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Johnson v. Gene's Supermarket





Appeal from the Circuit Court of Menard County; the Hon. Fred W. Reither, Judge, presiding.


Plaintiff brought an action for dissolution of defendant corporation, an accounting of the finances of defendant corporation, retaliatory discharge, breach of fiduciary duty, and breach of an employment contract. Prior to an adjudication on the merits, a preliminary injunction issued prohibiting defendants from taking any action indemnifying or reimbursing the individual defendants for their legal expenses in this cause. Defendants have taken an interlocutory appeal to that order.

We modify the injunction.

On July 7, 1982, plaintiff filed a multicount complaint seeking dissolution of defendant corporation, and actual and punitive damages against the corporation and against Roberta Johnson and Bradford Marquardt, both as individuals and corporate directors, for various acts against plaintiff. A motion to dismiss the complaint was denied, but plaintiff was ordered to amend the complaint so as to separately designate each cause of action.

A seven-count amended complaint was filed on November 5, 1982. The factual allegations of each count are basically the same. Plaintiff, Roberta Johnson, and Bradford Marquardt are each one-third owners of the common stock of Gene's Supermarket, Inc. The three of them constitute the corporation's board of directors. Prior to January 28, 1982, plaintiff acted as the corporations' secretary and was employed as "overseer of corporate property and affairs" with a $500 weekly salary, use of a vehicle, and a bonus from corporate profits. Roberta Johnson and Bradford Marquardt were president and vice-president of the corporation, respectively. Beginning on October 10, 1981, board meetings were held and illicit and inaccurate minutes were prepared without plaintiff's knowledge. Plaintiff's employment was unlawfully terminated and defendants' salaries were raised at these meetings. Roberta Johnson has refused to let plaintiff see financial records, which he as a director and stockholder has a right to inspect. Plaintiff alleged he has thus unlawfully been excluded from effective participation in the corporation's affairs and corporate assets are being wasted. Finally, plaintiff alleged that some of these actions have been taken to gain advantage for Roberta Johnson in a pending dissolution of marriage proceeding between her and plaintiff.

On October 12, 1982, plaintiff filed a petition for a "temporary" injunction. (The trial court treated it as a preliminary injunction, which is the appropriate term under section 11-102 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 11-102).) It alleged that on October 4, 1982, plaintiff received notice of a special meeting of the corporation's stockholders to consider adoption of a resolution which purported to indemnify defendants from "any and all liability and/or expenses" which they might incur in the present proceedings, and finding that they acted in good faith in all their actions upon which these proceedings are based. It also authorized the payment of the individual defendants' legal fees as incurred. Plaintiff requested a preliminary injunction forbidding defendants "from taking any action designed to indemnify and reimburse" Roberta Johnson and Bradford Marquardt until an adjudication on the merits in this cause, and that otherwise, "waste" of corporate assets would occur.

On November 12, 1982, a hearing on the preliminary injunction was held. The parties stipulated that the corporation did in fact mail out the aforementioned notice and resolution. No evidence was presented, and the parties merely presented arguments regarding the application of the Business Corporation Act (Ill. Rev. Stat. 1981, ch. 32, par. 157.1 et seq.).

The trial court found that plaintiff had alleged the conditions necessary for the issuance of a preliminary injunction. The defendants were enjoined from taking any action "to indemnify and reimburse Roberta Johnson and Bradford Marquardt for attorney's fees, court costs and any other expenses incurred by them in their defense of this lawsuit." The defendants then filed a notice of interlocutory appeal.

To obtain a preliminary injunction the moving party must show: (1) He possesses a right which needs protection; (2) he has a substantial likelihood of succeeding on the merits; (3) he has no adequate remedy at law; (4) he will suffer irreparable injury without the injunction; and (5) in the absence of preliminary relief, he will incur a greater injury than would be received by the objector if the relief was granted. Illinois Consolidated Telephone Co. v. Aircall Communications, Inc. (1981), 101 Ill. App.3d 767, 770, 428 N.E.2d 747, 750; Lums Restaurant Corp. v. Bloomington Restaurant Investments, Inc. (1981), 92 Ill. App.3d 1143, 1145, 416 N.E.2d 751, 752.

On appeal, defendants contend that plaintiff failed to establish (1) a likelihood of success on the merits, (2) that he had no adequate remedy at law, and (3) that he would suffer immediate and irreparable harm without the preliminary relief.

• 1 First we dispose of plaintiff's contention that defendants waived these objections by failing to raise them below. Defendants' argument regarding success on the merits centers on the sufficiency of both the underlying complaint and the prayer for the injunction. Since the sufficiency of a complaint may be attacked at any time, defendants' objection thereto was not waived. (See Biehn v. Tess (1950), 340 Ill. App. 140, 91 N.E.2d 160; Curran v. Harris Trust & Savings Bank (1952), 348 Ill. App. 210, 108 N.E.2d 729.) Also, defendants' attorney argued below that plaintiff had an adequate remedy at law and would not be irreparably harmed because of an undertaking the individual defendants would be required to sign before any funds were dispersed. We conclude that the issues raised on appeal are properly before us.

The individual counts of the underlying complaint seek, in summary, the following remedies:

Count I. Appointment of a receiver, liquidation of the corporation, and an injunction prohibiting the individual defendants from acting for the corporation.

Count II and III. Actual damages from the corporation and punitive damages from the individual ...

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