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Block v. Dardanes





APPEAL from the Circuit Court of Cook County; the Hon. NATHAN M. COHEN, Judge, presiding.


Defendant George Dardanes, a general partner in a limited partnership known as Wildfire Investments, appeals from an order granting plaintiff, his limited partner, an accounting and judgment for $105,400.54. On review, Dardanes contends that the trial court erred in denying his motion to dismiss at the close of plaintiff's case on grounds that (1) plaintiff failed to establish a prima facie case; and (2) plaintiff "did not come to the court with clean hands."

Many of the essential facts in this case are uncontradicted, inasmuch as defendants called no witnesses to testify. It appears that in January of 1973 plaintiff, a physician, was introduced to Dardanes by a common friend, Tony Dicharinti. Plaintiff and Dardanes became interested in the purchase of the Adria restaurant in unincorporated Lake County, and they entered into a written limited partnership agreement whereby Dardanes, who had experience in the restaurant business and at that time owned and managed the Sir George's restaurant, was the general partner, and plaintiff was the limited partner. The purpose was to finance and operate the anticipated new restaurant and, pursuant to the terms of the agreement, Dardanes was to be responsible for the actual management of the business, including the keeping of partnership records and accounts.

The seller of the Adria restaurant wanted $550,000 for the property — $50,000 of which was required as a down payment; $200,000 of which was to be paid in cash "under the table"; and the partnership was to obtain a mortgage for the remaining $300,000. Plaintiff, Dardanes and Dicharinti each agreed to furnish one-third of the cash needed for the down payment and the "under the table" money, although Dicharinti was not mentioned in the written partnership agreement.

It is somewhat unclear from the record exactly how plaintiff provided his share of the cash. He testified that he promptly gave Dardanes $3,333.33, representing one-third of the $10,000 earnest money; that in order to pay his share of the $200,000 "under the table" money he removed $46,000 in cash from his safety deposit box at the Old Orchard Bank; that he and Dicharinti took this money to his (plaintiff's) house and counted it; that they placed it in an attache case and brought it to Dardanes at Sir George's restaurant; that Dardanes said plaintiff was short by $1,070; that approximately one week later he gave Dardanes two watches (valued at $740) and $330 in cash to make up this deficit; that in order to pay his share of the $50,000 down payment, he withdrew $5,500 from his account at Home Federal Savings and Loan and $3,000 from his account at Continental Illinois National Bank and Trust; that he also sold some stock for $5,455 and wrote a check payable to "cash" for $4,000; and that he gave these sums to Dardanes. However, plaintiff's wife (Louise Block), who is also a physician and practices with plaintiff, testified that plaintiff originally removed $18,400 from the safety deposit box; that she later witnessed him counting $38,760 in cash, which he had taken from the box; that she gave plaintiff $1,600 from their office account and later gave him an additional $2,000 from office funds to invest in the partnership. Finally, plaintiff's income tax return for 1973 indicates that he invested $21,000 in the business.

In any event, it is clear that the partnership secured a mortgage, under which it was to pay approximately $3,000 per month and, in April of 1973, the purchase of the property was finalized. A corporation (Wildfire, Inc.) was set up as the owner of the business, and plaintiff personally paid $4,000 of a $12,000 charge by an architect who was hired to plan the new restaurant. Plaintiff made 20 to 25 visits to the restaurant before it opened on May 1, 1974, under the name "Wildfire."

Subsequent to the opening, Bruce Block (plaintiff's son), who had worked for Dardanes at Sir George's restaurant, began working at Wildfire and Dicharinti, together with an individual named Frank DeMarie, also became involved. Plaintiff testified that they were considered partners, even though their names did not appear in the limited partnership agreement. Plaintiff also testified that when Dicharinti suggested DeMarie's sons (Frank, Jr., and Salvatore) would be helpful at the restaurant, Dardanes agreed that they should be hired. Plaintiff and his son testified that Salvatore took over the day-to-day management of Wildfire. Plaintiff's son also testified that Sal kept two sets of books — one which was shown to anyone asking information, while the other was "private"; and that he (Bruce) told plaintiff of the two sets of books and reported the actual daily receipts to plaintiff.

It appears evident from the record that Dardanes did not involve himself in the operation of the restaurant to the extent contemplated in the limited partnership agreement. Plaintiff testified that he never saw any income statements of Wildfire Investments; that on several occasions during the period from July to September, 1974, he had requested of Dardanes some indication as to the partnership income, but he never received any such information; and that Dardanes never furnished plaintiff with an accounting.

Dardanes, called to testify under section 60 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 60), stated that while he was at the Wildfire approximately 10 times in May of 1974, he was never there during the period of June to September, 1974; that he "never operated personally the Wildfire"; that he did not have a key; that he never had anything to do with Wildfire from the beginning; that he never kept the partnership books; that his inactivity at Wildfire resulted because the DeMaries forcibly took over the business a few months after it opened; that Sal and Frank DeMarie, Jr., threatened his life; and that they and Bruce Block were in total control of Wildfire. On the other hand, plaintiff testified that Frank DeMarie did not threaten him or Dardanes in order to become involved in Wildfire. Bruce Block testified that the relationship between Sal DeMarie and Dardanes was amicable and that he never observed any quarreling between the two, and that he never heard Frank DeMarie, Sr., threaten Dardanes — although, on occasions, one of the DeMaries had kept a revolver in his desk.

Dardanes testified that he tried to render an accounting, stating that he had hired Norman Diamond, an accountant, to do so and that the DeMaries brought various vouchers and receipts to his (Dardanes') home, which he in turn delivered to Diamond. Diamond testified that during the period of May to October 1974, he received books from Dardanes; that he (Diamond) also visited Wildfire and requested and received various documents from Frank DeMarie. It was conceded at the oral arguments here that no accounting was in fact ever completed.

In October 1974 plaintiff filed the instant suit against Dardanes, Sal and Frank DeMarie, Jr., and Wildfire, Inc., seeking essentially a dissolution, accounting, and termination of the limited partnership. Dardanes filed an appearance and answer and, although the DeMaries were served with summons, they did not appear. At trial, plaintiff's witnesses testified as related above and, in addition, Dardanes testified that the restaurant was in serious financial difficulty during the period of June through September 1974; that in November, he orally agreed to sell the premises to an individual named George Christopulous; that under the agreement, Christopulous was to pay the outstanding bills and take over the mortgage; that three or four days after the agreement was reached, Christopulous gave Dardanes $20,000 in cash and later gave him an additional $17,500; that he neither gave nor received a written document of any kind; that the sale was never consummated; and that Christopulous sued him and recovered a judgment of $47,000. The record is not clear as to whether plaintiff was actually apprised of the proposed sale. In any event, Dardanes testified that he did not have to report it to plaintiff since he "seemed to know everything" but that he did in fact tell plaintiff of the sale during a telephone conversation; that plaintiff told him "to go right ahead and sell it" and then hung up on him; that plaintiff refused to talk to him and that he thus never had a chance to tell him that Christopulous had paid $37,500; and that he never gave plaintiff any part of that payment. It also appears from the testimony that a foreclosure suit was filed against the partnership in December 1974 for default of mortgage payments.

Plaintiff also testified that he personally paid many of the partnership debts, including the mortgage payments for March, April and May of 1974; that he paid the real estate taxes; that he loaned Dardanes $1,500; and that his "out-of-pocket" loss is over $118,000 as a result of the partnership effort.

At the close of plaintiff's case, Dardanes moved to dismiss on the grounds that plaintiff had failed to establish a prima facie case and that he came into court with unclean hands. The motion was denied, and Dardanes chose to stand on the motion and not introduce any evidence in his behalf. A default judgment order was then entered against the DeMaries for $105,400.54 and, subsequently, the court entered judgment against Dardanes in the same amount, with findings that plaintiff paid $105,400.54 to Dardanes in reliance upon his representations that it would be used in furtherance of the partnership; that Dardanes failed to fully and fairly account to plaintiff; that Dardanes failed to perform the duties and obligations incumbent upon him as general partner; that Dardanes failed to manage the business and thereby caused a waste of the assets of the partnership; and that there is due and owing from Dardanes the sum of $105,400.54. The trial court then entered a final order ...

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