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Euclid Engineering v. Illinois Power Co.

JANUARY 26, 1967.

EUCLID ENGINEERING CORPORATION, AN OHIO CORPORATION, PLAINTIFF-APPELLANT,

v.

ILLINOIS POWER COMPANY, AN ILLINOIS CORPORATION, AND ARCHIE KRAAKEVIK, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Macon County; the Hon. DONALD W. MORTHLAND, Judge, presiding. Judgment adverse to plaintiff affirmed.

CRAVEN, P.J.

This appeal arises from a decision of the trial judge, sitting without a jury, that a contract did not exist for the sale of two diesel generators to Euclid Engineering Corporation by Illinois Power Company and from a further decision that no such contract was made by Archie Kraakevik, an agent and employee of the defendant power company.

The plaintiff's theory on appeal is that the correspondence between it and the Illinois Power Company constituted a valid and enforceable contract of sale between the parties under sec 2-204 of the Uniform Commercial Code (Ill Rev Stats 1963, c 26, § 2-204) and that such contract was not rendered void because the Illinois Power Company failed to obtain the approval of its bondholders in accordance with the Illinois Public Utilities Act. With respect to the defendant Kraakevik, plaintiff claimed that if the defendant power company was not liable under an otherwise enforceable contract because it was void under the Public Utilities Act, then Kraakevik is liable to the plaintiff for breach of his implied warranty of authority to contract.

The appellees' position is that there was no agreement for sale within the meaning of sec 2-204 of the Commercial Code (Ill Rev Stats 1963, c 26, § 2-204) and that even if such contract did exist, it was void under the provisions of sec 27 of the Public Utilities Act (Ill Rev Stats 1963, c 111 2/3, § 27(c)). Defendant Kraakevik denies that any circumstances existed under which he could be held personally liable to the plaintiff because plaintiff was chargeable with notice of the provision of the Public Utilities Act which required Commission approval for the sale of tangible personal property.

A consideration of these issues requires a statement of the facts in some detail. The defendant Illinois Power Company, on May 14, 1963, wrote a letter to the plaintiff corporation. This letter follows:

"We are enclosing descriptive data on two diesel generator units recently retired in excellent condition at our Vandalia, Illinois power plant. This plant was used for a relatively short time as a peaking station until additional lines from our steam plants were extended to this load center. In recent years operation has been little more than weekly test runs. Note the low total operating hours.

"There is a railroad spur within about fifty feet of the station and there should be no problems in transporting the equipment with a minimum of dismantling.

"This equipment is offered for sale `where is and as is' subject to prior disposal and subject to our acceptance of purchaser's assurance that the units will be used outside of the Illinois area. If you are interested please submit your best offer in writing to reach us on or before May 31, 1963.

"If you wish to inspect the equipment simply let us know when you will arrive so that we can have one of our engineers at the site to assist you."

One month later, on June 14, 1963, there was a long-distance telephone conversation between the vice-president of the plaintiff corporation, George Kohn, and G.H. Wright of Illinois Power Company, followed by a letter from plaintiff to Illinois Power which in pertinent part was as follows:

"Subject your prompt acceptance, we will pay the sum of $30,000.00 where is and as is, Vandalia, Illinois, the two 1000KW General Motors diesel engine generator units, with associated equipment, more fully described specifications attached your letter May 14, 1963.

"This offer is subject our inspection and approval."

A subsequent telephone conversation occurred on June 24, 1963, between J.W. Kohn, president of the plaintiff corporation and G.H. Wright of Illinois Power, and was followed by a letter from defendant Kraakevik to Kohn which stated:

"Confirming telephone conversation this morning with our Mr. G.H. Wright, we accept your offer of thirty thousand dollars ($30,000.00), where is and as is, for the two 1,000 KW General Motors diesel engine generator units and associated equipment at our Vandalia, ...


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