
• Docket Number: No. 68869,68869
• Citation: Williams v. Illinois State Scholarship Com'n, 563 N.E.2d 465, 139 Ill.2d 24, 150 Ill.Dec. 578 (Ill. 1990)
• Parties: , 150 Ill.Dec. 578, 64 Ed. Law Rep. 445 Evelyn L. WILLIAMS, et al., Appellees, v. The ILLINOIS STATE SCHOLARSHIP COMMISSION, et al., Appellants.
• Court: Illinois Supreme Court

Page 465

563 N.E.2d 465

139 Ill.2d 24, 150 Ill.Dec. 578, 64

Ed. Law Rep. 445

Evelyn L. WILLIAMS, et al., Appellees, v. The ILLINOIS STATE SCHOLARSHIP COMMISSION, et al., Appellants.

No. 68869.

Supreme Court of Illinois.

Oct. 18, 1990.

Rehearing Denied Nov. 30, 1990.

Neil F. Hartigan, Atty. Gen., Springfield (Robert J. Ruiz, Sol. Gen., and Rosalyn B. Kaplan, Asst. Atty. Gen., Chicago, of counsel), for appellants.

John Ammann and Alan T. Stentz, Alton, and Richard Chase, East St. Louis, for appellees.

Justice STAMOS delivered the opinion of the court:

Plaintiffs, Evelyn L. Williams and Iola Lockett, initiated a class action in the circuit court of Madison County to enjoin defendants, the Illinois State Scholarship Commission (ISSC), its executive director, and its commissioners, from filing collection actions in an improper venue. The plaintiffs' class, as certified by the trial court, consisted of individuals who have allegedly defaulted on Illinois Guaranteed Student Loans (GSLs) and did not reside in or obtain their loans in Cook County. Plaintiffs claimed that ISSC's practice of suing alleged defaulters exclusively in Cook County violates public policy. The class members further alleged that defendants' practice of requiring borrowers to execute a contract containing a venue waiver clause as a condition for obtaining a GSL also violates public policy, and that these practices violate due process and equal protection under both Federal and State constitutional law. Finally, plaintiffs alleged that a statute which defined Cook County as the exclusive venue for all lawsuits involving delinquent and defaulted student loans (Ill.Rev.Stat., 1988 Supp., ch. 122, par. 30-15.12) violates their due process and equal protection rights under the Federal and State Constitutions.

The circuit court found ISSC's practices of filing all collection actions in Cook County and requiring borrowers to execute lending contracts containing venue waiver clauses violated public policy and were unconstitutional. The court also declared section 30-15.12 of the School Code (Ill.Rev.Stat.1987, ch. 122, par. 30-15.12) unconstitutional and entered summary judgment in favor of plaintiffs. Specifically, the trial court issued an injunction which required defendants to sue any alleged defaulter in the defaulter's county of residence or in the county where the loan was obtained, and to refrain from taking any action, including post-judgment proceedings, in all pending cases brought in Cook County involving parties in plaintiffs' class at the time of suit. The injunction further prohibited defendants from executing contracts containing venue waiver clauses as a condition for obtaining a GSL. Finally, the trial court awarded plaintiffs attorney fees and interest. Because the circuit court declared the statute to be unconstitutional; appeal lay directly to this court (107 Ill.2d R. 302(a)).

FACTS

Defendant ISSC is a State agency created by the Higher Education Student Assistance Law (Ill.Rev.Stat.1987, ch. 122, par. 30-15 et seq.) for the purpose of providing financial assistance to students in undergraduate, graduate, and vocational education programs. ISSC operates its student loan program in conjunction with the loans authorized and guaranteed under the Federal Higher Education Act of 1965 and serves as guarantor for the funds provided by the Federal loan program. (Ill.Rev.Stat.1987, ch. 122, pars. 30-15.10, 30-15.10a; see 20 U.S.C. § 1001 et seq. (1988).) ISSC is also empowered to make guaranteed loans of its own pursuant to the Federal guidelines. Ill.Rev.Stat.1987, ch. 122, par. 30-15.11a.

The deposition of Joshua Hershman, ISSC's director of legal services, described the agency's procedures. In order to obtain a GSL, a student must first file an application with the Federal Department of Education, and the application is then sent to one of three regional centers (located in Iowa City, Iowa; Jacksonville, Florida; and Princeton, New Jersey) for processing. The Federal regional office then determines whether the applicant qualifies for grant money (i.e., money that does not require repayment) or whether the applicant qualifies for a GSL. If the applicant qualifies, the amount of the loan is calculated based upon the applicant's financial need in relation to Federal guidelines. The regional office then prepares a student aid report and electronically transmits the information contained therein to ISSC's computer system.

ISSC has three offices in Illinois--in Cook, Lake, and Sangamon Counties. After ISSC's computer system receives the electronically transmitted student aid report, ISSC prepares a loan guarantee, a loan agreement, and a promissory note for the applicant. Deposition testimony revealed that these documents could be prepared at any of ISSC's offices, because all that was necessary to prepare these documents was access to an ISSC computer terminal. However, it is unclear exactly where any of these documents are actually prepared. Mr. Hershman stated that the loan guarantees and the promissory notes were not necessarily prepared in the same office, and noted that the guarantee could even be prepared in one of the Federal regional offices. He further admitted that, under a new system recently adopted by ISSC, very few of these documents are actually prepared in Cook County. When asked in which office loan guarantees are actually approved, both Mr. Hershman and Nancy Pietryla, ISSC's manager of litigation services, did not know where the guarantee preparation took place, and Mr. Hershman "guessed" that loan approval could be proper in any of the three ISSC offices.

After the loan is approved, ISSC forwards the paperwork to the student and the local lending institution, where the loan agreement is executed.

At the time this lawsuit was filed, ISSC's practice was to exclusively file in Cook County all suits against individuals who had allegedly defaulted on GSLs. This was done even in instances where the alleged defaulters resided in and obtained their loans in a locale quite distant from Cook County. Named plaintiff Iola Lockett, for example, obtained her loan in Madison County and resided there at the time she obtained the loan and at the time she was sued. Madison County is approximately 270 miles from Cook County.

ISSC also has a policy of pursuing post-judgment execution proceedings in Cook County against plaintiffs. For example, ISSC obtained a judgment against class member Carol Lynch in Cook County, even though she obtained her loan in Edgar County (approximately 180 miles from Cook County), where she resided at the time of the loan and currently resides. ISSC filed a post-judgment wage garnishment proceeding in Cook County against Ms. Lynch. Another example is class member Sherri Massey, who obtained her loan in Adams County (approximately 290 miles from Cook County), where she resided at that time and currently resides. After obtaining a judgment against her in Cook County, ISSC procured issuance of a citation to discover assets, also in Cook County. ISSC refuses to dismiss these post-judgment proceedings, even though Ms. Massey filed an affidavit to prove her income is exempt under her GSL agreement.

In 1982, ISSC began to require borrowers to execute loan agreements which contained venue waiver clauses. An example of such a clause is found in the promissory note signed by named plaintiff Williams "As a condition of receiving this loan, I agree that any subsequent legal proceedings, necessary to enforce the obligations to the ISSC, may be instituted in the County of Cook, State of Illinois, and that I will not object thereto, notwithstanding that at the time the proceedings are instituted I may reside in a county other than Cook."

After the commencement of this litigation, the General Assembly enacted an amendment to section 30-15.12 of the School Code, which reads:

"The Commission shall file any and all lawsuits on delinquent and defaulted student loans in the County of Cook where venue shall be deemed to be proper." (Emphasis added.) (Pub.Act 85-827, eff. Jan. 1, 1988 (amending Ill.Rev.Stat.1985, ch. 122, par. 30-15.12, now codified at Ill.Rev.Stat.1989, ch. 122, par. 30-15.12).)

Plaintiffs amended their complaint to contend that this new statute violated due process and equal protection under both the State and Federal Constitutions.

THE TRIAL COURT'S DISPOSITION OF THE CASE

In its order granting summary judgment in plaintiffs' favor, the trial court applied the balancing test set forth in Mathews v. Eldridge (1976), 424 U.S. 319, 334-35, 96 S.Ct. 893, 903, 47 L.Ed.2d 18, 33, for determining whether a statute or governmental policy violates due process. This test calls for courts to weigh the costs of requiring a particular set of procedures against the benefits derived from the use of those procedures. In particular, the Mathews test consists of three factors: (1) the private interest that will be affected by the official action; (2) the risk of erroneous deprivation of such interest through the procedures used and the probable value, if any, of additional or substitute procedural safeguards; and (3) the government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirements would entail.

The trial court, in examining the first Mathews factor, identified the private interest at stake in this cause as the fundamental right of access to the courts, and found that filing collection actions and post-judgment proceedings in a distant and inconvenient forum deprived plaintiffs of any meaningful opportunity to defend themselves in these actions. (See Mathews, 424 U.S. at 333, 96 S.Ct. at 902, 47 L.Ed.2d at 32 (fundamental requirement of due process is opportunity to be heard).) Examining the second factor, the court ruled that the risk of erroneous deprivation and the probable value of additional or substitute...