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Podbielniak v. Podbielniak

DECEMBER 27, 1962.




Appeal from the Circuit Court of Cook County; the Hon. THOMAS E. KLUCZYNSKI, Judge, presiding. Reversed and remanded with directions.


Rehearing denied and opinion modified February 5, 1963.

Plaintiff exercised a right to accelerate the maturity of the unpaid balance of $287,500 on an installment contract and confessed judgment against defendant. The judgment was opened, and leave to defend was granted defendant. Plaintiff then filed an amended complaint and, with supporting affidavits, moved for summary judgment. Defendant filed counteraffidavits, and also moved to dismiss the action under section 48(1) (i) of the Civil Practice Act. The trial court vacated and set aside the judgment entered by confession, and dismissed plaintiff's action. Plaintiff appeals.

The principal question is whether plaintiff properly exercised right of acceleration of maturity of the unpaid balance of the contract.

The facts appear from the pleadings and from affidavits submitted in support of the motions. Plaintiff, Wladzia G. Podbielniak, sold to defendant, Walter J. Podbielniak, her interest in certain patents, patent applications and license agreements. By the terms of the contract of sale, dated December 23, 1959, the price of $310,000 was to be paid over a 10-year period, with an initial payment of $15,000 and monthly installments of $2500 each, "beginning on July 1, 1960 and continuing on the first day of each succeeding month until the entire debt has been paid in full."

The contract provides that if the defendant purchaser decides to sell all or any part of the major patents, or substantially all of the assets of Podbielniak, Inc., "then he shall give written notice to Seller [plaintiff] of his decision to sell, and Purchaser shall make no contract of sale without such notice to Seller. Upon receipt of such notice from Purchaser, Seller has the right, with notice of five days to Purchaser, to elect to declare matured the entire unpaid balance then owed, and in the event of such election by Seller, the entire unpaid balance shall mature forthwith and become immediately due and payable provided such sale is consummated."

The contract also provides that "If Seller and Purchaser agree that a prospective purchaser from Purchaser is financially responsible, and if the prospective purchaser will assume or guarantee this contract and agree to make or guarantee the payments provided for here, or if other reasonable and adequate arrangements are mutually agreed upon by Seller and Purchaser, then maturity of the unpaid balance owed under this contract shall not be accelerated, but the monthly payment shall continue to accrue pursuant to this contract."

On September 22, 1960, plaintiff received from defendant a notice dated September 21, 1960, informing plaintiff of defendant's decision to sell to Dresser Industries, Inc., all of his interest in the patents and patent applications. The notice also stated:

"It is the intention of Walter J. Podbielniak, Purchaser, to make assignments of payments to be received from Dresser Industries to cover obligations to the Seller under the Agreement of December 23, 1959, for the ten-year period stated."

On September 23, 1960, plaintiff notified defendant by letter that "the proposed sale to Dresser Industries, Inc., shall be deemed to mature immediately the full payment of the balance of the purchase price due, . . . unless . . . Dresser Industries assumes or guarantees said contract and agrees to make or guaranty the payments therein provided, or other reasonable and adequate arrangements are mutually agreed to between you [defendant] and [plaintiff]. . . . Please understand that no question is being raised as to the financial responsibility of Dresser Industries, Inc., but Paragraph 7 does require the assumption or guaranty of the obligations by Dresser Industries as the proposed purchaser."

On September 26, 1960, plaintiff requested a copy of the "Sale of Assets Agreement." This request was denied by letter dated September 27, 1960. The letter reiterates defendant's contention that his proposed assignment to plaintiff, of his right to receive payments from Dresser, would greatly enhance plaintiff's position under the original agreement of December 23, 1959.

On September 27, 1960, plaintiff delivered to defendant a notice accelerating the whole unpaid balance then owing under the December 23, 1959, contract. Her notice rejected defendant's intention to assign to plaintiff money due him under his patent sale agreement with Dresser, on the ground that this would not comply with the provisions of their contract requiring a prospective purchaser to "assume or guarantee" the payments. The notice further states that "in the interval which has elapsed since September 22, 1960 no other reasonable and adequate arrangements for the payment of the contract obligation have been mutually agreed upon between the Seller and the Purchaser."

On February 24, 1961, plaintiff filed her complaint, and on February 28, 1961, judgment was entered for plaintiff, and against defendant, for the sum of $301,900, which included $14,400 as attorneys' fees for plaintiff. On April 7, 1961, the judgment was opened, and defendant was given leave to defend. Plaintiff then filed an amended complaint, which alleged defendant's breach of the provisions of the contract and sought judgment for an accelerated balance of $287,500 plus attorneys' fees.

Defendant's affidavit in support of the motion to dismiss recites that on September 21, 1960, he transmitted to plaintiff notice of his "decision" to sell to Dresser Industries; that on September 22, 1960, he sent plaintiff his check for $2500 for the monthly installment due September 23, 1960, being the date when monthly installments under the Agreement of December 23, 1959, were made and accepted by plaintiff from the initial monthly installment in July, 1960, to date; that plaintiff, by her counsel, had stated and acknowledged by letter of September 23, 1960, that the September installment was due September 23, 1960; that on September 27, 1960, plaintiff, by her notice to defendant, stated that she had elected to accelerate maturity of the principal balance because Dresser had not assumed or guaranteed the contract and because no other reasonable and adequate arrangements had been mutually agreed upon in the interval between September 22 and September 27, 1960. The specific grounds urged for dismissal were that plaintiff's conduct, in accepting payment on September 30, 1960, of the September ...

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