Palmer v. Mellen
2017 IL App (3d) 160022
| Ill. App. Ct. | 2017Background
- A family land trust/partnership (450 acres) created in 1977 has 26 partners: plaintiffs hold 83.33% (926.67 shares) and five defendants (the Mellen siblings) hold 16.67% (185.33 shares).
- Partnership agreement governs voting and requires unanimous consent for certain actions; trustee and five-member management committee administer business; trustee is a plaintiff.
- From 2012 onward disputes arose: defendants refused to participate in meetings, ignored correspondence, were allegedly verbally/physically intimidating, and opposed selling the land; majority voted to sell at public auction.
- Multiple appraisals valued the whole property between about $2.63M and $3.26M; defendants’ buy offers were rejected.
- Plaintiffs sought judicial dissolution and supervised winding up under §801(5) of the Illinois Uniform Partnership Act; trial court granted summary judgment dissolving the partnership and ordered sale at public auction by a named auctioneer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether summary judgment dissolution under §801(5) was proper | Relations irreparably deteriorated; defendants' conduct made continuation not reasonably practicable; economic purpose threatened | Partnership still economically viable; factual disputes preclude summary judgment | Affirmed — court may dissolve under §801(5); facts showed not reasonably practicable to continue |
| Whether the partnership agreement bars judicial dissolution/sale | Agreement cannot override statutory nonwaivable provisions; plaintiffs entitled to judicial relief | Agreement requires unanimous consent for sale and provides buyout mechanics; court order circumvents agreement | Affirmed — agreement cannot vary nonwaivable statutory rights (§801 winding up); agreement did not preclude judicial dissolution |
| Whether plaintiffs’ affidavits should have been stricken under Rule 191 | Affidavits set out specific facts and personal knowledge showing irreparable breakdown | Affidavits lacked required particularity and documentary support | Affirmed — affidavits were sufficient to create no genuine issue on material facts |
| Whether court erred in ordering public auction and naming an auctioneer | Judicial supervision and appointed auctioneer with prior involvement is appropriate and financially prudent | Court improperly appointed a specific auctioneer sua sponte | Affirmed — judicial supervision proper; appointment not an abuse of discretion given auctioneer's familiarity and alternative selection mechanism for trustee |
Key Cases Cited
- Tembrina v. Simos, 208 Ill. App. 3d 652 (Ill. App. Ct. 1991) (dissolution appropriate where partner relations and cooperation are irreparably deteriorated)
- Susman v. Cypress Venture, 114 Ill. App. 3d 668 (Ill. App. Ct. 1983) (dissolution proper when relations make it impracticable to conduct business beneficially)
- Kirksey v. Grohmann, 754 N.W.2d 825 (S.D. 2008) (defining "reasonably practicable" and upholding dissolution where internal impasse prevents reasonable business operation)
- Brennan v. Brennan Associates, 977 A.2d 107 (Conn. 2009) (irreparable deterioration of partner relations supports dissociation/dissolution)
- Elementary School District 159 v. Schiller, 221 Ill. 2d 130 (Ill. 2006) (statutory interpretation: disjunctive "or" indicates alternatives)
- Higgins v. Higgins, 72 Ill. App. 2d 179 (Ill. App. Ct. 1966) (economic and financial benefits relevant when liquidating partnership property)