No. 2--99--1232

__________________________________________________________________

	IN THE

	APPELLATE COURT OF ILLINOIS

	SECOND DISTRICT

_________________________________________________________________

NEWELL COMPANY, 	)	Appeal from the Circuit Court

	)	of McHenry County.

	Plaintiff-Appellee,	)	 

	)	

v.						  )	No. 97--LA--245  

             				  )

ALLEN D. PETERSEN, WILLIAM F.   )

WRIGHT, ROBERT W. BRADY,    	)

CHARLES D. PEEBLER, JR.,        )

AMERICAN TOOL COMPANIES, INC.,  ) 

and PETERSEN MANUFACTURING 	  ) 

COMPANY, INC.,                  ) Honorable

                                ) Michael J. Sullivan,

     Defendants-Appellants.     ) Judge, Presiding.

_________________________________________________________________

	JUSTICE O'MALLEY delivered the opinion of the court:

	Defendants, Allen D. Petersen, William F. Wright, Robert W.

Brady, Charles D. Peebler, Jr., American Tool Companies, Inc., and

Petersen Manufacturing Company, Inc., appeal from an order of the

circuit court denying their motion to dismiss the second amended

complaint of plaintiff, Newell Company.  On this interlocutory

appeal, the supreme court has directed us to answer two certified

questions.   

	The first certified question is as follows:  

		"Whether the Illinois borrowing statute for limitations

periods, 735 ILCS 5/13--210 [(West 1994)], is inapplicable

where none of the parties to a cause of action was an Illinois resident at the time the action accrued, but where one of the

parties later becomes an Illinois resident within the foreign

limitations period." 

We hold that our borrowing statute is applicable in the above

situation.  

	The second certified question is as follows: 

		"Whether section 218(c) of the Delaware Corporate Code 

	[Del. Code Ann. tit. 8, §218(c) (1985)] mandated, pursuant to

the internal affairs doctrine, a maximum ten year term for

Section 5(a)-(c) of the Shareholder Agreement entered into by

the parties regardless of whether the parties actually agreed

upon or intended a longer term." 

We hold that the 10-year time limit in section 218(c) of the

Delaware corporate code applied to section 5(a)-(c) of the

shareholder agreement.  We remand.  

BACKGROUND

	On August 22, 1997, plaintiff filed a nine-count complaint

against defendants Allen D. Petersen (Petersen), William F. Wright,

Robert W. Brady (Brady), American Tool Companies, Inc. (ATC), and

Petersen Manufacturing Co., Inc. (PMC).  On January 25, 1999,

plaintiff filed a second amended complaint (complaint) adding

Charles D. Peebler, Jr., as a defendant.  

	In relevant part, the complaint alleges that in 1985 Petersen,

Brady, plaintiff, and others who are not parties to this appeal

acquired the stock of PMC from other Petersen family members during a leveraged buyout.  To effectuate the buyout, ATC was created as

a holding company for all outstanding PMC common stock.  ATC is a

Delaware corporation with its principal place of business in

Illinois.  Petersen is chairman and chief executive officer of ATC

and currently resides in Illinois.  Since the buyout PMC has been

a wholly owned subsidiary of ATC.  Plaintiff also is a Delaware

corporation with its principal place of business in Illinois.   PMC

is a Nebraska corporation with its principal place of business in

Nebraska.  

	In connection with the buyout, a shareholders' agreement and

irrevocable proxy were executed on June 21, 1985.  Plaintiff

attached a copy of the agreement to its complaint.  The parties to

the agreement include plaintiff, Petersen, Brady and others not

relevant to this appeal.  The agreement refers to all shareholders

other than plaintiff as "Management Shareholders."  The agreement

provides that all Management Shareholders have the right to

transfer shares among themselves.  Section 5 of the agreement

contains a voting agreement pursuant to which the parties pledged

that each of them would vote their ATC stock so as to elect a board

of directors for ATC composed of four directors designated by

Petersen and three designated by plaintiff.  

	A provision in the shareholders' agreement entitled "Governing

Law" provides: 

		"This agreement shall be governed by, and construed and

enforced with the laws of Nebraska without giving effect to the provisions, policies or principles thereof respecting

conflict or choice of laws." 

    	Following the buyout of PMC stock, plaintiff owned 3,500 shares, or about 39%, of the 9,000 outstanding shares of ATC's

class A voting stock.  Petersen owned 3,972, or about 44%, of the

class A shares.  Subsequently, plaintiff acquired an additional

1,000 class A shares for a total of 4,500, or 45%, of the

outstanding shares.  

	In June 1992 and November 1994 Petersen purchased stock from

other Management Shareholders and thereby obtained a total of

5,530, or 55%, of the class A shares.  Plaintiff continued to own

the remaining 4,400 class A shares comprising 45% of the total

shares.  When the June 1992 stock purchases occurred by which

Petersen obtained 50.44% of the class A stock, no parties to this

action were residents of Illinois.  In 1994, Petersen became a

resident of Illinois, where he resides today.  In December 1996

Petersen removed two of the ATC directors that plaintiff had

designated and reduced the board of directors from seven members to

five members.      

 	In counts I through IX of its complaint plaintiff alleged, respectively, breach of fiduciary duty, breach of a shareholders'

agreement, breach of an employment agreement, breach of covenants

of good faith and fair dealing, fraud and fraudulent concealment,

oppression of a minority shareholder, civil conspiracy, tortious

interference with a shareholders' agreement, and tortious interference with an employment agreement.  Each count alleged

numerous acts of wrongdoing by defendants.  

	Counts I, II, IV, V, VI, VII, and VIII of the complaint are

all premised partly on Petersen's purchase of the class A voting

stock of ATC from other Management Shareholders.  Plaintiff

asserted that these purchases were coerced by Petersen, who

threatened to fire the other Management Shareholders if they

refused to sell him their stock.  Counts I, II, IV, VI, VII, and

VIII are all premised partly on Petersen's removal of the directors

plaintiff had designated, which, plaintiff asserted, contravened

the voting agreement in section 5 of the shareholders' agreement. 

     Defendants moved to dismiss the complaint pursuant to sections

2--603(b), 2--615, and 2--619(a)(5) of the Code of Civil Procedure

(735 ILCS 5/2--603(b), 2--615, 2--619(a)(5) (West 1998)).  They

contended, inter alia, that plaintiff's causes of action based on Petersen's June 1992 purchases of the class A voting stock of ATC

arose in Nebraska while none of the parties were Illinois

residents.  Therefore, defendants argued, section 13--210 of the

Code of Civil Procedure (735 ILCS 5/13--210 (West 1994)) requires

that the limitations law of Nebraska, not Illinois, be applied to

plaintiffs' contract and tort claims based on Petersen's 1992 stock

purchases.  Those claims, defendants observe, are barred under

Nebraska law.  

	Defendants also argued that, because the voting agreement

contained in section 5 of the shareholders' agreement concerned the internal operations of ATC, the "internal affairs doctrine"

mandated that the agreement be deemed controlled by the law of the

state of ATC's incorporation, that is,  Delaware.  Defendants

asserted that, by operation of section 218(c) of the Delaware

corporate code, which then imposed a 10-year limit on shareholder

voting agreements, the voting agreement expired on June 21, 1995,

well before Petersen removed the directors plaintiff had

designated. 

	Plaintiff replied that Petersen's establishment of Illinois

residency before the Nebraska limitations periods expired triggered

an exception to section 13--210 as set forth in McGuigan v. Rolfe, 80 Ill. App. 256 (1899), and subsequent cases.  Plaintiff also argued that the parties' choice of Nebraska law to govern the

shareholders' agreement superseded the internal affairs doctrine.

	The trial court, holding that section 13--210 did not apply to

plaintiff's claims and that Nebraska law governed the shareholders'

agreement, denied defendants' motion to dismiss but granted their 

subsequent motion under Supreme Court Rule 308 (155 Ill. 2d R. 308)

to certify the questions indicated above for interlocutory appeal. 

We initially denied defendants' application for leave to file an

interlocutory appeal under Rule 308.  The supreme court denied

defendants' petition for leave to appeal but, exercising its

supervisory power, ordered this court to grant the application for

interlocutory appeal and answer the two certified questions.  

	Concerning the first certified question, defendants first

argue that no Illinois case has authoritatively announced that

section 13--210 applies only if all parties to the action remain

non-Illinois residents until the expiration of the limitations

period of the state in which the cause of action accrued. 

Defendants acknowledge that this "continuous non-Illinois residency

requirement" has been recited in many Illinois cases.  Nonetheless,

defendants assert, the requirement was first announced in the dicta of very early supreme court cases such as Hyman v. Bayne, 83 Ill. 256 (1876), and Wooley v. Yarnell, 142 Ill. 442 (1892), and has since survived exclusively in the dicta of later cases, the most recent being Employers Insurance of Wausau v. Ehlco Liquidating Trust, 309 Ill. App. 3d 730 (1999).  Defendants claim that the correct state of the law is represented in the First District case

of First National Bank of Boulder v. Hurlbut, 224 Ill. App. 297 (1922), in which the court applied the foreign statute of

limitations despite the fact that not all the parties maintained

non-Illinois residency continuously until the foreign limitations

period expired. 

	Defendants next argue that the continuous non-Illinois

residency requirement contravenes the legislature's purpose in

enacting section 13--210 of promoting uniformity of limitations

periods and discouraging forum shopping.   Defendants maintain that

the requirement encourages forum shopping by permitting a plaintiff

to gain the benefit of Illinois limitations law simply by taking up

residence in Illinois prior to the expiration of the applicable

foreign limitations period.  Defendants also urge that the

requirement permits a plaintiff to seize upon the fact that any

party to the suit happens to establish Illinois residency before

the expiration of the foreign limitations period.  The requirement

also destroys uniformity, defendants submit, by making the

controlling limitations period change with the residencies of the

parties.  

	Plaintiff responds that the Illinois courts' construction of

section 13--210 as containing a continuous non-Illinois residency

requirement enjoys the force of law because it has been stated

unequivocally in Illinois cases for over a 100 years.  Plaintiff

contends that Hurlbut is consistent with the requirement, as was later recognized by the First District itself in Orschel v. Rothschild, 238 Ill. App. 353 (1925).

	Concerning the second certified question, defendants argue

that Illinois, Nebraska, and Delaware all follow the "internal

affairs" doctrine, according to which a state should not regulate

the internal operations of a foreign corporation but leave such

governance to the state of incorporation.  Relying primarily on the

Delaware cases of Rosenmiller v. Bordes, 607 A.2d 465, 469 (Del. Ch. 1991), and McDermott Inc. v. Lewis, 531 A.2d 206 (Del. 1987), the defendants submit that the internal affairs doctrine is

grounded not only in sound policy but in the constitutional principles of due process, equal protection, and full faith and

credit.  The parties' choice of law provision must yield to these

interests, defendants assert.  

	In response, plaintiff argues that it is the internal affairs

of PMC, not ATC, that plaintiff's claims concern because ATC was a

mere "shell" company for PMC when the wrongful acts plaintiff

alleges occurred.  As PMC is incorporated in Nebraska, whose law

the parties chose to govern the shareholders' agreement, there is

no conflict between the choice of law provision and the internal

affairs doctrine.  Plaintiff alternatively argues that this case

falls within an exception to the internal affairs doctrine because 

ATC's only contact with Delaware is the fact that it was

incorporated there.  

ANALYSIS

	I. The First Certified Question

	Because they only fix the time within which the remedy for a

particular wrong may be sought and are not designed to alter

substantive rights, statutes of limitations generally are

considered procedural in nature.  Fredman Brothers Furniture Co. v. Department of Revenue, 109 Ill. 2d 202, 209 (1985).  Generally, the lex fori, or law of the forum in which relief is sought, governs matters of procedure.  Marchlik v. Coronet Insurance Co., 40 Ill. 2d 327, 329 (1968).  Thus, an action cannot be maintained in the

forum state if it is barred either by the statute of limitations of

the forum state or by a statute of limitations that the forum state has "borrowed" from another jurisdiction in accordance with the

forum state's "borrowing statute."  Restatement (Second) of

Conflicts of Law §142, at 396-97 (1971).  The Illinois borrowing

provision, codified in section 13--210, states: 

		       	"Foreign limitation.  When a cause of action has arisen in a state or territory out of this State, or in a foreign

country, and, by the laws thereof, an action thereon cannot be

maintained by reasons of the lapse of time, an action thereon

shall not be maintained in this State."  735 ILCS 5/13--210

(West 1994). 

The borrowing provision is identical to its former embodiment in

section 20 of the Limitations Act (Ill. Rev. Stat. 1969, ch. 83,

par. 21).  We use section 13--210 and section 20 interchangeably in

what follows.  

	According to the most recent published Illinois case

construing section 13--210, the section applies where (1) the cause

of action accrued in another jurisdiction; (2) the limitations

period of that jurisdiction has expired; and (3) all parties were

non-Illinois residents at the time the action accrued and remained

so until the foreign limitations period expired.  Ehlco, 309 Ill. App. 3d at 737.  The parties do not dispute that plaintiff's causes

of action accrued in Nebraska when no party was an Illinois

resident.  Thus, we are concerned only with the question of whether

Illinois has a continuous non-Illinois residency requirement that

would preclude the application of the Nebraska limitations statute due to Petersen's having established Illinois residency before the

Nebraska limitations period expired. 

	Relevant to the discussion that follows is the interplay of

section 13--210 with section 13--208(a) of the Code of Civil

Procedure  (735 ILCS 5/13--208(a) (West 1994)), which provides:

		"Absence from State.  (a) If, when the cause of action

	accrues against a person, he or she is out of the state, the

action may be commenced within the times herein limited, after

his or her coming into or return to the state; and if, after

the cause of action accrues, he or she departs from and

resides out of the state, the time of his or her absence is no

part of the time limited for the commencement of the action." 

735 ILCS 5/13--208(a) (West 1994).  

Section 13--208(a) formerly was section 18 of the Limitations Act

(Ill. Rev. Stat. 1969, ch. 83, par. 19) (section 18).  Section 18

included a provision that immediately followed the above text: 

	"But the foregoing provisions of this section shall not apply

to any case, when, at the time the cause of action accrued or

shall accrue, neither the party against nor in favor of whom

the same accrued or shall accrue, were or are residents of

this state."  Ill. Rev. Stat. 1969, ch. 83, par. 19. 

In Haughton v. Haughton, 76 Ill. 2d 439, 444-46 (1979), the supreme court held that this residency requirement violated equal

protection guarantees.  The residency requirement does not appear

in the present text of section 13--208(a).    

	After close review of the relevant cases, we conclude that the

continuous non-Illinois residency requirement is the product of a

misinterpretation of our supreme court's analysis and holding in

Bayne, 83 Ill. 256, decided in 1876.  Notably, while the requirement that all parties to a suit be non-Illinois residents at

the time the cause of action accrues has been carefully justified

through statutory construction, there has been no attempt at a

rationale for the requirement that all parties to a cause of action

remain non-Illinois residents until the expiration of the

limitations period of the jurisdiction in which it arose.  Instead,

the requirement has been continually recited without a question as

to its underpinnings in legal analysis or policy.  Moreover, the

most recent supreme court cases applying section 20 seem to ignore

the requirement, giving us reason to believe it is at least

disfavored if it has not been discarded sub silentio.          

	We explain our holding by tracing the development of the

continuous non-Illinois residency requirement.  As authority for

its recitation of the requirement, Ehlco relies on Miller v. Lockett, 98 Ill. 2d 478 (1983), Coan v. Cessna Aircraft, 53 Ill. 2d 526 (1973), Delta Bag Co. v. Frederick Leyland & Co., 173 Ill. App. 38 (1912), and National Bank of Denison v. Danahy, 89 Ill. App. 92 (1899).  Coan relies on Davis v. Munie, 235 Ill. 620 (1908), Strong v. Lewis, 204 Ill. 35 (1903), Wooley, 142 Ill. 442, Delta Bag, 173 Ill. App. 38, Berry v. Krone, 46 Ill. App. 82 (1891), and Story v. Thompson, 36 Ill. App. 370 (1890).  Miller relies on Orschel v. Rothschild, 238 Ill. App. 353 (1925), Chicago Mill & Lumber Co. of Cairo v. Townsend, 203 Ill. App. 457 (1916), and Delta Bag, 173 Ill. App. 38.  From these cases and the cases they cite, the

lineage of the continuous non-Illinois residency requirement can be

traced back to three foundational cases: Wooley, Bayne, and Hyman v. McVeigh, 87 Ill. 708 (1877) (unpublished opinion).  McVeigh is unpublished, but its full text is reproduced in 10 Chicago Legal News, at 157 (1877). 

 	The continuous non-Illinois residency requirement is in its nascency in Wooley.  In Wooley, the plaintiff's cause of action accrued in Illinois while she and the defendant were residents of

Illinois.  The defendant subsequently left Illinois and established

residence first in Massachusetts and then in New Hampshire, where

he remained when plaintiff filed suit.  Citing section 20 (then

Ill. Rev. Stat. 1874, ch. 83, §20) defendant argued that the suit

was barred under the New Hampshire statute of limitations.  The

court construed section 20 as providing:

		"Where the maker of a promissory note, and the payee,

reside out of this State when the note becomes due, and the

cause of action accrues in another State, and the maker

continues to reside out of the State and in another State,

until, by the laws of such State, an action on the note is

barred, [section 18], when pleaded to an action brought on

such note in this State, may constitute a bar to such action." 

Wooley, 142 Ill. at 449.  

The court remarked that this was "the doctrine" of Bayne and McVeigh.  Wooley, 142 Ill. at 449, citing Bayne, 83 Ill. 256, and McVeigh, 87 Ill. 708.   

	This early formulation of the continuous non-Illinois

residency requirement is similar to the current version in Ehlco in that it conditions the application of section 20 on the maker of

the promissory note having resided outside Illinois when the cause

of action accrued and until the expiration of the limitations

period of the state in which the cause of action accrued.  However,

unlike the Ehlco formulation, this formulation does not require the payee as well as the maker of the note to continuously reside

outside Illinois; i.e., it does not require all parties, rather than just one, to reside continuously outside Illinois. 

	Proceeding to explain the origin of the requirement, the

Wooley court observed that, in both Bayne and McVeigh, "the maker and payee both resided out of this State at the maturity of the

cause of action sued on and when the cause of action accrued, and

so remained until an action was barred in and by the laws of the

foreign State where the domicil existed."  Wooley, 142 Ill. at 449. The court then found that the defendant's pleadings "[did] not

contain averments sufficient to bring them within the rule

indicated."  Wooley, 142 Ill. at 449.  The court explained that, because the defendant did not allege that he was a nonresident of

Illinois when the cause of action accrued, section 20 did not

control and the Illinois statute of limitations applied instead.  Moreover, by virtue of section 18 (then Ill. Rev. Stat. 1874, ch.

83, §18), the Illinois limitations period was tolled during the

defendant's absence from Illinois.  

	A close review of Bayne and McVeigh is needed to understand how the Wooley court gleaned from them its version of the continuous non-Illinois residency requirement.  In Bayne, the plaintiff sued defendant to recover money plaintiff had lent

defendant.  The plaintiff and the defendant were non-Illinois

residents when plaintiff's cause of action accrued in Maryland, and

they remained so until after the Illinois statute of limitations

had run.  The plaintiff sued in Illinois and the defendant, then a

resident of New York, argued that the suit was untimely under the

limitations laws of both Illinois and Maryland.  The court framed

the issue on appeal as "whether, under our limitations laws ***,

when both parties have, at all times, resided continuously beyond

the limits of this State for the statutory period, a bar to

recovery is created."  Bayne, 83 Ill. at 258.  The plaintiff argued that the suit was not barred because the Illinois limitations

period was tolled while the defendant was residing outside the

state.  The plaintiff pointed to section 13 of the Limitations Act

(Ill. Rev. Stat. 1845, ch. 66, §13) (later section 18), which

provided: 

		"If any person or persons against whom there is or shall

be any cause of action, as is specified in the preceding

sections of this chapter, except real or possessory actions, shall be out of this State at the time of the cause of such

action accruing, or any time during which a suit might be

sustained on such cause of action, then the person or persons

who shall be entitled to such action[] shall be at liberty to

bring the same against such person or persons after his, her

or their return to this State, and the time of such person's

absence shall not be accounted as part of the time limited by

this chapter."  Ill. Rev. Stat. 1845, ch. 66, §13.    

Interpreting "return to this State" as presupposing that the

individual previously had been in the State and noting that there

was no allegation that defendant ever was a resident of Illinois,

the court affirmed the trial court's holding that section 13's

tolling provision did not apply and that the plaintiff's suit was

barred.  Bayne, 83 Ill. at 259-60. 

	The court, however, disagreed with the trial court that

section  20 did not apply.  The plaintiff explained that his cause

of action, which arose in Maryland, was barred under Maryland's

statute of limitations when section 20 was passed in 1872.  The

plaintiff argued that section 20 did not apply to actions already

barred by the relevant foreign statute of limitations when the

section was passed.  The court disagreed, holding that section 20,

by its plain language, applied to actions already barred by the

relevant foreign statute of limitations.  The court then observed

that this application of section 20 did not deprive plaintiff of a

"fixed or vested right."  Bayne, 83 Ill. at 262.  Appellant had no cause of action in Maryland "nor had he any [in Illinois] until the

[defendant] should come into this State."  Bayne, 83 Ill. at 262.  All the plaintiff had "was the bare contingency that [the

defendant] might, by possibility, come into this State, and that he

might learn of the fact in time to sue him, and obtain service

before he should leave."  Bayne, 83 Ill. at 262.  

	Lastly, the court rejected the plaintiff's argument that the

defendant did not properly plead Maryland's statute of limitations

as a defense because the defendant did not allege that the Maryland

limitations period was not tolled by the defendant's leaving

Maryland for New York.  The court reasoned that it was sufficient

that the defendant pleaded the Maryland statute of limitations as

a defense; the defendant need not have pleaded that Maryland did

not have a provision that tolled the limitations period while he

was outside Maryland.  Bayne, 83 Ill. at 264-65.   

	Nowhere in Bayne did the supreme court state that a prerequisite to section 20's application was the non-Illinois

residency of all parties, let alone the continuous non-Illinois

residency of all parties.  The court did mention that the defendant

had remained outside Illinois until the expiration of the

limitations period, but the limitations period referenced was the Illinois limitations period, not a foreign limitations period, and, moreover, the court's remarks about the defendant's non-Illinois

residency concerned only the applicability of section 13's tolling

provision.  The sole issue the Bayne court addressed with respect to the borrowing provision in section 20 was its retroactive

application; the court neither explicitly nor implicitly construed

section 20 as containing an exception based on residency.  We can

only conclude that Bayne's analysis of section 13, including its comments about the continuous non-Illinois residency of the

defendant, have been appropriated by later cases and applied to

section 20. 

	Also, the following remarks by the Bayne court about section 13 easily could have been misinterpreted: 

	"It is urged that a person can not [sic] return to the State unless he had previously been in the State, and hence the

saving clause of [section 13] has no application where the

statutory period has expired, and the debtor has never been

within the State, and that when the debtor resides out of the

State, and the creditor is a non-resident, that statute

creates a bar to the action.  This is the language of the

statute.  A person can not [sic] return to a place until he has previously been at that place.  This proposition is self-

evident.  It can not [sic] be rendered plainer by illustration or by reasoning."  Bayne, 83 Ill. at 259-60.  

Here the court is recapitulating the defendant's argument that the

tolling provision in section 13 did not apply.  The factual

situation described in that argument is, of course, the factual

situation before the court in Bayne.  But the factual situation described by the court contains more facts than necessary to establish that section 13 does not apply.  Specifically, there is

a statement concerning the residency of the creditor, i.e., the plaintiff.  Section 13, however, is concerned only with the

residency of the party against whom a cause of action has arisen.  Section 13 is not concerned with the fact that the plaintiff was a

nonresident of Illinois.  We conclude that, combined with the

court's comments about the continuous non-Illinois residency of the

defendant, these comments about the non-Illinois residency of the

plaintiff may have misled later courts into believing that section 20 requires continuous non-Illinois residency of both parties.

	McVeigh appears to be a companion case to Bayne although the procedural connection between the two is not clear from either

opinion.  In McVeigh, the court noted that the issues before it were "determined in the main" by the decision in Bayne.  McVeigh,  87 Ill. 708.  As in Bayne, the court reversed the trial court's judgment in favor of the plaintiff.  The court asserted that,

despite "able and interesting" argument to the contrary, it would

retain the construction of the "statutes" articulated in Bayne.  McVeigh, 87 Ill. 708.  The court noted that the defendant argued that the limitations law of New York applied to the plaintiff's

claims because the defendant resided there.  The court remarked

that this argument was "not essentially different" from the

defendant's argument in Bayne that the limitations law of Maryland barred the plaintiff's suit.  McVeigh, 87 Ill. 708.  The court followed this statement with an interpretation of section 20:   

	"The words 'when a cause of action has arisen,' as they occur

in [section 20], should be construed as meaning, when

jurisdiction exists in the courts of a state to adjudicate

between the parties upon the particular cause of action, if

properly invoked; or, in other words, when the plaintiff has

the right to sue the defendant in the courts of the state upon

the particular cause of action, without regard to the place

where the cause of action had its origin.  This was the view

taken in [Bayne] *** although not discussed at length in the opinion, and we do not conceive that the question need be

discussed now."  McVeigh, 87 Ill. 708.

	Unfortunately, the court says nothing more about the issue.

Teasing out the unstated premises, we see the court as reasoning

that, although plaintiff's cause of action did not "originate" in

New York, the cause of action "arose" in New York for purposes of

section 20 because New York had, at least at one time, jurisdiction

to adjudicate plaintiff's cause of action.  

	The court's adoption of what it regarded as Bayne's construction of section 20 is confusing.  Nowhere in Bayne did the court construe section 20 in this fashion.  Bayne announced its definition of when a cause of action has arisen only to rebut the

argument that the plaintiff in that case would lose a vested right

if section 20 were applied to a cause of action whose limitations

period had already expired when section 20 was enacted.  See Bayne, 83 Ill. at 262-63.  Although McVeigh had the authority per its powers of statutory construction to find this definition embodied

in section 20, Bayne was not direct precedent for such a construction.  At any rate, whatever may be drawn from McVeigh, the opinion nowhere recites or implicitly applies the continuous non-

Illinois residency requirement. 

	The next relevant supreme court case in the history of the

continuous non-Illinois residency requirement is Strong v. Lewis, 204 Ill. 35 (1903).  In Strong, the question was "the effect section 20 of the Limitation act has upon causes of action arising

outside of this State where both parties are non-residents." 

Strong, 204 Ill. at 36.  The plaintiff sued on promissory notes that were executed in West Virginia and made payable in Virginia. 

Neither party was a resident of Illinois when the notes came due. 

The defendant became a resident of New York after the notes came

due and remained there until the limitations period of that state

expired.  The defendant then became a resident of Illinois.  The

court rejected the plaintiff's argument that, since the cause of 

action accrued in Virginia, that state's limitations law applied. 

Disagreeing and holding that the New York limitations period

applied, the court reasoned: 

	"We are of the opinion *** that when [the plaintiff] permitted

[the defendant] to go into the State of New York and permitted

the bar of the statutes of that State to become complete, he

lost all right, under the laws of Illinois, thereafter to

maintain suit against him, and that when he came into the State of Illinois he came clothed with all the privileges that

the law of the State of New York conferred upon him.  This

question we have decided in the case of [McVeigh] ***."  Strong, 204 Ill. at 37, citing McVeigh, 87 Ill. 708.      

The court stated with approval McVeigh's interpretation of section 20 and added that the interpretation was followed in Wooley.  Strong, 204  Ill. at 37, citing Wooley, 142 Ill. 442, and McVeigh 87 Ill. 708.

	The Strong court, then, concluded that the plaintiff's cause of action arose in New York for purposes of section 20. 

Presumably, based on what can be inferred from McVeigh, the court held as such because the defendant resided in New York and thus

plaintiff could have sued him there.  Why, however, the court found

it significant that the defendant remained in New York until the

expiration of New York's limitations period is uncertain. 

According to McVeigh's interpretation of section 20, it would seem that the defendant's presence in New York alone would have

triggered section 20.  

	In any event, Davis, the next important supreme court case for our purposes, severely curtailed the McVeigh/Strong interpretation of section 20.  Reexamining Bayne, the court held that Bayne's definition of when a cause of action arises was relevant only to

Bayne's discussion of whether section 20 applied to causes of action already barred when it was passed.  Davis, 235 Ill. at 623- 24.  In place of the McVeigh/Strong definition of when a cause of action arises, Davis held that a cause of action accrues or arises "when facts exist which authorize one party to maintain an action

against another."  Davis, 235 Ill. at 622.  Where the parties happen to reside is irrelevant, except as the law of the state of

residence "may affect rights arising out of the facts."  Davis, 235 Ill. at 622.  Thus, Davis undercuts McVeigh and Strong insofar as they read section 20 as embodying Bayne's definition of when a cause of action arises.    

	Davis also is important for its assertion that Bayne, McVeigh and Lewis all held: 

	"[W]here the maker and payee of a promissory note both resided

out of this State at the time of its maturity, a cause of

action arose in the State where the payee resided and in any

other to which he removed, and if he resided in any State long

enough to be entitled to the protection of the Statute of

Limitations of such State, such statute would be treated as a

bar in this State under section 20 of our Limitations act; but

if the defendant resided in this State at the date of the

maturity of his note and afterward removed to another State

and resided there during the full period of limitation as

provided by the statute of such other State, while a cause of

action would have arisen against him in such other State he

would not be entitled to the benefit of section 20 of our

Limitation act because of the provision of section 16 which

saves to the plaintiff, during the defendant's residence out of the State, the benefit of the cause of action which had

accrued before his departure."  Davis, 235 Ill. at 623. 

	Davis propagates Wooley's erroneous interpretation of Bayne.  Bayne, as explained above, did not rule that the application of section 20 hinges on whether the person against whom a cause of

action has arisen retained continuous non-Illinois residency until

the expiration of the limitations period of the state in which the

cause of action accrued.  The above passage also shows that the

continuous non-Illinois residency requirement is still in

development in Davis.  Davis mentions nothing about the residency of the plaintiff and, thus, is not itself authority for the

requirement that all parties retain non-Illinois residency until

the expiration of the foreign limitations period. 

	In the 1899 First District case of McGuigan v. Rolfe, 80 Ill. App. 256 (1899), we find the first full pronouncement of the

continuous non-Illinois residency requirement.  In McGuigan, the court concluded, based on Bayne, McVeigh, and Wooley, that "[t]he construction of section 20 *** must *** be limited and confined to

causes where not only both parties resided out of this State when

the action accrued, but both parties continued to reside out of the

State, and 'so remained until an action was barred in and by the

laws of the foreign State where the domicile existed.' "  McGuigan, 80 Ill. App. at 259, quoting Wooley, 142 Ill. at 449.  Notably, the last clause in this passage is drawn from Wooley's statement of the facts in Bayne and McVeigh.  As noted above, the Wooley court apparently misunderstood the significance of the facts in Bayne.  Bayne did cite the fact that the defendant in that case remained a non-Illinois resident until the limitations period expired. 

However, the court cited this fact in addressing the applicability

of the Illinois limitations period under section 13 (now section 18), not a foreign statute of limitations under section 20.   Also, as noted above, while Bayne did reference the plaintiff's non- Illinois residency in analyzing section 13, it did so needlessly

because section 13 was concerned only with the party against whom

a cause of action has arisen.  Bayne did not address whether section 20 has a non-Illinois residency requirement much less a

continuous non-Illinois residency requirement. 

 	Another problem with the McGuigan holding is that it is based on an interpretation of section 20 that the supreme court would

later reject in Davis.  Davis, as we noted, held that Bayne's definition of when a cause of action arises was relevant only to

the question of whether  section 20 could be applied to causes of

action already barred when it was passed.  Davis, 235 Ill. at 623- 24.  

	Citing Bayne, McVeigh, Wooley, Strong, and McGuigan, cases since McGuigan continue to recite and apply the continuous non- Illinois residency requirement.  See, e.g., Orschel, 238 Ill. App. at 359; Delta Bag, 173 Ill. App. at 41.  None of these cases provides a rationale for the requirement.  Rather, all cite cases that ultimately lead back to the foundational cases from the

nineteenth century.  

	We disagree with plaintiff that the result reached in Hurlbut,  224 Ill. App. 297 (1922), is inconsistent with a continuous non-

Illinois residency requirement.  In Hurlbut, the defendants were residents of Colorado when plaintiff's cause of action accrued

there.  Subsequently, but before the Colorado limitations period

expired, the defendants became Illinois residents.  The plaintiff

sued the defendants in Illinois after the Colorado limitations

period expired.  Defendants argued that, pursuant to section 20,

the Colorado statute of limitations applied to the plaintiff's

cause of action.  Affirming the trial court's order dismissing the

plaintiff's suit, the appellate court rejected the plaintiff's

contention that section 20 was inapplicable because the defendants

moved to Illinois within the Colorado limitations period.  Hurlbut, 224 Ill. App. at 299-300.  Thus, the court found section 20

applicable even though not all parties to the suit retained

continuous non-Illinois residency until the expiration of the

foreign limitations period.  Plaintiff directs us to Orschel's assertion that Hurlbut is consistent with the continuous non- Illinois residency requirement (see Orschel, 238 Ill. App at 359- 60), but we find that statement simply erroneous.

	We recognize that Hurlbut was an isolated deviation from a string of appellate court cases decided early in the twentieth

century that consistently reiterated the continuous non-Illinois residency requirement.  To us, however, Hurlbut indicates some instability in the appellate courts' interpretation of section 20

and also foreshadows the seeming abandonment of the continuous non-

Illinois residency requirement by the supreme court within the last

thirty years.    

	Miller and Coan, both decided within the last 30 years, can be construed as signaling a change in the court's construction of

section 20.  We disagree with plaintiff that Miller and Coan are indisputable authority for a continuous non-Illinois residency

requirement in section 20.

	In Coan, the court observed that section 20 "was intended to apply only to cases involving nonresident parties."  Coan, 53 Ill. 2d at 529.  Immediately we see a variation from past recitations of

section 20's residency requirement in that the court fails to 

state when the parties must be nonresidents for section 20 not to apply. 

	The Coan court reversed the trial court's order granting the defendants' motion to dismiss plaintiff's suit under the Kentucky

statute of limitations.  The court held that the trial court erred in reading section 20 to apply even where one of the parties was a

resident of Illinois.  Coan, 53 Ill. 2d at 528-30.  

	The court attributed this error to the trial court's failure

to read section 20 together with section 18's tolling provision. 

Unlike section 18, the court explained, section 20 does not exclude

from the limitations period the length of time a party against whom a cause of action accrues is absent from Illinois.  Thus, the court

observed, where a cause of action that, having accrued outside

Illinois while the parties thereto were Illinois residents, expires

under the foreign limitations statute while the defendant is absent

from Illinois, section 20 would automatically bar suit but section

18 would exclude from the limitations period the time the defendant

was absent from Illinois.  Coan, 53 Ill. 2d at 528-29.   Deferring to the rule that courts should strive to construe the provisions of

the same statute as being consistent, the court held that section

20 must be read as applying only to actions involving parties who

are nonresidents of Illinois.  Coan, 53 Ill. 2d at 529.  The court supplemented its reasoning by incorporating a passage from Orschel:

		" 'In such a case, that is of diverse residence, it has

been held that section 20 does not apply, and that section 20

only applies to cases where both debtor and creditor are

nonresidents of this State when the cause of action accrues. 

The interrelationship of sections 18 and 20 are [sic] well set forth by Mr. Justice Wall in the Berry case, supra [Berry v. Krone, 46 Ill. App. 82 (1892)].  He there says: "It will be seen by the second paragraph of section 18, it is provided the

preceding provisions are not to apply to any case where

neither debtor nor creditor resides in the State when the

cause of action accrues.  Section 20 then applies to the cases

not covered by section 18; that is, to cases where both debtor

and creditor are nonresidents when the cause of action accrues.  It cannot be supposed that the legislature intended

by section 20 to nullify and sweep away the provision

contained in section 18, and yet this is what has been done

unless section 20 is construed to apply only to those cases

which are, by the latter clause of section 18, carved out and

excepted from its operation." ' "  Coan, 53 Ill. 2d at 529-30, quoting Orschel, 238 Ill. App. at 358, quoting Berry, 46 Ill. App. at 84-85.  

	Coan raises a concern because the court uses Orschel's rationale to reach a different conclusion than Orschel did.  As the above passage indicates, Orschel holds that, in light of section 18,  section 20 must be interpreted to apply only to cases

involving parties who were non-Illinois residents when the cause of action accrued.  Orschel, 238 Ill. App. at 358.  Coan, however, concludes that "section 20 was intended to apply only to cases

involving nonresident parties," and provides no further

restriction.  Coan, 53 Ill. 2d at 529.  That the court reversed the trial court with the lone observation that "[t]he record shows that

the plaintiff and defendant Gene Siebert are clearly residents of Illinois" (emphasis added) (Coan, 53 Ill. 2d at 527) implies that it was not the residency of the parties at the time the cause of

action accrued that was determinative for the court but, rather,

their residency at the time the court's disposition was written or,

at the earliest, when the suit was filed.  

	Nor, moreover, was it a concern for the court whether or not

the parties maintained non-Illinois residency until the Kentucky

limitations period expired.  Plaintiff and the one defendant might

have remained non-Illinois residents until the Kentucky limitations

period expired, in which case they would have fulfilled the

continuous non-Illinois residency requirement, and, consequently,

the Kentucky limitations period would have applied under section 20

as interpreted in Ehlco.  Silent on when the plaintiffs and the one defendant became Illinois residents, the court declined to apply

section 20.      

	In Miller, the supreme court reaffirmed the holding in Coan and held that section 20 did not apply to the action before it

because the plaintiffs were Illinois residents.  Miller, 98 Ill. 2d at 480-83.  As in Coan, the court did not appear to concern itself with whether the parties were non-Illinois residents when the cause

of action accrued or whether they remained so until the foreign

limitations period ran.    	

	The question in Miller was whether the supreme court's invalidation in Haughton of section 18's exception for cases in which all parties were non-Illinois residents when the cause of

action accrued implicitly overruled Coan's holding that section 20 contained a non-Illinois residency requirement.  The court first

observed that Haughton did not mention Coan nor did it address section 20.  Coan's interpretation of section 20 became part of section 20 itself, the court explained, and has not been undone by legislative modification.  Further, the court reasoned, a statute

need not be valid and existing to be interpreted in pari materia with another statute.  Miller, 98 Ill. 2d at 484.  Thus, to consider Coan's interpretation of section 20 to have been undermined by Haughton's invalidation of section 20's residency exception would be to confuse the validity of section 18 with its

role in the construction of section 20.  Miller, 98 Ill. 2d at 484, citing 2A A. Sutherland, Statutory Construction §51.04 (4th ed.

1973).  Finally, the court rejected the defendant's constitutional

challenge to section 20's residency exception.  Miller, 98 Ill. 2d at 484-86. 

	We do not regard Miller as authority for the continuous non- Illinois residency requirement.  Nowhere in Miller did the court recite the continuous non-Illinois residency requirement.  While

the court cited cases that do state the requirement (see Miller, 98 Ill. 2d at 481-82, citing Orschel, 238 Ill. App. 353, Chicago Mill, 203 Ill. App. 457, and Delta Bag, 173 Ill. App. 38), its application of section 20 to the facts before it illustrated a divergent interpretation.  Miller held that section 20 was inapplicable with the bare observation that the plaintiffs were

Illinois residents.  Yet the plaintiffs might have been non-

Illinois residents until the Tennessee limitations period expired,

in which case the continuous non-Illinois residency requirement

would have been fulfilled and Tennessee law would have applied.  The court's failure to mention when the plaintiffs became Illinois

residents suggests that fact was of no significance to the court.

	We reject plaintiff's argument that the continuous non-

Illinois residency requirement is necessitated by the conflict

between the plain text of section 18 and section 20 that the

supreme court addressed in Orschel and Miller.  Before it was amended, section 18 created an exception to the tolling of the

Illinois limitations period for cases in which neither party was an

Illinois resident when the cause of action accrued.  See Ill. Rev.

Stat. 1969, ch. 83, par. 19.  As explained above, Orschel and Coan recognized that section 18 and section 20 could be harmonized only

if section 20 was interpreted as applying where section 18 did not,

that is, to cases where neither party was an Illinois resident when

the cause of action accrued.  See Coan, 53 Ill. 2d at 528-29; Orschel, 238 Ill. App. at 358-59.  Section 18, however, did not contain an exception for cases in which the parties were non-

Illinois residents when the cause of action accrued and remained so until the applicable foreign limitations period expired.  Indeed, never in any of its codifications did the Illinois tolling

provision address foreign limitations periods.  Therefore, dictates

of statutory interpretation do not compel us to read section 20 as

containing a requirement based on the continuous non-Illinois residency of the parties.   	

	The supreme court's construction of section 20 as stated in

Coan and Miller has been followed by the appellate courts.  See, e.g., Ko v. Eljer Industries, Inc., 287 Ill. App. 3d 35, 42 (1997) (stating that the borrowing statute "is only applied when none of

the parties are Illinois residents" and holding that the statute

did not apply because one of the parties was an Illinois resident);

LeBlanc v. G.D. Searle & Co., 178 Ill. App. 3d 236, 237 (1988) (stating that the borrowing statute "is applied only where none of

the parties are Illinois residents").

	We conclude, then, that the continuous non-Illinois residency

requirement was conceived in the misconstruction of a case from

1876,  that subsequent cases have perpetuated the requirement

without reexamining its foundation in case law, and, finally, that

the most recent supreme court cases to apply section 20 have

ignored the requirement. 

	We find no Illinois case that has offered a colorable policy

justification for the continuous non-Illinois residency

requirement.  Miller and Panchinsin v. Enterprise Cos., 117 Ill. App. 3d 441 (1983), are the only Illinois cases to attempt such a

justification for a residency requirement in section 20.  In Miller, the court suggested that the purpose of the residency requirement in section 20 was to promote uniformity of periods of

limitations and to discourage forum shopping.  Miller, 98 Ill. 2d at 485-86.  However, as noted above, the residency requirement that

Miller contemplated and attempted to justify apparently was not the continuous non-Illinois residency requirement.  Moreover, as explained below, the requirement that all parties retain continuous

non-Illinois residency actually defeats the ends Miller proposes. 

	In Panchinsin, the court reiterated Coan's holding that " '[section 20] was intended to apply only to cases involving

nonresident parties,' " and held that section 20 did not apply to

the plaintiff's tort action because the defendants were Illinois

residents.  Panchinsin, 117 Ill. App. 3d at 445, quoting Coan, 53 Ill. 2d at 529.  Responding to the defendants' argument that there

was no rational basis for denying them, Illinois residents, the

protection of the borrowing statute, the court suggested that the

legislature, in creating the residency requirement, could have

concluded:

	"(1) Illinois residents who commit torts are more likely to

injure other Illinois residents, and (2) refusing to permit

Illinois residents to take advantage of a shorter than

generally available limitations period (through application of

the borrowing statute) would promote the health, safety, and

welfare of our citizens by encouraging Illinois residents to

maintain higher safety standards."  Panchinsin, 117 Ill. App. 3d at 447. 

Whatever its accuracy, the prediction that Illinois residents who

commit torts are more likely to injure other Illinois residents is

a prediction concerning the parties' residency at the time the

tortious conduct occurs or, roughly, when the cause of action in

tort accrues.  Hence it would seem to justify a rule that the borrowing statute does not apply when a defendant (or perhaps, any

party) is an Illinois resident when the cause of action accrues. 

The prediction, however, is irrelevant to a party's establishment

of Illinois residency after a cause of action in tort accrues.  In any event, Panchinsin apparently was not attempting to rationalize the continuous non-Illinois residency requirement because, like

Coan before it, and Miller after it, Panchinsin held that section 20 applies only to cases involving nonresident parties.  See

Panchinsin, 117 Ill. App. 3d at 443.  There is no statement in any of these cases as to when a party must be an Illinois resident for

the borrowing statute not to apply.  In each case, the court found

it sufficient that a party was an Illinois resident when the cause

of action was filed or, at least, when the case reached the

appellate court.  In none of these cases does the court provide any

rationale for departing from previous interpretations of section

20.

	The state of the law regarding section 20 being so unsettled,

we find a reevaluation appropriate.  In our view, the continuous

non-Illinois residency requirement has fatal flaws.  First, it

draws an arbitrary distinction.  As interpreted in Ehlco and earlier cases, section 20 applies the relevant foreign limitations

period to an action if all parties maintain non-Illinois residency

until that limitations period expires.  See, e.g., Ehlco, 309 Ill. App. 3d at 737.  Thus, the foreign limitations period applies where

a party becomes an Illinois resident the day after the foreign limitations period expires but not where a party becomes an

Illinois resident the day before the limitations period expires. 

No Illinois court has attempted a rationale for this distinction

nor can we conceive of any adequate rationale.  Perhaps the

distinction contemplates that a plaintiff who took up residence in

our state after the foreign limitations period expired is more

likely to be guilty of opportunism than a plaintiff who, with no

intention of fleeing a foreign state's justice, established

residence in Illinois the day before the foreign limitations period

expired and, the next day, after that period expired, recognized

and attempted to capitalize on the open Illinois limitations

period.  In our view, however, where a cause of action arises in

another jurisdiction between parties who were then non-Illinois

residents, our state does not attain a closer connection to the

dispute if the plaintiff moves here on a Monday rather than a

Tuesday. 

	Even if the distinction is rational as applied to the

interstate movement of some plaintiffs, we still do not see how the

mere fact that any one party--whether plaintiff or defendant, whether intimately or tangentially connected to a controversy--who

establishes residency in our state after the cause of action

accrues in another jurisdiction gives our state a sufficient

interest in that controversy to justify our imposing upon it our

statute of limitations.  Rather than promoting uniformity and

discouraging forum shopping, the continuous non-Illinois residency requirement invites a plaintiff to extend the limitations period on

his foreign cause of action simply by establishing Illinois

residency before that period expires or by taking advantage of the

fact that any other party to the suit became an Illinois resident

within that time.  Likewise, a defendant can gain the benefit of a

shorter limitations period in Illinois simply by leaving the state

in which the cause of action accrued and establishing residency in

Illinois before the longer foreign limitations period expires or by

taking advantage of the fact that any other party to the suit

became an Illinois resident within that time.     

	Plaintiff suggests that the holdings of Miller and Coan became part of the borrowing statute when it was subsequently reenacted

without any alteration to its text.  See 735 ILCS 5/13--210 (West

1992) (amending Ill. Rev. Stat. 1991, ch. 110, par. 13--210). 

Plaintiff relies on the rule that the legislature is presumed to

know the judicial construction that a statute has been given and,

by reenacting the statute without modification, is assumed to have 

intended the statute to have effect as previously construed in the

courts.  Nevious v. Bauer, 281 Ill. App. 3d 911, 915 (1996).  

	Our holding that the Miller/Coan construction of section 20 is codified in section 13--210 would not give us the answer to the

certified question because, as we made quite clear above, we cannot

discern with any reasonable degree of assurance just how Miller and Coan construed section 20.  In citing cases that reiterated the continuous non-Illinois residency requirement, Miller and Coan said nothing more about section 20 than that it applies only where none

of the parties is an Illinois resident.  See Miller, 98 Ill. 2d at 481-82; Coan, 53 Ill. 2d at 529.  In neither case did the court say when the parties must be non-Illinois residents for section 20 to apply.  In neither case did the court even indicate whether

Illinois residency was established before or after the relevant

foreign limitations period expired.  Thus, Miller and Coan do not provide us an answer to the certified question of whether the

borrowing statute is applicable where one of the parties becomes an

Illinois resident prior to the expiration of the applicable foreign

limitations period. 

	In a significant number of states with borrowing statutes, the application of a foreign statue of limitations has been held to

depend on the residency of the parties at the time the cause of

action accrues, not on their residency at a later time.  See, e.g.,  Biewend v. Biewend, 17 Cal. 2d 108, 115, 109 P.2d 701, 706 (1941); Miller v. Stauffer Chemical Co., 99 Idaho 299, 300, 581 P.2d 345, 346-47 (1978); Dugan v. Schering Corp., 635 N.Y.S.2d 164, 164, 658 N.E.2d 1037, 1037 (1995); Glynn v. Stoneville Furniture Co., 85 N.C. App. 166, 169, 354 S.E.2d 552, 554 (1987); Savage v. Kramer, 95 Or. App. 166, 169, 768 P.2d 425, 426 (1989); Tullis v. Georgia Pacific Corp., No. 2-98--351--CV (Tex. App. September 28, 2000).  We note also that the Restatement provides that the limitations

period of the jurisdiction in which the cause of action arose

should apply if it has a "more significant relationship to the parties and the occurrence."  Restatement (Second) of Conflict of

Laws §142 (Supp. 1988).  Our holding that the application of a

foreign limitations period to a foreign cause of action will not be

precluded simply because any one party to the action establishes

Illinois residency after the foreign cause of action accrues will

insure that a greater connection exists between the parties, the

controversy, and the state whose statute of limitations governs it.

	The dissent accuses us of laboring to avoid an "obvious"

answer to the certified question.  Slip op. at 50.  In ordering

this court to grant defendants' application for interlocutory

appeal, our supreme court evidently believed that the certified

question--far from being as easily answerable as the dissent

believes it to be--"involves a question of law as to which there is

substantial ground for difference of opinion."  155 Ill. 2d R. 308. 

While we have a definite answer to the certified question,  we

recognize (along with the supreme court, apparently) that the

uncertainties raised by prior case law interpreting section 13--210

clearly preclude our calling any answer to the question--ours

included--"obvious." 

	The dissent would have us consider the Illinois courts'

construction of section 13--210 as part of the statute itself but

does not specify which of the divergent court holdings concerning

the statute we should pay heed to.  Slip op. at 52.  As explained

at length above, the supreme court, in its most recent expositions

of section 13--210, entirely ignored the continuous non-Illinois residency requirement as set forth in prior cases.  See Miller, 98 Ill. 2d at 480-83; Coan, 53 Ill. 2d at 527.  Some appellate court cases have followed the supreme court in ignoring the residency

requirement (see Ko, 287 Ill. App. 3d at 42; LeBlanc, 178 Ill. App. 3d at 237), but at least one case has affirmed the requirement (see

Ehlco, 309 Ill. App. 3d at 737).  Given this, we fail to conceive what grounds the dissent has for stating that the continuous non-

Illinois residency requirement "has been in existence since 1876

and remains good law" (slip op. at 51).

	The dissent agrees it is arbitrary to condition the

application of section 13--210 on whether the foreign

jurisdiction's limitations period had expired when a party--any party--established Illinois residency.  Nonetheless, the dissent

labors to posit policy justifications for this admittedly and, we

might add, "obviously" arbitrary distinction.  Slip op. at 4950-51-50.. 

For instance, the dissent suggests that the continuous non-Illinois

residency requirement prevents a defendant from eluding a

"potential plaintiff" by fleeing from the "forum state"

(presumably, the state in which the cause of action arose) to

another state and then making his whereabouts known only after the

"limitations period" expires.  Slip op. at 501.  Actually, the

residency requirement does indeed permit a defendant to change

residency, secret himself in Illinois before the foreign

limitations period expires, and then claim the benefit of the

shorter Illinois limitations period.  As noted above, the residency requirement  permits a plaintiff the same measure of deviousness. 

These are all reasons why we concluded above that the residency

requirement promotes forum shopping and undermines uniformity of

limitations.  

	Having determined that the continuous non-Illinois residency

requirement has no foundation in our cases or in sound policy and

appears to have been rejected sub silentio, or at least held in disfavor, by our supreme court in recent cases, we hold that

section 13--210 is applicable where none of the parties to a cause

of action was an Illinois resident when the cause of action

accrued, even if one of the parties later becomes an Illinois

resident before the expiration of the limitations period of the

jurisdiction in which the cause of action accrued.  Accordingly, we

need not address defendants' argument that the continuous non-

Illinois residency requirement is unconstitutional. 

	II. The Second Certified Question 

	We first address plaintiff's argument that Nebraska law

indisputably applies to Newell's claims because they concern the

internal affairs of PMC, a Nebraska corporation, rather than ATC,

a Delaware corporation.  We cannot reconcile this claim with the 

shareholders' agreement, which expressly designates ATC, not PMC,

as the corporate party.  Indeed, plaintiff refers in its complaint

to Petersen's allegedly wrongful removal of ATC's directors.  Accordingly, we consider plaintiff's claims as relating to the

internal affairs of ATC.     

	In 1985, when the parties executed the shareholders'

agreement, including the provision selecting Nebraska law to govern

the agreement, Nebraska corporations law did not impose a limit on

the duration of shareholder voting agreements.  See Neb. Rev. Stat.

§21--2034 (1985).  Delaware, however, limited shareholder voting

agreements to a duration of 10 years.  See Del. Code Ann. tit. 8, 

§218(c) (1985).  The time limit was removed in 1994 (see Del. Code

Ann. tit. 8, §218(c) (Supp. 1994), and presently Delaware does not

limit the duration of shareholder voting agreements (see Del. Code

Ann. tit. 8, §218(c) (Supp. 1998)).  However, the former time limit

applies to voting agreements entered into prior to July 1, 1994. 

See 69 Del. Laws 263 (1994).       

	We agree with defendants that Delaware law as it existed in

1985 governs the voting agreement in section 5 of the shareholders'

agreement.  We begin our analysis by looking to the conflicts law

of Illinois, the forum state, to determine the substantive law that

applies to plaintiff's claims concerning the shareholders'

agreement.  See Esser v. McIntyre, 169 Ill. 2d 292, 297 (1996).  Illinois courts follow the analysis recommended by section 187 of

the Restatement (Second) of Conflict of Laws (Restatement (Second)

of Conflict of Laws §187 (1971)) (Restatement) when deciding

whether to abide by the parties' selection of the law to govern

their contract.  See, e.g., Maher & Associates, Inc. v. Quality Cabinets, 267 Ill. App. 3d 69, 76 (1994).  Section 187 provides that a court should give effect to the parties' choice of law

unless either: 

		"(a) the chosen state has no substantial relationship to

the parties or the transaction and there is no other

reasonable basis for the parties choice, or

		(b) application of the law of the chosen state would be

	contrary to a fundamental policy of a state which has a

materially greater interest than the chosen state in the

determination of the particular issue and which, under the

rule of §188 [Restatement (Second) of Conflict of Laws §188

(1971)], would be the state of the applicable law in the

absence of the effective choice of law by the parties." 

Restatement (Second) of Conflict of Laws §187 (1971).   

Section (a) does not concern us here because defendants,

acknowledging that ATC is engaged in the worldwide manufacture and

distribution of handheld tools and was once headquartered in

Nebraska, do not dispute that Nebraska bears a substantial

relationship to this controversy.  Defendants' claim, rather, is

that the fundamental public policy of Delaware, the state of ATC's

incorporation, militates against application of Nebraska law to

plaintiff's claims. 

   	Applying, then, subsection (b) of section 187, we note that Delaware law would apply to the shareholders' agreement in the

absence of the parties' choice of law provision.  Section 188 of

the Restatement provides that a corporation's place of incorporation is a relevant factor in determining the law

applicable to a claim.  Restatement (Second) of Conflict of Laws

§188 (1971).  However, section 302 of the Restatement goes further,

providing that issues involving the rights and liabilities of a

corporation generally are determined by the law of the state of

incorporation.  Restatement (Second) of Conflict of Laws §302

(1971).  According to comment a, the section applies to the election or appointment of directors and officers.  Restatement

(Second) of Conflict of Laws §302, Comment a (1971).  As plaintiff's claims concern the voting rights of a shareholder, we

conclude that Delaware's law would apply under the Restatement in

the absence of the parties' choice of law provision. 

	Of course, Delaware law applies under section 187 only if

Delaware has a materially greater interest in this controversy than

does Nebraska and if honoring the parties' choice of Nebraska law

would violate a fundamental public policy of Delaware.  In our

view, Delaware's adherence to the internal affairs doctrine (see  Rosenmiller, 607 A.2d at 468) satisfies both factors.  

	The internal affairs doctrine is a conflict of laws principle

that prescribes that matters relating to a corporation's internal

governance should be controlled exclusively by the state of

incorporation.  Edgar v. MITE Corp., 457 U.S. 624, 645, 73 L. Ed. 2d 269, 285, 102 S. Ct. 2629, 2642 (1982); Rosenmiller, 607 A.2d at 468; Libco Corp. v. Roland, 99 Ill. App. 3d 1140, 1144 (1981).  A stockholder's participation in the election of directors, which plaintiff's claims concern, is quintessentially a matter of the

internal operations of a corporation.  Rosenmiller, 607 A.2d at 468 ("Nothing is more central to the internal management of a

corporation than a stockholder's right to vote in the election of

directors"); Babcock v. Farwell, 245 Ill. 14, 34 (1910); see also CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 89, 95 L. Ed. 2d 67, 85, 107 S. Ct. 1637, 1649 (1987) ("No principle of

corporation law and practice is more firmly established than a

State's authority to regulate  domestic corporations, including the

authority to define the voting rights of stockholders"). 

	We are convinced that the internal affairs doctrine is a

fundamental public policy.  The need for the inner workings of a

corporation to be governed by a single body of laws has been

frequently emphasized by state and federal courts alike.  The

internal affairs doctrine "serves the vital need for a single,

constant and equal law to avoid the fragmentation of continuing,

interdependent internal relationships."  McDermott Inc. v. Lewis, 531 A.2d 206, 217 (Del. 1987).  The Seventh Circuit explains: 

	"A single rule for each corporation's internal affairs reduces

uncertainty and the prospect of inconsistent obligations; it

also enables the corporate venturers to adjust the many

variables of the corporate life ***, confident that they can

predict the legal effect of these choices"  Nagy v. Riblet Products Corp., 79 F.3d 572, 576 (7th Cir. 1996).  

Taking a broader economic perspective, the Supreme Court has

observed: 

	"Large corporations that are listed on national exchanges, or 

even regional exchanges, will have shareholders in many States

and shares that are traded frequently.  The markets that

facilitate this national and international participation in

ownership of corporations are essential for providing capital

not only for new enterprises but also for established

companies that need to expand their businesses.  This

beneficial free market system depends at its core upon the

fact that a corporation--except in the rarest situations--is

organized under, and governed by, the law of a single

jurisdiction, traditionally the corporate law of the State of

its corporation."  CTS, 481 U.S. at 90, 95 L. Ed. 2d at 85-86, 107 S. Ct. at 1650. 

The compelling policy arguments for the internal affairs doctrine

convince us that Delaware, as the state of ATC's incorporation, has

an overriding interest in regulating the internal affairs of ATC, 

including the voting of shareholders. 

	Plaintiff claims that the predictability argument undergirding

the internal affairs doctrine has no force in this case because

predictability and uniformity were insured by the ATC shareholders'

selection of a single state's (Nebraska's) laws to govern their

shareholders’ agreement.  Applying the law of Delaware will defeat,

not protect, the expectations of ATC's shareholders, plaintiff submits.  The Missouri Court of Appeals has employed this line of

reasoning in giving effect to a choice of law clause selecting

Missouri law to govern an agreement to purchase the stock of a

Delaware corporation.  See Yates v. Bridge Trading Co., 844 S.W.2d 56, 62 (1992) ("One of the principal policy reasons for the

internal affairs doctrine is to avoid the application of

inconsistent or conflicting sets of laws to corporate affairs. 

Because the stock purchase agreement at issue applied to all Old

Trading stock, the uniform application of Missouri law would not

run afoul of this policy").  

	We disagree with the suggestion that our following the

parties' choice of law would advance the same interests to the same

degree as would following the internal affairs doctrine.  Yates is poor authority for the notion.  There, the court gave effect to the

choice of law clause only after finding that the corporation's only

tie to Delaware was the fact that it was incorporated there.  See 

Yates, 844 S.W.2d at 61-62 ("The parties were free to choose the law governing their stock issuance so long as there was a uniform

law applied to all shareholders, and the parties and the

corporation had substantial contacts with the state whose law was

selected").  Nor do the courts in the other cases cited by

plaintiff follow an approach that automatically exalts a choice of

law clause over the internal affairs doctrine; rather, each court

takes a fact-based approach.  See Resolution Trust Corp. v. Gladstone, 895 F. Supp. 356, 363 (D. Mass. 1995) (holding that presumption that internal affairs doctrine applies can be overcome

if warranted by certain factors including concerns for certainty,

for ease in the determination and application of law, and for the

expectations of the parties involved); Federal Deposit Insurance Corp. v. Raffa, 882 F. Supp. 1236, 1246 (D. Conn. 1995) (same); United States v. 105,800 Shares of Common Stock of First Rock Bancorp, Inc., 825 F. Supp. 191, 193-94 (N.D. Ill. 1993) (declining to follow internal affairs doctrine because the state of

incorporation had insufficient connection with the lawsuit); Wilson v. Louisiana-Pacific Resources, Inc., 138 Cal. App. 3d 216, 222-23, 187 Cal. Rptr. 852, 857-58 (1982) (applying a multifactor test for

determining when California can regulate internal affairs of a

foreign corporation); Demoulas v. Demoulas Super Markets, Inc., 424 Mass. 501, 511, 677 N.E.2d 159, 169 (1997)(declining to follow

internal affairs doctrine because the state of incorporation had

insufficient connection with lawsuit).  We do not see how the

officers, directors, and shareholders of a corporation will be

comforted knowing that their choice of law clause may or may not be

honored depending on how a court views various factual

circumstances peculiar to the case before it.  Plaintiff would have

us decide whether ATC is a genuine foreign corporation or is, in

fact, merely "pseudo-foreign" in that it has significant contacts

with Nebraska but no contact with Delaware other than the fact of

incorporation.  Not only would this approach be antithetical to

values of certainty and uniformity, but plaintiff has not convinced us that ATC has no contacts with Delaware other than the fact of

incorporation.  Indeed, plaintiff alleged in its complaint that ATC

is a holding company for companies that are engaged in the "world-

wide manufacture and distribution of hand-held tools."  We are more

inclined to infer from this allegation that ATC does have

significant contacts with Delaware than that it does not. 

	Our refusal to apply a balancing test to this issue does not

compel us to conclude that we can adequately protect the

expectations of parties to corporate agreements by always giving

effect to their choice of law provisions.  We might defer to the

parties' choice of law in the case before us and at least avoid

spoiling plaintiff's alleged expectation that Nebraska law would

apply to the shareholders' agreement, but we could not be confident

that the next court to adjudicate the agreement would apply

Nebraska law.  The corporate codes of at least 26 states contain an

exception for the internal affairs of a foreign corporation doing

business within the state.  See 4 Model Business Corporation Act

Annotated §15.05 (3d ed. 1984 & 1997 Supp.)(collecting state

statutes and noting that the internal affairs doctrine is "widely

accepted").  The internal affairs doctrine is a pervasive rule. 

See Resolution Trust Corp. v. Chapman, 29 F.3d 1120, 1122 (7th Cir. 1994) (noting that internal affairs doctrine is "recognized

throughout the states"); L. Ribstein, Choosing Law By Contract, 18 J. Corp. L. 245, 267 (1993)(noting that courts have applied the law

of a nonincorporating state "in only a few cases").  We would do far more to promote uniformity by adhering to the internal affairs

doctrine and placing ourselves in line with the majority of states

than by taking a divergent position and thereby exposing the

directors, officers, and shareholders of ATC to conflicting

obligations based on different bodies of law.  

	Independent of the foregoing is the fact, devastating to

plaintiff's position, that in 1985 the internal affairs doctrine

was embodied in the very statutes that the parties selected to

govern the stock purchase agreement and remains so today.  See Neb.

Rev. Stat. §21-20,105 (1985) (nothing in the corporate code "shall

be construed to authorize this state to regulate the organization

or the internal affairs of [a foreign] corporation"); Neb. Rev.

Stat. §21-20,172 (1995) (same).  Plaintiff does not even mention 

these provisions of Nebraska law in its brief, and its responses to

questions concerning them at oral argument were not persuasive.

	We acknowledge that the parties to the shareholders' agreement

expressly disavowed an intention to adopt the conflicts law of

Nebraska.  In our view, a state's conflicts rules are properly

conceived of as general rules that determine the procedural

question of whether that state's substantive law should be applied

to a controversy brought in its courts.  Cf. Mech v. Pullman Standard, 136 Ill. App. 3d 939, 941 (1984) (observing that Illinois choice of law rules determine "the procedural question of whether

Illinois or [another state's] law governs"). The provisions of the

Nebraska corporate code that exclude foreign corporations from the scope of the code do not contain general principles governing when

Nebraska law applies.  Rather, they are discrete provisions within

a self-contained body of substantive statutory law that quite

specifically constrain the effect of that law.  We conclude,

therefore, that even if we chose to apply Nebraska law as it

existed in 1985, we would be directed to Delaware law as it existed

in 1985.  See, e.g., In re Uno Broadcasting Corp., 167 B.R. 189, 196-98 (Bankr. D. Ariz. 1994) (noting that chosen state's statutes

expressly disavowed interference with internal affairs of a foreign

corporation). 

	Plaintiff urges us to apply Delaware law as it presently exists, that is, without the time limit on voting agreements.  The

only case plaintiff cites for this position concerns the issue of

whether an amendment that takes effect during the pendency of a

suit  applies to that suit.  See First of American Trust Co. v. Armstead, 171 Ill. 2d 282 (1996).  Section 218(c) of the Delaware corporate code, by contrast, was amended in 1994, well before

plaintiff filed its complaint.  Delaware law expressly provides

that section 218(c), as amended in 1994, does not apply to voting

agreements entered into prior to July 1, 1994.  See 69 Del. Laws

263 (1994). 

	Plaintiff's remaining arguments concern whether the voting

agreement falls within section 218(c) of the Delaware corporate

code.  As the certified question put to us simply was whether the

internal affairs doctrine mandates the application of section 218(c) to the voting agreement, we decline to address these

arguments.  Since we find that the internal affairs doctrine is

sufficiently justified with respect to public policy alone, we also

decline to address defendants’ argument that the doctrine is

constitutionally mandated.   	

	For the foregoing reasons, we hold that the limit on the

duration of shareholder voting agreements provided in section

218(c) of the Delaware corporate code as it existed in 1985 applies

to the 1985 shareholders' agreement. 

	Certified questions answered.  Cause remanded. 

	BOWMAN, J., concurs.  

	PRESIDING JUSTICE HUTCHINSON, specially concurring in part and dissenting in part:

	Although I agree with the majority's decision regarding the

second certified question, I respectfully dissent from its answer

to the first certified question.

	In Illinois the statute of limitations generally applicable to

claims based upon the rights and liabilities of stockholders is the

residual five-year period under section 13--205 of the Code of

Civil Procedure (the Code) (735 ILCS 5/13--205 (West 2000)). 

However, on occasion, we must also consider the applicability of

other limitations provisions.  On this occasion, our supreme court

has directed us to consider the applicability of the Illinois

"borrowing statute" to the circumstances before us in the present case.  See 735 ILCS 5/13--210 (West 1994).  The borrowing statute

provides:

		"When a cause of action has arisen in a state *** out of

this State *** and, by the laws thereof, an action thereon

cannot be maintained by reason of the lapse of time, an action

thereon shall not be maintained in this State."  735 ILCS

5/13--210 (West 1994).

The borrowing statute has three conditions, two of which are

apparent from the face of the statute:  the cause of action must

arise outside of Illinois, and the cause of action must be barred

by the law of the state where the cause of action arose.  See 735

ILCS 5/12--210 (West 1994); Employers Insurance of Wausau v. Ehlco Liquidating Trust, 309 Ill. App. 3d 730, 737 (1999).  In the present case, neither party disputes that the cause of action arose

in Nebraska.  Also, neither party disputes that the Nebraska

limitations period applicable to plaintiff's cause of action has

expired now.  See Neb. Rev. Stat. §25--205 (1994).

	One requirement remains for consideration:  as a matter of

judicial construction, all parties must have been non-Illinois

residents at the time the cause of action accrued and all parties

must have remained non-Illinois residents until the foreign

limitations period expired.  Ehlco, 309 Ill. App. 3d at 737.  The record reflects and neither party disputes that defendant Petersen

established Illinois residency prior to the expiration of the

Nebraska limitations period.  Thus, at first blush, the conclusion seems rather obvious--the Illinois borrowing statute does not apply

because defendant Petersen failed to maintain a continuous

residency in Nebraska until the expiration of the limitations

period.

	In an effort to avoid the obvious, however, the majority

concludes that both the appellate court and our supreme court have

been misinterpreting Hyman v. Bayne, 83 Ill. 256 (1876), for the past 125 years.  The majority notes that cases following Bayne have merely reiterated the non-Illinois residency requirement without

questioning its underpinnings in legal analysis or policy.  The

majority has also failed to find any Illinois case that has offered

a colorable policy justification for the continuous non-Illinois

residency requirement.

	Judicial construction, left undisturbed by the legislature,

fairly can be said to reflect legislative intent in that respect. 

See Miller v. Lockett, 98 Ill. 2d 478, 483 (1983).  In Miller, the court found persuasive two purposes of the residency requirement--

to promote uniformity of periods of limitation and to discourage

forum shopping.  Miller, 98 Ill. 2d at 486.  In this case, despite the majority's vigorous assertions to the contrary, I believe that

Illinois possesses an interest in discouraging the use of its

borrowing statute.  See 27th Ill. Gen. Assem., Senate Proceedings,

1871-72, at 378, 513, 618, 837, 843, 870.

	The continuous non-Illinois residency requirement promotes

uniformity by treating all parties from every state in the same fashion.  The residency requirement does not compel us to determine

in each circumstance whether a particular forum state has a tolling

statute and whether it applies to any particular defendant.  The

residency requirement prevents a potential defendant from taking

advantage of the forum state's tolling statute.  In Nebraska,

absence from the state generally does not toll the limitations

period.  See Neb. Rev. Stat. §25--213 (1994).  The residency

requirement discourages forum shopping by not allowing parties with

unclean hands to flee the forum state in an effort to elude a

potential plaintiff, making their whereabouts known only after the

limitations period has run, thereby allowing an automatic

affirmative defense based upon their own deceit.  Plaintiffs are

therefore required to diligently pursue their claims against their

wrongful party.  The result is that potential defendants must avail

themselves in their forum state to potential plaintiffs for the

requisite period of time.  The potential defendants may relocate;

however, they are then subject to the laws of this forum.  In this

case the applicable law has been in existence since 1876 and

remains good law.

	I believe the courts' interpretation throughout the years of

the continuous non-Illinois residency requirement of the Illinois

borrowing statute balances a nonresident plaintiff's interest in

pursuing its claim with the defendant's interest in being amenable

to suit for a finite period of time.

	The majority notes that the continuous non-Illinois residency

requirement draws an arbitrary distinction between parties who move

to Illinois on a Monday rather than a Tuesday.  I agree.  But that

is the nature of the beast with respect to statutes of limitation. 

Statutes of limitation are simple on their face because the time

period that the legislature affixes to an action can be measured by

the clock.  See 735 ILCS 5/13--101 et seq. (West 2000).  Courts are therefore left with the choice of watching the clock or inquiring

into the purpose of the statute.  In many cases courts follow the

letter of the statute and bar a cause of action if it was not

timely filed.  To alleviate the hardship in some cases, parties may

find relief by applying the tolling statute enacted by our

legislature.  See 735 ILCS 5/13--208 (West 2000).

	The majority recognizes that the state of the law regarding

the Illinois borrowing statute is unsettled.  Unless and until the

legislature amends it contrary to our interpretation, the courts'

construction of the Illinois borrowing statute is considered a part

of the statute itself.  See Kroger Co. v. Department of Revenue, 284 Ill. App. 3d 473, 480 (1996), citing Miller, 98 Ill. 2d at 483.  I believe that, rather than our reevaluation, it is up to the

legislature to modify its enactment.

	In the present case, I would hold that the Illinois borrowing

statute for limitations periods is inapplicable even though no

party to the cause of action was an Illinois resident at the time the action accrued but because one of the parties later became an

Illinois resident within the foreign limitations period.

	Therefore, for the foregoing reasons, I would answer the first

certified question in the affirmative.