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07/14/88 Reed Yates Farms, Inc., v. G. Robert Yates

July 14, 1988





Yates, Third-Party Defendant

and Counterplaintiff;

Jack C. Vieley, Petitioner-Appellee)

No. 4-88-0002

526 N.E.2d 1115, 172 Ill. App. 3d 519, 122 Ill. Dec. 576 1988.IL.1096

Appeal from the Circuit Court of McLean County; the Hon. Luther H. Dearborn, Judge, presiding.


JUSTICE KNECHT delivered the opinion of the court. GREEN, P.J., and LUND, J., concur.


Defendant G. Robert Yates (G. Robert) appeals an order which enforced a lien for attorney fees. The order was entered following protracted and hotly contested proceedings which resulted in a family-owned horse farm being placed in receivership for the purpose of liquidation.

The initial complaint in this cause was filed on June 19, 1983, by Reed Yates Farms, Inc. (Reed Yates), and named G. Robert as defendant. Among the relief sought in counts I through V was money damages for the boarding of G. Robert's horses and an injunction requiring G. Robert to endorse and return to the court for distribution a check payable jointly to him and Reed Yates, which represented proceeds from the sale of a horse jointly owned by those parties. Count VI was premised on an alleged joint venture agreement between Reed Yates and G. Robert under which the parties owned as tenants in common certain breeding stock and other horses. Reed Yates requested the court order an accounting of the affairs of the joint venture, order a partition thereof, and determine the equitable portion of the liquidation proceeds to be delivered to G. Robert and Reed Yates. In an additional count filed August 10, 1984, Reed Yates requested dissolution of the joint venture and liquidation of the joint venture assets.

In a counterclaim filed August 16, 1984, G. Robert asserted that since 1972, he and Don Yates (Don) engaged in a joint venture known as Reed Yates Farm Partnership (the partnership) for the purpose of boarding, breeding and selling race horses. The counterclaim further alleged, inter alia, Don misappropriated partnership assets and failed to provide G. Robert with adequate reports concerning partnership affairs. G. Robert stated he was informed and believed an independent audit of his, Don's, Mabel Yates', Reed Yates' and the partnership's assets would establish, inter alia, he is the owner of and entitled to all of the Reed Yates assets, and the other parties owe him substantial sums of money.

On the basis of the above allegations, G. Robert requested (1) the court appoint an independent auditor to audit the books and records of Don, Reed Yates, and the partnership and determine the balances due by the parties to each other; (2) Don be ordered to turn over to such auditor all books and records of himself, the partnership and Reed Yates; (3) upon completion of the audit, the court determine the interests of G. Robert and Don in the partnership and the balances or assets due to or from the partnership by any party; and (4) after the above determinations, the court dissolve the partnership and distribute its assets to G. Robert and Don on the basis of the results of the audit.

On October 2, 1985, G. Robert filed an amendment to his counterclaim, which added counts II through V. Count II repeated the allegations of Robert's initial counterclaim, and on the basis thereof requested money damages in excess of $15,000 for the counterdefendants' alleged unlawful and tortuous conversion of G. Robert's property. Count III alleged that in December 1977, Don and G. Robert entered into a joint venture by terms of which they agreed to purchase a horse named Rorty Hanover, which was to be used for stud purposes and was to be jointly titled in both of their names. G. Robert stated, however, Don took delivery of Rorty Hanover in his own name without authorization from G. Robert to do so, thereby converting G. Robert's property to his own use. On the basis of the above allegations, Robert requested money damages. Counts IV and V essentially requested punitive damages on the basis of the alleged wilful, wanton and fraudulent character of the acts alleged in the initial counterclaim and in count III, respectively.

G. Robert filed yet another counterclaim on October 2, 1985. The allegations of this counterclaim were, however, basically the same as those of G. Robert's previous counterclaims, except G. Robert also accused Mabel Yates (Mabel) of converting partnership assets to her own use and failing to make proper reports to G. Robert concerning partnership affairs.

A bench trial was held on January 8, 9, and 13, 1986.

In an order filed January 22, 1986, the circuit court found that on March 16, 1978, Don, Robert, and Mabel agreed to the issuance of stock in Reed Yates Farms, Inc., in the proportion of 49% to Don, 49% to Robert, and 2% to Mabel. The court found because he signed a document agreeing to distribution of the corporate stock in this manner, and signed a document in which he applied for insurance as a vice-president of Reed Yates, G. Robert is estopped from denying the corporate existence of Reed Yates. Moreover, the court found G. Robert's allegations of fraud and conversion were not substantiated by the evidence and were not proved. The court also found G. Robert was obligated to pay all board costs for animals owned in whole or in part by him and boarded at Reed Yates, except for board with respect to two animals which he owned and which Don refused to breed on or about March 8, 1983.

The court further found it appropriate and necessary to appoint a receiver to liquidate the Reed Yates assets. After paying all debts, the receiver was to distribute the assets of the corporation to Robert, Don, and Mabel in proportion to the amount of stock in the corporation which the court found they owned. The receiver was to deduct from Robert's distributions the amount of the accumulated board bill which he owed and was to deduct from Don's distributions an amount representing board for the two horses belonging to G. Robert which Don refused to breed. Also, the receiver was ordered to pay to G. Robert any unpaid director's fees and was given discretion to pay Don an appropriate amount for work which he did in connection with the sale at auction of horses belonging to Reed Yates at Lexington, Kentucky, in December 1985, in lieu of a $5,000 bonus which the corporate directors awarded him in December 1985. Finally, the court held although the receiver was to ...

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