APPELLATE COURT OF ILLINOIS, THIRD DISTRICT
518 N.E.2d 1297, 165 Ill. App. 3d 417, 116 Ill. Dec. 317 1988.IL.91
Appeal from the Circuit Court of Will County; the Hon. Herman Haase, Judge, presiding.
JUSTICE HEIPLE delivered the opinion of the court. BARRY, P.J., and SCOTT, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE HEIPLE
The plaintiff brought this action seeking dissolution of an alleged oral partnership, an accounting, judicial sale of a land trust, and injunctive relief. The trial court determined that no partnership was ever formed, but found that the parties jointly owned the real estate in the land trust. The court severed the parties' joint interests in the land, set the value of the plaintiff's interest, and gave the defendant the option of purchasing the plaintiff's interest. Finally, the court provided that in the event that the defendant elected not to purchase the plaintiff's interest, the property would be sold at a judicial sale and the proceeds would be divided. The plaintiff filed the instant appeal. We affirm.
Jack Davis and Karl Kurtz met and became friends in 1976. At that time, Kurtz was a licensed funeral director and embalmer. The parties orally agreed to purchase real estate and form a funeral home business corporation, with the intent that they would be equal partners in the venture. In 1977, they located a suitable piece of property with a farmhouse in New Lenox, Illinois, which they purchased in the name of Davkurt, Inc., the proposed business corporation. Immediately after the purchase, and at the request of the New Lenox State Bank, the parties placed the property in a land trust. The trust agreement provided that each party owned an undivided one-half of the beneficial interest in the property. Davis and Kurtz each contributed $15,000 for renovations and improvements to be performed on the premises. Davis participated in the initial renovations and intended to act as the funeral home's business manager once the business was established.
Later in 1977, the parties' attorney informed them that Davis could not participate in the intended corporation because State law prohibited an unlicensed individual from holding any interest in a funeral home business corporation. (Ill. Rev. Stat. 1977, ch. 111, par. 2801 et seq.) Therefore, Davkurt, Inc., the intended corporation, was never formed and the property remained in the land trust. Davis testified that upon learning of the State law prohibiting his active participation in the business, he reduced his level of participation but remained a financial and business consultant, as well as a partner in the real estate through his 50% beneficial interest in the land trust. Kurtz disputes this characterization, however. He maintains that Davis withdrew and disassociated himself from the venture, performing no further services to benefit the venture except to give some unsolicited advice.
The parties agree that from 1977 through the time of the trial in this matter, Kurtz actively operated the funeral home business. He made all of the mortgage, utility, insurance, and tax payments. Furthermore, Kurtz made approximately $350,000 in permanent improvements to the property. Specifically, a chapel and a morgue were constructed, the house was extensively remodeled and the second floor was renovated so the Kurtzes could reside there, the parking lot was paved, and the grounds were landscaped. Davis stated that some of the improvements were made over his objections and after his requests that Kurtz buy his interest in the business. Davis objected to the conversion of the two second-floor apartments into a single residence for Kurtz and his wife, but he loaned Kurtz $35,000 to complete the project. Kurtz repaid the loan in full.
In 1984, after Illinois law was amended and unlicensed individuals were permitted to own an interest in a funeral home business, Davis' attorney sent a letter to Kurtz announcing that Davis had elected to dissolve the partnership in the real estate business. The letter contained Davis' offer to buy Kurtz' 50% interest or to sell his 50% interest to Kurtz. Kurtz did not accept the offer.
In April 1985, Davis filed suit against Kurtz. In the complaint he alleged that he and Kurtz entered into an oral partnership agreement to acquire and improve the piece of real estate in New Lenox and to develop a funeral home business. The complaint further alleged that the partnership's two assets were the land trust and the funeral home business. He requested the court to provide certain temporary relief pending the outcome of the litigation, dissolve the partnership, order an accounting of the partnership assets, and order a judicial sale of the land trust. Kurtz denied the existence of a partnership and alternatively asserted that the partnership was dissolved in 1977 when Davis withdrew from the venture.
At the bench trial in this matter, Davis attempted to prove he and Kurtz were partners in D & K Partnership, which he described as a real estate partnership in the land and the buildings they purchased in New Lenox, but he abandoned his earlier claim for an interest in the funeral home business. Davis testified that he received no profits from the partnership, nor did he demand or receive an accounting. Kurtz admitted that he filed several partnership tax returns for D & K Partnership, but stated that he provided incorrect information on the returns and that D & K Partnership did not exist. Similarly, Kurtz admitted that on several of his personal financial statements he disclosed an interest in D & K Partnership, but claimed at trial that there was no D & K Partnership.
The real estate and improvements were appraised prior to trial and the appraisal report was admitted into evidence by agreement. According to the report, the market value of the entire property was $325,000, 43% of which was attributable to the land and 57% of which was attributable to the improvements.
After hearing all the evidence, the court found that no real estate partnership or funeral home business partnership was ever formed, but that Davis and Kurtz jointly owned the real estate. The court accepted the values set out in the appraisal report and further found that the outstanding mortgage indebtedness on the property was $102,000. The trial court noted that the improvements located on the property when it was purchased were of limited value and that the permanent improvements made since 1977 were paid for exclusively by Kurtz. Finally, the court found that the equitable principles of unjust enrichment and restitution applied. In accordance with those findings, the court severed the parties' joint interests in the land trust and provided that if he elected to do so, Kurtz could purchase Davis' interest in the property for $47,945, which, after deducting the outstanding mortgage, represents one-half of the proportionate value of the unimproved land. Alternatively, if Kurtz was unwilling to elect this remedy, the court ordered the ...