APPEAL from and WRIT OF ERROR to the Third Division of the
Appellate Court for the First District; heard in that court on
appeal from the Superior Court of Cook County; the Hon. ROBERT E.
CROWE, Judge, presiding.
MR. JUSTICE FULTON DELIVERED THE OPINION OF THE COURT:
Rehearing denied November 19, 1951.
This case originated in the superior court of Cook County by the plaintiffs, the widow and children of Samuel Altschuler, filing a complaint for an accounting against Irwin I. Altschuler as surviving partner of a partnership composed of Samuel Altschuler during his lifetime and the said Irwin I. Altschuler, and for partition of certain real estate allegedly owned by them as tenants in common. The case was previously before this court and a statement of the case is reported in 399 Ill. 559. In our prior opinion we limited the finding to a determination of whether the decree entered by the superior court was final and appealable. That decree held that during the period from July 10, 1930, to and including February 10, 1945, the defendant sustained a fiduciary relationship to Samuel Altschuler and owed him a duty to account, and the decree ordered an accounting of all his acts and doings during that period as administrator of the estate of Isaac Altschuler, the deceased father of Samuel and Irwin, as trustee and agent under a written appointment by the widow and heirs of Isaac Altschuler, as a co-partner with Samuel in the operation of an iron and steel business, and as a joint depositor with Samuel of certain funds in the First National Bank of Chicago in a joint account in the name of Samuel and Irwin. In that case we held that the decree appealed from was final and that the action of the Appellate Court in dismissing the appeal should be reversed and the cause remanded to the Appellate Court with directions to consider the case on its merits.
Upon the cause being remanded, the Appellate Court reconsidered the case, reversed the decree and remanded the cause to the superior court with directions to dismiss the complaint for want of equity at plaintiff's cost, and for further proceedings not inconsistent with the views expressed in the opinion as to a counterclaim by the defendant seeking specific performance of an option to purchase Samuel's interest in the partnership. It also modified a subsequent decree of the superior court which had taxed the master's fees and other costs against the defendant. This decision is reported in 340 Ill. App. 220.
The Appellate Court, besides reversing the decree of the superior court, determined the individual rights and interests of plaintiff Evelyn Altschuler and the defendant in the real estate upon which partition had been sought by said plaintiff, since it held that the real estate was part of the assets of the partnership and that Samuel and Irwin were not tenants in common of said real estate, although all jurisdiction over the real estate and the right to partition thereof had been reserved by the superior court in its original decree. The plaintiffs filed a petition for leave to appeal from the Appellate Court to review the decision of that court, which petition was granted, and also brought a writ of error in this court to review the judgment of the Appellate Court holding that the real estate was partnership property. The appeal and the writ of error were consolidated in this court for hearing and likewise are consolidated for decision.
The defendant filed a motion to dismiss the writ of error on the ground that the writ was not sued out of the Supreme Court prior to the expiration of 90 days from the entry by the Appellate Court of the judgment complained of. This motion was taken with the case and presents the question: Does the 90-day limitation for appeal in section 76 of the Civil Practice Act apply to a common-law writ of error to review a judgment of the Appellate Court in which that court, for the first time, has passed upon and determined the rights of the parties in a freehold estate, or where a constitutional question for the first time has been injected into the case by the judgment of the Appellate Court. It appears that this question has never been previously decided by this court.
Section 11 of article VI of our constitution provides for the creation of an inferior Appellate Court of uniform organization and jurisdiction upon which jurisdiction may be conferred and from which appeals and writs of error may lie to this court in all criminal cases and cases in which a franchise or freehold or the validity of a statute is involved, and in such other cases as may be provided by law. Section 75 of the Civil Practice Act (Ill. Rev. Stat. 1949, chap. 110, par. 199,) provides that the Supreme Court may review the judgments and decrees of the Appellate Court in certain cases but specifically excepts those cases wherein appeals are required by the constitution to be allowed from the Appellate Court to the Supreme Court. An examination of sections 74, 75 and 76 of the Civil Practice Act indicates that no provision has been made by the legislature for the mode of prosecuting appeals and writs of error from the Appellate Court to the Supreme Court in criminal cases and cases in which a franchise or freehold or constitutional question is involved. Section 11 of article VI of the constitution makes it mandatory that a writ of error issue from this court to review the judgment of the Appellate Court in all criminal cases, and cases in which a freehold or franchise or the validity of a statute or the construction of the constitution is involved. We, therefore, hold that the 90-day time limitation provided by the Civil Practice Act is not applicable to a writ of error issued by this court to review the judgment of the Appellate Court where it is mandatory for this court to review such judgment. In the case at bar it appears that a freehold was involved originally in the superior court and that court by its decree, which is appealed from, reserved unto itself the jurisdiction with reference to the partition of said real estate. It held that the real estate was not a partnership asset, and, in so holding, a freehold was not involved and was not presented in the prior appeal to this court reported in 399 Ill. 559. The Appellate Court by its decision has held that the real estate is a partnership asset which is contrary to the allegations of the complaint and, therefore, a freehold has become involved for the first time in that court. The defendant has never contended that he had any individual interest in the real estate except as a partnership asset. No freehold could possibly be involved in an appeal by him. Plaintiff Evelyn Altschuler, however, has always claimed individual ownership of the real estate, and thus any decision by any court holding it to be a partnership asset has deprived her of a freehold. Said plaintiff was entitled to a writ of error to review the action of the Appellate Court in this case. The motion to dismiss the writ of error is, therefore, denied.
We shall first consider the ownership of the real estate of which partition was sought. This real estate was originally owned by Isaac Altschuler and his wife, Ida Altschuler, the parents of Samuel and Irwin, as joint tenants and not as tenants in common. Upon the death of Isaac it passed to Ida. Said property had been used by Isaac and after his death was used by the family for the conduct of the business of the Altschuler Iron and Steel Company. Upon the death of Ida Altschuler the property, by her will, passed equally to her four children, Irwin, Samuel, Sadie and Sarah, share and share alike. She also owned other property which passed to her children in the same manner. About a year and a half after the estate of Ida Altschuler was closed the four children agreed to a partition and a division of the property which they had inherited from their mother. By an exchange of deeds between them the two daughters received certain improved property and the two sons received the property upon which was situated the business. The value of the property was such that by this division the daughters received more valuable property than did the two sons. The Appellate Court by its decision holds that this fact is indicative of the intention of the two sons to acquire this property as partnership property. The Appellate Court further points out that the taxes and repairs had been paid out of partnership funds. We believe that this decision by the Appellate Court is erroneous and not supported by the record in this case since it is apparent that the real estate upon which the business was conducted has never been treated as an asset of the business. When Ida Altschuler owned the property, the business continued to pay the taxes and repairs and she paid no rent, so that the conduct of Samuel and Irwin in making these payments does not seem to have much bearing in determining whether or not they considered the property as being partnership property. Likewise, at the death of Isaac, even though Ida was a joint tenant in the real estate she had only the statutory interest of a widow in the business. Historically, the family had not considered the real estate as part of the business, since, even at the time Irwin supposedly acquired Ida's and Sarah's interest in the business, he did not acquire Ida's interest in the real estate. Furthermore, it appears from the record that the will of Samuel specifically devises his interest in this property unto his wife individually. It further appears from the record that the arrangements for drafting of this will were made by Irwin and that he told the attorney who prepared it what the will should contain, and Irwin was a witness to the will. Certainly, if the real estate were considered a partnership asset it would not have been specifically devised to the wife and the interest in the business bequeathed in a different manner, as Samuel did in his will. Furthermore, if Irwin and Samuel were in dispute as to whether the real estate were a partnership asset, Irwin certainly would not have permitted the will to be so prepared without objection on his part. We hold that the decision of the Appellate Court with reference to the real estate is erroneous and that such real estate did not form or constitute a partnership asset.
We next consider the question of the tender by Irwin of the sum of $90,577.33 for the purchase of the interest of Samuel in the partnership and its assets. In view of the fact that the value of the partnership as stated by Irwin included therein the value of the real estate, the tender was not accurate and was not sufficient. In view of the fact that the partnership agreement did not contain a time limit within which the option to purchase should be exercised, we hold that the exercise was ineffectual only as to the amount tendered and not as to the time within which it could be exercised. We likewise believe that the relationship between the partners was such that it would be very difficult to arrive at an account between them and that, until an account has been stated or determined, the option should remain in full force and effect. We hold that the option was not exercised and that the option still continues, but that the decision of the Appellate Court with reference to enforcing the agreement to sell the deceased's interest in the business is erroneous.
We shall next consider the question regarding the accounting, as decreed by the superior court. It held by its decree that Irwin occupied a fiduicary relationship to Samuel and owed him a duty to account (1) as administrator of the estate of Isaac Altschuler, (2) as agent or trustee in the management and operation of the business under a written appointment by the Altschuler family, and (3) as co-partner with Samuel in the operation of the business and as codepositor of funds in a joint bank account. The court further found that the defendant acted as agent and trustee for the family from July 14, 1930, through the entire year 1937 and into a part of 1938 and that the partnership between him and Samuel began in the early part of 1938 and continued without interruption until Samuel's death.
There is no question as to the duty of a surviving co-partner to account to the estate of the deceased partner, under section 43 of the Uniform Partnership Act. (Ill. Rev. Stat. 1949, chap. 106, par. 43.) As we have stated above, the account rendered was not satisfactory and we believe that the trial court was correct in ordering an accounting by Irwin of all money, property and assets of the partnership business at the death of Samuel, together with all sums, profits, capital gains, accounts and notes payable and other credits derived from the operation of the business after the death of Samuel. In view of the fact that the record here shows that there was no accounting between the two partners from the date of the beginning of their partnership until Samuel's death, Irwin is under a duty to account during that period. It has been held that partners act toward one another in a fiduciary capacity, (Einsweiler v. Einsweiler, 390 Ill. 286; Grossberg v. Haffenberg, 367 Ill. 284,) and, therefore, it follows that Irwin was under a duty to account for the funds deposited in the First National Bank of Chicago in the joint bank account of Samuel and Irwin, including the disposition made of the money of said account, the securities purchased with said funds, and the proceeds derived from the sale of such securities.
In order to determine the periods which said accountings should cover, it is necessary to review the facts showing the relationship of the parties. From the evidence it appears that Isaac Altschuler owned and operated the business in his lifetime and maintained a commercial banking account in the name of Altschuler Iron and Steel Company at the South Chicago Savings Bank and another such account in the company name at the Calumet National Bank. Irwin, the eldest son, was employed by his father in the conduct of the business. Samuel, however, was not so employed. In 1929 Irwin established at East Chicago, Indiana, a small brokerage concern known as the Calumet Purchasing Company, in connection with the obtaining of scrap metal for resale to the Altschuler Iron and Steel Company. A bank account in the name of Calumet Purchasing Company was opened in January, 1929, by Irwin at the I.C. Bank and Trust Company. At this time Irwin was somewhat interested in other enterprises, in 1929 having acquired a substantial stock interest in the Hammond Brass Works and being president of that company at a fixed salary. Likewise, in that year he was a stockholder and director of the I.C. Bank and Trust Company. Irwin has remained an officer, director, and shareholder of the said corporations and is now chairman of the board of directors of the National Bank of Hyde Park, which formerly was known as the I.C. Bank & Trust Company.
On July 10, 1930, Isaac Altschuler died intestate leaving him surviving, as his only heirs-at-law, his widow and the four children, namely, Irwin, Samuel, Sadie and Sarah. On July 22, 1930, a joint petition was filed in the probate court of Cook County requesting the appointment of Irwin as administrator of the estate and on the same date letters were issued to him. At that time all of the heirs signed an authorization for Irwin to continue to conduct the business which is as follows:
"Chicago, Illinois July 14th, 1930.
Irwin I. Altschuler, Administrator of the Estate of Isaac Altschuler, deceased.
We, the undersigned, being all the heirs at law and next of kin of Isaac Altschuler, Deceased, do hereby authorize and empower you, as administrator of said estate, to continue and conduct and manage the business of said Isaac Altschuler, now deceased, known as Altschuler Iron & Steel Company, located at 3123 E. 91st Street, Chicago, Illinois; and to do all things necessary for the proper operation of said business for the best interests of all parties beneficially interested therein."
On August 4, 1930, Irwin petitioned the probate court for leave to continue the business and the court entered an order granting him such authority. On September 8, 1930, Irwin, as administrator, filed in the probate court an inventory in which he listed as the assets of the estate, "Business of said decedent known as Altschuler Iron and Steel Company located at 3123 E. 91st Street, Chicago, Illinois $153,677.22." This inventory also contained an itemization of the assets and liabilities of the business as of July 10, 1930.
The administrator did not sell or liquidate the business but continued it during the period of administration. Samuel became employed in the business in July, 1930, soon after his father's death and remained so employed until his death. The bank accounts of the company were retained by the administrator and were used by him in the conduct of the business. Purchase of scrap metal through the brokerage concern known as the Calumet Purchasing Company was not terminated, although the amount obtained through it during the ...