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Lester Witte & Co. v. Lundy





APPEAL from the Circuit Court of Cook County; the Hon. JOHN F. HECHINGER, Judge, presiding.


Rehearing denied August 25, 1981.

The instant action was brought by the plaintiffs pursuant to section 2(b) of the Uniform Arbitration Act (Ill. Rev. Stat. 1979, ch. 10, par. 102(b)) to stay an arbitration proceeding commenced by the defendant because the defendant's demand for arbitration did not state an arbitrable claim.

According to the allegations in the plaintiffs' complaint, the defendant, Todd S. Lundy, withdrew as a partner from the plaintiffs' public accounting firm, Lester Witte and Company, on October 1, 1976. Pursuant to the partnership agreement he was to be paid his equity account interest and his vested equity point interest in the firm over periods of five and ten years, respectively. The complaint further alleged that on or about July 16, 1980, due to temporary cash flow problems, the firm voted to defer these payments to the defendant. On August 11, 1980, the defendant filed his demand for arbitration. This demand was premised on paragraph 23 of the partnership agreement, which stated:

"Except as provided in Article 13, any controversy or claim arising out of or relating to this agreement, or the breach thereof, shall be settled by arbitration in accordance with the Rules of the American Arbitration Association for commercial disputes, and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof."

Article 13 is inapplicable to the instant action.

The plaintiffs' petition was filed on November 14, 1980. An arbitration hearing was set for November 20, 1980. On November 17, 1980, the plaintiffs made a motion for a temporary restraining order to enjoin the arbitration proceeding until the court could hold a hearing on the plaintiffs' complaint. On the same day, the defendant moved to dismiss the plaintiffs' complaint pursuant to section 45 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 10, par. 45). The trial court denied the motion to dismiss, entered a temporary restraining order, effective for seven days, and set a hearing on the plaintiffs' complaint on the day the restraining order was to expire. The defendant appeals from this order and contends that the trial court erred in denying his motion to dismiss the plaintiffs' complaint and in granting the temporary restraining order.

Prior to discussing the merits of the instant appeal, we must first address the plaintiffs' argument that this appeal should be dismissed because the issue of whether the temporary restraining order was properly entered is moot. The plaintiffs rely on City of Chicago v. Airline Canteen Service, Inc. (1978), 64 Ill. App.3d 417, 380 N.E.2d 1106, which held that any issue respecting a temporary restraining order is moot when the temporary restraining order has expired and there is no demonstration of the possibility of a claim for damages.

The first case to recognize the appealability of a temporary restraining order was Bohn Aluminum & Brass Co. v. Barker (1973), 55 Ill.2d 177, 303 N.E.2d 1. In this case a temporary restraining order was issued to restrain the individual defendant and other union members from interfering with ingress to and egress from the plaintiff's plant and from threatening or intimidating the plaintiff's employees. The court in Bohn Aluminum recognized the brevity of a temporary restraining order as a possible reason for holding such orders non-appealable. This factor was not persuasive, however, for the court stated:

"During the time when it remains in effect a restraining order could work substantial injury upon the defendant, injuries for which he should be entitled to recover damages if the order was wrongfully issued." (55 Ill.2d 177, 184, 303 N.E.2d 1, 5.)

The cause was therefore remanded with directions to deny the plaintiff's motion to dismiss the appeal.

A similar factual situation arose in Bettendorf-Stanford Bakery Equipment Co. v. UAW Local 1906 (1977), 49 Ill. App.3d 20, 363 N.E.2d 867, wherein a temporary restraining order had been issued after an ex parte hearing to enjoin the defendants from interfering with the movement of traffic upon the plaintiff's premises. The plaintiff moved to dismiss the subsequent appeal because the defendants had not sought damages. The plaintiff contended the appeal dealt with a moot question since the restraining order had expired and no effectual relief could be granted. This argument was rejected when the court held:

"By timely moving to vacate the TRO and then perfecting their appeal, defendants preserved for review the question whether or not the TRO was wrongfully issued. The question of damages, if any, does not come into issue until and unless an adjudication is made that the issuance was wrongful." (Emphasis added.) 49 Ill. App.3d 20, 22, 363 N.E.2d 867, 869.

• 1 While Bettendorf-Stanford was concerned with the absence of any allegation of damages in the defendants' motion to vacate the temporary restraining order (see Airline Canteen, 64 Ill. App.3d 417, 432 n. 1, 380 N.E.2d 1106, 1117 n. 1), we feel that the holding in that case has applicability to the instant case. Bettendorf-Stanford discussed the requirements of Supreme Court Rule 307 (Ill. Rev. Stat. 1975, ch. 110A, par. 307) governing interlocutory appeals and stated that that rule did not require appellants to request damages. Furthermore, after discussing the merits of the appeal, the court found the temporary restraining order had been erroneously issued and remanded the cause for a hearing on damages that may have been incurred by reason of the wrongful issuance. Thus, our examination of Bohn Aluminum and Bettendorf-Stanford leads us to a conclusion ...

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