Elmhurst Auto Parts, Inc. v. Fencl-Tufo Chevrolet, Inc.

600 N.E.2d 1229, 235 Ill. App. 3d 88, 175 Ill. Dec. 771, 19 U.C.C. Rep. Serv. 2d (West) 584, 1992 Ill. App. LEXIS 1544
CourtAppellate Court of Illinois
DecidedSeptember 24, 1992
DocketNo. 2-91-1242
StatusPublished
Cited by1 cases

This text of 600 N.E.2d 1229 (Elmhurst Auto Parts, Inc. v. Fencl-Tufo Chevrolet, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elmhurst Auto Parts, Inc. v. Fencl-Tufo Chevrolet, Inc., 600 N.E.2d 1229, 235 Ill. App. 3d 88, 175 Ill. Dec. 771, 19 U.C.C. Rep. Serv. 2d (West) 584, 1992 Ill. App. LEXIS 1544 (Ill. Ct. App. 1992).

Opinion

JUSTICE NICKELS

delivered the opinion of the court:

Plaintiffs, Elmhurst Auto Supply Company, Inc., and Villa Park Automotive Supply, appeal the order of the circuit court denying their motion for turnover of assets held by respondent, Quality Chevrolet-GEO Company (Quality). Plaintiffs contend the trial court erroneously applied the six-month statute of limitations of the Uniform Commercial Code — Bulk Transfers (Ill. Rev. Stat. 1989, ch. 26, par. 6 — 110) to their motion for a turnover order. The issue on appeal is whether a supplementary proceeding commenced under section 2 — 1402 of the Code of Civil Procedure (Ill. Rev. Stat. 1991, ch. 110, par. 2 — 1402) tolls the limitation period of section 6 — 110.

Prior to June 1990, plaintiffs sold and delivered auto parts to defendant, Fencl-Tufo Chevrolet, Inc. However, in May 1990, defendant and General Motors Automobile Corporation (GMAC) executed an “Asset Purchase Agreement” and bill of sale respectively with SypoltChevrolet-GEO, Inc., which transactions were completed on June 14, 1990. Plaintiffs eventually filed a complaint against defendant seeking payment for the auto parts and, on September 13, 1990, obtained a default judgment against defendant in the amount of $4,439.44.

In November 1990, plaintiffs caused the sheriff to serve a citation to discover assets on “Mr. Sypolt c/o Quality Chevrolet” and unsuccessfully attempted to levy defendants’ assets purchased by SypoltChevrolet-GEO, Inc., which had in turn been assigned under a contract to Quality. Quality appeared and participated in the citation proceedings, which were continued several times, and produced documents concerning its ownership of the assets formerly owned by defendant. Eventually on July 9, 1991, plaintiffs moved for a turnover of assets against Quality. Plaintiffs alleged that on or about June 14, 1990, defendant conveyed a substantial portion of its assets to Quality without notifying its creditors of the bulk sale of its assets as required by section 6 — 104(1) of the Commercial Code — Bulk Transfers. (Ill. Rev. Stat. 1989, ch. 26, par. 6 — 104(1).) Therefore, the change of ownership of the assets was ineffective as to plaintiffs as creditors without notice of the sale, and Quality was holding property deemed to be assets of defendant (see Ill. Rev. Stat. 1989, ch. 26, par. 6 — 104(1)), to which plaintiffs were entitled in satisfaction of their judgment against defendant.

Quality moved to dismiss plaintiffs’ motion for a turnover on several grounds. It maintained that the motion for a turnover was a levy and that because it was not filed until July 9, 1991, it fell outside the six-month statute of limitations that ran from the sale of assets. Quality also argued that its acquisition of the assets was not covered by the Commercial Code — Bulk Transfers based on various theories that are not at issue here.

On August 19, 1991, the trial court denied plaintiffs’ motion for turnover “finding that a levy was not made within the time period of [section] 6 — 110.” Plaintiffs filed a motion to reconsider the order, which the trial court denied on September 30, 1991. On October 24, 1991, plaintiffs filed a notice of appeal of those orders.

We first summarily dispose of Quality’s assertion, without citation to authority, that we have no jurisdiction to hear this appeal because plaintiffs’ motion to reconsider did not toll the time for filing their notice of appeal. Contrary to Quality’s bare assertion, a motion to reconsider is a post-trial motion. (Archer Daniels Midland Co. v. Barth (1984), 103 Ill. 2d 536, 538; Coleman v. Windy City Balloon Port, Ltd. (1987), 160 Ill. App. 3d 408, 418-19.) Therefore, under Rule 303(a)(2) (134 Ill. 2d R. 303(a)(2)), the time for filing the notice of appeal was tolled pending the ruling on the motion for reconsideration. Plaintiff’s notice of appeal was timely, and we have jurisdiction to hear such appeal.

Plaintiffs argue on appeal that they commenced an action within six months of the transfer of assets by virtue of their citation to discover assets on November 1, 1990, and, thus, section 6 — 110 does not apply to bar their claim. In contrast, Quality asserts that the citation to discover assets was not an action but merely a discovery measure.

Although the Commercial Code — Bulk Transfers was repealed effective January 1, 1992, it was effective at all times pertinent to this litigation. Section 6 — 110 of the Commercial Code — Bulk Transfers provides:

“No action under this Article shall be brought nor levy made more than 6 months after the date on which the transferee took possession of the goods unless the transfer has been concealed.” (Ill. Rev. Stat. 1989, ch. 26, par. 6 — 110.)

Section 6 — 110 is based on section 6 — 111 of the Uniform Commercial Code. 2C U.L.A. §6-111, at 104 (1991).

Prior to the enactment of the Commercial Code — Bulk Transfers, a merchant owing many debts would sell his stock in trade to any purchaser, sometimes a relative, for any price, appropriate the proceeds and flee the jurisdiction. Left with only the law of fraudulent conveyances, creditors had to prove that the acquisition was not bona fide to prevail against the purchaser and his assets. Most creditors could not meet this burden. (Ill. Ann. Stat., ch. 26, art. VI, Introductory Comment, at 611 (Smith-Hurd 1963); 2C U.L.A. Prefatory Note, at 6 (1991).) Bulk sales laws remedied this problem by allowing creditors to trace the debtor’s assets to the purchaser and to deem the assets as still belonging to the debtor-seller when the debtor-seller did not comply with the laws. (Ill. Rev. Stat. 1989, ch. 26, par. 6— 104.) For the conveyance to be effective against creditors, the transferor of the assets must compile a sworn list of creditors and a schedule of assets (Ill. Rev. Stat. 1989, ch. 26, par. 6 — 104), and the transferee must give creditors 10 days’ prior notice of the change of possession (Ill. Rev. Stat. 1989, ch. 26, par. 6 — 105). This notice provides creditors with the opportunity to investigate and prevent fraud prior to the conveyance. (Ill. Ann. Stat., ch. 26, par. 6 — 105, Illinois Code Comment, at 648 (Smith-Hurd 1963).) Without such notice, the transfer is deemed to be ineffective.

Because the remedy thus afforded was unique and available even against bona fide purchasers, and it was limited (see 2C U.L.A. Prefatory Note, at 7 (1991)), a short statute of limitations on the remedy was appropriate (Ill. Ann. Stat., ch. 26, par. 6 — 110, Uniform Commercial Code Comment, at 663 (Smith-Hurd 1963)). However, the remedy was cumulative of other legal remedies, and the statutes of limitations pertaining to other actions, such as repossession under a security agreement or a fraudulent transfers action, were not affected. See Palmeri v. Adams (1972), 4 Ill. App. 3d 881, 883; Boss v. Bassett Furniture Industries of North Carolina, Inc. (1982), 249 Ga. 166, 170, 288 S.E.2d 559, 562.

The drafters of the Commercial Code anticipated that the primary application of the act would occur when judgment creditors levied upon the debtor’s property held by a putative buyer. (See Ill. Ann. Stat., ch. 26, par.

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Related

Elmhurst Auto Parts, Inc. v. Fencl-Tufo Chevrolet, Inc.
600 N.E.2d 1229 (Appellate Court of Illinois, 1992)

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600 N.E.2d 1229, 235 Ill. App. 3d 88, 175 Ill. Dec. 771, 19 U.C.C. Rep. Serv. 2d (West) 584, 1992 Ill. App. LEXIS 1544, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elmhurst-auto-parts-inc-v-fencl-tufo-chevrolet-inc-illappct-1992.