APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION
543 N.E.2d 184, 187 Ill. App. 3d 312, 134 Ill. Dec. 901 1989.IL.1224
Appeal from the Circuit Court of Cook County; the Hon. Robert L. Sklodowski, Judge, presiding.
JUSTICE RIZZI delivered the opinion of the court. FREEMAN, P.J., and WHITE, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE RIZZI
Defendants, Cypress Venture et al. (the Ashers), appeal from an order of the circuit court of Cook County which approved a court-ordered accounting, judicial sale and distribution of the assets of the dissolved partnership between the Ashers and plaintiffs, Bernard Susman et al. (Susman). Susman cross-appeals from certain provisions of the court order. On appeal, the Ashers contend that (1) the trial court erred in its interest accrual ruling which terminated post-dissolution interest on their capital contributions as of April 3, 1981, and divided the net proceeds of the judicial sale equally between the Ashers and Susman and (2) the trial court erred in failing to vacate the confirmation of the judicial sale. On cross-appeal, Susman contends that (1) the trial court erred in granting the Ashers payment of interest on capital contributions after their September 27, 1974, expulsion of Susman from the partnership; (2) the trial court erred in permitting the Ashers to charge the partnership with $90,175 in legal fees paid to the Ashers' attorneys; and (3) the trial court erred in permitting the Ashers to pay Hilltown Associates (a corporation wholly owned by the Ashers) $56,642.35 in management fees from partnership funds. We affirm in part; reverse in part and remand with directions.
This litigation stems from a 1968 partnership agreement between Susman and the Ashers. The parties entered into a partnership to purchase and develop approximately 945 acres of property in Lake County, Illinois. According to the terms of the agreement, Susman was responsible for the management and development of the property. The Ashers contributed the cash assets and were given the right to make all decisions for the partnership until such time as their capital was returned or Susman contributed an equal amount of capital. Any profits generated were first to be distributed to the Ashers until their capital contribution plus imputed interest was returned and, thereafter, the profits were to be divided equally between the Ashers and Susman.
In 1976, the partners began the long course of litigation which culminated in this appeal. In 1981, the circuit court ordered the dissolution and winding up of the partnership, an accounting and judicial sale of partnership property. In addition, the circuit court found that Susman was entitled to $645,000 in damages (an amount he would have realized from a partnership deal which the Ashers rejected) or his share of the proceeds of the judicial sale, whichever sum was larger. The Ashers appealed from that decision. This court affirmed the circuit court's finding that the Ashers breached the parties' agreement and expelled Susman from the partnership, thereby justifying the court-ordered dissolution. However, this court reversed that portion of the circuit court decision which awarded Susman money damages. (Susman v. Cypress Venture (1982), 114 Ill. App. 3d 668, 449 N.E.2d 143.) The case was then remanded to the circuit court for an accounting and judicial sale.
In June 1986, following the accounting, the circuit court entered an order finding that (1) the Ashers are entitled to payment of management and legal fees from partnership funds; (2) the interest accrued on the Ashers' total capital contribution shall cease as of April 3, 1981 (the date the partnership was legally dissolved); and (3) all partnership real property and non-cash assets are to be sold at the judicial sale. In October 1986, the partnership property was sold at judicial sale to Amli Realty Company for $3,350,000. Susman was a joint venturer in the purchase. When the Ashers discovered that Susman was a party to the purchase, they moved to vacate the confirmation of the judicial sale. In April 1987, the circuit court entered an order which (1) denied the Ashers' motion to vacate the confirmation of judicial sale; (2) ordered the distribution of the cash assets of the partnership in accordance with the previous accounting; and (3) ordered that Susman and the Ashers each receive 50% of the net income from the investment proceeds of the judicial sale. This appeal followed.
The Ashers first argue that the circuit court erred in ordering the termination of their interest earned on capital contributions as of April 3, 1981, and in distributing the net proceeds of the judicial sale equally between the partners in accordance with the circuit court's interest accrual ruling. In support of this view, they assert that the partnership agreement clearly provides that the Ashers were to continue to accrue interest on their capital contributions after dissolution and until the partnership was wound up. The Ashers also contend that the circuit court should have distributed the proceeds of the judicial sale according to the parties' respective partnership shares. We disagree.
Section 2.5 of the Asher/Susman Agreement (Agreement), entitled "Interest on Total Capital Contributions," provides:
"(a) In the event that the Total Capital Contribution of the Asher Partners exceeds the Total Capital Contribution of the Susman Partners at the end of any calendar month during the Period of Existence of this Partnership, the Partnership will credit monthly the Asher Partner's Capital Accounts with guaranteed payment of interest with an amount equal to one percent (1%) above the prime rate of interest obtaining from time to time on short term commercial loans at the First National Bank of Chicago (or its successors) times the amount of such excess."
Section 1.5, paragraph (ee), of the Agreement defines "period of existence" as "the period from the date of the execution of this Agreement until the Partnership affairs are wound up by the General Partners, their assigns or legal representatives after the dissolution of the Partnership." The term "dissolution" is not specifically ...