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Fuchs v. Bidwill

AUGUST 14, 1975.

LEONARD FUCHS ET AL., PLAINTIFFS-APPELLANTS,

v.

ARTHUR J. BIDWILL ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Sangamon County; the Hon. HOWARD LEE WHITE, Judge, presiding.

MR. JUSTICE TRAPP DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 10, 1975.

Plaintiffs having elected to stand upon their complaint, the trial court dismissed with a judgment order their action for an accounting and to impose a constructive trust in favor of the State of Illinois upon monies alleged to have been received by the defendants in violation of their fiduciary relation and duties as legislators. Plaintiffs appeal.

It was alleged that the plaintiff Fuchs is a citizen, resident and taxpayer bringing the action for the benefit of the State following the refusal of the Attorney General to institute or prosecute such an action. The plaintiff, Businessmen for the Public Interest, is described as an Illinois not-for-profit corporation concerned with the prevention of corruption and self-dealing in public office, which has acted as a public-benefit corporation by asserting the interest of the public in preventing official misconduct.

It is alleged that in 1960, one Everett owned, operated and controlled two race tracks through certain corporations; that in 1960 she organized a corporation to conduct harness racing at one of such race tracks and that upon such organization the corporation was awarded prime racing dates and continued to be awarded such favoring dates through 1968, and that as a result the corporation earned large profits.

Plaintiffs allege that defendants were members of the State legislature with power and influence, individually and collectively with respect to the passage of legislation affecting the profits of racing through the licensing, regulating and taxing of horse racing. It is further alleged that following the organization of such corporation, Everett in 1961 and thereafter from time to time, secretly made available to the several defendants shares of the corporation at the price of one dollar per share in amounts ranging from 3000 to 4900 shares, and that beginning in 1965 and thereafter at various times, Everett arranged to buy back from the defendants such shares or portions of such shares at prices ranging from three dollars to seven dollars per share and that in such transactions the defendants made large profits doubling their investments, and in some instances making a much greater profit, and that the transactions were carried out secretly through divers means to conceal the ownership of the shares by the respective defendants.

It is further alleged that Everett made such shares available to defendants because his public office enabled each to exercise power and influence in legislation concerning horse racing and that the racing which the corporation provided would profit through the exercise of such power and influence; that each defendant knew of such reason for making the shares available to him and knew that while such shares were made available to the several defendants such shares were not generally available to persons who were not members of the General Assembly.

The complaint prayed that each defendant be declared a constructive trustee for the benefit of the State of Illinois of any shares which he now owns, directly or indirectly, and of all proceeds received by him, directly or indirectly, from such shares and that he be required to account for all proceeds received from shares so owned, and that each defendant be required to account for all such shares owned by him at any time and for all proceeds and profits realized therefrom.

The several defendants filed motions to dismiss the complaint and the order of the trial court was entered upon findings, (1) that the plaintiffs have no standing in court to file the action, and (2) that the complaint was insufficient as a matter of law.

• 1 For purposes of the review of such judgment, well-pleaded allegations and the reasonable inferences therefrom are to be taken as true. Adams v. J.I. Case Co., 125 Ill. App.2d 388, 261 N.E.2d 1.

The parties state the issues variously. In sum such include whether, upon the allegations made, legislators have a fiduciary duty which they violated, whether plaintiffs have standing to bring the action where they suffer no individual injury and no public funds were distributed or dissipated and whether citizens may bring the action when the Attorney General declines to proceed.

Defendants urge that the complaint is insufficient in that it fails to allege the equitable ownership of public funds as in United States v. Carter, 217 U.S. 286, 54 L.Ed.2d 768, 30 S.Ct. 515; Fergus v. Russel, 270 Ill. 304, 110 N.E. 130; People v. Holten, 287 Ill. 225, or the enforcement of a trust in public property as in Paepcke v. Public Building Com., 46 Ill.2d 330, 263 N.E.2d 11.

It is also contended that the complaint is insufficient in that it fails to allege that the defendants did anything which was contrary to the interests of the public or that there was a wrongful act, and that no facts alleged which show an exercise of power or influence to aid Everett. We note that the motion of at least one defendant did ...


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