First Wisconsin National Bank v. Kramer

560 N.E.2d 938, 202 Ill. App. 3d 1043, 148 Ill. Dec. 341, 1990 Ill. App. LEXIS 1324
CourtAppellate Court of Illinois
DecidedAugust 31, 1990
Docket1-89-3077
StatusPublished
Cited by16 cases

This text of 560 N.E.2d 938 (First Wisconsin National Bank v. Kramer) 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
First Wisconsin National Bank v. Kramer, 560 N.E.2d 938, 202 Ill. App. 3d 1043, 148 Ill. Dec. 341, 1990 Ill. App. LEXIS 1324 (Ill. Ct. App. 1990).

Opinion

JUSTICE McNAMARA

delivered the opinion of the court:

Defendants, Arnold I. and Sharon G. Kramer, appeal from a trial court’s grant of summary judgment in favor of plaintiff First Wisconsin National Bank of Milwaukee, permitting plaintiff to register a foreign default judgment against defendants. On appeal, defendants, both acting pro se, contend that the court erred in granting summary judgment for plaintiff; that the judgment sought to be registered is void due to lack of subject matter jurisdiction, or because Michigan had primary jurisdiction; that plaintiff was barred by collateral estoppel and res judicata from prosecuting the foreclosure deficiency action in Wisconsin; and that Illinois cannot enforce the Wisconsin judgment because the Wisconsin court failed to give full faith and credit to an earlier Michigan decision.

In March 1973, the bank extended a $1.4 million loan to a corporation, Sharfern, Inc., which the Kramers, who were guarantors of the loan, formed to borrow money to finance a condominium conversion project in Michigan. The project failed.

The extensive litigation concerning this debt has spanned 15 years and has been before State courts in Michigan, Wisconsin, Illinois, and a Federal bankruptcy court. The Illinois litigation seeking to register the foreign judgment began over three years ago.

In 1975, the bank commenced the Wisconsin action to recover on the guaranties. The bank also filed a foreclosure action in Michigan, seeking a sale and foreclosure of the mortgaged premises to satisfy the debt secured by the mortgaged premises and, in the event such sale shall fail to yield sufficient proceeds to satisfy the sums determined to be due, seeking a judgment for such deficiency against Sharfern.

(The Wisconsin action was stayed pending conclusion of the Michigan foreclosure proceedings. The Michigan proceedings were thereafter delayed when Sharfern filed for reorganization under the Bankruptcy Act. The bankruptcy court subsequently permitted the bank to proceed with the Michigan foreclosure action.)

In December 1976, the bank obtained a judgment of foreclosure in Michigan against Sharfern, and the bank purchased the property at a sheriffs sale for $1,453,000. The Michigan court entered an order confirming the sale. The court found the total amount owed to the bank was $1,794,380, including interest. The bank sold the property in 1980 for $1,475,000. In the Michigan action, no deficiency judgment was entered or requested.

In Wisconsin, the bank resumed its action against the Kramers as guarantors. The Kramers moved to dismiss, alleging failure to state a claim, estoppel due to the Michigan judgment, and lack of personal jurisdiction. On September 11, 1979, the motion to dismiss was denied. The Wisconsin trial court found the complaint stated a claim. The court also found an estoppel defense could not be decided on a motion to dismiss. In regard to personal jurisdiction, the court held that Wisconsin statutes and case law conferred jurisdiction over the Kramers because the loan guaranty was executed by the Kramers in Wisconsin, which constituted a “substantial contact with [this] state upon which jurisdiction of this court over defendants may be based” (citing Oxmans’ Erwin Meat Co. v. Blacketer (1979), 86 Wis. 2d 683, 691-92, 273 N.W.2d 285).

On October 29, 1979, the Kramers filed pleadings in the Wisconsin case which included affirmative defenses restating the three grounds of the motion to dismiss. The same jurisdiction and estoppel defenses are set forth by the Kramers in the present Illinois action.

In February 1985, a jury trial was held, and the jury awarded damages to the bank in the sum of $400,000. Judgment was entered on the verdict, including interest for a total of $428,840.24. That Wisconsin deficiency judgment has been affirmed on appeal. The jurisdiction issue was not raised on appeal by the Kramers, but the Wisconsin Court of Appeals addressed the Kramers’ res judicata and waiver arguments as follows:

“The Kramers argue that by failing to obtain a deficiency judgment in the Michigan proceedings, First Wisconsin waived its right to hold them liable for any deficiency, and the Michigan proceedings are res judicata. We disagree.
In the foreclosure action, the Michigan court held that upon confirmation of the sale hereunder, if either principal, interest or costs remain unpaid after application of sale proceeds, execution may issue for the amount of such deficiency upon application therefore, against Defendant, SHARFERN, INC., without notice to the Defendant herein and is hereby authorized under the provisions of C.L. 600.3105(2) to pursue its remedies as to such deficiency if any there be, as against Defendant Sharfern, Inc., and any guarantors or indemnitors thereof, without prejudice, however as to the assertion of any lawful defenses as to such guarantees or indemnities.
The Kramers argue that although the Michigan court authorized First Wisconsin to pursue its remedies as to the deficiency, the judgment did not alter the statutory requirement that leave of court must be granted before a separate proceeding on the debt could be maintained. We conclude that in its decision, the Michigan court did expressly grant such leave when it stated in the above paragraph that First Wisconsin was ‘authorized under ... C.L. 600.3105(2) to pursue its remedies as to such deficiency ... against ... any guarantors ... .’
The Kramers also argue that Michigan law requires that First Wisconsin apply to the clerk of circuit court issuing the first original foreclosure to obtain a deficiency judgment. According to the Kramers, this failure to obtain a deficiency judgment discharges Sharfern’s liability for any deficiency, and precludes First Wisconsin from holding the Kramers liable on their guaranty. This argument overlooks the fact that under both Wisconsin and Michigan law, First Wisconsin had the right to proceed directly against the Kramers because of their personal liability as guarantors, regardless of the fact that an action against the debtor corporation and the collateral had been started earlier. Therefore, we reject the Kramers’ argument on this issue.” First Wisconsin National Bank v. Kramer (Wis. App. Nov. 21, 1986), 135 Wis. 2d 542, 401 N.W.2d 27 (unpublished limited precedent opinion).

In Illinois, on February 3, 1987, the bank filed a petition for registration of foreign judgment, based on the Wisconsin deficiency judgment. On September 8, 1987, Sharon filed a, verified answer to the petition. On April 20, 1988, the bank moved for summary judgment against Sharon.

On April 22, 1988, the bank sought a default judgment against Arnold. On July 27, 1988, however, Arnold was permitted to file his verified answer to the petition. He subsequently moved to have the bank’s summary judgment request deemed filed against him as well, and he filed responses to the motion for summary judgment. (Sharon did not file a response to the summary judgment motion until June 1, 1989, when she filed a motion to dismiss the request for summary judgment.)

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Bluebook (online)
560 N.E.2d 938, 202 Ill. App. 3d 1043, 148 Ill. Dec. 341, 1990 Ill. App. LEXIS 1324, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-wisconsin-national-bank-v-kramer-illappct-1990.