APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION
536 N.E.2d 901, 181 Ill. App. 3d 97, 129 Ill. Dec. 851 1989.IL.382
Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.
JUSTICE RIZZI delivered the opinion of the court. McNAMARA and WHITE, JJ., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE RIZZI
Plaintiff-appellant Donald G. Worden appeals from a judgment of the circuit court of Cook County regarding the valuation of his stock in the three defendant corporations, Continental X-Ray Corporation, Alphatek Corporation and Allied Fabrication Corporation. Plaintiffs-appellants Ruth Taxy and CXR Corporation, in conjunction with plaintiff Worden, appeal from a judgment regarding the entry of a supervisory order and the appointment of a guardian ad litem with respect to the subject trust. On appeal, plaintiff Worden argues that the trial court committed crucial errors in the valuation proceedings of his shares in the three defendant corporations and that the resulting valuation was against the manifest weight of the evidence. Plaintiffs Worden, Taxy and CXR Corporation further argue that the trial court erred in (1) imposing a "supervisory order" requiring the various procedures be followed in the conduct of meetings of the subject trust and (2) appointing a guardian ad litem to protect the interest of "unborn heirs" of the trust and in awarding him attorney fees and costs. We affirm.
The three defendant corporations, Allied Fabricating, Alphatek and Continental X-Ray (collectively operating companies) are closely held corporations. Allied Fabricating is a sheet metal company, Alphatek manufactures X-ray processors and Continental X-Ray manufactures X-ray equipment. The principal shareholders, directors and officers in the operating companies were plaintiff Donald Worden (Donald) and defendants Julia Worden (Julia) and Patrick Fitzgerald (Fitzgerald).
Prior to 1987, the operating companies leased working premises from a fourth corporation, CXR Corporation . All four companies were founded by the now deceased J. Loyal Worden. Worden's will provided for the creation of the "J. Loyal Worden Testamentary Trust." The trust agreement provides that (1) life-long friend and business associate Ruth Taxy (Taxy) is the life beneficiary; (2) children Donald and Julia are the remaindermen; and (3) Taxy, Donald and Julia are the trustees. The trust owns 45% of the shares of CXR and Taxy owns the remaining 55%.
Donald, Julia and Fitzgerald ran the operating companies following Loyal's death. Taxy was an officer and employee of the operating companies. In 1985, however, a dispute arose. Donald was relieved of his duties as an officer and employee of the operating companies and Taxy's association with the operating companies was terminated. Furthermore, Julia and Fitzgerald planned to move the operating companies out of the real estate owned by CXR.
On March 16, 1986, Donald, Taxy, CXR and the trust filed a law-suit. The five-count amended complaint alleged that (1) the actions of Julia and Fitzgerald constituted a breach of the shareholders' agreement to run the companies on a joint basis; (2) the actions of Julia and Fitzgerald constituted a breach of their fiduciary duties; (3) Donald, Taxy, CXR and the trust were entitled to injunctive relief against certain imminent corporate actions soon to be carried out by Julia and Fitzgerald; (4) Donald, Taxy, CXR and the trust were entitled to a preliminary injunction maintaining Donald's and Ruth's status in the operating companies; and (5) injunctive relief, in the alternative, should be granted, thereby selling or dissolving the operating companies.
Following the testimony of expert appraisers and the introduction of other evidence, the trial court issued an order (1) requiring Donald to sell his shares in the operating companies back to those corporations; (2) setting an aggregated price of $876,000 for those shares and allowing interest on that price from November 25, 1986; (3) allowing the shares in Alphatek to be purchased through two future installment payments; and (4) refusing to allow Donald his expert appraiser's expenses. Further, the trial court issued an order both appointing a guardian ad litem for the unborn heirs of the trust and awarding the guardian $25,110.70 in attorney fees and costs. Finally, the trial court issued a supervisory order with respect to Donald, Taxy and CXR entering and continuing the guardian ad litem's petition for the appointment of a substitute trustee and governing the conduct of any trustee meetings held by Donald, Julia and Taxy. This appeal followed.
Donald first argues that the trial court committed error in its valuation proceedings and that its valuation was clearly erroneous. To support this Conclusion, Donald asserts that (1) the value the trial court reached was too low; (2) the trial court erred in appointing William McMillian, the court-appointed appraiser; (3) the trial court should not have allowed installment payments for his shares in Alphatek; (4) the trial court deprived him of eight months' interest required by statute; and (5) the trial court erred in denying him expert witness expenses.
The Illinois Business Corporation Act provides:
"(a) In either an action for dissolution . . . or in an action which alleges the grounds for dissolution . . . but which does not seek dissolution, the Circuit Court, in lieu of dismissing the action of ordering dissolution, may retain jurisdiction and:
(1) Appoint a provisional director;
(2) Appoint a custodian; or
(3) In an action by a shareholder, order a purchase of the complaining shareholder's shares as provided in subsections (f) and (g) below.
(g) Either the corporation or any shareholder or group of shareholders may, any time after the filing of an action for dissolution . . ., petition the court to purchase the shares of a complaining shareholder and, unless the court finds such procedure to be inequitable, the court shall determine the fair value of the shares as of such date as the court finds equitable. In so doing, the court shall follow the procedures set forth for appraisal of shares under Section 11.70 and shall thereafter dismiss the action." (Emphasis added.) Ill. Rev. Stat. 1987, ch. 32, par. 12.55.
We initially note that the term "fair value" is not defined in the statutes. Furthermore, case law on this issue clearly establishes that no precise and exact rules for determining the fair market value of stock exists. Instead, "fair value" is determined by an exercise of the court's judgment after consideration of all relevant factors. Ahlenius v. Bunn & Humphreys, Inc. (1934), 358 Ill. 155, 168, 192 N.E. 824, 829. As ...