Finley v. Kesling

Charles Finley (plaintiff) divorced his wife in Indiana. Finley testified at his divorce hearing that he owned 31 percent of his company’s stock, his wife owned 29 percent, and his children owned 40 percent. The court divided the stock accordingly and included the appropriate awards of stock in its divorce decree. The division of stock was affirmed on appeal in Indiana. Finley subsequently filed suit in Illinois, requesting a declaration that he had beneficial ownership of the 40 percent of company stock that he had previously testified was owned by his children. Finley argued that the Full Faith and Credit Clause of the United States Constitution required the Illinois court to apply Indiana’s collateral-estoppel rules. Indiana law required mutuality of estoppel, and Finley asserted that, because his children were not parties to the Indiana divorce, there was no mutuality of estoppel and therefore Illinois was compelled to allow him to proceed with his declaratory-judgment action. Illinois law did not require mutuality and thus he would have been barred from bringing his claim pursuant to Illinois rules of collateral estoppel. The trial court dismissed Finley’s claim, reasoning that although Indiana law required mutuality of estoppel, Illinois public policy prohibited Finley from denying either his previous testimony or the Indiana divorce decree. Finley appealed.