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Behrstock v. Ace Hose & Rubber Co.





Appeal from the Circuit Court of Cook County; the Hon. Harold A. Siegan, Judge, presiding.


This cause is before us a second time following our reversal of the judgment of the circuit court of Cook County upholding the validity and enforceability of an employment contract between defendant Bruce Behrstock (Bruce) and five closely held corporations, defendants Ace Hose and Rubber Company, Ace-Lite Step Company, Ace Stretch Hose Company (the Ace companies), L. Behrstock and Company and 1708 South State Street Building Corporation (the Building Corporation). Defendant Eugene Behrstock (Eugene), Bruce's father, had executed the contract over the objection of his brother, plaintiff Alfred Behrstock (Alfred); both Eugene and Alfred were 50% owners, officers and directors of the companies. We remanded to the trial court with directions that it enter judgment "declaring the written contract null and void" and to conduct further proceedings not inconsistent with our opinion. Behrstock v. Ace Hose & Rubber Co. (1983), 114 Ill. App.3d 1070, 449 N.E.2d 954.

Upon remand and after consideration of Alfred's petition for an accounting and other relief, and Bruce's and Eugene's response thereto, the court ordered Bruce to repay to the companies certain monies, which it deemed were made to Bruce pursuant to the employment contract, and profits received from his rental of cars to the Ace companies through his operation of A & B Leasing. The court also ordered Bruce and Eugene to repay attorney fees paid on their behalf by the Ace companies. On appeal, Bruce and Eugene now contend that the trial court erred in ordering repayment of these sums and in allowing portions of their discovery depositions to be admitted into evidence. For the reasons set forth below, we affirm.

The record discloses that Alfred is president of the Building Corporation and L. Behrstock and Company, as well as secretary-treasurer of each of the Ace companies. Eugene is the president of the Ace companies and secretary of the other two companies. Bruce was neither a director nor an officer of the companies. In 1970, Eugene employed Bruce as a comptroller and, in 1972, he began transferring his stock to Bruce. By 1973 Bruce had become assistant to the president and general manager of the Ace companies, which sell industrial rubber products. The Ace companies and L. Behrstock and Company are located in the buildings owned and operated by the Building Corporation. In 1975, Eugene retired from the companies, but continued to consult with Bruce, who by that time had assumed Eugene's managerial duties. Bruce was paid approximately $700 per week during the period preceding August 1978; however, no written employment contract had been entered into between the parties.

By 1978, Bruce was managing all five companies. In June and September or October, Eugene proposed to Alfred that they enter into an employment contract with Bruce. Alfred rejected these proposals on both occasions. On December 16, 1978, Bruce sent Alfred a copy of an employment contract entered into between Eugene and himself. Eugene had executed the contract on behalf of all five companies, signing it as president of the Ace companies and as vice-president of L. Behrstock and Company and the Building Corporation.

On February 16, 1979, Alfred filed suit, naming the companies and Bruce and Eugene as defendants. On appeal to this court for the first time, we held the contract was null and void and remanded the cause to the trial court. Thereafter, pursuant to the trial court's request, the parties entered into a stipulation, which stated, among other things: that prior to August 1978 Bruce received a salary of, at most, $700 per week from the Ace companies; that Bruce received a bonus of $30,500 for the fiscal year ending July 31, 1979, and a bonus of $28,000 for the fiscal year ending July 31, 1981, pursuant to the employment contract; and that Bruce's and Eugene's attorney fees were paid by the Ace companies in reliance on a letter from attorney Leonard Gordon to attorney Irving Ribstein and on article XIII of the corporate bylaws. The stipulation also indicated that the boards of directors of the Ace companies never made a determination to indemnify Eugene or Bruce for legal fees, no independent legal counsel ever issued a legal opinion that Eugene or Bruce should be indemnified by the Ace companies, nor was there ever a vote by disinterested shareholders of the Ace companies to indemnify them.

The trial court subsequently entered judgment ordering Bruce to repay to the companies $105,900, representing excess salary payments; $58,000, representing excess bonus payments; and $10,463, representing excessive profits received from his operation of A & B Leasing. The court further ordered that Bruce and Eugene repay $21,335, representing attorney fees paid on their behalf by the companies. This second appeal followed.


We first address Bruce's argument that the trial court erred in ordering him to repay excess salary payments to the companies. In its memorandum opinion, the trial court found, after considering documentary evidence, arguments of counsel and our opinion in Behrstock v. Ace Hose & Rubber Co. (1983), 114 Ill. App.3d 1070, 449 N.E.2d 954, that prior to August 1, 1978, Bruce received a salary of $700 per week and, thereafter, $1,000 per week. The court found that Bruce's salary was "properly" $700 per week based on that fact that no evidence had been presented to challenge this finding. The court further found that, based on our decision in Behrstock, Eugene lacked authority to raise Bruce's salary over the objection of Alfred and, accordingly, it ordered Bruce to return excess salary payments of $300 per week from August 1, 1978, to May 15, 1985, or $105,900.

• 1 Bruce now argues that his salary increase "was independent from the written contract" based on Eugene's implied authority to increase his salary, that the trial court should have allowed evidence of quantum meruit and that Alfred is estopped from disputing the raise. With respect to Bruce's first contention, he asserts that "[t]he simple undisputed facts" are that his salary was raised to $1,000 several months before the written contract was executed, pursuant to Eugene's implied authority to increase it, and that the written contract "adopted the $1,000 figure which had been paid for several months prior to the written contract."

We find it difficult to conceive how Bruce can argue that one 50% owner and director of a corporation had the implied authority to orally raise his salary over the repeated objections of another 50% owner and director when an appellate court has already ruled he did not have the express authority to do so pursuant to a written contract. There may be such authority based on the concept of human relations and family ties, but not when an appellate court has already ruled otherwise.

• 2 We also reject Bruce's argument that the trial court erred in refusing to allow quantum meruit evidence on this issue. Whether evidence is admissible rests primarily in the discretion of the trial court and its decision will not be disturbed absent an abuse of that discretion. (Country Mutual Insurance Co. v. Adams (1980), 85 Ill. App.3d 501, 407 N.E.2d 103.) "A quantum meruit recovery requires a showing that a * * * [party] has voluntarily accepted a benefit which would be inequitable for him to retain without payment since the law implies a promise to pay reasonable compensation when valuable services are knowingly accepted." (Emphasis added.) (Plastics & Equipment Sales Co. v. DeSoto, Inc. (1980), 91 Ill. App.3d 1011, 1017, 415 N.E.2d 492.) On remand of the instant case, the trial court had the following facts before it: prior to August 1978, Bruce earned $700 per week; by 1978 Bruce had assumed management of all five defendant companies and continued to be paid $700 per week until August 1978; Bruce's duties did not change to any considerable extent after the employment agreement was executed in December 1978; Alfred repeatedly objected to any employment contract with Bruce or a raise in his salary; this court's decision found that the contract terms provided for a retroactive salary increase, and the contract, which we held invalid, although not executed until December 1978 was dated August 1, 1978. Based on these facts, Bruce could not successfully contend that Alfred voluntarily and knowingly accepted his services for the increased salary of $1,000 per week, since Alfred had expressly objected to the increase. Accordingly, we find that the trial court did not err in refusing quantum meruit evidence upon this issue, since it was inapplicable under the circumstances.

• 3 Finally, we note that defendants present their estoppel argument for the first time in this second appeal. With some exceptions not applicable here, it is well settled that no point which could have been raised on the merits in a prior proceeding can be urged in a subsequent appeal, and those points not raised are considered waived. (People ex rel. White v. Busenhart (1963), 29 Ill.2d 156, 193 N.E.2d 850.) Since defendants here failed to raise their estoppel argument at trial or in their first appeal, they have waived it for purposes of review in this second appeal.

For the above reasons, therefore, we hold that the trial court did not err in ordering Bruce to ...

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