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Russell v. Klein

OCTOBER 24, 1975.




ON REMAND from the Illinois Supreme Court.


Rehearing denied December 4, 1975.

The Illinois Supreme Court has remanded the instant case to us for further consideration. (58 Ill.2d 220, 317 N.E.2d 556.) Plaintiff originally appealed from an order finding that a judgment by confession which had been entered against defendants was satisfied and from a money judgment entered against him after he had filed his notice of appeal. Initially, we reversed both the order and the money judgment holding that defendants' petition for satisfaction of the judgment by confession was barred by the two-year statute of limitations in section 72 of the Civil Practice Act. (Ill. Rev. Stat. 1971, ch. 110, par. 72(3); 14 Ill. App.3d 856, 303 N.E.2d 241.) In reversing, we did not consider any issues other than the one relating to section 72. The Supreme Court reversed our determination regarding section 72 and remanded the case to us for consideration of the remaining issues on appeal. In the instant appeal plaintiff contends that: (1) the trial court's judgment was against the manifest weight of the evidence; (2) the Statute of Frauds precludes enforcement of the agreement in satisfaction of the judgment; and (3) the trial court erred when having lost jurisdiction by virtue of plaintiff filing his notice of appeal nevertheless entered judgment for defendant for $24,880.

In its opinion, the Supreme Court observed that the facts of the instant case were adequately summarized in our prior opinion. (58 Ill.2d 220, 317 N.E.2d 556.) Having again examined the record, we believe our prior summary of the facts will amply serve our present needs and therefore refer the reader to that summary of the evidence. 14 Ill. App.3d 856, 303 N.E.2d 241.


Plaintiff first contends that the trial court's judgment was against the manifest weight of the evidence. He argues that defendant failed to prove: (1) that he was engaged in a joint venture with defendant, *fn1 and (2) that the judgment was satisfied.

• 1 Relying heavily upon Richton v. Farina, 14 Ill. App.3d 697, 303 N.E.2d 218, plaintiff first argues that defendant failed to prove that he was engaged in a joint venture with her. A joint venture is an association of persons jointly undertaking some commercial enterprise. It requires "a community of interest in the performance of a common purpose, a proprietary interest in the subject matter, a right to direct and govern the policy in connection therewith, and a duty, which may be altered by agreement, to share both in profit and losses." (Carroll v. Caldwell, 12 Ill.2d 487, 497, 147 N.E.2d 69, 74.) The intent of the parties is the most significant factor in determining whether a joint venture exists. (Maimon v. Telman, 400 Ill.2d 535, 240 N.E.2d 652.) A written agreement is not required to form a joint venture and the existence of a joint venture may be inferred from a variety of facts and circumstances. Reese v. Melahn, 53 Ill.2d 508, 292 N.E.2d 375; Ditis v. Ahlvin Construction Co., 408 Ill. 416, 97 N.E.2d 244; In re Estate of Sugar, 22 Ill. App.3d 484, 317 N.E.2d 685.

In the instant case, while plaintiff argued that he had loaned money to defendant, the trial court determined that he had contributed capital to their joint venture. Moreover, the evidence adduced at trial supports the trial court's conclusion. Defendant testified that she and plaintiff jointly agreed to develop the property defendant then owned. Plaintiff was to contribute in cash approximately the same amount as defendant's contribution — her equity in the property. Moreover, defendant's testimony was corroborated by that of Marie Farella, defendant's former employee. Farella overheard plaintiff and defendant talking about a joint venture. She later observed plaintiff at the building site on several occasions and heard plaintiff arguing with defendant about the selection of subcontracts. Furthermore, the evidence is clear that plaintiff issued six checks for the payment of various expenses of developing the property. Plaintiff admitted having no agreement with defendant regarding interest on these considerable amounts at the time he made the payments. Plaintiff also admitted arranging for the delivery of a construction trailer, at no charge, to the building site. On the basis of these facts, upon weighing the evidence, the trial court could properly have determined that the parties had entered a joint venture.

Notwithstanding the testimony of plaintiff and his attorney, since the trial court believed defendant's testimony regarding the joint venture, it must also have believed her testimony regarding the termination of the joint venture and the origin of the judgment note which was the subject matter of plaintiff's action. Defendant testified that notwithstanding their agreement, in the spring of 1966, plaintiff refused to contribute further funds to the project. However, since defendant wanted to complete the project, she reinmbursed him for his contribution in the form of the judgment note. The note, prepared by and at the insistence of plaintiff's attorney, was back-dated to December 1, 1965, and was signed by defendant and her husband. When defendant mailed plaintiff the note, she included a letter which referred to the note as a loan and made no reference to a joint venture. However, in the circumstances of this case, we do not believe that either the letter or the note are inconsistent with the prior existence of a joint venture. Clearly, the note evidenced the change of the form of plaintiff's investment, in the spring of 1966, from capital to debt and also evidenced the termination of the joint venture.

Plaintiff also suggests that defendant failed to prove that the judgment was satisfied. In September of 1966, plaintiff sued on the note and judgment was entered as confessed. When defendant was unable to secure further financing for the project, her creditors initiated procedures to enforce their claims. By the fall of 1967, defendant believed that her creditors were attempting to "pierce the corporate veil" of Y-K Builders, Inc., defendant's construction company, which had acted as general contractor on the project. She testified that, in these circumstances, she contacted plaintiff telling him that if he released her from the judgment, she would shield him from liability for the debts of the joint venture by turning the property over to her creditors. Although plaintiff denies it, defendant insists that plaintiff agreed to the arrangement, and explains that no formal satisfaction of the judgment was entered because the creditors might have discovered plaintiff's participation in the project.

Plaintiff insists that no agreement to satisfy the judgment was concluded. In particular, he points to the absence of documentary evidence supporting defendant's position. However, documentary evidence is not required to prove the existence of an agreement particularly where the Statute of Frauds is inapplicable. Moreover, defendant's explanation of the absence of such proof was not unreasonable in the circumstances. Since plaintiff had participated in the joint venture, it is not inconceivable that, if his participation became known, the creditors of the joint venture could recover their losses from him.

• 2 Whether an agreement was concluded was a question of fact to be resolved, in the instant case, by the trial court. Although plaintiff denied the existence of the agreement, defendant confirmed its existence. Thus, whether such an agreement was concluded resolves to a question of credibility. Here the court observed the demeanor of both witnesses and found for defendant. After studying the record here, we believe the trial court's finding on this issue was correct.

• 3 Plaintiff next contends that the agreement to satisfy the judgment violated the Statute of Frauds. The statute (Ill. Rev. Stat. 1965, ch. 59, par. 1), in relevant part, provides:

"That no action shall be brought, * * * whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person, * * * or upon any agreement that is not to be performed within the space of one year from the making thereof, unless the promise or agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and ...

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