text:
    THE VILLAGE OF GLENVIEW, Plaintiff-Appellee and Counterdefendant-Appellee, v. NORTHFIELD WOODS WATER AND UTILITY COMPANY, INC., Defendant-Appellant and Counterplaintiff-Appellant and Third-Party Plaintiff-Appellant (Citizens Utilities Company of Illinois, Third-Party Defendant-Appellee).
    First District (4th Division)
    No. 1 — 89—2523
    Opinion filed June 20,1991.

      Ronald Gertzman, of Chicago, for appellant.
    Jeffrey M. Randall, of Randall, Gayle & Patt, of Glenview, for appellee Village of Glenview.
   JUSTICE JOHNSON

delivered the opinion of the court;

Plaintiff, the Village of Glenview, sought a declaratory judgment in the circuit court of Cook County that defendant, Northfield Woods Water and Utility Co., Inc. (hereinafter Northfield), was not entitled to a water connection fee pursuant to the contract between the parties. Defendant answered plaintiff’s complaint and filed a counterclaim alleging an entitlement to an accounting for water connection fees. Plaintiff made a motion for summary judgment. The trial court granted the motion and entered a declaratory judgment order in favor of plaintiff.

On appeal, the issues for review are (1) whether the threshold requirements for summary judgment were met; (2) whether the trial court properly interpreted and construed the term “extension” in the contract between the parties and whether the proper construction of this term renders the trial court’s grant of summary judgment erroneous; and (3) whether a party to a contract may introduce opinions from States other than the State whose law governs the contract in order to interpret the contract.

We affirm.

Prior to 1977, defendant owned and operated a well water distribution system pursuant to a certificate of convenience and necessity issued by the Illinois Commerce Commission in a geographic area known as the Northfield Certified Area and located adjacent to plaintiff’s municipal boundaries. The source of the well water supply for defendant was located within the Northfield Certified Area.

During the same period of time, plaintiff operated a municipal water distribution system which served a substantial portion of its residents with Lake Michigan water purchased from the Village of Wilmette for resale. However, plaintiff’s citizens who resided in its western portion were supplied with well water by defendant and the Illinois Municipal Company. The Illinois Municipal Company operated pursuant to a certificate of convenience and necessity issued by the Illinois Commerce Commission in a certified geographical area adjacent to the Northfield Certified Area.

In or around June of 1977, plaintiff entered into an agreement with defendant for the purchase of Northfield’s well water distribution system, which included, but was not limited to, real estate, wells, well pump and discharge systems, water mains, and other physical properties, for the price of $2,200,000. In October of 1977, both parties signed a contract for the sale and purchase of the water distribution system (hereinafter purchase agreement). In recognition that there were undeveloped areas within the Northfield Certified Area at the time the purchase agreement was signed, paragraph 5 of the purchase agreement provided for additional compensation to be paid by plaintiff to defendant for a 15-year period for connections made to Northfield’s water main system. Paragraph 5 of the purchase agreement provides as follows:

“5. Future Participation by Company. The Village and the Company agree that in addition to that purchase price determined in paragraph 4, the Company shall receive payment from the Village from time to time for connections made within the present service area as identified and outlined on the map, Exhibit ‘C’ attached hereto, and for connections made in territory outside the [Northfield Certified Area] that may be hereafter serviced by the Village through Sellers’ [sic] present water main system or any extension thereof. The connection charge to be paid by the Village to the Company shall be $350 per residential customer or customer equivalent. Such connection charges shall be paid by the Village to the Company within 30 days after any such connections have been made. A residential customer includes such single family dwelling and the connection fee for each multiple family structure shall be $350 times the number of dwelling units contained therein. The connection charge due the Company for a non-residential user shall be calculated by estimating (such estimates to be submitted by the proposed use) the total number of gallons of water that will pass through the water meter(s) during the first twelve months of water use, and dividing such total by 150,000 with the resulting decimal amount (rounded to the nearest 1/100 of 1%) to be multiplied by $350.”

Subsequently, plaintiff converted the system’s source of supply from well water to Lake Michigan water by constructing and connecting a 30-inch water transmission main to a water transmission main owned by the Village of Wilmette located at the intersection of Wilmette Avenue and Laramie Avenue in Glenview. The Village of Wilmette, which is located directly east of Glenview, obtains water directly from Lake Michigan. Plaintiff’s water transmission main runs westerly from the Village of Wilmette to a location near the Chicago and Northwestern Freight Line on East Lake Avenue in Glenview. At that location, the 30-inch water main narrows in size and connects to a 24-inch water main which runs west to the Portage Run Reservoir, located in the former Northfield Certified Area.

In March of 1984, plaintiff entered into an agreement with the Citizens Utilities Company of Illinois (hereinafter Citizens) to sell Lake Michigan water to Citizens for resale by Citizens to its customers in the Village of Mount Prospect and the City of Prospect Heights. Citizens is an Illinois public utility regulated by the Illinois Commerce Commission. In 1984, Citizens entered into a contract (hereinafter Glenview/Citizens Contract) with plaintiff to purchase water from Glenview.

Three conditions precedent were made a part of the Glenview/Citizens Contract. Two of the three conditions were satisfied and are not the subject of this appeal. However, the remaining condition requires plaintiff to seek a declaratory judgment mandating that it is not required to pay a connection fee to Northfield pursuant to paragraph 5 of the purchase agreement as a result of the Glenview/Citizens Contract. If the declaratory judgment in favor of plaintiff is affirmed by this court, the third condition precedent specified in the Glenview/ Citizens Contract will be satisfied.

The Glenview/Citizens Contract provides for the construction of a 20-inch water transmission main to connect to the Citizens’ water main system at the intersection of Joy Lane and East Lake Avenue in Glenview. Water from Lake Michigan will flow through the Village of Wilmette, which draws its water from Lake Michigan, and on through the aforementioned 30-inch water transmission main until the 24-inch water transmission main connects to the contemplated 20-inch water transmission main by means of a T-valve connector. At the T-valve connection point, the water will continue to flow in a westerly direction to the Citizens water main system.

On March 18, 1987, plaintiff filed an action for a declaratory judgment in accordance with the Glenview/Citizens Contract. Plaintiff sought a judgment declaring that the term used in the purchase agreement requiring connection fees for the extension of the Northfield water main system was inapplicable.

Defendant answered the complaint and filed a counterclaim alleging an entitlement to an accounting for water connection fees for connections made for which monies were not properly paid by plaintiff to defendant.

In response, plaintiff filed a motion for summary judgment supported by affidavits. Plaintiff alleged its entitlement to a favorable ruling from the trial court by asserting that there were no genuine issues of material fact.

During the hearing on the motion, defendant contended that the term “extension,” as applied in the purchase agreement, raised a genuine issue of material fact. Defendant maintained that the meaning of the term “extension” included all water mains as part of the Northfield water main system for connection fee purposes. Defendant also requested that the trial court conduct a hearing concerning the meaning of the term. After extensive colloquy with defendant regarding the meaning of the term, the trial court declined to conduct an evidentiary hearing.

On April 24, 1989, the trial court entered a declaratory judgment order in favor of plaintiff. The court made the following findings: (1) that there were no genuine issues of material fact, and that the language of paragraph 5 of the purchase agreement was not ambiguous and could be interpreted by the court as a matter of law; (2) that subsequent to the acquisition of the Northfield water distribution system, Glenview converted the system from a well water source of supply to a Lake Michigan source of supply by means of constructing a 30-inch water transmission main which reduces to a 24-inch water transmission main for the delivery of Lake Michigan water from the Village of Wilmette to a reservoir located within the Northfield Certified Area; (3) that the extension of the 30-inch and 24-inch water transmission mains was an extension of Glenview’s water main system; and (4) that the point of connection between Glenview’s 24-inch water transmission main and the contemplated 20-inch water transmission main is outside of the Northfield Certified Area and is not connected to “ ‘seller’s present water main system or any extension thereof.’ ”

During the hearing on the motion for summary judgment, the trial court articulated several reasons for granting the motion for summary judgment and entering a declaratory judgment order on behalf of plaintiff. The court stated as follows:

“The contract language in dispute here is *** [in] paragraph 5 of the contract ***.
*** [F]or the purposes of this motion *** the language is not ambiguous, [and] is acceptable to an appropriate application by a Court on a motion for summary judgment.
The language must be viewed in light of the fact that it was entered into as a purchase *** by a municipality of an entire water supply system district.
*** [Accommodation was made for 15 years to give Northfield compensation for connections made within and without the present *** water main system or any extension
thereof. That’s the relevant language.
* * *
Glenview now wants to supply Citizens Utility with Lake Michigan water *** in a service area well to the west of the
current Glenview system.
***
The fact that it’s near it is really irrelevant. It’s [sic] nearness has nothing to do with the entitlement of Northfield to a connection fee. The 24-inch line *** is not a hook up to any extension of the Northfield system.
*** [T]he 20-inch connection being made by Glenview to service Citizens is not a connection to the *** ‘present water main system or any extension thereof of Northfield.
Since it is not such a connection, *** Northfield has no entitlement to connection fees ***.
Those connections are not the connections contemplated by paragraph five of the Northfield-Glenview agreement ***.
The Court is not in need of affidavits or expert testimony. *** [The] language [of paragraph 5] does not mean the kind and type of connection which is about to be made by Glenview for and on behalf of its contract with Citizens.”

On April 24, 1989, defendant filed a motion to reconsider the declaratory judgment order of April 24, 1989. On August 14, 1989, the trial court denied defendant’s motion. Defendant now appeals.

First, defendant maintains that the threshold requirements for summary judgment were not met. Specifically, defendant alleges that plaintiff failed to meet its burden of proof because plaintiff failed to establish that it had a clear legal right to summary judgment. Defendant also maintains that the trial court erred when it granted summary judgment because there were genuine issues of material fact, and because the trial court failed to search the record in order to determine whether a genuine issue of material fact existed. Furthermore, defendant maintains that summary judgment was improperly granted because the trial court failed to exercise caution before granting summary judgment so as not to preempt defendant’s right to a trial. Plaintiff maintains that it met its burden of proof and that the trial court’s grant of summary judgment was proper.

Summary judgment should be awarded with caution so as not to encroach upon the movant’s right to a trial. (Rodgers v. Hook-SuperX, Inc. (1990), 204 Ill. App. 3d 861, 863; Decatur Construction, Inc. v. Central Illinois Public Service Co. (1974), 16 Ill. App. 3d 1056, 1059.) When ruling on a motion for summary judgment, the trial court must consider the entire record. Schumacher v. Fatten (1958), 18 Ill. App. 2d 387, 390-91.

“[T]he moving party for summary judgment must affirmatively show a clear legal right thereto ***.” (Winnetka Bank v. Mandas (1990), 202 Ill. App. 3d 373, 387; see Hagy v. McHenry County Conservation District (1989), 190 Ill. App. 3d 833, 842; Wood River Area Development Corp. v. Germania Federal Savings & Loan Association (1988), 165 Ill. App. 3d 488, 491.) The opponent of a motion for summary judgment is not required to prove his case. However, the nonmovant has a duty to present a factual basis which would arguably entitle him to a judgment. Lutz v. Goodlife Entertainment, Inc. (1990), 208 Ill. App. 3d 565, 568; see also Winnetka Bank, 202 Ill. App. 3d at 387-88.

“Summary judgment is appropriate only when the pleadings, depositions, admissions on file, and affidavits present no genuine issue of material fact ***.” (Burghardt v. Remiyac (1991), 207 Ill. App. 3d 402, 406; see also Winnetka Bank, 202 Ill. App. 3d at 387; Wood River Area Development Corp., 165 Ill. App. 3d at 491.) A disputed issue of material fact exists “[where] a material writing contains an ambiguity requiring the admission of extrinsic evidence.” Ebert v. Dr. Scholl’s Foot Comfort Shops, Inc. (1985), 137 ILl. App. 3d 550, 558.

If reasonable persons disagree upon the facts of the case, the trial court should deny summary judgment and allow such disputed facts and inferences to be resolved by a trial court. Winnetka Bank v. Mandas (1990), 202 Ill. App. 3d 373, 387.

We find that plaintiff met its burden of proof for summary judgment. There are no genuine issues of material fact in this case. Defendant alleges that there are disputed issues of fact with respect to the definition of the term “extension,” as it applies to this cause of action, matters regarding certain water atlases and the merits of the evidence presented by way of affidavits and depositions. Defendant’s disagreement with the interpretation of this evidence does not constitute a genuine issue of material fact.

The material facts as set forth by plaintiff remain unrebutted. The record establishes, among other things, that the location of the connection point between plaintiff’s 24-inch water transmission main and the contemplated 20-inch water transmission main is outside of the Northfield Certified Area, which would be served through “seller’s [Northfield’s] present water main system or any extension thereof,” and that the contemplated 20-inch water transmission main would be dedicated solely for the delivery of Lake Michigan water to Citizens without the benefit of the old Northfield water main system or any extension thereof.

We find that the threshold requirements for summary judgment were met. Plaintiff has shown a clear legal right to summary judgment. The trial court’s decision is well reasoned and stands as an appropriate application of the law to the facts. We find that the trial court made a cautious decision to grant the plaintiff’s motion for summary judgment (see Rodgers v. Hook-SuperX, Inc. (1990), 204 Ill. App. 3d 861, 863; Decatur Construction, Inc. v. Central Illinois Pub- lie Service Co. (1974), 16 Ill. App. 3d 1056, 1059), after a close review of the entire record. See Schumacher v. Fatten (1958), 18 Ill. App. 2d 387, 391.

The second issue is whether the trial court’s construction and interpretation of the word “extension” was proper. Defendant maintains that the trial court erred in granting summary judgment because the trial court failed to comply with the law governing the construction of contracts containing technical terminology since the trial court declined to conduct an evidentiary hearing and to allow expert testimony. Defendant also alleges that the trial court erroneously granted summary judgment because it rejected the definition of the term favored by defendant. Plaintiff maintains that the trial court’s interpretation and construction of the.word “extension” was proper and that the court’s construction of the term does not render its grant of summary judgment improper.

We recently ruled that contract terms must be given their plain, ordinary, popular and natural meaning. (Hartford Insurance Co. v. Jackson (1990), 206 Ill. App. 3d 465, 470; Lucas v. Beaton (1990), 201 Ill. App. 3d 341, 346-47.) In addition, “[pjarties in entering into an agreement are presumed to have used terms having no technical meaning ***, and the words are to be construed according to their common understanding and common usage.” Wolf v. Schwill (1917), 282 Ill. 189,191.

In Hernandez v. Power Construction Co. (1978), 73 Ill. 2d 90, the Illinois Supreme Court ruled that it is within the discretion of the trial court to determine whether it needs assistance in understanding evidence. (Hernandez, 73 Ill. 2d at 99.) Even if a contract term of a private agreement has some peculiar meaning, it is within the discretion of the trial court to seek expert assistance with respect to its interpretation. Hernandez, 73 Ill. 2d at 99.

Whether or not an ambiguity exists is a question of law to be determined by the trial court. (Rao v. Parvathaneni (1979), 72 Ill. App. 3d 1, 5.) A contract is not ambiguous if a court can ascertain its meaning from the general contract language. (Gardner v. Padro (1987), 164 Ill. App. 3d 449, 453.) Furthermore, a contract is not ambiguous simply because the parties disagree on the meaning of its terms. (Gardner, 164 Ill. App. 3d at 453; Tondre v. Pontiac School District No. 105 (1975), 33 Ill. App. 3d 838, 842; see also Fink v. Baker (1977), 46 Ill. App. 3d 1061, 1067; Welsh v. Centa (1966), 75 Ill. App. 2d 305, 311.) “In the absence of an ambiguity, the intention of the parties *** must be ascertained by the language utilized in the contract itself, not by the construction placed upon it by the parties.” (Emphasis added.) Lenzi v. Morkin (1984), 103 Ill. 2d 290, 293; see also Gardner, 164 Ill. App. 3d at 453.

For purposes of summary judgment, a genuine issue of material fact exists where a material writing contains an ambiguity requiring the admission of extrinsic evidence. (Cory v. Minton (1977), 49 Ill. App. 3d 312, 316.) However, where the intent of the parties may be ascertained from the plain language of the contract, no disputed question of fact exists. Ebert v. Dr. Scholl’s Foot Comfort Shops, Inc. (1985), 137 Ill. App. 3d 550, 558.

We find that the trial judge properly construed the word “extension” and that the judge correctly determined that a connection fee would not be payable in accordance with paragraph 5 of the purchase agreement. The trial court properly rejected the definition of the word “extension” favored by defendant. The court found, and the record established, that the contemplated connection at Joy Lane and East Lake Avenue in Glenview would be unrelated to the Northfield water system, and that the connection to be made was not “an extension *** of [sellers’ present water main system.”

Defendant’s argument that the trial court should have conducted a hearing and allowed expert testimony to aid it in its construction of the word “extension” is misplaced. The word “extension” is presumed to have a nontechnical meaning. (See Wolf v. Schwill (1917), 282 Ill. 189, 191.) In the absence of contrary contract provisions, the trial court properly construed this term according to its plain meaning and common usage. (See Hartford Insurance Co. v. Jackson (1990), 206 Ill. App. 3d 465, 470; Lucas v. Beaton (1990), 201 Ill. App. 3d 341, 346-47.) It was well within the trial court’s discretion to determine that the court did not need assistance in order to comprehend the meaning of the term “extension.” See Hernandez v. Power Construction Co. (1978), 73 Ill. 2d 90, 98-99.

Moreover, in the instant case, the contract in question is not ambiguous (see Rao v. Parvathaneni (1979), 72 Ill. App. 3d 1, 5), and therefore defendant’s divergent view with regard to the meaning of the word “extension” does not create a genuine issue of material fact which precludes summary judgment. See Gardner v. Padro (1987), 164 Ill. App. 3d 449, 453; Ebert v. Dr. Scholl’s Foot Comfort Shops, Inc. (1985), 137 Ill. App. 3d 550, 558; Cory v. Minton (1977), 49 Ill. App. 3d 312, 315; Tondre v. Pontiac School District No. 105 (1975), 33 Ill. App. 3d 838, 842.

In addition, we find defendant’s reliance upon Toledo, St. Louis & Western R.R. Co. v. East St. Louis & Suburban Ry. Co. (1915), 197 Ill. App. 230, aff’d on reh’g (1917), 206 Ill. App. 216, inappropriate. Toledo, St. Louis & Western R.R. Co. was an action in assumpsit whereby the plaintiff alleged that the defendant breached their contract. The contract in issue allowed the defendant to “cross plaintiff’s right of way, *** providing that defendant in crossing should first bring its cars to a full stop and remain until the conductor in charge of such cars should ‘flag said crossing.’ ” (Toledo, St. Louis & Western R.R. Co., 206 Ill. App. at 216.) The plaintiff alleged that the defendant drove the car on to the plaintiff’s tracks without “flagging” in accordance with the terms of the contract. (Toledo, St. Louis & Western R.R. Co., 197 Ill. App. at 234.) During the trial, the plaintiff contended that the term “flagging” had a special meaning, and the plaintiff sought to define “flagging” for the trial court. (Toledo, St. Louis & Western R.R. Co., 197 Ill. App. at 235.) After the trial court refused to permit the plaintiff to explain this term, the plaintiff appealed. This court held that the trial court’s refusal to permit the plaintiff to explain this term constituted reversible error. (Toledo, St. Louis & Western R.R. Co., 197 Ill. App. at 235.) The court based its decision upon a prior supreme court ruling that testimony is admissible to explain the special meaning of a word in a particular trade or business. Toledo, St. Louis & Western R.R. Co., 197 Ill. App. at 236.

We find that Toledo, St. Louis & Western R.R. Co., 197 Ill. App. 230, is distinguishable from the case at bar. Under certain circumstances, testimony may be admissible to explain the meaning of a word which has a special meaning within a business or trade. (Miller v. Pillsbury Co. (1965), 33 Ill. 2d 514, 516; Hernandez v. Power Construction Co. (1978), 73 Ill. 2d 90, 98-99.) However, as we noted above, our supreme court has recently ruled that it is within the discretion of the trial court to determine whether it needs assistance in understanding evidence. (See Hernandez, 73 Ill. 2d at 98-99.) In addition, the supreme court has ruled that where a contract term of a private agreement has a peculiar meaning, it is within the discretion of the trial court to seek expert assistance with respect to the interpretation of said term. (Hernandez, 73 Ill. 2d at 99.) Therefore, defendant’s reliance upon Toledo, St. Louis & Western Railroad Co. is inappropriate.

For the aforementioned reasons, we conclude that the trial court’s interpretation and construction of the word “extension” were proper and that the court’s construction of the term does not render its grant of summary judgment improper.

Finally, plaintiff argues that defendant may not introduce precedent from States other than the State whose law governs the contract in order to interpret language of said contract.

In cases concerning the interpretation of a contract, courts have discretion to allow parties to introduce precedent from States other than the State whose law governs the contract. (See Williams v. Sohio Petroleum Co. (1958), 18 Ill. App. 2d 194, 198-200.) Therefore, defendant is free to introduce precedent from other States; however, Illinois courts are not bound by such precedent.

Accordingly, we find that defendant’s introduction of precedent from other States was not improper.

For the foregoing reasons, we affirm the decision of the trial court.

Affirmed.

LINN and McMORROW, JJ., concur.


source: Caselaw Access Project

author: JUSTICE LINN PRESIDING JUSTICE JIGANTI,

license: Public Domain

text:
    JAMES L. CAREY et al., Plaintiffs-Appellants, v. NEAL, CORTINA AND ASSOCIATES, f/n/a Neal and Cortina, et al., Defendants (H. Wayne Neal et al., Defendants-Appellees).
    First District (4th Division)
    No. 1 — 90—0439
    Opinion filed June 20,1991.

      JIGANTI, P.J., dissenting.

      Thomas C. Baratta, Jr., & Associates, of Melrose Park (Thomas C. Baratía, Jr., of counsel), for appellants.
    H. Wayne Neal and Rosemary Neal, both of Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago (Stephen R. Swofford, Thomas P. McGarry, and Edward J. Rolwes, of counsel), for appellees.
   JUSTICE LINN

delivered the opinion of the court:

Plaintiffs, James L. Carey, Thomas Ronchetti, and Roncasm, Inc., appeal from the dismissal of counts IV and V of their complaint for damages arising out of the alleged fraud of various defendants. In the first three counts of their lawsuit, plaintiffs charge their former attorneys, Neal Cortina & Associates, a law partnership, and David W. Neal and Frank J. Cortina, Jr., individually (the lawyer defendants), with engaging in a fraudulent scheme to sell certain Florida real estate to plaintiffs on behalf of the owners, H. Wayne Neal and Rosemary Neal (the Neals). In addition to the fraud claim, plaintiffs charge their former attorneys with breach of fiduciary duty and willful and wanton conduct. Those counts, which are not before us on this appeal, name as defendants the law partnership of Neal, Cortina & Associates and the individual named partners.

This appeal involves the two counts of the complaint that are directed against the Neals, who were the sellers of the Florida property. According to counts IV and V of the complaint, the Neals as well as the lawyer defendants made fraudulent representations to plaintiffs to induce their purchase of the Florida properly. Plaintiffs further charge that the Neals continuously dissuaded them from obtaining conventional financing in favor of arranging their own financing. Under this arrangement, the Neals acted as mortgagees and took a mortgage note from plaintiffs.

During the pendency of this lawsuit in Hlinois, a court in Florida entered a judgment of foreclosure on the Neals’ mortgage lien and ordered the sale of the Florida real estate. Plaintiffs did not contest the mortgage foreclosure, nor did they raise their fraud claims in that forum.

Pursuant to section 2 — 619(aX4) of the Hlinois Code of Civil Procedure (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 619(aX4)), the Neals moved the circuit court to dismiss counts IV and V of plaintiffs’ complaint, reasoning that the Florida judgment of foreclosure and sale of the real estate operated as a bar, under the doctrine of res judicata, to the plaintiffs’ ability to maintain their fraud action against the Neals. The trial court agreed and dismissed them from the lawsuit.

On appeal, plaintiffs argue that the trial court’s ruling is erroneous. We reverse and remand.

Background

The complaint alleges that plaintiffs’ attorneys were David Neal and Frank Cortina, partners in a law practice. The individual plaintiffs, James Carey and Thomas J. Ronchetti, formed Roncasm, Inc., at the recommendation of their attorneys, for the purpose of buying and holding income-producing property called Patio Palms, located in Pinellas County, Florida. David Neal’s father and mother owned the property, which was improved with rental units.

According to the complaint, all defendants represented to the plaintiffs that the property was worth $550,000 and that the rental income generated by the property was sufficient to meet the debt service on it. In reliance on these representations, and in reliance on their fiduciary relationship with the lawyer defendants, plaintiffs entered into a contract to purchase Patio Palms from the Neals for $550,000. The property was then conveyed to Roncasm and the individual plaintiffs guaranteed a promissory note in the amount of $525,000, payable to the Neals and secured by a “wraparound mortgage” in favor of the Neals. Plaintiffs also paid the Neals $25,000 as the balance of the purchase price.

The complaint further alleges that the defendants continually dissuaded plaintiffs from seeking conventional financing and did not disclose until months after the transaction that the property was encumbered by a mortgage that contained a “due-on-sale” clause. According to plaintiffs, the existence of the due-on-sale clause put their interest in the property “in jeopardy.”

The plaintiffs allege that the property was not in fact worth $550,000 but only $300,000 and the rental income was insufficient to meet the debt service obligations on the property. As a result, plaintiffs claim, they were forced to pay the difference out of their own funds and lost considerable sums of money and the property itself. Plaintiffs assert that the Neals actively participated in the transaction between January and April 1985 and that they made numerous representations as to the value of the property and its income-producing capabilities.

In June 1987 the Neals filed a foreclosure action on their mortgage in Florida. In November 1987 plaintiffs filed the instant lawsuit against all defendants, including the Neals, asking for damages. On March 10, 1988, the Florida court entered a final judgment of foreclosure. On March 24, 1988, the lawyer defendants filed a motion pursuant to section 2 — 615 of the Illinois Code of Civil Procedure, requesting that the court dismiss the complaint for failure to state a cause of action. On May 9, 1988, the Neals filed their own motion, for an extension of time in which to answer or otherwise plead to the complaint. In July, the trial court struck the complaint with leave to amend, and in August, plaintiffs filed an amended complaint. In November 1988, all defendants filed a motion to strike and dismiss the amended pleading.

On January 2, 1989, the trial court denied the lawyer defendants’ motion to dismiss but granted the Neals’ motion. Plaintiffs were allowed to replead the counts directed against the Neals. On March 27,1989, the Neals filed a motion to dismiss pursuant to section 2 — 619(aX4), raising the affirmative defense of res judicata. The court denied the motion without prejudice and in September 1989 the Neals filed an “amended” motion to dismiss counts IV and V.

In January 1990 the trial court granted the Neals’ motion and dismissed counts IV and V, with prejudice. The court further found that there was no just reason to delay enforcement or appeal of the order under Supreme Court Rule 304(a) (134 Ill. 2d R. 304(a)).

Opinion

The sole issue on appeal is whether principles of res judicata bar plaintiffs from suing the Neals in tort because the plaintiffs failed to assert this claim in the Florida foreclosure action, either by defense or counterclaim.

“[A] final judgment on the merits rendered by a court of competent jurisdiction constitutes an absolute bar to a subsequent action involving the same claim, demand or cause of action.” (Page v. Illinois Central Gulf R.R. (1987), 162 Ill. App. 3d 744, 746, 516 N.E.2d 431, 433, appeal denied (1988), 119 Ill. 2d 560, 522 N.E.2d 1247.) The doctrine extends to all matters that were litigated or could have been litigated (Housing Authority v. YMCA (1984), 101 Ill. 2d 246, 461 N.E.2d 959), but that “dimension of res judicata that bars matters which might have been litigated applies only where the first and second suit [involve] the same cause of action.” (Emphasis added.) (Pfeiffer v. William Wrigley Jr. Co. (1985), 139 Ill. App. 3d 320, 322, 484 N.E.2d 1187, 1189.) As the court in Pfeiffer explained, when analyzing the identity of causes of action for res judicata purposes, the second suit is not barred if the proof of its elements differs from the proof required to prove the prior action. (See In re Marriage of Firestone (1987), 158 Ill. App. 3d 887, 511 N.E.2d 895 (Earlier dismissal by Ohio court of husband's counterclaim based on oral settlement agreement did not bar his action in Illinois to enforce written settlement contract; the causes of action were different).) The main purpose of res judicata is to avoid duplicative litigation between the same parties over the same matters; judicial economy is served if a party is required to bring all of his or her claims arising out of the same facts at one time. See also Best Coin-Op, Inc. v. Paul F. Ilg Supply Co. (1989), 189 Ill. App. 3d 638, 545 N.E.2d 481.

Our analysis of res judicata only begins with the recognition that the Illinois plaintiffs in the pending case “could have” asserted a fraud defense to the Florida mortgage foreclosure proceedings or “could have” filed a counterclaim based on the Neals’ alleged fraud. The ultimate question is whether they were compelled by law to do so, upon pain of forfeiting their tort claim altogether.

In our opinion, the pending case is not a proper one in which to apply res judicata. Plaintiffs in the pending case were the defendants in the Florida foreclosure action and did not contest the foreclosure or assert any rights to the real estate itself. They did not counterclaim for tort damages in that forum, choosing instead to bring the fraud action in Illinois, joined with the claims against the lawyer defendants. If they were not barred as a matter of law from making that election, we cannot justify dismissal of their cause of action on the ground that they failed to raise their claim in the foreclosure proceedings.

In the absence of a statute or rule of court that requires defendants to assert their claims as a counterclaim to the plaintiff’s lawsuit, the general rule is that the defendant retains the choice of bringing a separate action against the plaintiff instead of filing a counterclaim. (See Restatement (Second) of Judgments §22, Comment a, at 185-86 (1982).) Although there is an exception to this general principle, the point is that the defendant generally should not be forced to assert his claims in the plaintiff’s forum or proceeding but should be free to bring a separate action.

For its value as a conceptual framework for our analysis, we turn to section 22 of the Restatement (Second) of Judgments (1982). This section summarizes the principles that govern when and under what circumstances a defendant in the initial lawsuit is allowed to bring a separate claim instead of filing a counterclaim:

“§22. Effect of Failure to Interpose Counterclaim
(1) Where the defendant may interpose a claim as a counterclaim but he fails to do so, he is not thereby precluded from subsequently maintaining an action on that claim, except as stated in Subsection (2).
(2) A defendant who may interpose a claim as a counterclaim in an action but fails to do so is precluded, after the rendition of judgment in that action, from maintaining an action on the claim if:
(a) The counterclaim is required to be interposed by a compulsory counterclaim statute or rule of court, or
(b) The relationship between the counterclaim and the plaintiff’s claim is such that successful prosecution of the second action would nullify the initial judgment or would impair rights established in the initial action. ” (Emphasis added.) Restatement (Second) of Judgments §22, at 185-86 (1982).

Comment b to section 22 points out that the defendant’s claim against the plaintiff is not normally merged in the judgment and “issue preclusion does not apply to issues not actually litigated. *** The defendant, in short, is entitled to his day in court on his own claim.” Restatement (Second) of Judgments §22, Comment b, at 186 (1982).

In the interests of allowing a party his “day in court,” then, the general rule assumes that the defendant in one lawsuit is not barred from suing the plaintiff in another, as long as the claim in issue is not one that must have been joined in the first suit as a counterclaim, either by statute, rule of court, or by those considerations that are expressed in subsection 22(2)(b).

A. COMPULSORY COUNTERCLAIM STATUTE OR RULE OF COURT (SECTION 22(2Xa))

With respect to the first exception to the general rule of section 22(1), Restatement (Second) of Judgments, we find no indication that Florida’s legislative enactments or rules of court require the filing of counterclaims. In fact, one of the Florida Rules of Civil Procedure, Rule 1.270(b), allows the trial court wide discretion in ordering severance of claims or separate trials. Significantly, at the time of the Neals’ mortgage foreclosure action, another provision of Florida law actually discouraged the filing of counterclaims in foreclosure actions by mandating that all such claims would be severed for separate trial. (See Fla. Stat. §702.01 (1987) (which states in pertinent part, “In a mortgage foreclosure action, the court shall sever for separate trial all counterclaims against the foreclosing mortgagee. The foreclosure claim shall, if tried, be tried to the Court without a jury”). (Emphasis added).) Such a provision implies that the Florida legislature intended to expedite mortgage lien foreclosures by allowing summary adjudication of the liens and leaving all other counterclaims to separate determination.

In Kirian v. Haven Federal Savings & Loan Association (Fla. App. 1990), 560 So. 2d 380, affirmed in Haven Federal Savings & Loan Association v. Kirian (Fla. 1991), 579 So. 2d 730, however, the appellate court held that a mandatory construction of section 702.01 violated separation of powers principles. The court reasoned that because the Florida Constitution vested power in the State supreme court to adopt rules of practice and procedure, and because Rule 1.270(b) granted trial courts discretion in severing claims, the legislature could not abrogate that power by requiring the severance of all counterclaims in mortgage foreclosure proceedings. The reviewing courts in Kirian accordingly held that the trial court erred in striking the defendant’s fraud-based affirmative defenses and counterclaims in a mortgage foreclosure proceeding.

Kirian illustrates a significant procedural conflict that existed in Florida law regarding the severance of counterclaims in mortgage foreclosure cases. At the time of the Neals’ foreclosure action, section 702.01 by its terms required the severance of all counterclaims in such actions. That being the case, it is not unreasonable to expect that a defendant with a counterclaim would believe it necessary, as well as desirable, to file his claim in a separate action. In any event, the defendants in the mortgage foreclosure action in Florida were not required by statute or rule of the Florida Supreme Court to assert their counterclaims in the Neals’ lawsuit.

B. COMMON LAW RULE OF COMPULSORY COUNTERCLAIM (RES JUDICATA PRINCIPLES) (SECTION 22(2)(b))

Absent a mandatory counterclaim statute or rule enacted by the State supreme court, a defendant is free to file a separate action unless his claim falls within the scope of subsection 22(2)(b) of the Restatement. This subsection focuses on the interrelationship of the two causes of action. If the second suit would result in the nullification of the first judgment, res judicata bars the second suit in what may be viewed as a “common law” rule of compulsory counterclaim.

Comment/to section 22(2)(b) sheds some light on the application of this concept. The central question is whether “allowance of a subsequent action would so plainly operate to undermine the initial judgment that the principle of finality requires preclusion of such an action. *** For such an occasion to arise, it is not sufficient that the counterclaim grow out of the same transaction or occurrence as the plaintiff’s claim, nor is it sufficient that the facts constituting a defense also form the basis of the counterclaim. The counterclaim must be such that its successful prosecution in a subsequent action would nullify the judgment, for example, by allowing the defendant to enjoin enforcement of the judgment, or to recover on a restitution theory the amount paid pursuant to the judgment, *** or by depriving the plaintiff in the first action of property rights vested in him under the first judgment.” (Emphasis added.) Restatement (Second) of Judgments, Comment f at 189-90 (1982).

Comment b to section 22 notes that if (as here) the facts constituting a defense are also grounds for a counterclaim, the defendant is not precluded from bringing a separate suit against the plaintiff by his failure to assert the defense in plaintiff’s action. However, the failure to interpose a defense does preclude the defendant from thereafter asserting that defense as a basis for attacking the judgment. Hence, in the pending case, the failure to assert fraud as a defense to the mortgage foreclosure would bar plaintiffs from now seeking relief from the mortgage foreclosure judgment, including liability on the note. In other words, they cannot have the Illinois court collaterally attack the Florida judgment by rescinding the note. Nor could they maintain a claim to the Florida real estate itself. On the other hand, the elements and proof of fraudulent misrepresentation and the elements and proof of the mortgage documents and promissory note are clearly distinct. Accordingly, we believe that plaintiffs should not be barred from seeking whatever tort damages they can prove. Because of the Neals’ existing judgment on the note, however, the Neals presumably would be entitled to a setoff in the event the plaintiffs are awarded damages on their tort claim in this case.

We conclude that the rationale of section 22 of the Restatement inveighs against the application of res judicata to bar plaintiffs’ claim. Plaintiffs are not contesting the foreclosure of the mortgage lien or their liability on the note and have not asserted any rights to the property itself. That was the sole subject of the Florida action. In contrast, the pending action is premised on the tort of fraudulent misrepresentation. See Suttles v. Vogel (1987), 160 Ill. App. 3d 464, 480-81, 513 N.E.2d 563, 575, rev’d on other grounds (1988), 126 Ill. 2d 186, 533 N.E.2d 901 (res judicata would not bar plaintiff’s equitable action to recover monies paid to vendor of land under unjust enrichment theory despite fact plaintiff failed to assert such matter as counterclaim in earlier forcible entry and detainer action, because forcible statute only allows counterclaims if they are “germane to the distinctive purpose” of the action); cf. Steel City National Bank v. J.J. Wright Oldsmobile, Inc. (1989), 192 Ill. App. 3d 926, 549 N.E.2d 726 (action to eject lessee from premises was barred by res judicata where earlier mortgage lien foreclosure action had determined that the valid lease was in full force and effect; both actions involved determination of the parties’ legal interests in possessing the real estate).

C. APPLICATION OF SPECIFIC CASE LAW TO FACTS OF PENDING CASE

Because fraud was never asserted in the foreclosure case we are in that “dimension of res judicata that bars matters that might have been litigated”; accordingly, the doctrine applies only if the first and second suit involve the “same cause of action.” Pfeiffer v. William Wrigley Jr. Co. (1985), 139 Ill. App. 3d 320, 322, 484 N.E.2d 1187,1189.

The Neals rely on Housing Authority v. YMCA (1984), 101 Ill. 2d 246, 461 N.E.2d 959, to support their argument that the Florida and Illinois actions involve the same cause of action. Housing Authority involved a dispute over the ownership of a parcel of land. The plaintiff sought to enjoin the defendant’s attempt to build a parking lot on land that plaintiff claimed to own. As the court found, however, the ownership of the parcel had been determined long since, in a 1932 Federal condemnation suit in which both parties’ predecessors in interest had been joined. The two suits, therefore, were “substantially the same.” That is, they sought the same relief — determination of ownership in a parcel of land. Accordingly, the Illinois Supreme Court held that res judicata principles barred the parties in the later case from essentially relitigating the earlier condemnation action.

In contrast, the pending lawsuit does not seek any interest in the Florida real estate, while the earlier foreclosure action had as its very point the adjudication of rights in the property. Therefore, the two cases cannot be viewed as the same cause of action.

Other cases that the Neals cite are distinguishable for the same reasons that we find Housing Authority inapposite. See La Salle National Bank v. County Board of School Trustees (1975), 61 Ill. 2d 524, 337 N.E.2d 19, cert. denied (1976), 425 U.S. 936, 48 L. Ed. 2d 177, 96 S. Ct. 1668 (plaintiffs who sought declaration of their reversionary interests in property were barred from seeking to restrain the school board’s transfer of the property because prior condemnation proceedings had resulted in the vesting of fee simple title in the school board); Village of Northbrook v. County of Cook (1980), 88 Ill. App. 3d 745, 410 N.E.2d 925 (res judicata barred plaintiff from claiming a violation of its subdivision regulation when prior action between the parties had adjudicated titleholder’s right to develop the property in accordance with approved plans).

The above cases involve a litigant’s collateral attack on a prior adjudication of rights in real estate between the same or successor parties. That is not the situation before us.

Nor do we find persuasive another case that the Neals rely on, Henry v. Farmer City State Bank (7th Cir. 1986), 808 F.2d 1228, which the Neals call “an almost identical situation.” In Henry, the Federal court held that an Illinois judgment of mortgage foreclosure against the owners of commercial property constituted a res judicata bar to the owners’ later RICO action against the bank and numerous other defendants. The basis of the Federal action was the bank’s alleged forgery in the making of the mortgage documents.

The Henrys were beneficial owners of commercial property held in a land trust. Defendant bank had given them two loans, both of which were secured by a mortgage lien on the business property. The Henrys defaulted on the loans, and the bank sought to foreclose its two mortgage liens. The trial court entered judgments of foreclosure and authorized a judicial sale of the property. Afterwards, the Henrys moved to set aside the sale of the property for various reasons, none of which asserted forgery in the making of the mortgage documents. Instead, the Henrys claimed they had failed to receive proper notice. The trial court rejected this contention and reconfirmed the sale, and entered deficiency judgments against the Henrys. On appeal to the Illinois Appellate Court, the Henrys raised a number of unsuccessful challenges to the foreclosure and deficiency judgments. At no time, either on trial or appeal in the State court, did the Henrys claim that one of the mortgages was a forgery or had been obtained through fraud.

Thereafter, the Henrys filed in Federal court under RICO and under 42 U.S.C. §1983 (1988), suing 29 defendants, including the sheriff and State’s Attorney of De Witt County; the auctioneer; the moving company that confiscated and transported the Henrys’ personal property after the foreclosure sale; the Henrys’ former attorneys; and directors, officers, and attorneys of the bank. The racketeering claims asserted in essence that bank officials had forged the second mortgage in the amount of $345,000. The defendants successfully moved to dismiss the suit for failure to state a claim. During the pendency of appeals from the dismissal of the claims, the Henrys went back into State court and filed a complaint naming eight of the Federal defendants and alleging various theories of common law fraud. The RICO defendants successfully moved the Federal district court to enjoin the State suit pending the outcome of the Federal litigation.

After reviewing the Henrys’ appeal from the order issuing the injunction, the seventh circuit found no error in the district court’s conclusion that the Henrys failed to state a claim under RICO, but held that the suit was barred in any event under res judicata because the Henrys had not raised their claims as a defense in the State court mortgage proceedings.

We cannot agree with the Neals that Henry is an “almost identical situation” to the one at bar. It is true that the Federal court cited the principle that a defendant in a prior action “may not relitigate a defense, which was available but not raised in a prior action, by making it the basis of a claim in a subsequent action against the original plaintiff which if successful would nullify the initial judgment.” (Henry, 808 F.2d at 1234.) This is the same principle that is expressed in section 22(2)(b) of the Restatement (Second) of Judgments.

The Henrys’ fraud claims were based on an allegedly forged mortgage document, however, not on a misrepresentation theory dependent on proof outside of the mortgage documents. If indeed the Henrys believed that one of the two liens the bank was foreclosing on had been forged or altered, the obvious place and time to raise the defense would have been at the original foreclosure proceeding. Instead, they launched a series of unsuccessful attacks on the judgment in the State court and then went to the Federal court after deciding that the mortgage document had been forged in the first place. Then, after the district court dismissed their suit for failure to state a claim on which relief could be brought, the Henrys went back to the State court to reincarnate the RICO action in the guise of common law theories. Such facts are tailor-made for application of a doctrine designed to promote judicial economy and curtail duplicative litigation.

The position of the plaintiffs in the pending case cannot be fairly compared to the orchestrations in Henry, however. The plaintiffs in the instant case never challenged the Florida foreclosure proceedings or attempted to have the judgment set aside and have not filed numerous actions based on the same facts. In light of the pending controversy, it could be argued that they should have defended against the foreclosure action and asserted fraud as a means of rescinding the real estate transaction. But as long as the pending suit is not a means by which the Florida judgment is nullified, we believe it preferable to allow the suit to proceed. Rather than rescission and restitution, plaintiffs are seeking damages arising out of a fraudulent scheme that the Neals and the other defendants allegedly perpetrated. Their strategy may actually promote judicial economy, since the presentation of their proofs of fraud may now occur at one time in one place against all defendants who allegedly participated in the scheme. Moreover, it may not have been practicable or even possible for the plaintiffs to join the Illinois lawyer-defendants as counterdefendants in the Florida foreclosure action. We believe that such complexities should be considered when analyzing whether plaintiffs should be estopped from maintaining their lawsuit against the Neals.

Res judicata is an equitable doctrine capable of easy expression but sometimes difficult application. Courts should carefully examine the circumstances presented in a specific case to ensure that a party is not precluded from litigating a claim simply because it “might have” been raised, if the nature of the claim is sufficiently separate from that which was actually litigated. Another consideration here is that we see no prejudice to the Neals because they are not being required to twice defend against the fraud claim (or relitigate anything) and they were well aware of the pendency of the Illinois action during the Florida proceedings.

In fact, in reviewing the equities of the case on appeal, we find the latter point significant because of the timing of the Neals’ motion to dismiss counts IV and V based on res judicata-. The record reveals that the Illinois lawsuit was filed in November 1987, while the Florida foreclosure action was still pending. All defendants in Illinois were and are represented by the same counsel. In the months before the Florida court entered its final judgment, defendants’ counsel appeared in the Illinois case and filed a series of motions for additional time to respond, to vacate technical defaults, and to strike the complaint. Since the Neals maintain in this appeal that the Illinois tort action is the same as the Florida foreclosure action, they could have moved to dismiss the Illinois action on the grounds that the Florida case was a “prior pending action” between the parties. (111. Rev. Stat. 1987, ch. 110, par. 2 — 619(a)(3).) It may be coincidence that the Neals waited several months before raising the relevance of the Florida action as a bar to the Illinois action. Instead of promptly moving to dismiss on the basis of a prior pending action, the Neals were granted extensions of time and thus were able to assert the res judicata defense once the Florida court entered the final judgment of foreclosure and sale. Had the Neals promptly asserted the existence of a prior pending action as a grounds for dismissal, plaintiffs would have been accorded an opportunity to at least consider refiling their tort claim in Florida as part of the foreclosure action. While this factor may be of limited relevance in itself, we believe it has some bearing on the equities involved in applying res judicata in this case. See Rotogravure Service, Inc. v. R.W. Borrowdale Co. (1979), 77 Ill. App. 3d 518, 525-26, 395 N.E.2d 1143, 1149 (“[R]es judicata should only be applied as fairness and justice require, and only to facts and conditions as they existed when the judgment was entered”).

While we express no opinion as to the likelihood of plaintiffs’ ultimate success in the pending lawsuit, we believe that they should not be barred by res judicata from presenting well-pleaded causes of action. As we have noted, plaintiffs’ successful recovery in tort would not affect title to the Florida property or otherwise nullify the effect of the orders entered therein. Therefore, we reverse the dismissal of counts IV and V and remand for further proceedings.

Reversed and remanded.

JOHNSON, J., concurs.

PRESIDING JUSTICE JIGANTI,

dissenting:

The instant complaint, wherein the plaintiffs seek tort damages, alleges that the defendants, H. Wayne Neal and Rosemary Neal, fraudulently induced the plaintiffs to execute a mortgage and promissory note in connection with a purchase of Florida real estate. A Florida court had previously rendered a judgment foreclosing the mortgage and entering a money judgment against the plaintiffs on the promissory note. The trial court allowed the Neals’ motion to dismiss the complaint on the basis that res judicata bars the action.

The supreme court of Illinois in the case of Housing Authority v. YMCA (1984), 101 Ill. 2d 246, 251, 461 N.E.2d 959, 962, quoting People v. Kidd (1947), 398 Ill. 405, 408, 75 N.E.2d 851, 853, stated:

“ ‘[A] final judgment rendered by a court of competent jurisdiction on the merits is conclusive as to the rights of the parties and their privies, and, as to them, constitutes an absolute bar to a subsequent action involving the same claim, demand or cause of action.’ (Emphasis added.)”

The doctrine applies “not only to what actually was decided in the original action but also to matters which could have been decided in that suit.” La Salle National Bank v. County Board of School Trustees (1975), 61 Ill. 2d 524, 529, 337 N.E.2d 19, 22, cert. denied (1976), 425 U.S. 936, 48 L. Ed. 2d 177, 96 S. Ct. 1668.

The majority holds that this action for money damages on the basis of fraud is not the “same cause of action” as the action in Florida in which the court granted foreclosure and ordered a money judgment against the plaintiffs. I respectfully disagree.

We have consistently held that a subsequent action is barred on the principle of res judicata if it arises out of “a single group of operative facts.” (Radosta v. Chrysler Corp. (1982), 110 Ill. App. 3d 1066, 1069, 443 N.E.2d 670, 673; Baird & Warner, Inc. v. Addison Industrial Park, Inc. (1979), 70 Ill. App. 3d 59, 64, 387 N.E.2d 831, 838.) Professor Richard A. Michael, 4 Illinois Practice, Civil Procedure Before Trial section 41.5, at 315 (1989), urges that Illinois adopt Restatement (Second) of Judgments section 24(1), which states that when a valid and final judgment has been rendered, a plaintiff’s claim is extinguished with respect to “all or any part of the transaction, or series of connected transactions, out of which the action arose.” (Restatement (Second) of Judgments §24(1), at 196 (1982).) Professor Michael notes that the primary goal of the doctrine is “judicial economy coupled with avoidance of the unfairness to the defendant of incurring multiple costs and risks.” (4 R. Michael, Illinois Practice §41.5, at 314 (1989).) I believe it is evident that the instant tort action for fraud in inducing the real estate purchase and the foreclosure action in the real estate purchase previously ruled on in Florida arise out of a common core of operative facts and are part of the same transaction. I would affirm the trial court.

       The Neals cite Florida cases for the proposition that fraud may be raised as an affirmative defense to foreclosure proceedings. (See, e.g., Neeld v. Sperry (Fla. 1931), 101 Fla. 521, 134 So. 500.) That a claim may be raised as a defense to one action, however, does not mean that failure to raise it is always fatal to a subsequent action between the parties. See Bratcher v. Wronkowski (Fla. App. 1982), 417 So. 2d 1132, appeal denied (1982), 424 So. 2d 760 (Home buyer who defaulted on mortgage was not precluded from maintaining an action for breach of contract regarding defective fix-times sold as part of contract price; such claim was not compulsory counterclaim in mortgage foreclosure action because the issues were different and the plaintiff was not asserting the contract claim as a defense for her failure to make the mortgage payments); cf. Wise v. Tucker (Fla. App. 1981), 399 So. 2d 500 (Defendant in foreclosure action, who obtained agreement for extension of time to pay arrearages on loan, was barred by res judicata from maintaining suit for breach of the extension agreement under these facts: he failed to inform foreclosure court of his extension agreement with plaintiff; he lost his subsequent motion to set aside the foreclosure sale based on fraud; he did not appeal from that holding; and he then filed a contract claim alleging that the foreclosure plaintiff had breached the extension agreement).


author: JUSTICE LINN

text:
    SHEA, ROGAL AND ASSOCIATES, LTD., Plaintiff-Appellee, v. LESLIE VOLKSWAGEN, INC., Defendant-Appellant.
    First District (4th Division)
    No. 1 — 90—3088
    Opinion filed June 20,1991.

      Edward T. Graham, of Chicago (Max Rittenberg, of counsel), for appellant.
    Susan M. Coleman and Ira A. Rogal, both of Westchester, for appellee.
   JUSTICE LINN

delivered the opinion of the court:

Plaintiff law firm, Shea, Rogal & Associates (SRA), sued its client, Leslie Volkswagen, Inc. (Leslie), to recover the balance of attorney fees that it claimed were due and owing on account. Leslie raised the affirmative defense of accord and satisfaction, asserting that it sent a check in full payment of the disputed billing and that SRA accepted the conditional check by depositing it and retaining the funds. The check stated that it represented “payment in full for all services rendered.” The trial court initially granted Leslie’s motion for summary judgment, but later vacated the judgment and permitted the case to go to trial before a jury. The jury found in favor of SRA and awarded $6,000 in damages. On appeal, Leslie contends that it was entitled to judgment as a matter of law and alternatively challenges the trial court’s refusal to tender the various jury instructions that Leslie had offered.

We reverse.

Background

In October 1986, Leslie Volkswagen, Inc., acting through its owner, Ralph Rosengarden, employed plaintiff law firm. Rosengarden met with SRA’s senior partner, Gerald W. Shea, and explained that he needed legal assistance in resolving an issue concerning the amount of back wages that were due Leslie Volkswagen’s employees. This issue arose out of an earlier labor dispute before the National Labor Relations Board (NLRB), in which SRA was not involved. A final decision and order had been entered in the original case in September 1985. Rosengarden hired Shea to help resolve the ancillary dispute over back wages. SRA and the NLRB eventually settled the dispute for $86,000. Rosengarden paid the claimants in the labor dispute that amount.

In March 1987, approximately six months after SRA was retained by Leslie Volkswagen, Rosengarden received the first of two billings from the law firm. Rosengarden testified that when he received this bill he thought the labor case was over because Shea had told him the matter was settled for the $86,000. This first invoice showed an amount due of $12,667.70. Rosengarden telephoned Shea about the bill, asserting that it was “high” and requesting him to “look at the bill.” Shea agreed to do so, but no specific adjustments were discussed.

On or about June 8, 1987, Rosengarden received a second bill. This bill reflected an additional sum of $7,902.50 due and owing, for a total charge of $20,570.20. Rosengarden testified that he telephoned Shea regarding this bill and told him it was “outrageous.” He testified that following some discussion, the parties agreed to meet face to face to settle the matter. He received a letter from Shea’s partner regarding the meeting, set for September 21, 1987, but on the morning of the 27th, Shea cancelled it. Rosengarden then drafted and sent the check for $12,000 to SRA on that same date.

Shea testified at trial that he recalled the telephone discussions of the billings. Shea denied that he agreed to accept $12,000 but admitted that that was the amount Rosengarden offered. Shea also admitted that during the telephone conversation he offered to adjust the bill downward, to $18,000, but that Rosengarden rejected this settlement offer. Shea further testified that he cancelled the September 21 settlement meeting because Rosengarden was represented by counsel and Shea’s law partner advised him that he could not meet Rosengarden outside the presence of Rosengarden’s attorney.

On the check that Rosengarden mailed the firm was a detachable stub, bearing this inscription: “Payment in full for all services rendered.” On the back of the check, where the endorser would sign, a notation stated: “This check is payment in full for all services rendered.”

The law firm’s office manager and bookkeeper, Kathleen Light-foot, testified that she had been an employee of the firm for 12 years. She was responsible for bank deposits, billing clients, and maintaining time records. She received Leslie’s check on September 24, 1987. Pursuant to her authority and the normal course of business, she entered the check in the ledger and “bank stamped” the back of the check with a stamp she customarily used for preparing checks for deposit into the firm account. She wrote the firm’s account number beneath the stamped endorsement and deposited the check in the firm account on September 25, 1987. She did not call anyone’s attention to the conditional language on the check and Shea was not in the habit of personally reviewing the checks coming into the firm. According to her testimony she “normally” would not have shown the check to Shea or a partner unless it was accompanied by correspondence. She was the party responsible for check deposits and she maintained the firm’s accounting ledger.

On November 3, 1987, SRA sent Rosengarden a letter stating that it planned to sue him for the balance due on account if they did not “reach some other agreement.” Another letter sent three months later advised Leslie’s attorney that the law firm remained “open at this time to talk regarding settlement or compromise.” The proceeds of the $12,000 check were not returned to Leslie, however.

SRA filed the instant suit to recover $8,570.20, the balance it claimed was due and owing on account. Leslie’s answer denied that any sum was due and asserted accord and satisfaction as its affirmative defense. SRA did not file a reply to the affirmative defense.

The trial court granted summary judgment in favor of Leslie but then, following SRA’s motion to reconsider, the court reversed itself and set the matter for trial.

During the trial, Leslie moved for directed verdict and then for judgment notwithstanding the verdict. Additionally, Leslie noted objections to the trial court’s refusal to accept any of its 14 jury instructions, particularly those relating to the law of accord and satisfaction, for which no Illinois Pattern Jury Instruction exists. The jury was given general instructions. No issue instructions were given, however, either as to plaintiff’s case in chief or as to defendant’s theory of its affirmative defense. The sole instruction the court gave on the issue of accord and satisfaction read as follows:

“A meeting of the minds with intent to compromise is essential to an accord and satisfaction, and agreement to accept partial payment in full consideration of a claim is sufficient consideration to sustain an accord and satisfaction between the parties.”

Opinion

The concept of accord and satisfaction has been explained as follows:

“Where a balance claimed due by a creditor is fairly in dispute, the controversy renders the claim unliquidated. [Citations.] Where a claim is unliquidated or disputed, the acceptance and use of a remittance tender ‘in full’ of the claim amounts to an accord and satisfaction of the entire obliga-

tion.” Standard International Corp. v. Alert Steel Co. (1956), 10 Ill. App. 2d 175,179, 134 N.E.2d 613, 614-15.

In Nelson v. Fire Insurance Exchange (1987), 156 Ill. App. 3d 1017, 1020, 510 N.E.2d 137, 139, appeal denied (1987), 116 Ill. 2d 562, 515 N.E.2d 112, the court stated:

“If there is an honest dispute between the parties, a tender by the debtor with the explicit understanding of both parties that it is full payment of all demands, and an acceptance by the creditor, there is an accord and satisfaction. [Citation.] If there is a bona fide dispute as to the amount due, it makes no difference that the creditor protests that he does not accept the amount in full satisfaction. The creditor must either accept the payment with the condition or refuse. [Citation.] Cashing a check offered with the condition that it is in full payment of claims of the creditor, although the creditor before endorsing the check includes language that it is not releasing its claims, nonetheless, constitutes acceptance.”

Leslie argues that there is no genuine issue of material fact in dispute and that it is entitled to judgment as a matter of law. SRA, on the other hand, maintains that defendant failed to establish the threshold element of a bona fide dispute over the amount due on its billing statement. Because the bill reflected a fixed and certain amount for legal services rendered, SRA reasons, there could be no “bona fide” dispute over the amount that was due. According to SRA, Leslie’s unwillingness to pay does not equate with a true “dispute” over the bill, which is a prerequisite for the operation of the doctrine.

We do not agree that simply because an invoice may state a definite or liquidated amount due it is insulated from being the subject of a legitimate, good-faith dispute. (See Standard International Corp. v. Alert Steel Co. (1956), 10 Ill. App. 2d 175, 134 N.E.2d 613 (reversing trial court’s judgment in favor of seller of goods and entering judgment for buyer, whose accord and satisfaction defense was found to be proved as a matter of law).) That is not to say that a person may unilaterally write a check to pay a bill, include a notation that the amount tendered is in full satisfaction of the debt, and expect to prevail on the accord and satisfaction theory if the receiver of the check then deposits or cashes it. See Sherman v. Rokacz (1989), 182 Ill. App. 3d 1037, 1044-45, 538 N.E.2d 898 (rejecting accord and satisfaction defense where, among other things, debtor had not even pleaded the doctrine or established at trial that there was a bona fide dispute over the amount owing).

In the pending case, the uncontroverted facts establish that there was a genuine dispute over the law Arm’s charges for legal services rendered. Shea admitted that he discussed a compromise of the bill with Rosengarden, that Rosengarden offered $12,000, and that Shea agreed to accept $18,000. Accordingly, there is no real question but that the account was in dispute and that the parties were negotiating settlement in good faith.

The record reflects the trial court’s belief that the issue for the jury was whether the parties actually intended to enter an accord and satisfaction. The element of contractual intent, generally a question of fact, may nonetheless be established as a matter of law when the material facts are not disputed. Intent can be inferred from conduct and, indeed, the very act of knowingly accepting and cashing or depositing a check upon which conditional language has been added is the hallmark of an accord and satisfaction. (See Staver Carriage Co. v. American & British Manufacturing Co. (1914), 188 Ill. App. 634, 644-45 (“An agreement to do a thing in consideration of the settlement of a controversy or claim is not a satisfaction. It is the doing of the thing agreed upon that has that effect. *** ‘It is not the second contract but the performance of it which discharges the original contract’ ”).) Under classical contract analysis, the tender of a check upon which “payment in full” is clearly displayed is an offer by the debtor to settle the unliquidated or “fairly disputed” debt. If the creditor takes and keeps the payment with actual or constructive knowledge of the condition, he has accepted the offer and the original debt is settled for the reduced amount.

In a given case, factual matters may be alleged and proved to show that there was not a bona fide dispute over the debt. Evidence of bad faith may be relevant in some situations to militate against the finding of a genuine dispute over a bill. Or, the creditor’s acceptance of the conditional check could be found ineffective for some legitimate reason. In such cases, the matter will be submitted to the finder of fact to determine the credibility of the witnesses and to ascertain which party’s version of the facts is correct.

In the instant case, however, we find that the parties essentially agree as to what happened in the case; the controversy centers on what legal effect flows from the actions of the parties. There was a dispute over the amount that SRA charged Leslie for legal services rendered. There were at least two telephone conversations in which the bills were discussed. It is undisputed that during the telephone conversations, the parties disagreed as to what amount should be paid on the bill. Hence, the question is whether, in light of the disputed billing and the negotiations for an adjustment, the law firm’s acceptance and retention of defendant’s conditional tender worked an accord and satisfaction.

This brings us to the last consideration: whether the law firm’s endorsement and deposit of the check should be deemed a valid acceptance or “satisfaction.” Here, the long-time employee of SRA who acted as bookkeeper and office manager was empowered to deposit checks to the firm’s account and to handle the billings. Neither this employee, Lightfoot, nor SRA asserted at trial that Lightfoot lacked authority to handle Leslie’s check as she did. That being the case, we find it immaterial that none of the partners actually observed the check and the conditional language thereon. The firm’s practice of authorizing its employee to endorse firm checks and deposit them in an account cannot be used as a means of isolating the firm or its partners from the legal consequences that flow from the employee’s actions or omissions in the scope of her duties for the firm. Lightfoot’s testimony indicated that she would have shown Leslie’s check to a partner for instructions only if she received a letter from the client, accompanying the check. Nevertheless, Lightfoot was at all times acting under the auspices of the firm, and absent contrary evidence of record, we must assume her authority included depositing checks upon which restrictive language appeared.

We have examined the check in the record. The restrictive language is clearly typed on the back of the check, above the space where the endorser signs or, in this case, stamps it for deposit. Lightfoot did not testify that she did not notice or read the conditional language, and she did not assert that she was unaware of legal consequences that might arise from her depositing a check upon which conditional language appeared. Accordingly, we conclude that on this record, her acts must be imputed to the firm as a matter of law. (See, e.g., Elmore v. Blume (1975), 31 Ill. App. 3d 643, 334 N.E.2d 431 (agent’s authority may be presumed from silence of alleged principal when he knowingly allows another to act for him as his agent); Lynch v. Board of Education of Collinsville Community Unit District No. 10 (1980), 82 Ill. 2d 415, 412 N.E.2d 447 (agency is a question of law where the evidence is not disputed).) SRA’s acceptance of the check and retention of the funds therefore worked an accord and satisfaction. Consequently, we hold that judgment notwithstanding the verdict should have been granted in favor of Leslie. See Pedrick v. Peoria & Eastern R.R. Co. (1967), 37 Ill. 2d 494, 510, 229 N.E.2d 504.

Because of our conclusion, we need not address Leslie's challenge to the jury instructions.

For the foregoing reasons, we reverse the judgment entered upon the jury verdict and remand for entry of judgment in favor of Leslie Volkswagen, Inc.

Reversed and remanded.

JIGANTI, P.J., and McMORROW, J., concur.


author: PRESIDING JUSTICE JIGANTI

text:
    THE PEOPLE ex rel. NEIL F. HARTIGAN, Attorney General, Plaintiff-Appellant, v. PROGRESSIVE LAND DEVELOPERS, INC., et al., Defendants-Appellees.
    First District (4th Division)
    No. 1 — 90—1006
    Opinion filed June 20,1991.
    — Rehearing denied August 14,1991.

      Neil F. Hartigan, Attorney General, of Springfield (Floyd D. Perkins, Matthew D. Shapiro, and Thomas P. James, Assistant Attorneys General, of counsel), for appellant.
    Rufus Cook, of Cook Partners Law Offices, Ltd., of Chicago, for appellees.
   PRESIDING JUSTICE JIGANTI

delivered the opinion of the court:

The plaintiff, the Illinois Attorney General, filed suit against the defendant, Progressive Land Developers, Inc., attempting to recover charitable assets on a theory of unjust enrichment. The suit also sought the imposition of a constructive trust. Progressive Land Developers made a motion to dismiss on the grounds of res judicata, laches, estoppel and the statute of limitations. The trial court dismissed the lawsuit on the basis of res judicata, expressing reasoning that would also support the theory of laches.

This litigation involves the estate of Elijah Muhammad, the leader of a religious organization known as the Nation of Islam (Nation). The Nation itself is not a legal entity, but is administered by a not-for-profit corporation called Muhammad Mosque No. 2, Inc. (Mosque). Funds collected from the members of the Nation were placed into an account denominated the Poor Fund Account, which was controlled by Elijah Muhammad. Funds from the Poor Fund Account were used for the purposes of the Nation and were also used by Elijah Muhammad personally. According to the Attorney General’s complaint, money from the Poor Fund Account was used to establish Progressive Land Developers. The ownership of the Poor Fund Account at the time of Elijah Muhammad’s death and the use of that money to establish Progressive Land Developers provides the focus of this appeal. The relationship between the estate of Elijah Muhammad, the Poor Fund Account and Progressive Land Developers will be developed at some length, along with the actions of the Attorney General.

Elijah Muhammad died in 1975, survived by several children (the Estate). In 1980, the Estate filed a 12-count citation petition seeking to recover property allegedly belonging to the Estate. Counts I and III of the citation petition are pertinent to the instant lawsuit. In count I, the Estate sought to recover a balance in the Poor Fund Account in excess of $3 million. Count III was directed against Progressive Land Developers. Count III asserted that Progressive was incorporated but that no stock was ever issued and that Elijah Muhammad made all of the capital contributions to Progressive from his own personal and individual funds. It further alleged that following Elijah Muhammad’s death, Progressive allowed the management and operation of its assets “by other than the ESTATE.” Among the relief requested was an accounting.

Although count I is not directly involved in this lawsuit, a brief history of the litigation involving that count is essential to an understanding of the issue before us. In count I, the Estate sued First Pacific Bank to recover funds remaining in the Poor Fund Account which the bank had turned over to the new leader of the Nation. The Estate’s theory was that the funds constituted gifts made to Elijah Muhammad personally and should not have been given to the Nation. The bank filed a third-party claim against the Nation seeking indemnity and served the Attorney General on May 5, 1981, on the basis that the funds constituted charitable assets held for the poor and needy and that the Attorney General had a duty to safeguard such assets.

On May 27, 1981, the Attorney General filed a general appearance in the probate proceeding and subsequently participated fully in the litigation involving the Poor Fund Account. The litigation involved two trials and two appeals to this court. (In re Estate of Muhammad, (1984), 123 Ill. App. 3d 756, 463 N.E.2d 732 (Muhammad I); In re Estate of Muhammad (1987), 165 Ill. App. 3d 890, 520 N.E.2d 795 (Muhammad IT).) In a “Statement of Position” filed in the first trial, the Attorney General, arguing that the Poor Fund Account constituted charitable assets, stated as follows:

“Absent a showing that the Honorable Elijah Muhammad had a source of income other than monies received by virtue of being the leader of the Nation of Islam, it must be presumed that the sole source of income of the Honorable Elijah Muhammad was as the Leader of the Nation of Islam. Such monies were thus given to further the causes and charitable purposes expressed by Elijah Muhammad.”

The trial court in July of 1986 held that the monies in the Poor Fund Account were gifts to Elijah Muhammad and that he was the equitable owner of the account. In his brief before this court in Muhammad II, the Attorney General represented that he had “intervened in the original proceedings under his common-law power and authority to safeguard charitable assets and preserve charitable trusts.” The litigation over the Poor Fund Account was ultimately resolved against the Estate and in favor of the position taken by the Attorney General when this court held in 1987 in Muhammad II that monies in the account, having been solicited in the name of charity, constituted charitable assets rather than personal property of Elijah Muhammad.

On January 11, 1983, while the litigation was proceeding through the courts, the Estate filed the “Administrator’s First Petition for Recovery Citation” against the Mosque, the Nation and certain individual defendants (hereinafter collectively referred to as the Nation). Essentially, like count III of the 1980 citation petition, the petition sought to recover funds and assets held by Progressive. The petition recited that at the time of his death, Elijah Muhammad and his sons owned all of Progressive’s stock and that the Nation had improperly seized control of Progressive, sold substantial portions of its assets and misappropriated the proceeds. Although the Attorney General was not served a summons in this proceeding, he was mailed a copy of the petition. On July 22, 1983, the Nation filed an amended answer to the petition alleging that Progressive was formed in 1963 by Elijah Muhammad aided by three of the Nation’s trustees “with the sole intent of furthering The Nation’s financial growth.” The answer alleged that “The Nation was intended to be the sole shareholder of Progressive Land. Money to form, finance, and operate Progressive Land came from the members of The Nation who lived throughout the United States. *** [Elijah Muhammad] was never a shareholder in Progressive Land, but only acted as an official to operate Progressive Land on behalf of all the members of The Nation.” (Emphasis added.) The Attorney General was mailed a copy of the amended answer.

The Attorney General was mailed several other pleadings in the Progressive litigation, including a motion for a preliminary injunction filed by the Estate to enjoin the Nation from selling Progressive’s assets “until such time as there has been a final adjudication by this court relative to the equitable ownership of Progressive Land Developers, Inc.” The mailings stopped on September 21, 1983, and the Attorney General did not receive the third-amended petition on which the trial was based or any of the post-trial filings and motions.

The trial involving the ownership of Progressive began in March of 1984 and lasted approximately one month. The trial court initially refused the Nation the opportunity to present evidence showing that Progressive was formed with contributions to Elijah Muhammad from members of the Nation. It was the court’s position that the theory of a constructive trust was not sufficiently pleaded by the Nation. However, when the court indicated that the Nation need only amend the pleadings to include that theory, counsel for Progressive withdrew his objection and the issue of equitable ownership of Progressive was fully litigated.

In November of 1986, while the litigation involving the Poor Fund Account was pending on appeal, the trial court entered a judgment in favor of the Estate and against the Nation in the amount of $12,975,907.50. The court specifically found that Progressive was formed in large part with funds from the Poor Fund Account and that the monies in the account were the personal property of Elijah Muhammad. An appeal by the Nation was dismissed by this court as untimely, and the supreme court denied leave to appeal. Following the dismissal of the appeal, the Estate and the Nation conducted extensive negotiations and entered into a settlement agreement on August 31,1988.

On October 20, 1988, nearly two years after the judgment in the Progressive case and almost one year after our decision in Muhammad II, the Attorney General filed his unjust enrichment claim against Progressive. The complaint alleged that Elijah Muhammad used money from the Poor Fund Account to purchase real estate and then placed the title to the real estate in Progressive. The complaint further alleged that Elijah Muhammad completely controlled Progressive and used its assets for the charitable purposes of the Nation. In the dispute between the Estate and the Nation over ownership of Progressive’s stock after Elijah Muhammad’s death, the trial court held that Progressive was funded with Elijah Muhammad’s personal assets and that equitable ownership of Progressive therefore rested in the Estate. The complaint alleged that this finding was erroneous in light of this court’s opinion in Muhammad II, which held that monies in the Poor Fund Account were charitable assets. The Attorney General requested the court to impose a constructive trust on the charitable assets placed in Progressive by Elijah Muhammad.

Progressive filed a section 2 — 619 motion to dismiss (Ill. Rev. Stat. 1989, ch. 110, par. 2 — 619) alleging that the unjust enrichment suit was barred by res judicata, laches, estoppel and the statute of limitations. The trial court granted the motion to dismiss. In denying reconsideration, Judge Curry made the following statements:

“The Attorney General here was barred in this action by res judicata, as simple and straightforward a case of res judicata as could be imagined, set in a convoluted and complex fact situation, but res judicata as Illinois case law describes it, pure and simple.
The issue before the trial judge was resolved in a fashion that the Attorney General does not agree with. The issue and the resolution by the probate court was never appealed. Whether the determination by the probate court was right or wrong is irrelevant because it’s final.
The Attorney General then says well, I wasn’t a part of that. I didn’t participate. No one expected me to participate. No one invited me to participate. I didn’t participate. I’m not bound. When the Attorney General files a general appearance, the law is clear that he’s in the case for all reasons and is bound by all determinations.
So when I say that this is a classic case of res judicata, that’s exactly what it is. The extensive briefing, the convoluted proceedings and the zeal to have a different result do not detract from the realities that simple law, well-established law in Illinois dictates the result that was delivered by this court in May of last year.”

On appeal, the Attorney General contends that the instant unjust enrichment suit is not barred by res judicata because it involves different issues than the earlier citation proceeding. The Attorney General also contends that he was neither a party nor in privity with a party to the citation proceeding.

Essentially, the doctrine of res judicata provides that a final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies and, as to them, constitutes an absolute bar to a subsequent action involving the same claim, demand or cause of action. (Spiller v. Continental Tube Co. (1983), 95 Ill. 2d 423, 432, 447 N.E.2d 834.) The doctrine is designed to protect litigants from the burden of retrying an identical cause of action or issue with the same party or privy and to enhance judicial economy by prohibiting repetitive litigation. (People v. Bone (1980), 82 Ill. 2d 282, 286, 412 N.E.2d 444, cert. denied (1981), 454 U.S. 839, 70 L. Ed. 2d 120, 102 S. Ct. 145.) The doctrine of res judicata applies “not only to what actually was decided in the original action but also to matters which could have been decided in that suit.” La Salle National Bank v. County Board of School Trustees (1975), 61 Ill. 2d 524, 529, 337 N.E.2d 19, 22, cert. denied (1976), 425 U.S. 936, 48 L. Ed. 2d 177, 96 S. Ct. 1668.

In determining whether two lawsuits involved the same claim, demand or cause of action for purposes of applying res judicata, Illinois courts have examined whether the suits arise out of “a single group of operative facts.” (Radosta v. Chrysler Corp. (1982), 110 Ill. App. 3d 1066, 1069, 443 N.E.2d 670, 673.) In determining whether the party in the subsequent litigation was in privity with a party to the earlier litigation, Illinois courts have often looked to the following definition of privity provided in the Restatement of Judgments:

“Privity is a word which expresses the idea that as to certain matters and in certain circumstances persons who are not parties to an action but who are connected with it in their interests are affected by the judgment with reference to interests involved in the action, as if they were parties.” (Restatement of Judgments §83, Comment a, at 389 (1942).)

(Johnson v. Nationwide Business Forms, Inc. (1981), 103 Ill. App. 3d 631, 634, 431 N.E.2d 1096; Country Mutual Insurance Co. v. Regent Homes Corp. (1978), 64 Ill. App. 3d 666, 670, 380 N.E.2d 516; Upper Lakes Shipping Ltd. v. Seafarers’ International Union of Canada (1963), 40 Ill. App. 2d 392, 401, 189 N.E.2d 753.) In Nationwide Business Forms, the court interpreted this definition as meaning that “a nonparty may be bound if his own interests are so closely aligned to a party’s interests that the party is his virtual representative.” Nationwide Business Forms, 103 Ill. App. 3d at 634, 431 N.E.2d at 1098.

Applying these principles to the case at bar leads us to conclude that the trial court was correct in ruling that the Attorney General’s unjust enrichment suit is barred by res judicata. The defense made by the Nation in the citation proceeding and the claim made by the Attorney General in the instant litigation are the same, i.e., that monies used to form Progressive came from the members of the Nation and therefore constituted charitable assets. Thus, both lawsuits arose out of the same group of operative facts and involved the same claim or demand regarding the ownership of Progressive.

With regard to the “same party” requirement, we believe that the facts showed that the Attorney General was in privity with the Nation. As stated above, a nonparty may be bound by a judgment if its interests were so closely aligned to a party’s interests that the party was the nonparty’s virtual representative. (Nationwide Business Forms, 103 Ill. App. 3d 631, 431 N.E.2d 1096.) The Nation in the citation proceeding took the position that assets held by Progressive constituted charitable assets, thereby asserting the public interests in preserving those assets. The Attorney General in the unjust enrichment suit took an identical position. Although the Attorney General argues that he was not aware of the citation proceeding and was therefore not able to fully present his position, the record does not support this argument. To allow the Attorney General’s action to proceed now would be to undermine the purpose of the doctrine of res judicata, which is to avoid repetitive litigation of the same issue by giving conclusive effect to a prior judgment.

The doctrine of laches also operates to bar the Attorney General’s claim. Laches is an equitable principle which operates to bar an action where, because of the plaintiff’s unreasonable delay in bringing suit, the defendant has been misled or prejudiced or has taken a course different from what he would have otherwise taken. (Hippert v. O’Grady (1981), 97 Ill. App. 3d 310, 312, 423 N.E.2d 228.) No absolute rule governs when laches should apply, and what facts will combine to constitute laches depends upon the circumstances of each case. (Eckberg v. Benso (1989), 182 Ill. App. 3d 126, 132, 537 N.E.2d 967.) To establish unreasonable delay, the plaintiff must show that the defendant failed to seek prompt redress after acquiring knowledge of the fact supporting his claim. (Eckberg v. Benso, 182 Ill. App. 3d 126, 537 N.E.2d 967.) However, it is not necessary that the plaintiff have actual knowledge of the specific facts upon which his claim is based. If the circumstances are such that a reasonable person would make inquiry concerning these facts, the plaintiff will be charged with laches if he fails to ascertain the truth through readily available channels. Eckberg v. Benso, 182 Ill. App. 3d 126, 537 N.E.2d 967.

In the case at bar, the Attorney General argues that his delay in filing the unjust enrichment suit is not unreasonable because he did not know until early in 1988 that there was a dispute concerning the equitable ownership of Progressive’s assets. We are not persuaded by this argument. The record reveals that in 1980 the Estate filed a 12-count citation proceeding seeking to recover funds and assets allegedly belonging to the Estate. The Attorney General was made a party to count I, involving the Poor Fund Account, and filed a general appearance in the probate proceeding. The Attorney General participated fully in the litigation over the Poor Fund Account and specifically adopted the position that unless it could be shown that Elijah Muhammad had a source of income other than contributions from the Nation, the monies were “given to further the causes and charitable purposes expressed by Elijah Muhammad.”

Progressive was named as a citation respondent in count III of the 1980 petition. Although that count was abandoned, the Estate in 1983 filed a complaint against the Nation claiming that the Nation had improperly seized the assets of Progressive. The Attorney General was mailed a copy of the original complaint as well as the Nation’s answer, which stated that “[m]oney to form, finance and operate Progressive Land came from the members of The Nation” and that Elijah Muhammad operated Progressive “on behalf of all the members of The Nation.” These pleadings were filed during the pendency of the Poor Fund Account litigation, which involved a dispute over the equitable ownership of funds contributed to Elijah Muhammad by the members of the Nation. In light of this knowledge, we believe that it was incumbent upon the Attorney General to investigate the dispute involving Progressive’s funds and assets and decide whether the facts were sufficient to warrant a claim that they constituted charitable assets.

The Attorney General then maintains that even if the delay was unreasonable, the doctrine of laches does not apply to the instant claim for unjust enrichment because the claim was brought by the State in the discharge of its governmental actions. It is true as a general proposition that laches will not be applied against the State when acting in its governmental capacity. (Hickey v. Illinois Central R.R. Co. (1966), 35 Ill. 2d 427, 448, 220 N.E.2d 415, cert. denied (1967), 386 U.S. 934, 17 L. Ed. 2d 806, 87 S. Ct. 957.) The reason supporting this general proposition is that application of laches could result in valuable public interests being jeopardized or lost by the negligence or inattention of public officials. (Hickey, 35 Ill. 2d 427, 220 N.E.2d 415.) It has therefore been stated that mere nonaction by government officials is insufficient to justify invoking laches against the State; there must bé some positive act which induced the defendant to act to his detriment. In Hickey, the court stated that “the question to be answered is whether the reasons underlying the reluctance to extend doctrines of estoppel and laches to governmental bodies outweigh the mischief which may result from [the State’s conduct].” Hickey, 35 Ill. 2d at 449, 220 N.E.2d at 426-27.

In our view the instant fact situation shows more than mere nonaction or inattention on the part of the State. As stated earlier, the Attorney General had knowledge as early as 1981 when it was made a party to the original citation proceeding that there was a dispute over whether funds held by Elijah Muhammad at his death belonged to him personally or the Nation under the theory of constructive trust. The Attorney General intervened in the probate proceedings and participated fully in the litigation concerning the Poor Fund Account. Yet, the Attorney General did not make any claim to Progressive’s assets despite knowledge that the Nation was claiming ownership of the assets on the theory that the money used to purchase them came from contributions by the Nation’s members. By actively pursuing the Poor Fund litigation while ignoring the controversy over Progressive, the Attorney General led Progressive to believe that the State did not consider Progressive’s assets to be charitable in nature. Progressive thus fully litigated the issue of ownership with the Nation, won a judgment in its favor and entered into a settlement agreement fully resolving all of the issues between the parties. Considering all of the circumstances set forth above, we believe that the Attorney General’s lawsuit was barred by the doctrine of laches.

Accordingly, the judgment of the circuit court is affirmed.

Affirmed.

LINN and McMORROW, JJ., concur.