Roddy v. Armitage-Hamin Corp.

• Court: Illinois Supreme Court
• Writing for the Court: WILSON
• Citation: Roddy v. Armitage-Hamin Corp., 401 Ill. 605, 83 N.E.2d 308 (Ill. 1949)
• Decision Date: 17 January 1949
• Docket Number: No. 30555.,30555.
• Parties: RODDY et al. v. ARMITAGE-HAMIN CORPORATION et al.

401 Ill. 605

83 N.E.2d 308

RODDY et al.

v.ARMITAGE-HAMIN CORPORATION et al.

No. 30555.

Supreme Court of Illinois.

Nov. 18, 1948.

Rehearing Denied Jan. 17, 1949.

Appeal from First Division Appellate Court, First District, on Appeal from Circuit Court, Cook County; John Prystalski, Judge.

Action by Frank B. Roddy and others, minority shareholders in the Armitage-Hamlin Corporation, against the Armitage-Hamlin Corporation and the Admiral Corporation to have a lease executed by the Armitage-Hamlin Corporation, as lessor, and the Admiral Corporation, as lessee, declared void. From order dismissing the first count for want of equity, the plaintiffs appeal to the Appellate Court for the First District. An order was entered by the Appellate Court dismissing the appeal, and plaintiffs' petition for leave to appeal was granted by Supreme Court.

Reversed and remanded with direction.

Shulman, Shulman & Abrams, of Chicago (Meyer Abrams, of Chicago, of counsel), for appellants.

Pope & Ballard and Peter F. McNamee, all of Chicago, (Francis H. Urill, John R. Whitman, and Martin A. Hendele, all of Chicago, of counsel), for appellees.

WILSON, Justice.

The plaintiffs, Frank B. Roddy, Samuel Baer, and Eli Metcoff, minority shareholders in the Armitage-Hamlin Corporation, brought an action in the circuit court of Cook County against the defendants, the Armitage-Hamlin Corporation, a building corporation, and the Admiral Corporation, a manufacturing company, seeking to have a lease executed by the building corporation, as lessor, and the manufacturing company, as lessee, declared null and void. The amended complaint consisted of two counts, the first charging a violation of section 72 of the Business Corporation Act (Ill.Rev.Stat.1947, chap. 32, par. 157.72) and the second charging fraud.

In the first count, plaintiffs allege that they are, and have been since 1941, the registered owners of a total of 189 shares of the capital stock of the Armitage-Hamlin Corporation, an Illinois corporation; that the only important asset of the corporation is its building at the intersection of Armitage and Hamlin streets, in Chicago; that the sole business of the corporation consisted of operating, managing and leasing the building to various tenants; that the gross income from rentals for the year ending April 30, 1945, was $65,451.44, and the net operating income was $47,191.07; that, after acquiring control of the corporation, the Admiral Corporation, as lessee, made important additions and improvements to the original building for its own benefit; that the corporation executed a new mortgage for $150,000, and used $125,000 to reimburse the Admiral Corporation for the improvements; that, by a resolution adopted September 20, 1945, the board of directors abandoned the management and operation of the building by leasing the entire premises to the Admiral Corporation for a period of five years at a net rental of $50,500 per year; that, in abandoning the business and leasing the building to a single tenant, at a net rental, the corporation entered into a transaction out of the regular and usual course of its business, without giving notice to its shareholders or obtaining the approval of the holders of two thirds of its outstanding shares; and that the corporation violated section 72 of the Business Corporation Act providing that a sale, or lease, of all, or substantially all, the property and assets of a corporation may be authorized by a resolution of the board of directors recommending the sale or lease, followed by written notice of a shareholders' meeting and the affirmative vote of the holders of at least two thirds of the outstanding shares entitled to vote at the meeting. Plaintiffs asked that the lease be declared null and void and removed as a cloud, and that the court grant such other relief as to equity may seem proper.

All the allegations in count one were incorporated in count two and other allegations added. The gist of the second count is that, at the date the lease was executed, the fair rental value of the property was approximately $105,000 and that the directors and officers of the corporation knew the rental provided for in the lease to the Admiral Corporation was far below the true value of the property but failed to solicit other tenants and executed the lease because they had been elected and were controlled by the lessee corporation. Plaintiffs further alleged that no demand for action had been addressed to the Armitage-Hamlin Corporation because it would be futile and that, their interest being identical with all other shareholders, except the Admiral Corporation, the present action was filed for the common interest of all shareholders. In addition to seeking a declaration that the lease was null and void, plaintiffs prayed that Admiral Corporation be required to pay a reasonable rental for its past occupancy and that future rental be fixed by the court or by competitive bidding.

Upon motions of defendants to dismiss the amended complaint, the chancellor entered an order dismissing the first count for the want of equity and denied the motion as to the second count. With the action on the second count still pending in the circuit court, plaintiffs prosecuted an appeal from the order dismissing the first count to the Appellate Court for the First District. Defendants moved to dismiss the appeal on the ground that the order appealed from was not a final order, and the Appellate Court dismissed the appeal. We have granted plaintiffs' petition for leave to appeal.

The sole issue presented for determination is whether the order dismissing the first count of the amended complaint is a final and appealable order, within the contemplation of section 77 of the Civil Practice Act. Ill.Rev.Stat. 1947, chap. 110, par. 201. Plaintiffs proceed on the theory that the cause of action stated in count one is personal to them as shareholders, while count two is a derivative action brought for the primary benefit of the corporation; that the two counts countain separate and distinct causes of action; that the dismissal of one cause of action was a final order, and that their right to appeal should not be precluded by the mere circumstance that they joined in one complaint two actions which could have been brought separately. Defendants, on the other hand, maintain that both count one and count two are derivative actions and that an order dismissing one or more, but less than all, counts of a complaint attacking a single transaction on several grounds is not a final order.

A final order has been variously defined. In general, to be final and appealable, an order or decree must terminate the litigation between the parties on the merits of the cause, so that, if affirmed on review, the trial court has only to proceed with the execution of...