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Lichtenstein v. Anvan Co.

OPINION FILED JUNE 28, 1978.

MAURICE LICHTENSTEIN ET AL., PLAINTIFFS-APPELLEES,

v.

THE ANVAN COMPANY ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND K. BERG, Judge, presiding.

MR. JUSTICE MCNAMARA DELIVERED THE OPINION OF THE COURT:

Plaintiffs, former partners in defendant Anvan Company, a partnership, brought this action seeking a mandatory injunction requiring an accounting and the distribution of plaintiffs' pro rata shares in said partnership. Defendants counterclaimed, alleging certain fraudulent acts and conversions of partnership assets and business opportunities by plaintiffs. The trial court granted judgment for plaintiffs pursuant to an account stated by the court. The trial court granted plaintiff Lichtenstein $63,432 and plaintiff Flannery $95,147. These amounts represented the purchase price of plaintiffs' interests in Anvan. The court further found that there was no just cause to delay enforcement of or appeal from the order. The trial court also transferred defendants' counterclaims to the law division of the circuit court where they are pending.

Anvan Company was formed by defendants Anthony A. and Irene D. Antoniou on January 1, 1971, pursuant to written articles of general partnership. The Antonious own the stock of certain affiliated companies: Anvan Realty and Management, Anvan Hotel Corporation, Anvan Corporation, and Anvan Industries, Inc.

On July 20, 1970, Flannery was hired by Anthony to manage the properties of Anvan Hotel. Flannery eventually was promoted to the position of senior vice-president in charge of administration for the aforementioned affiliates and, on March 3, 1972, was admitted to the partnership. Lichtenstein was hired on April 1, 1971, to work for Anvan Industries and became senior vice-president in charge of finance and corporate planning for the Anvan affiliates. On April 5, 1972, Lichtenstein became a partner of Anvan Company.

In the Anvan articles of partnership, the interest of each partner is evidenced by the issuance of capital units in one or more of the following six categories:

(1) A Class A partner is required to own at least one Class A capital unit and be an employee of the partnership or an Anvan affiliate. A Class A partner has a voice in the management of the partnership and each Class A capital unit is entitled to one vote.

(2) A Class B partner is required to own at least one Class B capital unit, but is not required to be an employee of Anvan Company or an affiliate. A Class B partner has a voice in the management of the partnership and is entitled to one vote per Class B capital unit.

(3) A Class C partner has rights and obligations identical to those of a Class A partner. In addition, upon termination of Class C partner's employment for any reason, he or his successor in interest immediately becomes a Class F partner.

(4) A Class D partner must meet the ownership and employment requirement of Class A and C partners, but has no voice in the management of the partnership and no vote in partnership affairs. A Class D partner also becomes a Class F partner upon termination of employment for any reason.

(5) A Class E partner must also meet the basic ownership and employment requirements and has no voice or vote in the management of the partnership. The interest of a Class E partner is merely the right to participate in the profits or losses of the partnership for the period of time during which he is a Class E partner. A Class E partner's interest is extinguished upon termination of employment for any reason and his only recourse is a claim for undistributed profits or losses.

(6) A Class F partner is either a former Class C or Class D partner whose employment by the partnership or an affiliate has been terminated. A Class F partner cannot be an employee of the partnership or any other Anvan company and has no voice or vote in the management of the partnership.

Anthony Antoniou is a Class A and managing partner of Anvan Company. Irene is a Class B partner. At the time of Flannery's admission to the partnership, he was issued 200 Class D and 200 Class E capital units. On July 1, 1973, his interest was converted to 300 Class D and 100 Class E capital units. Upon Lichtenstein's admission to the partnership, he acquired 100 Class D and 300 Class E capital units. One year later his interest was converted to 200 Class D and 200 Class E capital units.

On August 13, 1973, Lichtenstein's employment was terminated; the following month, Flannery's employment was ended. Since plaintiffs were no longer employed by the partnership or an affiliate, their Class D capital units were transferred into Class F and they became Class F partners. Their respective interests as Class E partners were extinguished upon termination of their employment.

Plaintiffs' complaints sought a mandatory injunction requiring defendants to render an accounting. Defendants in their answer and counterclaim alleged that plaintiffs paid no consideration for their partnership interests, that they had obtained the certificates of capital units by means of fraud, and were ...


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