APPEAL from the Circuit Court of Rock Island County; the Hon.
CONWAY L. SPANTON, Judge, presiding.
MR. PRESIDING JUSTICE STOUDER DELIVERED THE OPINION OF THE COURT:
Plaintiff, SRI Corp., filed a complaint against First National Bank of Rock Island and Judson Mills seeking a declaration of rights respecting a land-trust agreement and a joint-venture agreement. The complaint requested the court to determine that under such agreements an addendum to a lease had been properly approved under the terms of the agreements. A counterclaim filed by Judson Mills requested a determination that the addendum had not been properly approved and requested that the parties be prevented from executing the addendum.
The facts are substantially undisputed.
On April 1, 1961, a partnership was formed by the name of River Realty. The purpose of the partnership was to purchase and develop a parcel of land in downtown Rock Island, Illinois. The partnership was formed by the execution of a written partnership agreement.
The real estate was acquired and on March 2, 1964, River Realty, a partnership, entered into a lease with William R. Smith wherein the latter agreed to rent a large hotel to be erected on the property. The rent was to be based upon a percentage of gross room rentals and sales, with a monthly minimum.
In June 1964, River Realty, in order to raise additional capital, entered into a joint-venture agreement with 26 other individuals, trusts and corporations. River Realty contributed the land to the joint venture and the other venturers contributed the capital necessary for the construction of the hotel. Pursuant to the agreement, River Realty owned 50 percent of the joint venture and the remaining 50 percent was owned in varying amounts by the aforementioned individuals, trusts and corporations.
The joint-venture agreement included two provisions that dealt specifically with a proposed lease of the property and the management and control of the property:
"6. Leases * * * Said lease shall be in such form and substance, as shall be approved in writing by the holders of a majority of the beneficial interest in said land trust.
8. Majority Control. The holders of the majority of the beneficial interest in said Land Trust, or any agent or agents designated in writing by them, shall have the management of said property and the control of the selling, renting and handling thereof, and the Land Trustee shall be authorized to act in respect thereto and in all respects upon the written direction of the holders of the majority of the beneficial interest in said Land Trust."
On June 27, 1964, a land trust was established pursuant to the terms of the joint venture agreement. The hotel property was placed in trust with the First National Bank of Rock Island acting as trustee. The trust agreement provided:
"* * * First National Bank of Rock Island will deal with said real estate only when authorized to do so in writing and that (notwithstanding any change in the beneficiary or beneficiaries hereunder) it will on the written direction of the beneficiaries holding a majority of the beneficial interest in the trust, or will on the written direction of such other person or persons as shall be from time to time named by the beneficiaries holding a majority interest in the trust, make deeds for or otherwise deal with the title to said real estate * * *."
Pursuant to the trust agreement and the establishment of the land trust, the subject property was deeded in trust to the First National Bank of Rock Island. The deed gave the trustee full power and authority to leave the property, renew or extend leases, or to change or modify leases and the terms and provisions thereof.
A Sheraton Motor Inn was subsequently constructed on the property and leased to William R. Smith pursuant to the original lease.
In 1967 Smith transferred all his interest in the Sheraton of Rock Island, including his rights with respect to the lease to SRI Corp., the present tenant in ...