Eychaner v. Gross

• Citation: 779 N.E.2d 1115,269 Ill.Dec. 80,202 Ill.2d 228
• Decision Date: 03 October 2002
• Docket Number: No. 91496.,91496.
• Parties: Fred EYCHANER et al., Appellees, v. Theodore GROSS et al., Appellants.
• Court: Supreme Court of Illinois

779 N.E.2d 1115

202 Ill.2d 228

269 Ill.Dec. 80

Fred EYCHANER et al., Appellees, v. Theodore GROSS et al., Appellants.

No. 91496.

Supreme Court of Illinois.

October 3, 2002.

Stanley B. Eisenhammer, of Hodges, Loizzi, Eisenhammer, Rodick & Kohn, Arlington Heights, for appellant Theodore Gross.

William F. Conlon, Susan A. Stone, Neil Wyland, of Sidley, Austin, Brown & Wood, J. Timothy Eaton, of Ungaretti & Harris, David A. Epstein, Chicago, for appellant Roosevelt University.

William R. Quinlan, James R. Carroll, James A. Niewiara, Jean M. Prendergast, Martin J. O'Hara, of Quinlan & Carroll, Ltd., Donald B. Hilliker, Marie A. Halpin, of McDermott, Will & Emery, Chicago, for appellees Fred Eychaner and Berry Lou Weiss.

Terry M. Grimm, Julie A. Bauer, Mary Pat Benz, of Winston & Strawn, Chicago, for appellee Auditorium Theatre Council.

Frank G. Mares, Chicago, for amicus curiae DePaul University.

Mary Anne Smith, Chicago, for amicus curiae Illinois Institute of Technology. Richard F. Friedman, Chicago, for amicus curiae Landmarks Preservation Council of Illinois.

Justice FREEMAN delivered the opinion of the court:

Plaintiffs, Fred Eychaner and Betty Lou Weiss, were directors of the Auditorium Theatre Council (Council). Plaintiffs brought an action against defendants, Roosevelt University and its president, Theodore Gross (collectively Roosevelt), in the circuit court of Cook County. In the claims and counterclaims that developed in this case, the Auditorium Theatre Council, Inc. (ATC Inc.), and Roosevelt, respectively, asserted their authority to control and operate the Auditorium Theatre (Theatre). Specifically, plaintiffs and ATC Inc. claimed that Roosevelt placed the right to control and operate the Theatre into a charitable trust with ATC Inc. as trustee.

At the close of a bench trial, the trial court found in favor of Roosevelt and rejected all theories supporting ATC Inc.'s control of the Theatre. The trial court, inter alia, declared Roosevelt the sole and exclusive owner of the Theatre. The court also ordered an accounting of ATC Inc.'s funds to separate public donations from operating revenues.

The appellate court, with one justice dissenting, reversed these orders and remanded the cause for further proceedings. 321 Ill.App.3d 759, 254 Ill.Dec. 557, 747 N.E.2d 969. We allowed defendants' petition for leave to appeal. 177 Ill.2d R. 315(a). We now reverse the judgment of the appellate court, affirm the order of the trial court, and remand the cause to the trial court for further proceedings.

BACKGROUND

During the 10-week bench trial, the court received approximately 400 documents and heard testimony from 37 witnesses, all of which generated 98 record volumes. The bench trial adduced the following facts.

Setting

The Auditorium Building is located in downtown Chicago, bordered by Michigan Avenue on the east, Congress Parkway on the south, and Wabash Avenue on the west. The building was designed and built in the late nineteenth century by the renowned architects Louis Sullivan and Dankmar Adler. The building originally contained a hotel, commercial office space, and the Theatre, which comprises approximately 40% of the entire building. The Auditorium Building, including the Theatre, with its near-perfect acoustics, was recognized as an architectural masterpiece. However, by the end of World War II, the building, including the Theatre, was abandoned and in a state of disrepair.

Cast

In 1945, Roosevelt was incorporated as an Illinois not-for-profit corporation. In 1946, it became possible for Roosevelt to purchase the Auditorium Building and, to that end, the University solicited and received donations. In 1947, Roosevelt purchased the building, protected the Theatre from further deterioration, and converted the remaining space for use as Roosevelt's campus.

In the mid 1950s, Roosevelt began exploring ways to restore the Theatre. On September 11, 1958, a committee of Roosevelt's board of trustees recommended to the full board that a separate not-for-profit corporation be created to restore and operate the Theatre under that corporation's "trusteeship." On September 25, the full board rejected the proposal amid concerns of giving away rights to the University's property. The board recommended that "[t]he University should remain the `trustee' of the Auditorium Theatre."

At a December 4, 1958, board meeting, trustee Beatrice Spachner submitted "a plan for the restoration of the Auditorium Theater and its operation under the auspices of Roosevelt University." On February 17, 1959, Roosevelt's board of trustees established the Auditorium Restoration and Development Committee (ARDC), composed of Roosevelt Board members and faculty, and community representatives. The ARDC was directed to examine Spachner's Theatre restoration plan.

On October 29, 1959, the ARDC reported to Roosevelt's board of trustees. At that meeting, the board passed a motion tentatively approving a fund drive to restore the Theatre, subject to the following conditions: that the committee's fund-raising efforts not impair Roosevelt's financial resources or credit; that Roosevelt's legal counsel recommend to the board "the legal entity and manner of contract" that would enable Roosevelt to obtain its objectives; and "[t]hat the University not lose ownership or control of the Auditorium Theatre."

The ARDC oversaw the drafting of a resolution to implement the fund drive. Attorney Elmer Gertz was the principal drafter of the resolution. In a letter dated January 21, 1960, Gertz asked Kenneth Montgomery, Roosevelt's attorney, to review the draft resolution. Gertz stated:

"[A] draft of the resolution has been agreed upon. I am sending a copy of it herewith. It is the consensus of all involved in this situation that it is best not to form any separate corporation, foundation, trust or other legal entity, but to proceed in the manner set forth in the resolution." (Emphasis added.)

Gertz asked for Montgomery's ideas on the resolution, specifically on the subject of tax exemption.

The ARDC presented the draft resolution to Roosevelt's trustees at their February 11, 1960, board meeting. The proposed resolution renamed the ARDC the Auditorium Theatre Council (Council) and authorized it to raise funds for and to restore the Theatre. Several trustees continued to express concerns that the proposed resolution was not sufficiently explicit in its description of Roosevelt's; control over the ARDC. They questioned whether the resolution complied with the board's October 29, 1959, motion that Roosevelt "not lose ownership or control of the Auditorium; Theatre." Criticizing the proposed resolution, trustee Lerner stated that the "Theater would be given away in perpetuum, under this proposal. No [Roosevelt] trustee who understands the word `trust' should vote for it."

As reflected in the minutes of the board meeting, Gertz responded to these concerns:

"[Gertz] was not attempting to make policy for the Board, he said, but had simply tried to realize its intent as derived from the Board's own earlier resolutions and statements of policy. He went on, to say that no separate corporation had been proposed because this arrangement would be even more subject to the objection that the University would be prevented from exercising control over the Auditorium. He asserted that any action taken by the proposed Auditorium Council could be changed or rescinded by the Board of Trustees."

The resolution was tabled to allow the ARDC to address the concerns that had been raised.

On February 18, 1960, the ARDC presented a revised resolution to Roosevelt's board of trustees. The revision renamed the ARDC the Auditorium Theater Council. The revision made Roosevelt's control more explicit and further limited the authority of the Council. Language stating that the Council would "fully control" the fund-raising, restoration, maintenance, management, and programming for the Theatre was deleted, leaving the Council only "responsible" for fund-raising and restoration and "charged with the responsibility of carrying out the details of" the fund-raising campaign and the management, programming, and operation of the Theatre. Language that would have allowed the Council to "adopt such procedures * * * as it may deem necessary" was dropped. Language was added to ensure Roosevelt board approval, on an annual basis, of all new members to the Council's executive committee. Language was added to ensure the board's involvement in establishing a development reserve amount for the Theatre, with all Theatre revenues above that amount being transferred to Roosevelt's unrestricted funds. Language was added requiring the Council to make periodic progress reports regarding the restoration to the board, to provide information requested by the board, to make annual reports of operations to the board, and to submit to an annual audit by accountants. Finally, language was added requiring that the actions and programming of the Council "be in harmony with the aims of the University in serving the educational and cultural aspirations of the community."

The revised resolution, as quoted in the minutes, reads in its entirety:

"`Resolved, that it is the intent of the Board of Trustees of Roosevelt University, for and on behalf of the University to implement as described hereinafter the plan for the restoration and operation of the Auditorium Theater which was submitted by the [ARDC] to the Board at its meeting of October 29, 1959, and incorporated in its minutes of that date.

IT IS, THEREFORE, ORDERED

(1) That the [Council] be now authorized and directed to take such steps as it may deem necessary to carry out a fund drive for the restoration of the Theater with due regard for safeguarding the right, title and interest of the University in and to the Theater and protecting the resources and credits of both the University and the Council.

(2) That the Council be responsible for raising

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