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Regas v. Danigeles

DECEMBER 9, 1964.

GUST REGAS AND SPIROS REGAS, PLAINTIFFS-COUNTER-DEFENDANTS-APPELLEES,

v.

PETER DANIGELES AND THOMAS PAPPAS, DEFENDANTS-COUNTER-CLAIMANTS, APPELLANTS.



Appeal from the Superior Court of Cook County; the Hon. SAMUEL B. EPSTEIN, Judge, presiding. Affirmed in part reversed in part and remanded with directions.

MR. PRESIDING JUSTICE ENGLISH DELIVERED THE OPINION OF THE COURT.

Rehearing denied January 27, 1965.

Defendants appeal from a decree awarding plaintiffs damages for loss of rental money due to what it found was the arbitrary refusal of defendants to accept tenants in a building held in a land trust for the benefit of the parties herein. Defendants appeal also from the denial of their counterclaim for an injunction, a receiver, an accounting of rentals and disbursements, and an award of damages allegedly resulting from plaintiffs' trespassory occupation of a part of the building by storage of ice-cream parlor fixtures, as well as damages for injury to the store upon the fixtures' removal.

Plaintiffs cross-appeal from the part of the decree denying their prayer for a judicial sale of the beneficial interests in the land trust and a division of the proceeds according to the rights of the parties under the trust agreement.

There is substantial agreement on most of the facts.

Plaintiffs Gust Regas and Spiros Regas are brothers. Defendants Peter Danigeles and Thomas Pappas are brothers-in-law of plaintiffs. All four were equal beneficial owners of a building which had been placed in trust in 1944. In 1952 a new land trust agreement was executed, naming a bank as trustee, and providing that each beneficiary had the right to an undivided 25 per cent of the earnings, avails and proceeds from the property. The management and control of the property was vested in the owners of 75% of the beneficial interest under the trust. Similarly, the trustee was authorized to deal with the title on the written direction of the owners of 75% of the beneficial interest. *fn1

From 1944 until 1952 plaintiff Gust Regas carried on the management of the building, including the signing of leases and the handling of funds, all apparently with the tacit consent of the other three, but with some disputed participation by defendant Danigeles. From the time of the 1952 agreement until 1955, there was increased participation by Danigeles, especially through his son George.

In 1954, a tenant who operated an ice-cream parlor in the corner unit of the building, terminated his lease and vacated the premises without removing the fixtures (consisting of a soda fountain, booths and tables, refrigerators, stove, ice-cream making machines and an air conditioner). Gust Regas subsequently bought the fixtures for his own account for $4,500. It is disputed whether Regas tried to rent the corner unit himself for $275 per month through a secret agent, and whether Danigeles told Regas to remove his fixtures.

The falling out of the parties began in 1952 after a particular conversation in which there were charges of a double-cross, and the defendant Pappas never spoke to Gust Regas again except in the courtroom. In 1952 Danigeles had been given authority (along with Gust Regas) to sign checks on the business checking account. After the situation of the fixtures arose in 1954, there was a further deterioration of the relationship between the parties. In April, 1955 Gust Regas withdrew all money from the business account and put it in his own personal bank account without informing the others. Regas also removed the books and records of the business from their customary place at a poolroom operated as a partnership by three of the parties herein, and directed tenants thereafter to forward their rent checks to his residence rather than to the poolroom. His explanation for these actions was that he had discovered some of the records were missing. He continued, as before, to send annual written statements of income and expenditures to the other beneficiaries, and to make a division of the profits.

The corner store containing the fixtures was vacant after June, 1954, and remained vacant at the time of this appeal. Plaintiffs claimed that during this period they found four prospective tenants, all of which were rejected by defendants, thus preventing a lease through the concurrence of the owners of 75% of the beneficial interest. According to plaintiffs, these prospective tenants were: a drugstore, a liquor store, a snack shop and a General Finance Loan Company office. The defendants, however, denied knowledge of the first two prospects and refused to accept the other two, allegedly because the rent was to be only $350 per month as compared with the store's previous rental of $425 per month. They testified that in their judgment the unit should not have been rented for less than $375.

Conversely, the defendants claimed that they found two possible tenants (Imperial Finance and Walgreen) which were refused by plaintiffs. However, plaintiffs testified they had no knowledge of the Imperial lease and contended that the Walgreen offer had already expired when tendered to them.

On December 27, 1955, plaintiffs filed the instant suit.

Both the Master and the Chancellor found that the loss of rental money was due to the arbitrary refusal of defendants to accept two tenants procured by plaintiffs, who were ready, willing and able to rent the vacant store. The Master also found, however, that this arbitrary rejection of tenants gave rise to no cause of action for damages under the controlling document, the trust agreement of 1952. And it is strongly argued by defendants in this court that, whether arbitrary or not, the actions of defendants in rejecting the tenants were within their rights under the trust agreement. The Chancellor overruled the Master on this point, and the decree found that plaintiffs were entitled to damages. *fn2

We do not face the need to reconcile this difference between the Master and the Chancellor, because, in our opinion, the evidence does not support the conclusion that defendants' refusal of the leases was arbitrary. The full record discloses that defendants' decision not to rent may reasonably have been based on the fact that the proposed rental was considerably less than the rent of $425 per month paid by the previous tenant. The snack shop lease called for a rent of only $350 per month for the first five years and then $400 per month for the next five years, coupled with a rent concession of 90 days; and there was no evidence of the financial condition, reliability or business ability of the proposed tenant. The proposed lease with General Finance called for rent of $350 per month. Through hindsight it may appear to ...


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