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03/08/96 JOHN J. HAYES v. THOMAS F. ENNIS

March 8, 1996

JOHN J. HAYES, PLAINTIFF-APPELLEE,
v.
THOMAS F. ENNIS, DEFENDANT-APPELLANT.



Appeal from Circuit Court of Champaign County. No. 95C491. Honorable George S. Miller, Judge Presiding.

Released for Publication March 8, 1996. As Corrected August 9, 1996.

Honorable Rita B. Garman, J., Honorable Robert W. Cook, P.j., Honorable Robert J. Steigmann, J., Concurring. Presiding Justice Garman delivered the opinion of the court: Cook, P.j., and Steigmann, J., concur.

The opinion of the court was delivered by: Garman

The Honorable Justice GARMAN delivered the opinion of the court:

Plaintiff John Hayes and defendant Thomas Ennis entered into a partnership agreement (Agreement) in connection with the purchase, development, sale, and lease of houses, duplexes, and apartments on the former Chanute Air Force Base in Rantoul. Their partnership was known as "Ennis-Hayes Properties" and was formed on July 19, 1994. Under this Agreement, Hayes (a real estate broker and developer) was to oversee and manage the marketing of the real estate sales and rentals, and Ennis (an excavation contractor) was to oversee and manage any repairs or remodeling to the real estate. Each partner was to contribute certain amounts of working capital within certain periods of time after the execution of the Agreement. In addition, each partner could give notice (referred to as a "capital call"), requiring each partner to contribute further capital in the event the balance in the partnership checking account, after deduction of all accounts payable, dipped below $25,000. The Agreement provided for the expulsion of a partner under certain specified conditions. The Agreement further provided for arbitration in the event of a dispute arising thereunder.

Hayes allegedly failed to make some of his capital contributions and capital calls. Ennis sought arbitration on several issues, including whether Hayes failure to pay capital contributions and capital calls was material, thus invoking Ennis' right to expel Hayes from the partnership. Hayes also submitted issues for arbitration. The parties also disagreed as to computation of the profits to be distributed to the partners.

The arbitrator found Hayes had breached the Agreement, but that the breaches were not material. The arbitrator further gave Hayes 30 days to cure all breaches and, if not cured within that period of time, the arbitrator declared this would constitute a material breach. Hayes sought confirmation of the arbitrator's decision in the circuit court of Champaign County. The court confirmed the arbitrator's decision and Ennis now appeals to this court under Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)), arguing that the arbitrator disregarded the Agreement and the award should be vacated. We disagree and affirm.

Section IV(b) of the Agreement provided that each partner's initial contribution of $160,000 to the partnership would be considered contributed by his assignment of his undivided one-half interest in the contract whereby the parties were the successful bidders on the purchase of the real estate (referred to as the "Chanute Contract"). Under section IV(c), this contribution was to be made upon execution of the Agreement. Section IV(d), entitled "Additional Capital Contributions," set forth further capital contributions to be made by each partner as follows: (1) the sum of $10,000 to be contributed on or before the execution of the Agreement (section IV(d)(A)); (2) the sum of $25,000 to be contributed within 30 days after execution by the partners of a "License Agreement" with the United States for the real estate (section IV(d)(B)); and (3) the further sum of $50,000 to be contributed within 60 days after execution of the "License Agreement" (section IV(d)(C)).

Section IV(d)(E) provided:

"Additional capital contributions will be required from each Partner if, at any time, the balance in the Partnership checking account, net of accounts payable then in hand, is less than $25,000. The amount to be contributed by each of the Partners will be the greater of the sum of $10,000 or the amount necessary to raise the cash balance in the checking account, net of the accounts payable in hand to $25,000. Either Partner may give notice to the other Partner of the need for such a capital contribution (herein a 'Capital Call')."

Each capital call was to be fulfilled by each of the partners within 20 days of service of notice of the capital call.

Section IV(d)(H) of the Agreement provided that if a partner failed to pay a capital call within the 20-day period, the other partner could make the contribution for him. The nonpaying partner could reimburse the paying partner within 60 days of the payment by paying the amount of the capital call, plus a fee of 25% of the amount of the capital call. If not repaid, the paying partner could, upon notice to the other partner, elect to treat the contribution as an additional capital contribution of his own.

Section VIII of the Agreement provided that the partners were entitled to profits equal to their respective percentage of partnership capital. The distributive share of profits was to be determined as of the last day of each month and distributed to the partners as soon thereafter as possible. Section XIV provided for the expulsion of a partner in the event of:

"A judicial determination that the Partner in question has failed to fulfill any material obligation to the Partnership as specified in this agreement, and such failure has continued for a ...


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