See Wilson v. Comtech Telecommunications Corp., 648 F.2d 88, 92 n. 6 (2d Cir. 1981). With regard to the common law fraud claim, the parties agree that recovery required proof of: (1) defendants' concealment of a material fact; (2) an intent to deceive; and (3) plaintiff having been unaware of the concealed fact and that he would have acted differently had he known of it. Agreed Instruction No. 19; see also Michaels, 767 F.2d at 1205-06 n. 8. Recovery under the breach of fiduciary duty claim required proof of: (1) defendants' failure to make full and frank disclosures of all relevant information; (2) defendants' failure to exercise their judgment in the interest of the Frain Companies and with the utmost fidelity to plaintiff's interests and in good faith; and (3) any damage suffered being the proximate result of the breach of the duty owed. Johnson v. Central Standard Life Ins. Co., 102 Ill. App.2d 15, 243 N.E.2d 376 (1st Dist. 1968); Tr. 1348-49. As with the securities law claim, the other elements of plaintiff's case, duty and resulting damages, are irrelevant for the purpose of this ruling.
The trial court cited both the release language contained in the dissolution agreement and plaintiff's delay in making his claim as grounds for its decision. Laches has been defined as a failure to assert a right over a period of time which, when taken in conjunction with all other circumstances, would result in undue prejudice to the other party. ( Johnson v. Central Standard Life Insurance Co. (1968), 102 Ill. App.2d 15, 243 N.E.2d 376.) Defendant contends that the statutory deadline for plaintiff to have demanded an accounting from defendant was July 11, 1978, five years after the date of the dissolution agreement. Defendant cites Schlossberg v. Corrington (1980), 80 Ill. App.3d 860, 400 N.E.2d 73, where an accounting action was brought with respect to a partnership more than five years after its dissolution.
• 4 Whether a party has been guilty of laches is a question addressed solely to the sound discretion of the trial court. ( Johnson v. Central Standard Life Insurance Co., 102 Ill. App.2d 15, 243 N.E.2d 376.) The decision of the trial court will not be disturbed upon review unless the determination of the court is so clearly wrong as to constitute an abuse of discretion.
Prior to 1983, Illinois law was unsettled on the issue. The Illinois courts had determined in numerous cases that a single controlling shareholder owed a fiduciary duty to other shareholders in the corporation, see, for example, Shlensky v. South Parkway Bldg. Corp., 19 Ill.2d 268, 166 N.E.2d 793 (1960); Ill. Rockford Corp. v. Kulp, 41 Ill.2d 215, 242 N.E.2d 228 (1968); Johnson v. Central Standard Life Ins. Co., 102 Ill.App.2d 15, 243 N.E.2d 376 (1968); Zokoych v. Spalding, 36 Ill.App.3d 654, 344 N.E.2d 805 (1976); Graham v. Mimms, 111 Ill.App.3d 751, 67 Ill.Dec. 313, 444 N.E.2d 549 (1982), but none had determined that two or more shareholders who constituted a majority owed a similar duty to the minority. An Illinois court took the controlling shareholder cases one step further in Jaffe Commercial Finance Co. v. Harris, 119 Ill. App.3d 136, 74 Ill.Dec. 722, 456 N.E.2d 224 (1983).
Laches is an equitable principle which bars recovery by a litigant whose unreasonable delay in bringing an action for relief prejudices the rights of the other party. ( McDunn v. Williams (1993), 156 Ill.2d 288, 330, 620 N.E.2d 385, citing People ex rel. Daley v. Strayhorn (1988), 121 Ill.2d 470, 521 N.E.2d 864; and Finley v. Finley (1980), 81 Ill.2d 317, 410 N.E.2d 12.) Laches has been defined as a failure to assert a right over a period of time which, when taken in conjunction with all other circumstances, would result in undue prejudice to the other party. Peskin v. Duetsch (1985), 134 Ill. App.3d 48, 479 N.E.2d 1034; Johnson v. Central Standard Life Insurance Co. (1968), 102 Ill. App.2d 15, 243 N.E.2d 376. Where a legal remedy is available for the same claim, a court of equity may look to the legal limitation period to determine if a cause of action is barred by laches.
In determining that the statute of limitations was tolled, the Court went on to state, "`The duty to disclose stems from the necessity of preventing a corporate insider from utilizing his position to take unfair advantage of the uninformed minority stockholders.'" Id. at 342, quoting Johnson v. Central Standard Life Insurance Co. (1968), 102 Ill. App.2d 15, 243 N.E.2d 376, 384. Also, the Court noted that Sam was justified in trusting Monnie because of the fiduciary relationship; thus, Sam would not be charged with a duty to exercise diligence to guard against misappropriation of assets by his brother. Id. at 342, n. 6.
An officer or director cannot serve himself first by manipulating the affairs of the corporation to the detriment of shareholders and creditors in disregard of the standards of common decency and honesty. ( Johnson v. Central Standard Life Insurance Co. (1968), 102 Ill. App.2d 15, 243 N.E.2d 376.) It is also unlawful for corporate directors to manipulate corporate property so as to pay their own claims against the company to the loss of creditors.
• 4 Whether a party has been guilty of laches is a question addressed to the sound discretion of the trial court. The decision of the trial court will not be disturbed upon review unless the determination of the court is so clearly wrong as to constitute an abuse of discretion. ( Gill v. Gill (1972), 8 Ill. App.3d 625, 290 N.E.2d 897; Johnson v. Central Standard Life Insurance Co. (1968), 102 Ill. App.2d 15, 243 N.E.2d 376.) We do not consider the trial court's order barring petitioner's claim based on the doctrine of laches to be an abuse of discretion.
To establish estoppel by acceptance of benefits, the person to be estopped must have accepted the benefits with full knowledge of the facts. (See Dale v. Groebe Co. (1981), 103 Ill. App.3d 649, 653, 431 N.E.2d 1107; Johnson v. Central Standard Life Insurance Co. (1968), 102 Ill. App.2d 15, 31-32, 243 N.E.2d 376; 18 Ill. L. Prac. Estoppel sec. 23, at 84 (1956).) Here, plaintiff alleged that he had no knowledge of the contents of the agreement or the purpose for the checks.
"The duty to disclose stems from the necessity of preventing a corporate insider from utilizing his position to take unfair advantage of the uninformed minority stockholders." Johnson v. Central Standard Life Insurance Co. (1968), 102 Ill. App.2d 15, 243 N.E.2d 376, 384; Speed v. Transamerica Corp. (D.Del. 1951), 99 F. Supp. 808, 829 aff'd (3d Cir. 1956) 235 F.2d 369. Monnie's failure to disclose his claims of ownership tolled the statute of limitations until 1976 and, therefore, the present action was timely brought pursuant to Ind. Code § 34-1-2-9.