{ "id": 3251748, "name": "THE HANOVER INSURANCE COMPANY, Appellee, v. WILLIE SMITH et al. (Joan Fried, Appellant)", "name_abbreviation": "Hanover Insurance v. Smith", "decision_date": "1990-05-23", "docket_number": "No. 68868", "first_page": "304", "last_page": "312", "citations": [ { "type": "official", "cite": "137 Ill. 2d 304" } ], "court": { "name_abbreviation": "Ill.", "id": 8772, "name": "Illinois Supreme Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "182 Ill. App. 3d 793", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2622058 ], "weight": 3, "pin_cites": [ { "page": "796-97" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/182/0793-01" ] }, { "cite": "98 Ill. App. 3d 467", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 8499505 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/98/0467-01" ] }, { "cite": "118 Ill. App. 3d 1154", "category": "reporters:state", "reporter": "Ill. App. 3d", "opinion_index": 0 }, { "cite": "136 Ill. App. 3d 1155", "category": "reporters:state", "reporter": "Ill. App. 3d", "opinion_index": 0 }, { "cite": "120 A.L.R. 1062", "category": "reporters:specialty", "reporter": "A.L.R.", "weight": 2, "year": 1939, "pin_cites": [ { "page": "1062-63" }, { "page": "1065" } ], "opinion_index": 0 }, { "cite": "68 Cal. 2d 619", "category": "reporters:state", "reporter": "Cal. 2d", "case_ids": [ 2306179 ], "year": 1985, "pin_cites": [ { "page": "624" } ], "opinion_index": 0, "case_paths": [ "/cal-2d/68/0619-01" ] }, { "cite": "68 Cal. Rptr. 447", "category": "reporters:state", "reporter": "Cal. Rptr.", "year": 1985, "pin_cites": [ { "page": "450" } ], "opinion_index": 0 }, { "cite": "440 P.2d 927", "category": "reporters:state_regional", "reporter": "P.2d", "year": 1985, "pin_cites": [ { "page": "930" } ], "opinion_index": 0 }, { "cite": "701 P.2d 1061", "category": "reporters:state_regional", "reporter": "P.2d", "case_ids": [ 10424894 ], "pin_cites": [ { "page": "1063" } ], "opinion_index": 0, "case_paths": [ "/p2d/701/1061-01" ] }, { "cite": "68 Ill. 236", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2627502 ], "pin_cites": [ { "page": "240" } ], "opinion_index": 0, "case_paths": [ "/ill/68/0236-01" ] }, { "cite": "86 Ill. 329", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2770271 ], "year": 1875, "pin_cites": [ { "page": "331" } ], "opinion_index": 0, "case_paths": [ "/ill/86/0329-01" ] }, { "cite": "78 Ill. 208", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 823965 ], "pin_cites": [ { "page": "210" } ], "opinion_index": 0, "case_paths": [ "/ill/78/0208-01" ] }, { "cite": "276 Ill. 177", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 4853567 ], "pin_cites": [ { "page": "180" } ], "opinion_index": 0, "case_paths": [ "/ill/276/0177-01" ] }, { "cite": "69 Ill. 2d 320", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5455758 ], "opinion_index": 0, "case_paths": [ "/ill-2d/69/0320-01" ] } ], "analysis": { "cardinality": 704, "char_count": 13693, "ocr_confidence": 0.778, "pagerank": { "raw": 6.770845263994211e-08, "percentile": 0.41149020657188895 }, "sha256": "13328e9332b457ff2205573352c8fb7c5defc84bbf2924ed6a66048ddb3a1105", "simhash": "1:cbef7bf172b78497", "word_count": 2208 }, "last_updated": "2023-07-14T21:33:36.772225+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "THE HANOVER INSURANCE COMPANY, Appellee, v. WILLIE SMITH et al. (Joan Fried, Appellant)." ], "opinions": [ { "text": "JUSTICE CALVO\ndelivered the opinion of the court:\nAppellant, Joan Fried, appeals from a judgment of the Appellate Court, First District (182 Ill. App. 3d 793), awarding Hanover Insurance Company (Hanover) attorney fees, costs, and other expenses in the amount of $24,408.95 pursuant to an indemnity provision in a suretyship agreement by which Hanover agreed to act as surety for Joan Fried and two other litigants on an appeal bond and Fried agreed to post collateral and indemnify Hanover for any expenses it incurred as a consequence of the execution of the bond. The appellate court\u2019s majority opinion overturned a circuit court decision allowing Hanover only $9,200 of its claimed expenses. (182 Ill. App. 3d 793.) Fried petitioned this court for leave to appeal, challenging, as she did in the appellate court, Hanover\u2019s right to indemnification and the necessity of the expenses incurred. We allowed Fried\u2019s petition.\nHaving thoroughly reviewed the record on appeal, we wholeheartedly agree with the circuit court\u2019s assessment that this is \u201ca classic case of litigation run amuck,\u201d in which a personal injury judgment worth little more than $15,000 has spawned four appeals with attendant costs and expenses for all concerned.\nThe genesis of this dispute was a personal injury action filed in 1975 by Willie Smith, naming as defendants Joan Fried, James Lewis and the Garden of Paradise Missionary Baptist Church (Church). All three defendants were represented by Bernard Fried. Smith ultimately prevailed, obtaining a judgment against Fried, Lewis and the Church in the amount of $15,000 plus costs.\nDefendants chose to appeal, and to that end, Joan Fried entered into an agreement with Hanover whereby Hanover would act as surety on an appeal bond for Fried, Lewis and the Church, and Fried would post a letter of credit in the amount of $18,250 as collateral and agree to indemnify Hanover \u201cfor all loss, costs, attorney\u2019s fees and other expenses which [Hanover might] incur or sustain in consequence of the execution of said bond.\u201d The appeal bond, subsequently approved by the circuit court, was prepared solely by Bernard Fried, who then submitted it to Hanover for its signature; Hanover did not participate in the preparation of the bond or presentation thereof to the circuit court. The bond was submitted for court approval well beyond the time limitations of our Rule 305(a)(1) (107 Ill. 2d R. 305(a)(1)) and misidentified the year in which the judgment was entered. These defects notwithstanding, Smith did not object to the bond, nor did he collect the judgment during the pendency of the first appeal.\nOn June 30, 1981, the appellate court affirmed the judgment against Lewis and the Church, but reversed the judgment against Fried. (Smith v. Fried (1981), 98 Ill. App. 3d 467.) Hanover was thereafter beset with conflicting demands concerning payment: since the judgment as to Lewis and the Church had been affirmed, Smith demanded payment in accordance with the terms of the bond; Fried, however, instructed Hanover to deny Smith\u2019s claim for payment, contending that the bond was null and void because it was not issued in compliance with Supreme Court Rule 305(a)(1) (107 Ill. 2d R. 305(a)(1)).\nIn an attempt to resolve the dispute, Hanover, through an attorney retained by Fried, filed an action in the circuit court for declaratory judgment. Hanover\u2019s amended complaint alleged that the bond was \u201ca nullity, void and of no effect.\u201d The complaint requested a declaration that the bond was a nullity and that Hanover was not liable thereunder. It was apparently around this time that Smith\u2019s attorney, Sheldon Gomberg, objected to Hanover\u2019s certification as a court-appointed surety in the annual qualifications proceedings before the court\u2019s surety division. Gomberg\u2019s objection was based upon Hanover\u2019s refusal to disburse payment pursuant to the terms of the bond.\nRealizing that its interests did not necessarily coincide with Fried\u2019s, Hanover petitioned for leave to substitute counsel of its own choice and for leave to interplead the interested parties, deposit the penal amount of the bond with the clerk of the circuit court, and thereby discharge its obligation under the bond. Hanover requested \u201ccosts, expenses and attorneys\u2019 fees incurred in connection with [the] bond.\u201d By a letter dated July 22, 1982, Bernard Fried, acting \u201con behalf of [his] clients,\u201d advised Hanover that he would file suit against' Hanover if Hanover paid any sums to Smith.\nThe circuit court, on July 27, 1982, ordered Hanover to pay the penal amount of the bond to Smith and his attorney, Sheldon Gomberg. In so ruling, the circuit court held the bond was \u201cat all times a nullity insofar as it in no manner acted as a supersedeas bond on appeal,\u201d but the bond was, nonetheless, \u201cthe binding obligation\u201d of Hanover. As Fried indicated she intended to appeal the ruling, the court set bond at $27,000 for any subsequent appeal, denied her request for leave to add $8,750 to the $18,250 already held by Hanover in order to satisfy the bond requirement, and stayed enforcement of the judgment until September 7, 1982. Evidently, no supersedeas was filed, because, on September 8, 1982, Hanover issued a check to Smith and Gomberg for $18,250, the penal sum of the original bond.\nIn the appeal which followed, the appellate court reversed (Hanover Insurance Co. v. Smith (1983), 118 Ill. App. 3d 1154 (unpublished order under Supreme Court Rule 23)), holding that Hanover was not liable to Smith and Gomberg because the appeal bond was not issued in compliance' with Rules 305(a)(1) and (a)(2) and was, therefore, ineffectual. The court noted that Smith had \u201cproceeded with his efforts to collect the judgment,\u201d despite the bond, \u201cas evidenced by his Citation to Discover Assets mailed to Fried and Lewis in August 1980 directing them to appear in court on September 5, 1980, for examination as to the extent of their assets.\u201d The appellate court made no reference to Gomberg\u2019s unrefuted explanation of events during a July 23, 1982, circuit court hearing wherein Gomberg stated that he had indeed begun garnishment proceedings when attorney Fried telephoned, advising him that an appeal bond had been filed; whereafter, Gomberg abandoned his attempt to collect the judgment. The appellate court\u2019s omission of Gomberg\u2019s explanation is both significant and incomprehensible: significant, because it may well have altered the outcome of the appeal; incomprehensible, because such an important piece of information could hardly have been overlooked by the court if indeed the relevant transcript was made part of the record on appeal.\nIn any event, following the appellate court\u2019s reversal, proceedings shifted, once again, to the circuit court where Hanover sought restitution from Smith. The court denied Hanover\u2019s motion for restitution and a third appeal followed, culminating in reversal of the circuit court. (Hanover Insurance Co. v. Smith (1985), 136 Ill. App. 3d 1155 (unpublished order under Supreme Court Rule 23).) On remand, the circuit court ordered restitution in the amount of $18,250 to Hanover.\nFried thereafter moved for return of the collateral from Hanover, and Hanover, in response, moved for fees and costs, contending that it was entitled to indemnity. The circuit court ordered the return of Fried\u2019s collateral less an offset to Hanover for fees and costs expended during litigation. Hanover was, however, awarded only $9,200 of the $24,408.95 it claimed.\nIn this regard, Hanover\u2019s position was vindicated in the ensuing appeal in which a majority of the appellate court held that the indemnification agreement was enforceable and that Hanover was entitled to full indemnification in the amount it had requested. (182 Ill. App. 3d at 796-97.) We affirm that judgment.\nFried contends that the indemnity provision in the suretyship agreement is unenforceable because the appeal bond executed as a result of that agreement was later ruled to be a nullity. Fried argues that the indemnity provision must necessarily fall with the appeal bond. Underlying Fried\u2019s position is the assumption that she received nothing of value by reason of Hanover\u2019s execution of the bond and is, therefore, not liable on her part of the bargain. Notwithstanding the result of the second appeal, we disagree. As the history of this case amply demonstrates, by merely executing the bond, irrespective of whether it was later determined to be a nullity, Hanover exposed itself to potential liability and incurred substantial expenses in attempting to discharge its obligations to Fried and Smith.\nAs concerns liability, \u201c[sjureties generally are held liable on a supersedeas or appeal bond, although it was legally insufficient to effect a stay of proceedings, where as a matter of fact there was in effect a stay, no execution being issued, nor any attempt made to collect an execution if issued, or to enforce the judgment.\u201d (Annot., Liability on supersedeas bond which was legally insufficient to effect stay, where enforcement of judgment was in fact suspended, 120 A.L.R. 1062, 1062-63 (1939); see Merritt v. J.A. Stafford Co. (1968), 68 Cal. 2d 619, 624, 68 Cal. Rptr. 447, 450, 440 P.2d 927, 930; U-M Investments v. Ray (Utah 1985), 701 P.2d 1061, 1063.) Legal insufficiency or procedural error may be a basis for rejection of the bond by the party in whose favor it is executed, but does not of itself defeat an action against the surety or principal. Receipt by the obligors of the contemplated benefits of an appeal bond furnishes sufficient consideration for enforcement notwithstanding legal insufficiency (Restatement of Security \u00a7188 (1941); 120 A.L.R. at 1065), and will estop the obligors from denying their liability thereunder (31 C.J.S. Estoppel \u00a7110(4) (1964)). Long-standing decisions of this court have recognized that technical flaws in a bond do not necessarily negate \u201cthe valuable consideration of having the cause reviewed *** and of delay to plaintiff in the execution of his decree\u201d (George v. Bischoff (1873), 68 Ill. 236, 240) where plaintiff in fact relies upon the bond and defendant obtains the benefit thereof (Mix v. People (1877), 86 Ill. 329, 331; Courson v. Browning (1875), 78 Ill. 208, 210). In such an instance, one signing the appeal bond cannot later claim the bond is a nullity or question the truth of recitals therein. (Moses v. Royal Indemnity Co. (1916), 276 Ill. 177, 180.) Yet, this is precisely what Fried has successfully done.\nAlthough the point of the foregoing recitation of authority is to demonstrate that a litigant in Fried\u2019s position does benefit from the execution of a bond which' has the effect of staying execution on the judgment, and that a surety, such as Hanover, incurs a detriment by undertaking obligations to both the principal and the obligee, thus establishing consideration (see generally Steinberg v. Chicago Medical School (1977), 69 Ill. 2d 320) to support the indemnity provision in this case, the cases previously cited, when considered with the facts in the record before us, compel us to question the appellate court\u2019s decision in the second appeal. We do not know what record or arguments were presented to that court, nor are we called upon to render our opinion as to the legal foundation of that decision, which, in any event, lacks precedential effect (107 Ill. 2d R. 23). However, neither will we allow Fried to hide behind that judgment and, in so doing, escape contractual liability.\nIt was either Fried\u2019s attorney\u2019s ineptitude or deception in the execution and handling of the bond which placed Hanover in the middle of this ongoing controversy, jeopardized Hanover\u2019s status as a court-appointed surety, and required the numerous expenditures which are the subject of this appeal. Hanover attempted, at all times, to discharge its obligations with dispatch and extricate itself from this quagmire of litigation, to no avail. It would truly be a miscarriage of justice to allow Fried to escape liability under the indemnity provision which requires Fried to reimburse Hanover for \u201call loss, costs, attorney\u2019s fees and other expenses\u201d sustained \u201cin consequence of the execution of [the] bond.\u201d This we refuse to do.\nWe have examined Hanover\u2019s claim for expenses and find each category of expense presented therein to have been sustained \u201cin consequence\u201d of the execution of the appeal bond. Although the circuit court questioned whether certain expenditures \u2014 such as Hanover\u2019s defense of its status as a court-appointed surety \u2014 were \u201cdirectly incurred as a result of the execution of the bond,\u201d we agree with the appellate court\u2019s determination that all of the claimed expenditures were reasonably incurred as a result of the execution of the bond. We further take issue with the circuit court\u2019s assessment that Hanover made questionable decisions in its handling of this litigation. Our view of the record reveals a litigant attempting at every juncture to fulfill its obligations as it saw them (and as we see them) and to extricate itself from litigation without incurring further liability or unnecessary expense. We find that Hanover adequately made its case for recovery of the claimed expenditures pursuant to the indemnity provision at issue.\nFor the reasons stated, the judgment of the appellate court is affirmed.\nAffirmed.", "type": "majority", "author": "JUSTICE CALVO" } ], "attorneys": [ "Bernard Allen Fried, of Chicago, for appellant.", "Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago (D. Kendall Griffith, Lawrence R. Moelmann and Kathryn A. Spalding, of counsel), for appellee." ], "corrections": "", "head_matter": "(No. 68868.\nTHE HANOVER INSURANCE COMPANY, Appellee, v. WILLIE SMITH et al. (Joan Fried, Appellant).\nOpinion filed May 23, 1990.\nRehearing denied October 1, 1990.\nBernard Allen Fried, of Chicago, for appellant.\nHinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago (D. Kendall Griffith, Lawrence R. Moelmann and Kathryn A. Spalding, of counsel), for appellee." }, "file_name": "0304-01", "first_page_order": 360, "last_page_order": 368 }