Appeal from the Circuit Court of Coles County; the Hon. HARRY
I. HANNAH, Judge, presiding. Reversed and remanded.
Rehearing denied and opinion modified March 5, 1968.
Plaintiff, Emmert Curtis, appeals from an order of the Circuit Court dismissing Counts I and II of an Amended Complaint for recision and other relief based upon a contract alleged to be within the Illinois Securities Law.
Count I alleges that defendant, Kenneth L. Huston, a resident of the State of Nevada, through his agents, the defendants, Doyle Johnson and William Walborn, who are residents of the State of Illinois, did, in Coles County, Illinois, on or about January 6, 1964, sell to plaintiff a document purporting to be a trust receipt as follows:
"WHEREAS, HUSTON HOTEL CORPORATION, a Nevada corporation, Las Vegas, Nevada, has leased from PARADISE HOTEL AND HEALTH SPA CORPORATION, the hotel portion of the property consisting of 400 deluxe rooms to be constructed and completely furnished:
"AND, WHEREAS, it is contemplated for tax purposes that the HUSTON HOTEL CORPORATION will sub-lease to a Limited Partnership on the same basis it is now leasing the hotel from PARADISE HOTEL AND HEALTH SPA CORPORATION with KENNETH L. HUSTON being the General Partner and all other investors to be Limited Partners;
"AND, WHEREAS, the undersigned, KENNETH L. HUSTON as General Partner, agrees to fully consummate this transaction in his name and shall have all of the liability attached to said lease and shall keep and save harmless the Limited Partners from liability of all kinds.
"AND, WHEREAS, fractional interest in such Limited Partnership will be sold on the basis of one per cent (1%) equal to FIVE THOUSAND DOLLARS ($5,000.00) with a minimum share to any Limited Partner of 5% and a maximum share to any Limited Partner of 10%.
"AND, WHEREAS, as soon as possible, but prior to opening date of said hotel, a Partnership Agreement will be drawn and executed by the General Partner and all Limited Partners subject to the following:
"(a) All investors shall have the option at the time the Limited Partnership Agreement is ready to be executed, to enter into such partnership agreement and to become a Limited partner, or to demand and receive back from the undersigned the monies deposited hereunder;
"(b) The undersigned shall pay to each investor who elects not to enter into said Limited Partnership, within 90 days after demand, the total amount deposited hereunder by such investor, plus accrued interest as hereinafter provided.
"NOW, THEREFORE, the undersigned, KENNETH L. HUSTON, hereby acknowledges receipt from EMMERT CURTIS of Oakland, Ill. of the sum of $5,000.00, which represents his subscription for a 1% ownership in said proposed Limited Partnership. Said amount is received by the undersigned to be held in trust for said investor upon the terms and conditions herein set forth.
"The undersigned hereby agrees to pay to said investor in quarterly installments from and after January 1st, 1964, an amount equal to 5% per annum on the amount deposited hereunder up to the date of the execution of the Limited Partnership Agreement by said investor, or up to the date his deposit is returned pursuant to demand.
"This Trust Receipt is given and the agreements and conditions hereof are made under the laws of the State of Nevada and relate to real estate located in the State of Nevada and the laws pertaining to interest rates in that state shall govern.
"Dated this 6 day of January, 1964.
S/ KENNETH L. HUSTON KENNETH L. HUSTON"
That the above described document was sold to plaintiff as a security within the definition of section 21 of the Illinois Securities Law of 1953 (Ill Rev Stats 1963, c 121 1/2, § 137.2-1), that defendant Huston issued a promissory note payable to plaintiff which has been retained by defendants Doyle Johnson, William Walborn and others, and it alleges payment of the $5,000 to Johnson and Walborn and receipt by plaintiff of the trust receipt.
That the securities were not registered pursuant to the Illinois Securities Law (Ill Rev Stats 1963, c 121 1/2, §§ 137.1 through 137.19) and said securities were sold in violation of said law.
That plaintiff had no knowledge that the sale was voidable by him at his election until February 17, 1965, when he consulted his attorney, Robert N. Corley, and that on March 14, 1965, plaintiff gave notice by registered mail to the defendants of his election to declare the sale void and to tender back the security and all rights thereunder and demanding payment of the sum of $5,000.
That the defendants refused to accept the tender and make the repayment, and that plaintiff continues to make tender in open court.
The Count asks that the sale be rescinded, that defendants pay plaintiff $5,000, plus interest at 5% from the sale to the decree and court costs and attorneys' fees, and such relief as equity may require.
Count II makes the same allegations except that it does not allege the failure to register the securities under the Illinois Securities Law, and it adds the allegations that the defendants immediately ...