Court Opinion

ID: 9729173
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:28:36.823465+00
Date Added: 2024-06-11T13:20:54.024480
License: Public Domain

JUSTICE GKEIMAN, dissenting: In Yugoslav-American, 289 Ill. App. 3d 728 (Yugoslav-American T), we determined that Tupanjac was a party controlling the corporation which fraudulently received a deed to the subject property from YACC. Although Tupanjac was not an officer of the YACC, he apparently was involved in the corporation with the YACC secretary. Thereafter, there was a subsequent conveyance of the property to a nominee and it was later revealed that Tupanjac was the real party in interest. In Yugoslav-American I, the majority acknowledges that Tupanjac was aware that the seller of the premises was a Yugoslavian club and that he had never been advised that the two officers had authority to sell and convey the property. Yugoslav-American I, 289 Ill. App. 3d at 737. We said then that “[s]uch admissions greatly undermine Tupanjac’s claim that he reasonably or justifiably relied upon the apparent authority” of these officers. Yugoslav-American I, 289 Ill. App. 3d at 737. Additionally, Tupanjac’s lawyer played a major role on behalf of all of the parties and was quite aware that Barjactarevic was a corporate officer of YACC who authorized the sale and one of the initial purchasers of the property, “a clear conflict of interest that would undermine any actual authority Barjactarevic might have to authorize the sale.” Yugoslav-American I, 289 111. App. 3d at 737-38. Yugoslav-American I further observes that “knowledge of an attorney is treated as knowledge of, or at least knowledge imputed to, the client, notwithstanding whether the attorney has actually communicated such knowledge to the client.” Yugoslav-American I, 289 Ill. App. 3d at 737. Quite clearly Tupanjac took advantage of the initial fraudulent conveyance and sought later to set out an apparent conveyance to a bona fide purchaser for value although he remained the real party in interest. Although he was not an officer of YACC at the time of the fraudulent conveyance, it is difficult to imagine that he can purge himself of the wrongdoing in connection with the initial transaction since he was a participant in the grantee corporation and his lawyer’s knowledge is fully imputed to him. Now he seeks restitution of monies spent to improve and enhance the value of the building. The majority has thoughtfully set out the equitable theory of quasi contract or quantum meruit. However, one of the ancient maxims of equity is that he who comes into equity must come with clean hands. La Salle National Bank v. 53rd-Ellis Currency Exchange, Inc., 249 Ill. App. 3d 415 (1993); In re Marriage of Stuckert, 138 Ill. App. 3d 788 (1985). The purpose of the “unclean hands” doctrine is to protect courts of equity from assisting litigants in accomplishing their fraudulent or unlawful purposes. Cole v. Guy, 183 Ill. App. 3d 768 (1989). Although Yugoslav-American I is founded upon the failure of the board to adopt a resolution, the inappropriate scheme of the officers executing the deed and the role of the grantees are clear. Here the conduct of which the parties complain is directly involved in the transaction that was at issue in Yugoslav-American I. For a court to invoke the “unclean hands” doctrine, such conduct must be directly involved in the very transaction at issue before the court. Cole v. Guy, 183 Ill. App. 3d 768 (1989); Holsinger, Theis & Co. v. Holsinger, 329 Ill. App. 460 (1946). That was the case there and that is the case here. As we have previously noted, the trial court indicated that there was no way Tupanjac could have acted in good faith. The majority would return the matter to the trial court to determine whether Tupanjac has a right in equity to quantum meruit and if so to determine the improvements and expenses provided by Tupanjac to the premises. The trial court’s refusal to allow Tupanjac to prove up the alleged expenses that enhanced the property is, in effect, the application of the “clean hands” doctrine. Trial courts are generally allowed wide discretion in the application of this equitable principle and we should not disturb it. To be sure, even where there is fraud or inappropriate conduct by a party, the court does not always invoke the “clean hands” doctrine where one party shows that the property was greatly enhanced. Graham v. Mimms, 111 Ill. App. 3d 751 (1982). However, in the instant matter, the trial court has appropriately exercised its discretion. One might ask, why would we allow restitution of the real estate taxes paid while ignoring the other expenses that have been incurred by Tupanjac? The inappropriate transaction has robbed YACC of its options. It could have decided to sell the property “as is.” It could have decided to rent the property to a tenant with a net-net lease where the tenant would have been required to make all the improvements and restorations. It could have decided to take the building down and hold it for future investment as the area gentrified. All of those were possible options for YACC. The payment of real estate taxes, however, was not such an option and accordingly restitution of those sums seems fair and equitable and well within the discretion of the trial court. Accordingly, I would affirm the judgment of the trial court.