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Zimmerman v. Birdge

OPINION FILED DECEMBER 13, 1982.

HENRY ZIMMERMAN, PLAINTIFF-APPELLANT AND CROSS-APPELLEE,

v.

CLEO BIRDGE, DEFENDANT-APPELLEE AND CROSS-APPELLANT. — (BIRDGE-ZIMMERMAN, INC., DEFENDANT.)



Appeal from the Circuit Court of Champaign County; the Hon. William C. Calvin, Judge, presiding.

JUSTICE MILLS DELIVERED THE OPINION OF THE COURT:

This suit for accounting involves a stipulation between the litigants as to procedure in the trial court.

(And we note initially that stipulations are not only favored, but are to be encouraged.)

Henry Zimmerman and Cleo Birdge each owned 50% of the outstanding shares of Birdge-Zimmerman, Inc. Zimmerman sued for an accounting and also alleged several other theories of Birdge's liability.

By stipulation of the parties, the accounting action was tried first by the court without a jury. The remaining issues were to be tried by a jury if they were not found to be res judicata by virtue of the accounting judgment. The court's judgment order on the accounting issues found that no further issues were left for trial.

Plaintiff appeals, arguing that certain findings of the court on the accounting action were against the manifest weight of the evidence, and urging this court to enforce the stipulation by remanding for trial on the remaining issues. Defendant Birdge cross-appealed but moved in his brief for voluntary dismissal. There being no objection, the cross-appeal is dismissed.

We affirm on the accounting action and remand.

FACTS

Zimmerman and Birdge formed the corporation, chartered in 1969, by combining the meat locker plant owned by Zimmerman with a portion of Birdge's cattle-raising operation. Birdge already operated a 300-acre farm with a feeder lot and deeded two acres of this land along with two Harvestore silos to the corporation. He was to build — and did build — a modern confinement type feeder lot for corporation use on this property. Zimmerman deeded the locker plant to the corporation.

As a shareholder, Zimmerman filed a five-count complaint on May 11, 1976, alleging that Birdge: (1) was a director and president of the corporation? (2) exercised responsibility for operation of the feed lot owned and maintained by the corporation; and (3) had a fiduciary duty to the corporation, as president and director, to act in the best interests of the corporation and to refrain from converting corporate assets to his own use. It was alleged that this fiduciary duty was violated by several actions itemized in the complaint, including conversion of 66 bulls and feed supplies. It was further alleged that, as a director and president of the corporation, defendant was in the position of a trustee toward the plaintiff as beneficiary and that plaintiff was entitled to rely on Birdge to conduct himself and discharge his duties and obligations accordingly. In more specific allegations, it was stated that Birdge failed to comply with a leasing agreement between the shareholders and the corporation and that Zimmerman was compelled to personally assume certain corporation debts to prevent foreclosure against corporation assets.

A bench trial on the accounting issue was held beginning November 2, 1981. Prior to the taking of evidence, the court noted a stipulation as to the use of a report by Elizabeth Curzon. This report was an audit of the corporation from its inception to December 31, 1972, constructed from the business and banking records of the corporation (such as they were) made available to her. The parties stipulated that the report should be admitted into evidence and that the figures stated in the report were to be accepted as a true and accurate accounting except to the extent that any figure in the report was impeached, altered or supplemented by competent evidence. The effect of this stipulation, as noted by the trial court, was to put the burden of proving any inaccuracy in the report on the party asserting such inaccuracy. The parties had also stipulated that the court should treat December 31, 1972, as the closing date for corporate operations, but plaintiff would introduce evidence to show the parties entered a lease agreement with the corporation in March of 1973 and, should the court find that there was such an agreement, this should be taken into account.

Elizabeth Curzon testified that she was hired by the attorneys to perform an audit of the corporation but that it was impossible to verify all of the records. Due to the passage of time, she was unable to verify beginning assets and liabilities and it was very difficult to confirm the ending assets and liabilities. The funds of Zimmerman and the corporation were commingled and there was no general ledger kept by the corporation. She had to reconstruct bank records from the bank account, but a complete reconstruction was not possible.

The court found that: The business terminated on December 31, 1972, there was no lease agreement reached between the parties in March of 1973; and the corporation accounting prepared by Curzon was confirmed as the corporation accounting except for two changes. Those exceptions were that (1) defendant was required to account to plaintiff for 26 cattle by paying to plaintiff $3,770, and that (2) defendant was ...


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