Court of Appeals of Illinois, First District, Sixth Division
GREGORY BERKOWITZ, as Trustee of the W.F.T. Trust, Plaintiff-Appellant and Cross-Appellee,
RICHARD J. URSO, JR., as Administrator of the Estate of Richard Urso, Deceased, Defendant-Appellee and Cross-Appellant, Banco Popular NorthAmerica and Unknown Owners, Defendants
Appeal from the Circuit Court of Cook County. No. 04 CH 5166. The Honorable Richard J. Billik, Jr., Judge Presiding.
For Appellant/Cross-Appellee: George B. Collins, Adrian Vuckovich, Benjaminn C Butler, of counsel, Collins, Bargione & Vuckovich, Chicago, IL.
For Appellee/Cross-Appellant: Mary Elizabeth Damitio, Matthew Levitt, Helm & Wagner, Naperville, IL.
JUSTICE LAMPKIN delivered the judgment of the court, with opinion. Justices Hall and Rochford concurred in the judgment and opinion.
[¶1] Following a bench trial, the circuit court found that a joint venture agreement existed for the ownership and operation of a rental property between plaintiff, Gregory Berkowitz, as trustee of the W.F.T. Trust (Trust), and Richard Urso (Urso), who had since died. The circuit court, however, found the Trust was barred or precluded from enforcing any claimed right to one-half of the property interest because the property was acquired vis-a-vis a fraudulent or improper purpose and in violation of the Frauds Act (740 ILCS 80/2 (West 1998)). Notwithstanding, the circuit court concluded that the evidence supported the enforcement of the Trust and Urso's agreement for the operation of
the rental property. The circuit court, therefore, ordered plaintiff and defendant, Richard J. Urso, Jr. (Richard Jr.), as administrator of the estate of Richard Urso, deceased, to wind up the operation of the joint venture arrangement for the rental of the property and to provide an accounting to each other for the operation of the business since Urso's death. The parties have cross-appealed.
[¶2] Plaintiff contends the circuit court erred in finding the joint venture agreement for the ownership of the subject property was unenforceable based on an improper or fraudulent purpose and is barred by the Frauds Act. In contrast, defendant contends the circuit court erred in even finding a joint venture agreement existed. In the alternative, defendant contends the circuit court erred in finding the joint venture agreement as to the operation of the property, i.e., the renting of the property, was not unenforceable based on a fraudulent or improper purpose, was not barred by the statute of frauds, was not void based on public policy, or was not barred by the Probate Act of 1975 (Probate Act) (755 ILCS 5/18-2, 18-3 (West 1998)). Based on the following, we affirm in part and reverse in part.
[¶4] The undisputed facts are these. In 1998, the subject property, 750 S. Clinton Avenue, in Chicago, Illinois, was purchased. On April 30, 1998, the title to the property was placed in a land trust with Metropolitan Bank and Trust Company, trust number 2153 (land trust). The designated beneficiary of the land trust was Urso, having sole power of direction. The land trust then entered into a mortgage loan agreement with Banco Popular North America (Banco Popular). The property was leased to Scarlett's G.P., Inc. (Scarlett's), a gentlement's club, for a nine-year term with a five-year option to renew. The May 12, 1998, lease listed the land trust as the landlord with the address of " c/o G.B. Management, 1307 S. Wabash, Suite 200, Chicago, Illinois 60605." The lease contained an " option to purchase" provision, in which Scarlett's had the option to purchase the property until May 31, 1999. In the event Scarlett's wished to exercise the purchase option, pursuant to the terms of the lease, an executed contract was to be sent to " c/o G.B. Management, 1307 S. Wabash, Suite 200, Chicago, Illinois 60605." 
[¶5] The " buyer's settlement statement," dated July 22, 1998, listed the purchase price of the subject property as $627,500. The settlement statement revealed credits for $25,000 in earnest money, $25,955.17 in tax credits, and $472,500 in loan proceeds. The settlement statement also listed " W.F.T. Contribution, $50,000" as a line item reducing the overall balance required to close the property. The statement listed the " total due from Urso" as $134,769.83. The settlement statement contained a signature line with the name Richard Urso printed below the line and a completed signature on the line. The record contains a copy of a cashier's check dated July 27, 1998, for $50,000 made out
to " C. T. and T."  with " WFT Trust" as the remitter.
[¶6] Urso annually reported the income generated from the property on his personal joint tax returns that he filed with his wife. Urso died on April 15, 2003. As the administrator of Urso's estate, Richard Jr. has acted as the beneficiary of the land trust since the time of his father's death.
[¶7] On March 24, 2004, plaintiff, as trustee of the W.F.T. Trust, filed suit against defendant alleging that Urso and Louis Wolf, the former trustee of the Trust, entered into an oral joint venture agreement for the purchase and operation of the subject property. The Trust alleged it was entitled to partial ownership and a share in the rents received from the subject property. Plaintiff subsequently filed four amended complaints. In its fourth amended complaint, the subject of which underlies this appeal, the Trust alleged that, in January or early February of 1998, Wolf, acting for the Trust, and Urso verbally agreed to purchase the subject property together. The terms of the agreement were such that the Trust would provide $25,000 in earnest money and an additional $50,000 at the time of closing, while Urso would obtain financing for the property and provide any funds necessary to close over and above the available financing. Moreover, the property would be held in a land trust to which Urso would be the beneficiary. According to the fourth amended complaint, Wolf and Urso agreed that any profits, i.e., the surplus of rents and receipts over the expenses including interest, would be divided and any profits derived from the sale of the property, either by Scarlett's exercising its option to purchase or the ultimate dissolution of the venture, would be divided equally. Defendant filed an answer denying the existence of a joint venture agreement and asserted affirmative defenses based upon illegality/fraudulent purpose, the Frauds Act, the Probate Act, the statute of limitations, and as against public policy. The case proceeded to trial.
[¶8] Louis Wolf testified at trial that he started the Wolf Family Trust in 1975. The Trust was involved in all aspects of commercial real estate. Wolf testified that Berkowitz was the trustee of the Trust and Wolf's wife and children were the named beneficiaries. Wolf said that he acted on behalf of the Trust in the acquisition of properties and all negotiations related thereto.
[¶9] Wolf testified that he met Urso in 1995. Urso was a neighbor and became a close friend. According to Wolf, he and Urso had a business relationship for the acquisition of real estate. Specifically, Wolf and Urso purchased three parcels of property together: one on Clark Street, one on Harlem Avenue, and the subject property. The owners of the Clark Street property were Wolf, Urso, and Albert Berland, who had since passed away. Wolf testified that he could not recall who held title to the Clark Street property, but he knew that neither he nor the Trust were named on the title. Wolf said that they held the Clark Street property for three or four years before selling it and splitting the proceeds equally amongst the three men. Wolf testified that there was no written agreement related to the Clark Street property. According to Wolf, he and Urso purchased the Harlem Avenue property in 2002. Wolf and Urso each contributed half of the purchase price, but title was held by a corporation to which Urso controlled the ownership shares. Wolf testified that he and Urso had the Harlem Avenue property for " several years and then Mr. Urso sold the property."
Wolf and Urso split the proceeds equally. There was no written agreement attached to the Harlem Avenue property.
[¶10] Wolf additionally testified that in 1998 he learned of the subject property. Mark Vajdik, operator of Scarlett's, suggested Wolf purchase the property because, as the lessor of the premises, Vajdik was having issues with the owner at the time. After viewing the property, Wolf told Vajdik that he was interested in purchasing the parcel. As a result, Wolf began negotiating a lease with Vajdik. While negotiating the lease, Wolf contacted Daniel Kravetz, whom he had known for 15 years, to inquire if Kravetz was interested in partnering on the deal. Wolf also retained the services of attorney Charles Goodbar. Wolf provided Goodbar with a $25,000 check from the Trust for purposes of earnest money. Meanwhile, Kravetz contacted Larry Slonina, a loan officer at Banco Popular, in an effort to obtain a loan to purchase the subject property. According to Wolf, he and Kravetz planned to be equal owners of the subject property, but Kravetz was going to hold title and obtain the loan in Kravetz's name only.
[¶11] Wolf testified, however, that Kravetz met him and a group of men for a weekly breakfast meeting at which time Kravetz told Wolf that he could not proceed with the deal. Kravetz was in the currency exchange business and his partners in that business had a problem with Kravetz entering a partnership for the purchase of the subject property. Urso attended the breakfast as well and expressed interest in taking over Kravetz's position in the deal. Specifically, Urso would become an equal partner with Wolf in the transaction and would proceed to get financing. Wolf testified that Urso ultimately signed the lease agreement as the landlord. According to Wolf, the Trust contributed $75,000 to the purchase of the subject property and Urso contributed $135,700. Wolf acknowledged that the settlement statement did not expressly denote that the Trust contributed $25,000 for earnest money. Rather, there was no identifiable source for the $25,000 listed on the settlement statement. Moreover, Wolf acknowledged that the $50,000 line item from the Trust was not designated as a contribution to the partnership. Wolf testified that Goodbar represented both the Trust and Urso at the closing for the property.
[¶12] Wolf acknowledged that Urso was named as the beneficiary of the land trust, which held title to the subject property. Wolf stated that he was not named on the title of the property because, at the time, he " had several judgments against [him] that [he] was paying on. And [he] didn't want to complicate financing." According to Wolf, if the Trust was on the title " there would be a problem." In particular, Wolf had a judgment against him for $2.2 million related to an Environmental Protection Agency violation concerning one of his properties and a judgment against him for $1.8 million related to a property tax violation related to another of his properties.
[¶13] Wolf testified that, after its purchase, he visited the subject property several times. On one occasion, Wolf introduced Vajdik to Urso and directed him to pay rent to Urso. Wolf added that he went to the property once or twice because the lessee was not making the proper payment to cover the tax escrow. Wolf also visited the property to collect rent on one occasion after Urso's death. Wolf forwarded the rent check to defendant because Richard Jr. was managing the property and collecting rent after Urso's death. Wolf believed that defendant had taken the place of Urso in managing the subject property on behalf of the partnership. Wolf admitted that no written partnership agreement existed
for the subject property, but maintained that there was an oral partnership agreement.
[¶14] Wolf further testified that in August 2000 Berkowitz sent Urso a letter to obtain an accounting of the rent from the subject property for purposes of income taxes. Wolf added that he subsequently sent Goodbar a facsimile stating:
" I spoke to Mr. Urso after Greg had a problem with him regarding partnership returns. He advised me as to the closing statement, just how much I owe to him for my fifty percent interest. And I will bring you a check for the W.F.T. interest in this property. I have asked Urso on three occasions to give me that figure with no success. After his conversation with Greg I want this matter to be disposed of one way or another."
According to Wolf, he annually reported an interest in the subject property on his " Schedule E" tax return. The returns do not appear in the record.
[¶15] Gregory Berkowitz testified that he was a licensed real estate broker and the trustee for the W.F.T. Trust, but not the beneficiary of the Trust. Berkowitz was also the president of GB Property Management, Inc., which managed Wolf's properties. Berkowitz testified that he managed the real estate for the Trust and handled the maintenance for the Trust's buildings. According to Berkowitz, the Trust had " well over 100 pieces of property." The Trust maintained office space, first at 1307 South Wabash Avenue in Chicago, Illinois, and later at 770 North LaSalle Street in Chicago, Illinois. Berkowitz had known Wolf since Berkowitz was a teenager and began working for him in 1984. Berkowitz said he met Urso when he started working for Wolf. Berkowitz described Wolf and Urso as old friends and neighbors with a business ...