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April 20, 1995


Appeal from the Circuit Court of the 12th Judicial Circuit, Will County, Illinois. No. 93-L-10103. Honorable Herman Haase, Judge Presiding.

Rehearing Denied May 25, 1995. Released for Publication May 25, 1995.

Present - Honorable Allan L. Stouder, Presiding Justice, Honorable Peg Breslin, Justice, Honorable Michael P. Mccuskey, Justice

The opinion of the court was delivered by: Stouder

The Honorable Justice STOUDER delivered the opinion of the court:

This is an appeal by defendants, Wayne Vercellotti, Barbara Vercellotti, Bernice Friedrich and Friedrich Binding & Embossing Co. d/b/a Friedrich, Inc. from a grant of partial summary judgment entered in favor of the plaintiff, Barbara J. Hunter. The circuit court made a finding that there was no just reason for delaying either enforcement or appeal pursuant to Supreme Court Rule 304(a) (157 Ill. 2d R. 304(a) Adv. Sheet). We affirm.

The record shows the plaintiff was an employee of Friedrich, Inc. for 34 years. During that time, through purchases and gifts, she acquired 77 shares of the company's stock. Following the death of the company's founder in 1986, differences arose between the plaintiff and the other shareholders of this closely held corporation. Attempts to negotiate the requisition of the plaintiff's shares proved fruitless.

In August 1993, the plaintiff filed a complaint alleging oppressive conduct on the part of the defendants and breach of fiduciary duty. She sought, inter alia, punitive and compensatory damages. Meantime, on October 20, 1993, the corporation-defendant mailed to all shareholders, including the plaintiff, notice of a special shareholders' meeting to be held November 15, 1993. The meeting was called to discuss the proposed sale of substantially all the corporation's assets to the H.C. Miller Company. Included in the notice was a copy of the statutory provisions concerning a shareholder's right to dissent. (See 805 ILCS 5/11.65, 11.70 (West 1992).) The plaintiff and her attorney attended this meeting, at which a majority voted in favor of the sale. The plaintiff voted against the acquisition.

Subsequently, the circuit court denied the plaintiff's motion for a temporary restraining order. The sale of the company was completed on December 3, 1993. On December 9, 1993, the plaintiff presented a formal written demand for payment to her of the fair market value of her shares as of December 3, 1993. The notice alleged that the information supplied to her prior to the November 15, 1993, meeting was insufficient to allow her to objectively vote on the transaction, or to decide whether to exercise dissenter's rights.

On December 29, 1993, the corporation notified the plaintiff that it estimated the fair value of her shares to be $1,205 per share or a total of $92,785. On January 26, 1994, the plaintiff gave notice that she disagreed with the corporation's estimate. She claimed the shares were worth a total of $269,000. Prior to this, on January 12, 1994, the plaintiff filed a first amended complaint. The complaint alleged "oppressive conduct" (count I), breach of fiduciary duty (count II) and misrepresentation and fraud (count III). On March 10, 1994, the defendants filed a counterclaim in the plaintiff's action requesting a fair value determination by the circuit court.

On April 4, 1994, the circuit court denied the defendants' motion to strike plaintiff's first amended complaint as to counts I and III. However, the court granted the motion as to count II, with leave for the plaintiff to file an amended count. On April 28, 1994, the plaintiff filed an amended count II. In addition, she filed a new count IV. Therein, the plaintiff sought an order that within 10 days of delivery of her stock certificates, the company was to pay the amount it estimated to be the value of her shares. Additionally, the plaintiff requested the court make a valuation determination and order the company to pay the plaintiff the difference.

The plaintiff moved for summary judgment on count IV. On August 30, 1994, the circuit court granted the motion and entered a judgment in favor of the plaintiff for $92,785 plus interest from December 3, 1993. The judgment was conditioned on the plaintiff delivering her shares to the corporation within 21 days.

On appeal, the defendants argue the circuit court erred in granting the plaintiff partial summary judgment. The defendants contend there is no authority under the procedures set forth in section 11.70 of the Business Corporation Act of 1983 (805 ILCS 5/11.70 (West 1992)) for a circuit court to enter a judgment awarding a dissenting shareholder the amount of the corporation's estimated fair value, prior to a final determination by the court of the fair market value of the shareholder's shares. In other words, there is no authority for a "preliminary" determination of fair value.

The defendants maintain that section 11.70 contemplates the corporation will notify the dissenting shareholder of its opinion as to the estimated value of the shares, along with a commitment to pay that amount on transmittal of the shares to the corporation. Thereafter, the dissenting shareholder delivers her share certificates (or other evidence of ownership) to the corporation and the corporation in turn pays the estimated fair value to the dissenting shareholder. Subsequently, in light of any dispute over valuation, the circuit court is empowered to enter a judgment for the amount the court's determination of fair market value exceeds that of the corporation's estimate. (See 805 ILCS 5/11.70(h) (West 1992).) Thus, according to the defendants there exists no authority under the statute for entry of a judgment prior to a determination of fair market value by the court. In the instant case, the court has yet to make such a determination.

In addition, the defendants argue questions of fact remain which render entry of partial summary judgment improper. For example, the defendants argue that questions remain as to whether the plaintiff followed the statutory procedures requisite to being considered a dissenting shareholder. Also, a question of fact remains as to the fair market value of the plaintiff's shares. The defendants point out the court may determine the shares are worth less than the value estimated by ...

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