Appeal from the Circuit Court of Cook County. Honorable Thomas Durkin, Judge Presiding.
The Honorable Justice Hartman delivered the opinion of the court. Hourihane and South, JJ., concur.
The opinion of the court was delivered by: Hartman
The Honorable Justice HARTMAN delivered the opinion of the court:
Ashley B Corp. (Ashley) appeals from the circuit court's judgment favoring Lyn-Jay Homes, Inc. (Lyn-Jay), and Rosemary Joyce Enterprises (Rosemary), appellees. The litigation was initiated by River Forest State Bank and Trust Company (River Forest), which filed a declaratory action as trustee of a land trust holding title to a parcel of vacant land located in Westchester, Illinois. Ashley, Lyn-Jay, and Rosemary were beneficiaries of the trust. Among other things, the action sought directions as to the trustee's responsibilities regarding the proposed disposition of the trust property. Lyn-Jay filed an answer and counterclaim and, subsequently, sought temporary and preliminary injunctive relief. Rosemary filed a "motion" for declaratory judgment, later amended to a complaint for a preliminary injunction.
By an agreed order entered March 8, 1996, the parties were directed to take certain steps to wind-up their business relationships and dispose of their assets. Ashley was ordered to file pleadings stating all its claims to any interest and assets in a joint venture involving the beneficiaries, based upon a joint venture agreement earlier entered into by the parties to this appeal. Lyn-Jay and Rosemary were directed to respond to those pleadings. An ancillary trial was held upon those pleadings, resulting in the order from which this appeal proceeds. A Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)) finding was entered by the circuit court upon which our appellate jurisdiction rests.
The issues identified in this appeal include whether the circuit court erred (1) in construing the terms of the joint venture agreement; (2) in finding in favor of Lyn-Jay and Rosemary after Ashley rested, where Ashley purportedly presented a prima facie case; and (3) whether an order of sale entered by the court after this appeal was filed should be considered here.
In 1992, Frank J. Barrett secured and paid $35,000 for an option to purchase a 6.155 acre tract of land from its owner in Westchester. Thereafter, Barrett formed a joint venture with Rosemary Joyce and Robert, Fred, Cary, and Henry Erfurth for the purpose of developing and selling the property and, in October, 1992, they executed a joint venture agreement.
In December of 1992, the parties placed the land in the instant land trust, with River Forest as trustee. The original three parties each held an undivided one-third interest in the trust. The parties subsequently assigned their beneficial interests to corporate entities owned by each respective party. Specifically, Barrett assigned his interest to Ashley, Joyce assigned her interest to Rosemary, and the Erfurths assigned their interests to Lyn-Jay.
Following the establishment of the land trust, on December 22, 1992, the parties executed a new joint venture development agreement (December Agreement) that superseded the October 1992 agreement, and changed the name of the venture to the Rosebrook Joint Venture. The December Agreement again authorized the joint venture purchase of the 6.155 acre parcel, under section I.6.C. and, under I.6.D., provided that "the purchase price shall be $725,000 minus the $35,000 capital already paid by *** Barrett. Rosemary *** and Lyn/Jay will each contribute $345,000 toward the purchase price balance." The December Agreement also set forth Barrett's assignment of all his right, title, and interest in the option contract to the joint venture partners. Section I.6.H. of the December Agreement stipulated that the fair market value of the real estate was $725,000.
Section I.6.I. directed that:
"Frank J. Barrett shall be reimbursed equally by the other two (2) parties to the joint venture for 2/3 of his ascertainable pre-closing expenses to date ($24,136.55) and his $35,000.00 capital contribution which were paid to bring the project to its current condition. All further expenses from this date forward are to be shared and allocated equally between the three entities. Such capital and expense reimbursement shall take place at the same time of any expense reimbursement."
Further, section I.6.H. provided, in part, that:
"In the event, contribution of the Real Estate is subject to existing taxes and/or liens at the time of contribution to the Land Trust, and a Joint Venture party advances monies to the Joint Venture for the payment of real estate taxes, mortgage payments or other liens or costs that currently affect the premises, the Contributing Party shall be credited with same as a capital contribution." Under section II.3., Lyn-Jay:
"as Developer shall contribute its own services as a general contractor or obtain the services as of such third parties (hereinafter referred to as "Subcontractors") as it chooses to undertake the Development of the Property." Section II.6. of the joint venture agreement stated, in part:
"It is further understood that Lyn-Jay, Barrett and Joyce, as parties to the Primary Joint Venture, shall share equally in the proceeds from: any lease income and/or from the sale of the partially or fully developed parcel earned by the Primary Joint Venture and/or with the Secondary Joint Venture as co-venturers."
In addition, the December Agreement in section III.2. read, in part:
"Profit: The three entities shall share equally all profit generated by either the development or disposition of all or part of the entire 6.155 acre tract. Profit is defined as the remainder of revenue minus a pro rata return of each party's investment of capital to the project which shall include an interest rate of return from the date of each capital contribution at a rate of return of 2% over the prime rate as published in the Wall Street Journal."
Nothing in the December Agreement suggested that Barrett's $35,000 or any services he might perform were to constitute capital contributions equivalent to the $345,000 each of the other parties contributed, nor was any other value ascribed to such service, if any.
The circuit court's construction of the foregoing December Agreement provisions is the crux of the instant controversy.
In 1993, both Lyn-Jay and Rosemary made loans to the joint venture in order to finance initial construction expenses. On December 21, 1993, the three parties assigned their beneficial interests to The First National Bank of Chicago (First National) as security for a construction loan of $600,000. From that loan, the joint venture, in January 1994, reimbursed Lyn-Jay and Rosemary in full for previous loans they made to the joint venture.
On February 10, 1994, Ashley assigned its beneficial interest in the land trust, which was already subject to the collateral assignment to First National, to Lyn-Jay as security ...