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Reese v. Melahn

AUGUST 25, 1971.

NORMAN REESE ET AL., PLAINTIFFS-APPELLEES,

v.

E.M. MELAHN ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Lake County; the Hon. CARRIE L. WINTER, Judge, presiding.

MR. JUSTICE BALES DELIVERED THE OPINION OF THE COURT:

The defendants appealed from a decree of the court in favor of the plaintiffs in which the court ordered that the defendants account to plaintiffs and render to defendants 20% of the net proceeds from rent, issuances, and profits; that a constructive trust be imposed; and that 20% of the defendant, Highland Memorial Park, Inc., its assets, income, real estate, and all other property required be transferred to the plaintiffs.

The issues presented for review are as follows:

1. Was there sufficient competent evidence to prove an agency existed between McDonald, a real estate broker, and the defendant, E.M. Melahn?

2. Would the evidence establish that plaintiffs and defendant were joint adventurers?

3. Was there sufficient competent evidence to prove a contract was made between plaintiffs and defendants?

4. May a constructive trust be imposed to prove plaintiffs' interest?

The land in this case, referred to as the Clark property, was subject to use as a cemetery, and plaintiffs claim an interest in a cemetery project located on the Clark property.

In 1963 plaintiffs, together with Arthur B. McDonald, began a search for property adaptable to cemetery use. Several properties were shown, including the Clark property. McDonald introduced plaintiffs to possible investors, including defendant, E.M. Melahn, who had been engaged in road construction business for many years. The plaintiffs and McDonald met with Melahn, the plaintiffs presented a brochure of a memorial type cemetery, explained their backgrounds, and proposed that Melahn purchase the land and provide the money to operate the project; they to receive 50% of the ownership of the project as their interest. Melahn rejected this proposal and said that he would consider the matter further and would get back to them through McDonald.

An offer was made by Melahn, and communicated to the plaintiffs on October 25, 1963 through McDonald, in which he proposed to pay plaintiffs $7500.00 each year for their full time employment, and would set aside 20% of the stock of the planned cemetery project to be acquired by purchase.

Arthur B. McDonald died on September 15, 1966.

Reese and Doyle testified that in November of 1963, McDonald told them that Melahn was offering 20% for them, plus $7500.00 per year. They told McDonald they wanted 50% and rejected Melahn's offer. McDonald then contacted another potential investor. Both Doyle and Reese testified that they told McDonald that they accepted Melahn's offer. McDonald apparently called Melahn, telling him that Reese and Doyle had accepted his offer, that the details would have to be worked out and a contract drawn.

Defendant, Melahn, was called as a witness under section 60 of the Practice Act and testified that there was a meeting with McDonald, Reese and Doyle, McDonald having suggested and arranged the meeting. He retained McDonald to acquire the Clark property. Without authority, McDonald started paying Doyle, and in turn was paid by Melahn, but that Melahn ordered the payments to stop. After McDonald's death, Melahn paid to his estate $7600.00 for services rendered in connection with the cemetery land purchase.

McDonald requested Melahn to reduce the agreement to writing, but this was never done. The Clark property was conveyed to ...


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