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Palmer v. Mellen

Court of Appeals of Illinois, Third District

February 17, 2017

MARTHA E. PALMER, MICHELE L. GREEN, LUANN L. CLARK, JOEL L. WATKINS, MATTHEW B. WATKINS, JENNIFER L. McCARTHY, ASHLEY WATKINS, JOHN W. WATKINS, MARY J. CARLSON, RICHARD L. WATKINS, ROSE M. MURPHY, RONALD P. WATKINS, DANIEL B. WATKINS, ROBERT J. WATKINS, ALBERT K. WATKINS, JAMES L. WATKINS, STEPHEN N. WATKINS, JO GREENSLET JONES, JANE MARIE GREENSLET, KENNETH A. GREENSLET, and JOHN M. GREENSLET, Plaintiffs-Appellees,
v.
CHRIS E. MELLEN, PAUL H. MELLEN, DENNIS L. MELLEN, CYNTHIA A. PARRY, and DAVID L. MELLEN, Defendants-Appellants.

          Rehearing denied March 21, 2017

         Appeal from the Circuit Court of Marshall County, No. 14-MR-34; the Hon. Michael P. McCuskey, Judge, presiding.

          Angela Evans (argued), of Angela Evans Law, of Peoria, for appellants.

          Janaki Nair (argued), John S. Elias, and Lauren A. Christmas, of Elias, Meginnes & Seghetti, PC, of Peoria, for appellees.

          JUSTICE LYTTON delivered the judgment of the court, with opinion. Justices O'Brien and Schmidt concurred in the judgment and opinion.

          OPINION

          LYTTON JUSTICE

         ¶ 1 Plaintiffs, Martha E. Palmer and other relatives, filed a complaint seeking dissolution of a family land trust and partnership against the remaining partners, Chris E. Mellen and his siblings. The trial court granted summary judgment in favor of plaintiffs. On appeal, defendants argue that the trial court erred in (1) ruling, as a matter of law, that the partnership should be dissolved, (2) ignoring provisions of the partnership agreement, (3) denying their motion to strike plaintiffs' affidavits, and (4) ordering the trust property sold at public auction by a named auctioneer. We affirm.

         ¶ 2 In 1977, Albert Leslie Watkins and Rose Frances Watkins (grantors), as husband and wife, formed the "Watkins Enterprises Land Trust/Partnership Agreement." Albert passed away a few months after the partnership agreement was created, and Rose died in 1989. Under the terms of the agreement, 1112 shares were initially issued to Albert and Rose's children and their then-living grandchildren. Their children have since distributed portions of their shares to their descendents. The partnership's primary asset is 450 acres of land, of which 280 acres are tillable and 120 acres are covered in trees and include a cabin.

         ¶ 3 The partnership agreement provides that "[w]hen two or more Persons own Shares, a Partnership shall thereupon be created and be governed, except as otherwise provided in this Agreement, by the Partnership Act." Article 2 of the partnership agreement defines the business of the partnership as "farming and related activities." Article 9 describes the termination process and states that the partnership "shall terminate upon the first to occur of the bankruptcy, receivership or dissolution of the partnership, or the written agreement of all the Shareholders."

         ¶ 4 The trustee of the partnership is assigned certain duties under article 11 of the agreement. Specifically, section 11.08 states:

"The Trustee shall have the following powers and discretions and, except to the extent inconsistent herewith, any others that may be granted by law:
(a) To sell any portion of the Property for cash or on credit, at public or private sales; to exchange any portion of the Property for other property; to grant options to purchase or acquire any portion of the Property and to determine the prices and terms of sales, exchanges and options."

         ¶ 5 Currently, there are 26 partners under the trust and partnership agreement. Plaintiffs comprise 21 of the 26 partners and collectively hold 926.67 shares in the partnership (83.33%). Defendants, the remaining 5 partners, hold 185.33 shares (16.67%). Plaintiffs include two of the grantors' three living children, Martha E. Palmer and Joel L. Watkins, 23 grandchildren, and one great-grandchild. The five defendants are all children of the grantors' third child, Georga Mellen. The trustee of the partnership is plaintiff Robert J. Watkins, who is also a partner. According to the terms of the agreement, the partnership is governed by a management committee made up of five partners, including defendant Chris Mellen.

         ¶ 6 In 2012, several partners indicated to the trustee that they would like to be "bought out" by the partnership, but the partnership did not have sufficient funds to purchase the partners' shares. On July 3, 2012, four of the five members of the partnership's management committee voted in favor of selling the property at public auction in an attempt to raise funds for the buyout and to allow any interested partner an equal right to purchase the property. Chris Mellen voted against the sale and requested, instead, that the property be appraised.

         ¶ 7 Three appraisals were then completed. They indicated that the entire 450 acres, including the cabin, were valued at (1) $2, 634, 000, (2) $3, 160, 000, and (3) $3, 256, 000. The appraisals also provided subdivided parcel reports that valued the pasture and timber areas at (1) $3960 per acre, (2) $3075 per acre, and (3) $3412 per acre.

         ¶ 8 Shortly thereafter, Chris Mellen and Paul Mellen made several offers to purchase the timbered portions of the property or, in the alternative, the entire parcel. The first offer to purchase the entire parcel proposed a purchase price based on the average of the three appraisals, $3, 016, 666, minus the average value of the cabin and 50% of the closing costs for 2012. The second offer did not include a reduction for 50% of the 2012 closing costs. All of their offers were rejected by the partners.

         ¶ 9 In the summer of 2013, Trustee Watkins began making plans to sell the partnership property. He contacted Doug Hensley, a local real estate agent and auctioneer, and asked him to work on a proposal for public auction.

         ¶ 10 On November 21, 2014, plaintiffs filed a complaint seeking judicial dissolution of the partnership and supervision of the partnership's winding up. In the complaint, plaintiffs alleged that the partnership's economic purpose has been unreasonably frustrated and that defendants had engaged in conduct making it impracticable to continue carrying on partnership business. As such, plaintiffs requested dissolution and a sale of the partnership real estate on the open market under section 801(5) of the Uniform Partnership Act (1997) (Act) (805 ILCS 206/801(5) (West ...


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