Fuchs v. Bidwill

• Decision Date: 03 December 1976
• Docket Number: 47947,Nos. 47944,s. 47944
• Citation: 3 Ill.Dec. 748,65 Ill.2d 503,359 N.E.2d 158
• Parties: , 3 Ill.Dec. 748 Leonard FUCHS et al., Appellees, v. Arthur J. BIDWILL et al., Appellants.
• Court: Illinois Supreme Court

Page 158

359 N.E.2d 158

65 Ill.2d 503, 3 Ill.Dec. 748

Leonard FUCHS et al., Appellees, v. Arthur J. BIDWILL et al., Appellants.

Nos. 47944, 47947.

Supreme Court of Illinois.

Dec. 3, 1976.

Rehearing Denied Jan. 28, 1977.

John M. Bookwalter, Danville and William T. Panichi, Springfield, for appellant Barbara Peters.

Jack E. Walker, Lansing and William T. Panichi, Springfield, for appellant Lillian H. Pollack.

R. G. Heckenkamp, of Heckenkamp & Fuiten, Springfield, for appellants Clyde W. Choate, John W. Lewis, Jr., and William J. Murphy.

Edward F. Casey, of Casey & Casey, Springfield, for appellants Arthur J. Bidwill, A. L. Cronin, and Clyde Lee.

Kenneth E. Critser, of Kritser, Stansell & Critser, Monmouth, for appellant Robert T. McLoskey.

Alexander Polikoff, Robert J. Vollen, Chicago, and Thomas F. Londrigan, Springfield, for appellees.

William J. Scott, Atty. Gen., Chicago (Samuel W. Witwer, Asst. Atty. Gen., of counsel), for amicus curiae People of the State of Illinois.

GOLDENHERSH, Justice.

Plaintiffs, Leonard Fuchs and Businessmen for the Public Interest, appealed from the judgment of the circuit court of Sangamon County entered in favor of the defendants upon allowance of their motions to dismiss. The appellate court reversed the judgment and remanded the cause for further proceedings (31 Ill.App.3d 567, 334 N.E.2d 117), and we allowed defendants' petitions for leave to appeal.

Plaintiffs, 'as representatives of and on behalf of all citizens, residents and taxpayers of the State of Illinois' filed a complaint in two counts, seeking an accounting, the declaration of a constructive trust and other equitable relief. They alleged that plaintiff Fuchs, 'is, and has been, a citizen, resident and taxpayer of the State of Illinois' and that 'plaintiff Businessmen for the Public Interest, Inc., is an Illinois not-for-profit corporation concerned with the prevention of corruption and self-dealing in public office. Since its inception Businessmen for the Public Interest has acted as a public benefit corporation by asserting the interest of the public in preventing official misconduct.'

In count I, pleaded in 27 paragraphs, plaintiffs alleged that Marjorie Lindheimer Everett (hereafter Everett) operated Arlington Park and Washington Park racetracks that in 1961 she organized Washington Park Trotting Association, Inc. (hereafter Washington Park); that during the years 1962--1968 Washington Park was awarded 'prime racing dates' and 'earned large profits'; that immediately after Washington Park was organized Everett began 'making shares of stock * * * available' to defendants, 'who were members and leaders of the Illinois General Assembly during the 72nd and 73rd sessions of the General Assembly held during 1961--1964'; that 'During these years, each defendant purchased Association (Washington Park) shares at the price of $1 per share'; that 'Thereafter, during 1965--1967, Everett afforded defendants the opportunity to have such Association shares repurchased, and each defendant sold all or substantially all his Association shares at price ranging from $3 to $7 per share.' It was alleged that the defendants made profits on the stock ranging from $6,000 to $294,000.

It was further alleged that the transactions 'were carried out secretly in order to conceal the fact that defendants had ownership interests' in Washington Park and that 'each profited greatly from the sale of those interests.' Stating that 'In view of the secrecy' the allegations were made on information and belief it alleged the approximate dates on which 'Everett afforded' each defendant 'the opportunity to purchase,' the approximate dates on which 'Everett afforded' each defendant 'the opportunity to sell' the shares alleged to have been so bought and sold, the number of shares involved and the approximate profit realized from the transaction. The complaint set forth the office occupied by each individual defendant and alleged that:

'22. By virtue of their public offices, defendants, individually and collectively, had power and influence with respect to the passage by the General Assembly of legislation directly affecting the operations and profitability of thoroughbred and harness racing in Illinois. * * *

23. Everett made Association shares available to each defendant, individually and collectively, because the public office each held enabled him to exercise power and influence over horse racing in the State of Illinois, and Everett expected that by making such shares available to the defendants, individually and collectively, her racing businesses would profit from such power and influence. At the times Association shares were made available to and acquired by him, each defendant knew of Everett's reason for making Association shares available to him and knew of Everett's expectation of profit. At such times each defendant also knew that Association shares had been or would be made available by Everett to the other defendants. At such times Association shares were not generally made available by Everett to persons not holding positions of power and influence in the General Assembly of the State of Illinois.

24. By acquiring, owning and selling Association shares under the circumstances alleged above, each defendant violated his fiduciary duty to the people of the State of Illinois, including his obligation to utilize the power and influence of his public office solely in the best interests of the people of the State of Illinois and not for private gain.

25. By reason of such violations by each defendant of his fiduciary duty, each defendant holds all Association shares which he now owns and all proceeds, including dividends and gains from sale, received with respect to Association shares which he has owned at any time, as an involuntary and constructive trustee for the benefit of the people of the State of Illinois.'

Plaintiffs prayed that:

'I

Each defendant be declared a constructive trustee for the benefit of the people of the State of Illinois (a) of any Association shares which he now owns, directly or indirectly, and (b) of all proceeds received by him, directly or indirectly, at any time with respect to Association shares which he now owns or has owned, directly or indirectly, including, without limitation, all proceeds received upon the sale of said shares.

II

Each defendant be required to account for all Association shares owned by him at any time, and for all proceeds received and profits realized in connection with the ownership and sale of such shares, and that an appropriate judgment based on that accounting be entered against each defendant in favor of the people of the State of Illinois.'

In count II plaintiffs repeated and realleged the allegations of count I and that:

'24. By acquiring, owning and selling Association shares under the circumstances alleged above, each defendant violated the standard of conduct mandated by Ill.Rev.Stat., ch. 38, sec. 33--1(d).

25. By reason of such violations by each defendant of his statutory duty, each defendant holds all Association shares which he now owns, and all proceeds, including dividends and gains from sale, received with respect to Association shares, which he has owned at any time, as an involuntary and constructive trustee for the benefit of the people of the State of Illinois.'

It was also alleged that written demand was made on the Attorney General that 'he bring suit against defendants by reason of the matters herein above alleged' and that he declined to do so.

The circuit court holding 'that plaintiffs have no standing to file this action and that the complaint filed herein is insufficient as a matter of law' dismissed the suit. The appellate court, holding that both plaintiffs had standing to sue and that 'Since the rule defining the responsibilities of public officials is not based upon harm necessarily done but upon equitable principles of preventing a conflict of opposing interests in the minds of officials, there is little persuasive weight in the contention that the complaint fails to allege facts which disclose that defendants did anything which was contrary to the public interest, that there are, or were, wrongful acts, or which disclose an exercise of power or influence to aid Everett' (31 Ill.App.3d 567, 573, 334 N.E.2d 117, 121), found the complaint sufficient, reversed the judgment and remanded the cause to the circuit court.

Defendants, arguing that permitting plaintiffs to bring this action 'is an unconstitutional usurpation of the power of the Attorney General of the State of Illinois,' contend that the circuit court correctly decided the question of standing and that in reversing the judgment the appellate court erred. We allowed the Attorney General's motion for leave to file an Amicus curiae brief in which it is argued that plaintiffs have standing to bring this action. The brief neither disputes plaintiffs' assertion that the Attorney General declined to bring the action nor states his reasons for so doing.

Common to all the authorities cited by the parties and Amicus (see Fergus v.Russel, 270 Ill. 304, 110 N.E. 130; People v. Holten, 287 Ill. 225, 122 N.E. 540; Jones v. O'Connell, 266 Ill. 443, 107 N.E. 731; Saxby v. Sonnemann, 318 Ill. 600, 149 N.E. 526; Droste v. Kerner, 34 Ill.2d 495, 217 N.E.2d 73; Paepcke v. Public Building Com., 46 Ill.2d 330, 263 N.E.2d 11; Koehler v. A Century of Progress, 354 Ill. 347, 188 N.E. 445; Carstens v. City of Wood River, 344 Ill. 319, 176 N.E. 266; McCormick v. Chicago Yacht Club, 331 Ill. 514, 163 N.E. 418) is the fact that the funds alleged to be misappropriated, misapplied or wrongfully retained were unquestionably public funds, and in those cases which involved real estate, the lands were unquestionably public property. In the cases cited by plaintiffs in which an equitable accounting was ordered or a constructive trust imposed, the action was brought by the political entity whose property or...