Bank Of Lyons v. Schultz

399 N.E.2d 1286 (1980)

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Nature of the Case

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Facts

D filed a creditor's suit against P and her late husband, who died during the pendency of that suit. As the beneficiary of his life insurance policies P was to receive $61,533.27. D filed for an injunction to restrain distribution of the insurance proceeds to P. The trial court issued a preliminary injunction enjoining the insurance companies from making payments to P and ordering that the funds be deposited with the clerk of the circuit court. That injunction was dissolved, and D's complaint was dismissed. P was also granted leave to file a suggestion of her damages on account of the injunction's issuance. P was awarded $2,369.67 on her suggestion of damages to cover interest she would have earned on the insurance proceeds held by the clerk of the court, attorneys' fees, and costs. Seventeen days after the injunction was dissolved, D was given leave to amend the complaint in its pending creditor's suit by adding a second count, and in it D again prayed for an accounting and a preliminary injunction prohibiting distribution of the insurance proceeds. A preliminary injunction was entered on July 19, but almost two years later, on September 24, 1965, the court dismissed the second count, stating that the injunction had been wrongfully issued. The court also dissolved this injunction and ordered the clerk of the court to release to the plaintiff those insurance proceeds in excess of $30,000. P again was given leave to file a suggestion of damages under section 12. In November of 1965 D, with leave of court, filed another count to its creditor's suit. This third count alleged conversion and unlawful withholding of funds based on claims that D had been induced to issue cashier's checks to Alvin Schultz without consideration and that the bank had erroneously credited P's account in the amount of $10,200. A master in chancery found, however, that D failed to prove a prima facie cause of action, and the circuit court, following the recommendation of the master, dismissed this third count. This was in September 1969. The court ordered the release of the balance of the insurance proceeds to P. D appealed, and the appellate court remanded to the trial court to determine whether the P was a holder in due course. The court found that P was a holder in due course and again dismissed the third count. On June 21, 1972, the trial court dismissed count I of D's creditor's suit because of a failure to allege fraud. No appeal was taken by D. On August 1, 1972, the plaintiff filed her second suggestion of damages pursuant to the September 1965 order and, on March 6, 1973, was awarded a total of $24,103.52, representing unearned interest on the proceeds of insurance, attorneys' fees and costs. D appealed, and the appellate court affirmed. P then sued for malicious prosecution claiming $49,848.13 in compensatory damages for the forfeiture of her interest in a house which interest was foreclosed, she alleged, as a result of the injunction which prevented her from using the insurance proceeds to make mortgage payments. P also claimed $300,000 in punitive damages. This action was dismissed in that recovery was barred under the doctrine of res judicata, and, further, because she failed to allege an arrest of her person, seizure of property, or some other special injury. The appellate court reversed: the wrongful issuance of the preliminary injunction constituted a seizure of property for purposes of establishing a cause of action for malicious prosecution and that P's claim for compensatory and punitive damages was not barred by the doctrine of res judicata. D appealed.