People v. B.R. MacKay & Sons, Inc.

490 N.E.2d 74, 141 Ill. App. 3d 137, 95 Ill. Dec. 601, 1986 Ill. App. LEXIS 1888
CourtAppellate Court of Illinois
DecidedFebruary 19, 1986
Docket85-241
StatusPublished
Cited by16 cases

This text of 490 N.E.2d 74 (People v. B.R. MacKay & Sons, 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
People v. B.R. MacKay & Sons, Inc., 490 N.E.2d 74, 141 Ill. App. 3d 137, 95 Ill. Dec. 601, 1986 Ill. App. LEXIS 1888 (Ill. Ct. App. 1986).

Opinion

JUSTICE McNAMARA

delivered the opinion of the court:

B.R. MacKay & Sons, Inc., respondent in a contempt proceeding, appeals from a judgment of the circuit court of Cook County finding it guilty of contempt and imposing a fine of $1,000. On appeal, respondent contends that the trial court erred in finding respondent in contempt for failure to comply with post-judgment discovery requests made by the Attorney General of the State of Illinois in connection with his petition to vacate judgment, which was filed pursuant to section 2 — 1401 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-1401).

On May 12, 1983, the State filed a complaint for injunctive and other relief against respondent and other defendants, alleging violations of environmental protection laws for producing hazardous waste. On May 23, 1983, respondent filed a motion to dismiss for lack of personal jurisdiction because respondent did not conduct business in Illinois. The motion was supported by the affidavit of Michael MacKay, respondent’s president. MacKay stated, among other things, that respondent had no employees in Illinois; that respondent did not sell or distribute products or services in Illinois; that respondent did not engage in the business of processing scrap film in Illinois; and that respondent did not store film chips resulting from the process in Illinois. MacKay also stated, however, that respondent provided the initial capital for the Illinois operation, was a customer and creditor of the Illinois corporation, Film Recovery Systems, Inc., and that it maintained a mailing address and phone number in Illinois during January and February, 1983. Based on these sworn representations, among other things, petitioner arrived at a settlement agreement with respondent and the other defendants. The settlement was for $250,000, of which respondent paid $90,000. The agreement resulted in a dismissal order entered by the trial court on July 26,1983.

Subsequently, petitioner acquired information indicating that MacKay’s sworn statements were false. In a sworn deposition taken in an unrelated lawsuit, MacKay stated that respondent paid the salaries of the employees of the Illinois corporation; that respondent purchased scrap film in Illinois; that respondent was involved in processing scrap film in Illinois; that respondent paid rent for the Illinois property; that respondent’s comptroller exercised control over expenditures made by the Illinois corporation; and that employees in the Illinois corporation were authorized by respondent to draw money from respondent’s account in Utah. Other evidence indicated that MacKay was president of Silver Recovery Systems, an Illinois company; and that little or no distinction existed between respondent and the Illinois corporation.

On October 24, 1983, petitioner filed a petition to vacate the dismissal order of July 26, 1983. Respondent subsequently filed a motion to dismiss the petition, and petitioner filed a supplemental petition. On May 30, 1984, petitioner was given leave to file its first request for production of documents. The request sought business records which would indicate whether respondent conducted business in Illinois at the time it filed affidavits stating it did not conduct business in Illinois. Respondent objected, contending that discovery is not authorized under section 2 — 1401. (Ill. Rev. Stat. 1983, ch. 110, par. 2— 1401). After considering briefs and hearing oral argument, the trial court ruled that petitioner could seek discovery, but limited the discovery to materials relevant to the claimed fraud. After receiving permission from the court, respondent filed specific objections to the discovery requests. The trial court ruled in favor of respondent on some of its objections, generally limited the scope of the discovery requests, and ordered respondent to comply within 30 days.

Respondent then sought and received a protective order, and the trial court again ordered respondent to comply with the discovery requests. When respondent failed to do so, petitioner filed a petition for a rule to show cause why respondent should not be held in contempt for failure to comply. On January 16, 1985, the court held respondent in contempt and ordered it to pay a fine of $1,000 per day, which was later limited to a total of $1,000.

The sole issue before this court is whether, under the narrow circumstances presented here, petitioner had the right to conduct limited discovery proceedings in connection with its section 2 — 1401 petition. Respondent urges that the trial court has no jurisdiction to compel discovery because a section 2 — 1401 proceeding is not a continuation of the original proceeding, and the filing of such a petition does not affect the final judgment. Ill. Rev. Stat. 1983, ch. 110, pars. 2— 1401(b), (d).

In City of Chicago v. Hart Building Corp. (1969), 116 Ill. App. 2d 39, 253 N.E.2d 496, cert, denied (1970), 398 U.S. 950, 26 L. Ed. 2d 290, 90 S. Ct. 1870, petitioner filed a verified petition for full disclosure of respondent’s interest in certain properties after a final order of the trial court had discharged respondent as a receiver for the properties. The trial court ordered respondent to make a full disclo- . sure, and evidentiary hearings were subsequently held. Petitioner was then given leave to file instanter an amendment to its petition for disclosure to include, among other things, a request to vacate the final order discharging respondent as receiver of the properties involved, pursuant to a section 72 petition (now par. 2 — 1401). The trial court held respondent in contempt, fined him $5,000 and vacated the earlier order which had discharged him as the receiver.

In City of Chicago v. Hart Building Corp. (1969), 116 Ill. App. 2d 39, 253 N.E.2d 496, this court upheld the trial court’s decision, despite respondent’s argument that the trial court lacked jurisdiction to compel discovery because the petition was not ancillary to a pending civil suit. The court stated at page 48 that “[s]uch an argument overlooks the point that the city was compelled to commence the action in this unusual way because of the subterfuge employed by the respondent as he attempted to conceal *** his self-dealing in receivership property without disclosure to the court.” In holding there was no error within the “unusual facts” of that case, the court also noted that to “sustain the respondent’s contention *** would be to enable him to profit from his own wrongs.” City of Chicago v. Hart Building Corp. (1969), 116 Ill. App. 2d 39, 49, 253 N.E.2d 496.

Similarly, we find that the unusual facts present here, establishing a prima facie case of fraud, permit limited discovery in relation to the 2 — 1401 petition. Petitioner was forced into this unique position by MacKay’s fraudulent statements regarding whether it was sufficiently involved in Illinois to fall under Hlinois’ long arm jurisdiction. Respondent contends that MacKay’s affidavit filed in support of its motion to dismiss for lack of personal jurisdiction did not deny any involvement in Illinois, and contained facts which should have notified petitioner that respondent had substantial connections with Illinois.

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Bluebook (online)
490 N.E.2d 74, 141 Ill. App. 3d 137, 95 Ill. Dec. 601, 1986 Ill. App. LEXIS 1888, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-v-br-mackay-sons-inc-illappct-1986.