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Magrini v. Jackson

MAY 2, 1958.




Appeal from the Circuit Court of Champaign county; the Hon. GROVER WATSON, Judge, presiding. Affirmed.


Rehearing denied and opinion modified June 2, 1958.

In the original complaint in this cause, the plaintiff Arthur Magrini sued Waddell Jackson and Pauline Smith for $17,750 praying judgment against said defendants, jointly and severally. The original complaint alleged that on or about September 13, 1952, the plaintiff sold a certain restaurant and tavern equipment to Ernest Englund, Jr. and June Thompson for $26,000, and that possession of the same by Englund was on or about January 1, 1953. Later, by leave granted, an amended complaint was filed adding Ernest Englund, Jr., as a party defendant, changing the amount claimed from $17,750 to $17,250 and alleging that on September 13, 1952, the plaintiff sold to the defendant Ernest Englund, Jr. certain tavern and restaurant equipment for the sum of $25,000; that Ernest Englund, Jr. took possession thereof; that thereafter on January 7, 1953, said Ernest Englund, Jr. entered into a written partnership agreement with the defendants Waddell Jackson and Pauline Smith to operate a tavern restaurant; that at the time of the formation of the partnership there was due plaintiff $17,250 with accrued interest; that the partnership assumed and agreed to pay the indebtedness due the plaintiff; that the total amount due plaintiff at the time of the filing of the complaint was $14,250; wherefore plaintiff prayed for judgment against the defendants. The defendant Englund, being outside the country, was not served with process and filed no appearance. The complaint was further amended by deleting the reference to June Thompson in the original allegation of sale of the equipment on September 13, 1952 to Ernest Englund, Jr., and June Thompson and changing the allegation of the original price of such sale from $26,000 to $25,000.

The defendants Jackson and Smith, answered the amended complaint admitting the execution of the partnership agreement; admitting that they thereby became partners with Englund in the operation of the tavern restaurant; admitting that at the time of the formation of the partnership there was due to plaintiff $17,250; alleging that the obligation to plaintiff was the personal obligation of Englund and denying that defendants were indebted to plaintiff. Affirmative defenses were also alleged in the answer as follows:

(1) Fraud on the part of Englund to induce defendants to enter into the partnership agreement.

(2) That plaintiff was relegated to partnership assets only for the collection of his obligation as provided by Illinois Revised Statutes, Chapter 106 1/2, paragraph 17.

(3) That there were no partnership assets and plaintiff is relegated to his remedy of repossessing the tavern and restaurant equipment sold.

(4) That all partners must be served before proceeding against any of the partners.

Plaintiff replied to the affirmative defenses that it was not informed as to (1) but that the same does not constitute a defense; that (2) has no application and does not constitute a defense; that (3) does not constitute a defense and that (4) is a matter of law theretofore passed upon by the court.

The cause was tried by the court without a jury and judgment was entered against the defendants Smith and Jackson in the sum of $14,318.39. This appeal seeks to reverse this judgment.

The testimony and documentary evidence reveals that in 1951 the plaintiff commenced the operation of the tavern restaurant hereinbefore referred to. He had a lease to the premises from the Wilson Park Club. He owned the equipment in the tavern restaurant. In September, 1952, the plaintiff sold to Ernest Englund, Jr. under a written conditional sales contract, all of this equipment. By the conditional sales contract Englund paid $7,000 down and agreed to pay the balance of $18,000 at the rate of $250 per month commencing November 1, 1952, with interest at 3 per cent annually computed monthly on the unpaid balance. The conditional sales contract contains the usual provisions reserving title in the vendor until full payment of the purchase price. At the same time, plaintiff obtained the consent of Wilson Park Club to an assignment of the lease to Englund and the assignment was made. On September 13, 1952, Englund entered into possession of the tavern restaurant and commenced its operation.

A short time later Englund approached the defendant Jackson about a loan. These parties then discussed the advisability of Jackson putting money into the business and the formation of a partnership. This discussion led to the signing of the written partnership agreement which is the main source of the controversy in this case.

The partnership agreement was entered into between Englund, Jackson and Smith on January 7, 1953. It recites that the parties become partners under the name of "8 O'clock Club" to operate a night club; that Jackson and Smith have contributed $6,534.33 in cash and that Englund has contributed the lease, stock of goods, fixtures and good will which the parties value at the same amount. The agreement provides that Englund shall be the full time manager at a weekly salary of $75.00; that all leases, licenses and policies of insurance shall be deposited in a designated bank and Englund alone will issue checks on the account. The agreement then provides:

"The parties will at all times during this partnership bear, pay and discharge equally all expenses that may be required for the support and management of the said business. All gains or losses shall be divided equally between them. On the first day of each month hereafter, the said manager shall carefully and accurately prepare and submit a report covering the financial status of the said business for the preceding month, and, in the event of an excess of funds on deposit in said bank over that which he may deem necessary to retain for contingencies in said account, remains in said bank account, divide the same into two equal parts, retaining one part for himself and giving the other part to his aforesaid partners. The said manager shall not incur any indebtedness by contract or otherwise over the sum of Two Hundred Fifty Dollars ($250.00), without the consent of his partners. It is mutually understood that ARTHUR MAGRINI is the owner of a chattel mortgage covering the chattels enumerated in said mortgage, and that there is now due approximately Seventeen Thousand Two Hundred ...

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