Herst v. Chark

579 N.E.2d 990, 219 Ill. App. 3d 690, 162 Ill. Dec. 176, 1991 Ill. App. LEXIS 1548
CourtAppellate Court of Illinois
DecidedSeptember 9, 1991
Docket1-88-3722
StatusPublished
Cited by32 cases

This text of 579 N.E.2d 990 (Herst v. Chark) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Herst v. Chark, 579 N.E.2d 990, 219 Ill. App. 3d 690, 162 Ill. Dec. 176, 1991 Ill. App. LEXIS 1548 (Ill. Ct. App. 1991).

Opinion

PRESIDING JUSTICE MANNING

delivered the opinion of the court:

This is an interlocutory appeal pursuant to Supreme Court Rule 307 (107 Ill. 2d R. 307) from an order granting a preliminary injunction, an accounting, and the right to distribution of revenues on behalf of plaintiff, James T. Herst (hereafter Herst). Herst and his corporation, Performance Source, Inc. (hereafter PSI), sued defendants, Alvin C. Chark (hereafter Chark), ACC Systems, Inc. (hereafter ACC), and Legal Liaison Service, Ltd. (hereafter LLS), for judicial dissolution of a joint venture, an accounting, constructive trust, and injunctive relief alleging that he and Chark were engaged together in the commercial debt collection business and that he was entitled to certain remuneration as a result. Chark filed an answer individually and a counterclaim on behalf of LLS asserting that Herst had been a commission salesman for LLS, that the parties had never entered into a joint venture, that Herst was engaged in unfair competition, tortious interference, and breach of fiduciary duty. No cross-appeal is involved.

In the verified complaint filed on November 30, 1988, Herst alleged that in 1982 he and Chark entered into a written or verbal agreement establishing a joint venture to engage in the commercial debt collection business where Herst was to sell the venture’s services to commercial clients through the use of his unique marketing concept of a renewable, refundable retainer and Chark was to perform the collections of the clients’ debts. The complaint alleged that Herst solicited clients, authored the sales documents and client agreements and that the two men established a jointly owned reserve account for the refund of client retainers. The enterprise continued until September 1, 1987, when Herst gave Chark notice of termination of the venture and sought an accounting which Chark refused to provide.

On October 4, 1988, the trial court rendered its findings which were incorporated in the written order entered on November 22, 1988. The issue on appeal is whether the parties were engaged in business as joint venturers or whether their relationship was one of employer and independent salesman.

A court of review will not substitute its own opinion and disturb the findings of the trial court unless the holding of the trial court is manifestly against the weight of the evidence. (Schulenburg v. Signatrol, Inc. (1967), 37 Ill. 2d 352, 356, 226 N.E.2d 624.) The appellate court is required to review the entire record as a whole, considering all evidence in its aspects most favorable to the appellee. See, e.g., Trauscht v. Gunkel (1978), 58 Ill. App. 3d 509, 515-16, 374 N.E.2d 843.

In this case, the trial court after hearing all of the evidence concluded that Herst and Chark were engaged in a joint venture and that Herst was entitled to an accounting and a part of the revenues. We affirm.

Herst maintains that commencing in 1982, the parties entered into either a verbal or written agreement, as evidenced by the memo of understanding, to form a joint venture. Chark maintains that it was never his intent to enter into a joint venture relationship with Herst and asserts that the independent sales agent agreement is the best evidence of the parties’ intent and their relationship and that no parol evidence should have been allowed in the trial court to contradict unambiguous terms that were expressed in the sales agreement.

Initially, we note that Public Electric Construction Co. v. Hi-Way Electric Co. (1978), 62 Ill. App. 3d 528, 378 N.E.2d 1147, which Chark refers to in support of his position, is distinguishable on its facts. In that case, plaintiff alleged that, pursuant to an oral agreement, the parties were engaged in a joint venture and thus requested the trial court to find that such a relationship continued even" after the oral agreement creating a subcontractual arrangement was reduced to writing. The court there declined to find the existence of a joint venture, noting that a joint venture is not a status created or imposed by law, but is a relationship voluntarily assumed and a matter of intent as between the parties. Although the court stated that the intention of only one party to enter into a joint venture is insufficient, it concluded that where a relationship is governed by a contract, the contract controls. Public Electric, 62 Ill. App. 3d at 532.

In the present case, there is no specific formal joint venture agreement or contract of record. The independent sales agreement referred to by Chark is not the controlling document with regard to the relationship between the parties. We have diligently searched the record and the only relevant sales agreement we have found is the one Herst used when hiring his sales staff. There is mention of an exclusive sales agreement between Chark and Herst; however, this agreement appears to be no more than one of several draft proposals that was exchanged between the parties over the years in an attempt to reach a final agreement. Neither is the memo, standing alone, the controlling document. The record reveals that the memo dated September 16, 1982, was authored and signed only by Herst and that at the bottom of the memo is a note that the parties would prepare and approve a specific formal agreement by December 31, 1982. The parties, as previously mentioned, never entered into a formal written agreement. However, like other contractual relationships, the existence of a formal agreement is not an indispensable necessity. Our courts have found that, in the absence of any specific formal agreement, a joint venture may be implied or established by proof of surrounding facts and circumstances showing such an enterprise was in fact entered into. (Ditis v. Ahlvin Construction Co. (1951), 408 Ill. 416, 97 N.E.2d 244; Burtell v. First Charter Service Corp. (1980), 83 Ill. App. 3d 525, 404 N.E.2d 455.) “It is the nature of the enterprise undertaken that controls, not the form of the agreement.” (Ditis v. Ahlvin, 408 Ill. at 425.) While surrounding circumstances may prove the existence of a joint venture, there must be a meeting of the minds, an agreement, express or implied, which shows the parties’ intent to embark on a joint venture. Barton v. Evanston Hospital (1987), 159 Ill. App. 3d 970, 974, 513 N.E.2d 65.

A joint venture is an association of two or more persons to carry on a single enterprise for profit. (Carroll v. Caldwell (1957), 12 Ill. 2d 487, 147 N.E.2d 69.) Partnership legal principles govern joint ventures (Bachewicz v. American National Bank & Trust Co. (1986), 111 Ill. 2d 444, 448, 490 N.E.2d 680), and the only distinction of consequence between the two is that a joint venture relates to a single enterprise or transaction, while a partnership relates to a general business of a particular kind.

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Bluebook (online)
579 N.E.2d 990, 219 Ill. App. 3d 690, 162 Ill. Dec. 176, 1991 Ill. App. LEXIS 1548, Counsel Stack Legal Research, https://law.counselstack.com/opinion/herst-v-chark-illappct-1991.