Thomas J. Moriarty v. James F. Svec, Individually, Doing Business as Svec and Sons Funeral Home and Doing Business as West Suburban Livery , 164 F.3d 323 ( 1999 )

MANION, Circuit Judge,

concurring.

I concur with the result and most of the court’s analysis. I write separately to focus on a few aspects of successor liability.

In addressing the successor liability issue, the defendant chose to argue that Atherton v. FDIC, 519 U.S. 213, 117 S.Ct. 666, 136 L.Ed.2d 656 (1997), had overruled sub silentio our prior decision in Upholsterers’ Int’l Union Pension Fund v. Artistic Furniture, 920 F.2d 1323 (7th Cir.1990). The court’s opinion correctly concludes that this argument fails. And because the defendant waived arguing that Artistic Furniture does not apply in the first place, I agree that the defendant loses on this issue. But I emphasize that the defendant’s waiver here does not resolve the question whether the rule of Artistic Furniture would apply to these facts.

Svee & Sons Funeral Home and West Suburban Livery are not legal entities. They are simply assumed names. Prior to Elmer Svec’s death, Svec & Sons was the assumed name under which Elmer conducted business as a “sole proprietorship.” And that term is merely a short hand formula for describing someone who, perhaps with property he owns individually, does business as an individual, and not through a corporation or a partnership. The “sole proprietorship” label simply means Elmer owned the business individually. Vernon v. Schuster, 179 Ill.2d 338, 228 Ill.Dec. 195, 688 N.E.2d 1172, 1176-77 (Ill.1997) (“It is well settled that a sole proprietorship has no legal identity separate from that of the individual who owns it.”). The name of the sole proprietorship is merely another name for “Elmer’s.” See Main Street Development v. DeMicco, 248 Ill.App.3d 392, 187 Ill.Dec. 851, 618 N.E.2d 442, 444 (Ill.App.1993) (“The designation d/b/a or doing business as[ ] generally indicates a sole proprietorship or some other situation where the named person owns or transacts business under an assumed name.”); Vernon, 179 Ill.2d 338, 228 Ill.Dec. 195, 688 N.E.2d at 1177 (referring to d/b/a as “pseudonym” of the individual who uses it). Prior to Elmer Svee’s death in 1987, “Svec & Sons” was an alias for Elmer Svec, an individual, and ‘West Suburban Livery” was an alias for co-owners James and Elmer, who were apparently acting as a common law partnership, although the record is unclear on this point. At his death, Elmer’s property passed to his estate. The estate’s property, thus, included Elmer’s half interest in the partnership with James and all of the property Elmer owned and used in the business known as “Svee & Sons” (presumably including goodwill). Because the record regarding the probating of Elmer’s estate is unclear, we have remanded for further proceedings regarding that issue. But we know that at some point Elmer’s property passed in equal shares to his children, James and Sharon. Thus, it appears at this point that “Svec & Sons” is an alias for a partnership between James and Sharon and “West Suburban Livery” is an alias for a second partnership between them. (Sharon’s absence from this suit should be irrelevant because generally partners are jointly liable for the debts and obligations of the partnership; thus, James represents her interest here. See Cook v. Department of Revenue, 281 Ill.App.3d 171, 217 Ill.Dec. 224, 666 N.E.2d 893, 896 (Ill.App.1996) (interpreting Illinois’ Uniform Partnership Act).)

This brings us to the important distinction between the assets óf a deceased in an estate and the assets of a corporation. If James and Sharon’s two partnerships are successively liable for the contractual obligations of Elmer individually and of Elmer and James’ •partnership, they are so liable because the obligations passed with Elmer’s property through probate and into James’ and Sharon’s possession. The facts here are significantly different than those encountered in Artistic Furniture, where one corporation had purchased all the assets of another corporation. See 920 F.2d at 1325. Both parties assume without discussion that if Artistic Furniture is still valid law — which it is — that its rule for corporate successor liability applies here. Because the parties have waived any other argument, we need not decide whether this assumption is valid, but I write separately to point out that this assumption is far from clear.

As stated in Artistic Furniture, the general common-law rule is that a corporation which purchases the assets of another corporation is not liable for the other corporation’s obligations, but the general rule has four exceptions. 920 F.2d at 1325. We adopted a somewhat broader rule for corporate successor liability in ERISA cases because we had to balance the interest of effectuating the federal policy with the common-law interest in “the fluid transfer of corporate assets.”, 920 F.2d at 1326. We are not dealing with corporate assets here, so that common-law interest is not present. Neither party addressed the competing interests of individuals, estates, partnerships, corporations, and the state. Certainly at a minimum Illinois has an interest in the speedy and final resolution of estates. Moreover, the rule of Artistic Furniture was tailored for a fact setting involving a corporation’s purchase of another’s assets; thus, some of that analysis would not apply here. For example, the rule of corporate successor liability is premised on the assumption that the purchaser could negotiate the acquisition price based on the potential liability. 920 F.2d at 1327. Obviously that reasoning has no application in an estate transfer, where the heirs took possession of the property by inheritance. The possibility of taking on the obligations of the deceased may determine whether the heir agrees to take property or refuses it, as Anne Svec did here. We should not presume as a matter of law that an heir knows of the obligations of the deceased under the CBA (as we do in the corporate purchase-of-assets setting), although under the facts here James must have known of Elmer’s obligations.

The court does not decide today whether the appropriate rule for successor liability under these facts is an application of state probate law, some federal common-law rule based on probate law, or some other rule. At oral argument, counsel for the plaintiff suggested that the answer to this issue is simple: ERISA preempts state probate law because ERISA preempts everything. That is an inadequate answer. First, this is an exaggeration; ERISA does not displace all other law. Second, even if ERISA did preempt some conflicting state probate law, it would still have to be decided what the appropriate rule under ERISA was. These issues will be resolved when the litigants properly raise and argue them.