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Allen v. Amber Manor Apts. Partnership

OPINION FILED MARCH 31, 1981.

FRANKLIN G. ALLEN, PLAINTIFF-APPELLEE,

v.

AMBER MANOR APARTMENTS PARTNERSHIP ET AL., DEFENDANTS-APPELLANTS. — (HYMAN CLAPMAN ET AL., DEFENDANTS.)



APPEAL from the Circuit Court of Cook County; the Hon. GEORGE A. HIGGINS, Judge, presiding.

MR. JUSTICE PERLIN DELIVERED THE OPINION OF THE COURT:

Rehearing denied May 12, 1981.

Defendants-appellants Amber Manor Apartments Partnership, William J. Brant, Jr., L. Cosby Bernard, Jr., and Lewis J. Scheer appeal from an order of the circuit court of Cook County which granted a motion by plaintiff-appellee, Franklin G. Allen, for partial summary judgment declaring Allen a limited partner of the Amber Manor Apartments Partnership. We consider whether the trial court erred in granting Allen's motion for partial summary judgment.

The following factual allegations emerge from the pleadings, affidavits and discovery depositions. On or about November 1, 1971, defendants Sauk Properties, Inc., Hyman Clapman, Willard Gassel and Duane F. Linden entered into a limited partnership agreement for the purpose of constructing and operating a qualifying housing development under the National Housing Act. The partnership was designated the Amber Manor Apartments Partnership. On or about February 27, 1972, defendants-appellants, William J. Brant, Jr., L. Cosby Bernard, Jr., and Lewis J. Scheer, entered into an agreement which provided for the admission of Brant, Bernard and Scheer as limited partners. *fn1 During the period of November 1971 through December 1974, Amber Manor Apartments Partnership acquired an interest in certain real estate in Hobart, Indiana, and obtained certain financing for the construction of an apartment complex.

In December 1974 additional financing was required to pay outstanding construction debts, to complete construction and provide working capital. During the latter part of 1974 representatives of Brant, Bernard, Scheer, Clapman, Linden and Amber Manor Apartments Partnership met with representatives of plaintiff-appellee, Franklin Allen, and other interested investors. Thereafter Allen, the other investors, Brant, Bernard, Scheer, Clapman, Cassel, Linden, Sauk Properties, Inc., and Eugene Storry executed an agreement which is the subject of this action. *fn2

The agreement provides, inter alia: (1) that each of the new limited partners (Allen and the other investors) "agree to pay into the capital of Amber [Manor Apartments Partnership] the amount of money set opposite his name, the aggregate total of which constitutes FIVE HUNDRED THOUSAND ($500,000) DOLLARS, provided the terms and provisions of this Agreement are met, as evidenced by promissory notes"; (2) that Brant, Bernard and Scheer "shall be the sole General Partners of Amber prior to December 31, 1974, and shall continue as sole General Partners until `completion of the Project'"; *fn3 (3) that "Storry shall become a General Partner of Amber * * * upon Completion of the Project"; (4) that each of the new limited partners "agree to loan to the General Partners, jointly and severally, the amount of money set opposite his name, the aggregate total of which constitutes FIFTY THOUSAND ($50,000.00) DOLLARS, which loan shall be evidenced by a Promissory Note from the General Partners to the New Limited Partners, bearing interest at 6% per annum, due and payable on or before December 31, 1975, *fn4 subject to acceleration upon the escrow dispursement [sic] pursuant to the Completion of the project, secured by an assignment of collateral reasonably acceptable to Storry, with a net fair market value of at least $50,000.00"; (5) that the "General Partners shall loan such $50,000.00 to Amber to be used for: (a) the redemption of the interest of Salk [sic] Properties, Inc., Talandis Construction Company, and Vytantes Talandis in the Partnership; and/or (b) the Project"; (6) that the "capital contributions from the New Limited Partners shall be due and payable within thirty days following notice from the General Partners of the Completion of the Project; provided, however, such notice may not be given sooner than June 15, 1975 nor later than January 31, 1976"; (7) that "[i]f the completion of the Project does not occur on or before January 31, 1976, then the obligation of the New Limited Partners to: (a) make any capital contribution, or (b) pay any monies whatsoever with respect to either Amber or the Project, shall terminate."

The agreement further provides that "[t]he New Limited Partners are hereby admitted to Amber as of January 1, 1974 on the following basis:

(a) The participation in the profits and losses of Amber shall be allocated among the parties hereto in the following manner:

(i) For the calendar year 1974:

Party Percent of Profits and Losses

Old Limited Partners 0% New Limited Partners 100%

(ii) For: (a) calendar year 1975; and (b) calendar year 1976 and subsequent years, if the Completion of the Project does not occur:

Party Percent of Profits and Losses

Old Limited Partners 51% New Limited Partners 49%

(iii) For the calendar year 1976 and subsequent years, if the Completion of the Project occurs:

Party Percent of Profits and Losses

Old Limited Partners 47-1/2% Storry 5% New Limited Partners 47-1/2%

(b) The net cash flow generated from the operations of the Project shall be distributed among the parties hereto in the following manner and in ...


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