APPEAL from the Circuit Court of Cook County; the Hon. PAUL
ELWARD, Judge, presiding.
MR. PRESIDING JUSTICE HAYES DELIVERED THE OPINION OF THE COURT:
William J. Bradford, Franklin B. Evans, Jr., Charles L. Bradford, and Robert O. Evans, appellants, were apparent successor beneficiaries of a certain land trust agreement dated 24 May 1940, and known as Trust Number 32308, wherein the Chicago Title and Trust Company was named trustee and was to hold title to certain land, including the first-floor store located at 4700 S. Indiana Avenue in Chicago, which was used as a tavern (hereafter tavern).
The trust agreement included the following pertinent provisions:
(2) IT IS UNDERSTOOD AND AGREED by and between the parties hereto, and by any person or persons who may become entitled to any interest under this trust, that the interest of any beneficiary hereunder shall consist solely of the power to direct the Trustee to deal with the title to said property, and the right to manage and control said property as hereinafter provided, and to receive the proceeds from rentals, mortgages, sales, or other disposition of said premises, and that such interest and rights in the avails of said property shall be deemed to be personal property, which interest and rights may be assigned or transferred as personalty. No owner of the shares or units of beneficial interest under this trust shall at any time have any right, title or interest in or to the said real estate as such, or any portion thereof, either legal or equitable, the owner's interest being exclusively in the earnings, avails and proceeds as aforesaid. The death of any owner of beneficial interest hereunder shall not terminate the trust nor in any manner affect the powers of the Trustee hereunder, and in the event of the death of any such owner during the existence of this trust, his or her right and interest hereunder shall, except as herein otherwise specifically provided, pass to his or her executor or administrator as personalty, and not as realty to his or her heirs at law.
(3) The Trustee will deal with the aforesaid real estate only when authorized so to do in writing by the owner or owners of two-thirds (2/3) or more of the shares or units of beneficial interest hereunder, and the Trustee will, upon the written direction of the owner or owners of two-thirds (2/3), or more of the shares or units of beneficial interest hereunder, or such other person or persons as shall be from time to time named in writing by the said owner or owners, or on the written direction of such person or persons as may be the owner or owners of such shares or units at the time, make deeds for, or otherwise deal with the title to said real estate; provided, however, that the Trustee shall not be required to enter into any personal obligation or liability in dealing with said land or to make itself liable for any damages, costs, expenses or penalties, or that the Trustee shall not be required to deal with the title so long as any money is due it hereunder. Otherwise, the Trustee shall not be required to inquire into the propriety of any such direction. It shall not be the duty of the purchaser of the said real estate, or any part thereof to see to the application of the purchase money paid therefor; nor shall any one who may deal with the Trustee be required or privileged to inquire into the necessity or expediency of any act of the Trustee or of the provisions of this instrument.
(4) The owner or owners of two-thirds (2/3) or more of the shares or units of beneficial interest hereunder shall have the right to manage this aforesaid property and to control the selling, renting and handling thereof, and shall collect and handle the rents, earnings, avails and proceeds thereof; and the Trustee shall have no duty in respect of such management and control, or the collection, handling or application of such rents, earnings, avails or proceeds, or in respect of the payment of taxes or assessments or in respect of insurance, litigation or otherwise, except upon written direction, and after payment to it of all money necessary to carry out such instructions as herein provided. No owner or owners of the shares or units of beneficial interest hereunder shall have any authority to contract for or in the name of the Trustee or to bind the Trustee personally.
(6) The real estate firm of DRAPER & KRAMER, INC., an Illinois corporation, is hereby designated agent for the owners of the beneficial interest under this trust, to manage and operate the trust property, to lease the same as such agent, to receive and collect the rents therefrom, and to disburse or distribute net rentals in accordance with whatever instructions it may receive from time to time from the owner or owners of two-thirds (2/3) or more of the shares or units of beneficial interest hereunder. In all matters relative to said agency, Draper & Kramer, Inc., is hereby authorized and directed to act upon the written instruction of the owner or owners of two-thirds (2/3) of the shares or units of beneficial interest hereunder, and said agency shall continue until revoked and terminated by a notice in writing signed by the owner or owners of two-thirds (2/3) or more of the shares or units of beneficial interest hereunder, and delivered to the principal office of Draper & Kramer, Inc., in the City of Chicago, Illinois. The Trustee shall have no duties, obligations or responsibilities in connection with the said agency, it being expressly understood that there shall be no agency relationship existing between the Trustee and Draper & Kramer, Inc., and that the said agent at all times shall be acting exclusively as the representative of the owners of the beneficial interest in this trust and that said agent shall have no right or authority to contract for or in the name of the Trustee or to do any acts or things for or in the name of the Trustee, excepting only that said agent may, if and when directed so to do by the owner or owners of two-thirds (2/3) or more of the shares or units of beneficial interest hereunder, pay general real estate taxes and special assessments levied or assessed against the trust property in the name of Chicago Title and Trust Company as Trustee under this agreement."
On 10 August 1965, Draper and Kramer, purporting to act as agent for the trustee, in an apparent violation of the trust provisions, entered into a written lease of the tavern to one Louis Desideri for a period of 1 year, commencing 1 January 1966 and ending 31 December 1966. The lease provided that the tavern was to be used "as a confectionary [sic] store and tavern with the retail sale of tobaccos, fountain lunches and package liquor." The lease also contained the following pertinent provision:
"Lessee hereby covenants that he will at all times, protect, defend, indemnify and hold harmless the said lessor and lessor's Agent, and the Officers, Directors and Agents of each of them, from and against any and all loss, liability, suits, claims, costs, expenses or damages, resulting from or caused in whole or in part, by the selling, dispensing or giving away of alcoholic liquors in or upon or about said demised premises, by any person, firms or corporation whatsoever, whether such liability is based upon any statute of the State of Illinois, or upon the common law, or arising out of the violation of any statute, ordinance, regulation or duty imposed by any statute or the Common Law or otherwise."
On 23 July 1966, one Amos Bain allegedly attacked one Henry Harden with a beer bottle while both men were in the tavern. Harden allegedly suffered a severe shock to the nervous system, in addition to severe physical injuries, both internal and external, including the loss of his left eye. On 24 May 1967, Harden and his wife, Arcola (hereafter Hardens), filed an amended complaint against Desideri; the Chicago Title and Trust Company (hereafter trustee); Amos Bain; and William J. Bradford, Franklin B. Evans, Jr., Vivian Brown Spear, Charles I. Bradford, and Robert O. Evans (hereafter collectively referred to as the beneficiaries of the land trust). The Hardens alleged that Desideri, by and through his agents and employees in his behalf, sold or gave to Bain, while in the tavern, alcoholic liquors in such quantities as to then and there cause, in whole or in part, his intoxication; and that, while so intoxicated, he assaulted Henry Harden, causing his injuries. The Hardens claimed that, by virtue of the Illinois Dram Shop Act (Ill. Rev. Stat. 1967, ch. 43, sec. 135), a cause of action had accrued to each of them, and each sought damages under the Act from Desideri, the trustee, and the beneficiaries by virtue of their status as operator and owners of a dram shop respectively. (There was also a count in the complaint seeking damages from Amos Bain.)
On 29 October 1971, a court order was entered, pursuant to a settlement agreement, dismissing the principal action, but stating that "any cause of action which defendants may have against each other shall survive this dismissal of plaintiff's [sic] complaint."
Thereafter, on 23 November 1971, the beneficiaries filed an amended counterclaim in chancery against Desideri and Draper & Kramer. In Count one of the amended counterclaim in Chancery, the beneficiaries alleged that Draper & Kramer and Desideri, in their negotiations leading to the lease, had agreed that the beneficiaries would be the lessors; that the trustee was thereafter negligently designated as lessor by Draper & Kramer; that Draper & Kramer negligently executed the lease as agent for the trustee instead of as agent for the beneficiaries; that, according to the lease, Desideri had agreed to indemnify the lessor for certain losses (see indemnity provision supra); that Desideri did occupy the premises for the full term of the lease, paying the amount of rent set forth in the lease; that the Hardens did allege a cause of action against the beneficiaries and Desideri; that Desideri acknowledged in writing his obligation to the beneficiaries under the indemnification clause; and that, in settlement negotiations, Desideri had stated his assets to be a 5-year-old car and $480 in a checking account, but that he had recently conveyed real property to his wife by quit-claim deed. Having no adequate remedy at law, the beneficiaries asked that the lease be reformed to show that they were, in fact, the lessors and that Draper & Kramer be designated their agent. Then, the lease being so reformed, the beneficiaries asked that Desideri be ordered to comply with the indemnity provision of the lease and pay them all the sums that they had been required to pay to the Hardens as a result of this principal suit, plus expenses.
In Count II of the amended counterclaim in Chancery, the beneficiaries, apparently in an alternative to Count I, asked for indemnity from Desideri based on the theory of "active-passive" conduct. Specifically, they allege that their conduct in owning the tavern was merely passive in nature, whereas Desideri's conduct in serving Bain intoxicating liquors and thereby causing his intoxication, was active.
On 24 January 1972, Desideri petitioned the court to strike Count I, alleging various grounds for the impropriety of reformation in this case; and also to strike Count II, alleging that there had not been any factual determination as to his actions and that, in any case, the penal nature of the Dram ...