Schlossberg v. Corrington, 78-1282

• Decision Date: 21 January 1980
• Docket Number: No. 78-1282,78-1282
• Citation: 35 Ill.Dec. 936,80 Ill.App.3d 860,400 N.E.2d 73
• Parties: , 35 Ill.Dec. 936 Norman M. SCHLOSSBERG, Plaintiff-Appellant, v. Louis E. CORRINGTON, Jr., Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 73

400 N.E.2d 73

80 Ill.App.3d 860, 35 Ill.Dec. 936

Norman M. SCHLOSSBERG, Plaintiff-Appellant, v. Louis E. CORRINGTON, Jr., Defendant-Appellee.

No. 78-1282.

Appellate Court of Illinois, First District, First Division.

Jan. 21, 1980.

Fisch & Lansky, Chicago, for plaintiff-appellant.

Arvey, Hodes, Costello & Burman, Chicago, for defendant-appellee; Rosemarie J. Guadnolo and Donald F. Spak, Chicago, of counsel.

McGLOON, Justice:

On July 15, 1976, Norman M. Schlossberg filed suit seeking dissolution of partnership and an accounting. The trial court dismissed the suit, but granted leave to replead. On November 14, 1976, Schlossberg filed an amended complaint. In his amended complaint Schlossberg sought dissolution of partnership and an accounting or, in the alternative, damages. The trial court granted Corrington's motion to dismiss the complaint. Schlossberg appeals. On appeal, Schlossberg contends that: (1) the partnership had never been dissolved; (2) the action for an accounting was not barred by laches; and (3) the bar of the statute of limitations was avoided by alleging defendant's promises, made after the statute had run, to pay the debt which arose from the partnership's dealings.

We affirm.

On July 15, 1976, Norman M. Schlossberg filed a complaint for the dissolution of partnership and an accounting. The trial court dismissed this complaint and granted leave to replead. On November 14, 1976, Schlossberg filed a two-count amended complaint. Count I contained a prayer for dissolution of partnership and an accounting. Count II was brought for the recovery of money. Because the complaint was dismissed on the pleadings, a summary of the allegations therein is necessary.

In Count I, Schlossberg alleged that he and Louis E. Corrington formed a partnership on October 28, 1959, for the purpose of trading stocks and securities. The partnership agreement was oral in nature, and each partner agreed to contribute equal capital and share profits and losses equally.

Both parties contributed capital to the partnership, but Corrington would not contribute his proportionate share. He did, however, make periodic payments of $500 between September 1963, and December 1965. When the partnership ceased doing business in 1965, $28,743.86 was allegedly due to Schlossberg. The amount accrued as a result of Corrington's failure to contribute his share of capital and pay his share of losses in contravention of the partnership agreement. From time to time, Schlossberg demanded that Corrington account for the monies due and owing. Because Corrington did not pay his share of losses, Schlossberg was forced to and did pay Corrington's share of monies paid out by the partnership. For these reasons, Schlossberg filed suit seeking a dissolution of partnership and an accounting.

In the second count for the recovery of money, Schlossberg realleged those facts in Count I relating to the formation and purpose of the partnership. He also alleged that the partnership ceased doing business in 1965, but that in December 1972 and August 1974, after the running of the statute of limitations, Corrington made new and unconditional promises to pay the monies owed by him to Schlossberg. He further averred that these promises were binding on Corrington. In Count II, he sought a judgment for $28,743.86.

The trial court granted Corrington's motion to dismiss the complaint. Count I was dismissed by reason of the statute of limitations and laches. Count II was dismissed by reason of the statute of limitations and failure to state a cause of action.

On appeal, Schlossberg contends that the partnership had never been dissolved and that therefore his prayer for dissolution was valid. He further argues that his prayer for an accounting was not barred by laches or the statute of limitations because, until there had been a dissolution of the partnership, no action for an accounting could be brought.

The term "dissolution" is defined in the Illinois Uniform Partnership Act (UPA), as " * * * the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business." (Ill.Rev.Stat.1977, ch. 1061/2, par. 29.) A partnership may be dissolved either by judicial order or by operation of law. Section 32(1) of the UPA provides for a judicial order of dissolution for various reasons upon application by or for a partner. Although not expressly stated on the face of the amended complaint, Schlossberg's suit for dissolution was presumably brought pursuant to this section.

However, an obvious prerequisite to a dissolution of a partnership is its actual existence at the time dissolution is sought. In Fitzgerald v. Chicago Title & Trust Co. (1978), 72 Ill.2d 179, 20 Ill.Dec. 581, 380 N.E.2d 790, the Supreme Court said:

"Because the judgment was entered upon allowance of defendant's motion to dismiss, all facts properly pleaded in the complaint must be taken as true. (Acorn Auto Driving School, Inc. v. Board of Education (1963), 27 Ill.2d 93, 96, 187 N.E.2d 722.) This court has repeatedly held that a cause of action should not be dismissed on the pleadings unless it clearly appears that no set of facts can be proved which will entitle plaintiffs to recover. (Fechtner v. Lake County Savings & Loan Association (1977), 66 Ill.2d 128, 5 Ill.Dec. 252, 361 N.E.2d 575; Edgar County Bank & Trust Co. v. Paris Hospital, Inc. (1974), 57 Ill.2d 298, 312 N.E.2d 259; Winnett v. Winnett (1974), 57 Ill.2d 7, 310 N.E.2d 1; Miller v. DeWitt (1967), 37 Ill.2d 273, 226 N.E.2d 630.)" (72 Ill.2d at 187, 20 Ill.Dec. at 585, 380 N.E.2d at 794.)

To the same effect is Walker v. Rumer (1978), 72 Ill.2d 495 at 502, 21 Ill.Dec. 362 at 365, 381 N.E.2d 689 at 692. We find that Count I of the complaint contains sufficient factual allegations indicating that the partnership was dissolved in 1965. Schlossberg stated twice in his complaint that the partnership ceased doing business in 1965. A reasonable inference from this fact is that neither party was thereafter associated with the carrying on of the partnership affairs. In light of the definition of dissolution stated above, it may be concluded that the partnership was dissolved in 1965.

In the absence of any agreement to the contrary, a partner's right to an accounting accrues at the date of dissolution. (Ill.Rev.Stat.1977, ch. 1061/2, par. 43.) Therefore, Schlossberg's right to bring an action for an accounting arose in 1965 when the partnership was dissolved. Because an action for an accounting must be brought within 5 years from the date of dissolution (Trecker v. Trecker (1948), 334 Ill.App. 263, 78 N.E.2d 843), Schlossberg's right to maintain such an action expired in 1970. In the case at bar, the complaint was not filed until 1976, 11 years after the cause of action arose, and 6 years after the statute of limitations had expired. Therefore, Schlossberg is precluded from maintaining an action for an accounting by reason of the statute of limitations.

Furthermore, Schlossberg's claim for an accounting was also barred by laches. Laches is generally defined as "such neglect or omission to assert a right, taken in conjunction with a lapse of time of more or less duration and other circumstances causing prejudice to an adverse party, as will operate to bar relief in equity." (Mitchell v. Simms (No. 78-1294, November 30, 1979), 79 Ill.App.3d 215, 34 Ill.Dec. 536, 398 N.E.2d 211, cit...