Appeal from the Circuit Court of Cook County. Honorable Albert Green, Judge Presiding.
The Honorable Justice Tully delivered the opinion of the court: Rizzi, and Cerda, JJ., concur.
The opinion of the court was delivered by: Tully
JUSTICE TULLY delivered the opinion of the court:
Plaintiff, Lawrence W. Lasday (hereinafter Lasday), filed a shareholder derivative suit in equity to recover corporate funds on behalf of Larsid, Incorporated (hereinafter Larsid), to prevent the removal of officers and to judicially dissolve the corporation. The trial court ordered defendant, Sidney Weiner (hereinafter Weiner) to return $102,000, which he had previously appropriated for his own use, to an authorized Larsid bank account. Plaintiff then petitioned the court to recover the attorney's fees expended to recover those funds. The trial court ordered defendant to personally pay interim attorney's fees in the amount of $28,180.26. It is from this order defendant now appeals pursuant to Supreme Court Rule 304(a). 134 Ill. 2d 304(a).
In the late 1980's, Wiener, a businessman, was seeking to invest in a "Mister Bulky" franchise. Wiener contacted the franchisor who suggested he contact Lasday, a small businessman who had experience managing and operating Mister Bulky stores. Together, Wiener and Lasday formed Larsid, a corporation to own and operate the Mister Bulky franchise in North Riverside, Illinois. Wiener made a capital contribution of approximately $158,000 to Larsid in exchange for 75% of its stock. Lasday exchanged some equipment and inventory for the remaining 25% of the Larsid stock. Lasday was designated the president of the corporation and Wiener the vice-president. Lasday was to manage the day to day affairs of the business. Larsid began operating the Mister Bulky store on October 20, 1986.
In early 1991, Wiener informed Lasday that he had found three buyers (hereinafter Buyers) who were willing to pay $240,000 for Wiener's stock in Larsid. In May of 1991, the Buyers also offered to purchase Lasday's 25% stake in Larsid. In preparation for closing this deal, Wiener requested Lasday provide him with the books, records and financial statements of Larsid so he could turn them over to the Buyers for inspection. The record is not clear as to exactly why Lasday never produced the records; however, it is certain that because of the lack of financial information, the Buyers refused to purchase the Larsid stock.
In July of 1991, Larsid entered into an alternative agreement with the Buyers to purchase the assets owned by the corporation. Lasday and Wiener agreed that all proceeds from the asset sale were to be split in accordance with the ratio of their stock holdings; to-wit, Lasday was to receive 25% of the total sales price and Wiener was to receive 75% of the sale price. On July 5, 1991, the Buyers and Larsid executed a formal agreement and the Buyers assumed control of the operation of the Mister Bulky franchise on that day. The asset sale was never completed due to some unresolved financial issues between Larsid and the Buyers.
At some point, Wiener had opened a corporate account at the Lakeside Bank in the name of Larsid. Wiener provided the bank with an unauthorized corporate resolution which stated that he was both president and secretary of Larsid. Lasday was unaware of the existence of this account and no provision was made for him to access any money which may have been on deposit there. Wiener directed the Buyers to wire transfer all payments for the asset purchase from Larsid to this account. Accordingly, the Buyers wire transferred $50,000 to the Lakeside Bank account on July 5, 1991 and an additional $87,000 on August 30, 1991.
In August and September, Lasday made repeated demands upon Wiener to release his 25% share of the funds received from the Buyers. Wiener refused to do so until such time as Lasday explained some perceived irregularities in the corporate accounting and provided the Buyers with the financial information required to close the sale of the business. Wiener however, treated the funds deposited in the Lakeside Bank as his own and withdrew them almost immediately after they were deposited for his own personal use.
On October 18, 1991, Wiener delivered to Lasday, Lasday's wife and their attorneys, a five-day notice pursuant to Section 7.10(a)(i) of the Illinois Business Corporation Act (805 ILCS 5/1.01 et. seq.) that he would seek to remove Lasday and his wife as officers of Larsid. In response, Lasday filed a verified complaint in equity along with a motion for a temporary restraining order and preliminary injunction. On October 24, 1992, the trial court entered a temporary restraining order which ordered Wiener as follows:
a) to place all money and other assets he received from the Buyers of Larsid's assets into the existing corporate accounts of Larsid;
b) to make no other transfer of funds received from the Buyers of Larsid's assets;
c) to not discharge Lawrence Lasday and Joan Lasday as officers and ...