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Commercial Products Corp. v. Briegel

NOVEMBER 22, 1968.




Appeal from the Circuit Court of Henry County; the Hon. CONWAY L. SPANTON, Judge, presiding. Judgment affirmed.


Plaintiff, Commercial Products Corporation, appeals from a summary judgment which, on the basis of pleadings, depositions, affidavits and counteraffidavits, was entered by the Circuit Court of Henry County in favor of defendants named in a five-count complaint that pleaded multiple causes of action.

On or about January 1, 1964, the defendants Theodore W. Briegel, Sr., and Theodore W. Briegel, Jr., were partners in the Briegel Method Tool Company, and were also the principal shareholders in a corporation styled as the B.M. Fitting Corporation, hereinafter referred to as BMFC. At the time, both the partnership and the corporation were indebted to Stephen Tonchen for a judgment of $200,000, and the Briegels seem to have been preoccupied with the discharge of such obligation. Sometime early in the year, Conrad Dyke, president of the plaintiff Commercial Products, discussed with Briegel, Sr., the possibility of obtaining financing with which to satisfy the judgment. Nothing came of the proposal, however, and on May 16, 1964, Tonchen accepted a note for $204,485.56 signed by the BMFC corporation "and others," which was secured by real and chattel mortgages on corporate property. During August, 1964, the relationship again became critical when Tonchen brought a suit against BMFC for wrongful discharge and lost salary, and exerted a claim for royalties allegedly due him.

Late in August, 1964, the defendant All-Steel Equipment Company, Inc., became interested in the purchase of BMFC and, for a period of two months thereafter, its representatives engaged in discussions and negotiations with the Briegels and their attorneys. On October 20, 1964, a draft of a proposed agreement was prepared, one provision of which was that BMFC would be required to obtain, prior to closing, a release of all of Tonchen's claims. However, on October 26, 1964, Tonchen filed a suit to foreclose his mortgages and the active negotiations of All-Steel came to a halt. During November, 1964, representatives of All-Steel did make inquiries as to the status of the BMFC matter, being told on one occasion that the Briegels were considering a proposition made by Dyke, and on a second that the deal with Dyke was going to be closed.

About the time negotiations with All-Steel came to a standstill, Dyke had lunch with the Briegels and expressed an interest in purchasing BMFC on the same terms proposed by All-Steel. Thereafter, on November 6, 1964, the parties and their attorneys met to discuss the matter, and as a result an offer by the Briegels to sell all their stock in BMFC to the plaintiff (Commercial Products) was drafted and signed by the Briegels on November 9, 1964. The offer contained certain conditions precedent, to be discussed later, one of which required compliance on or before December 1, 1964, and also provided that the closing date was to be on or before December 31, 1964. What occurred on and around December 1, 1964 shall be subsequently set forth. For now, however, it is sufficient to say that those representing the Briegels took the position that the conditions imposed had not been met thus nullifying the offer, while those representing plaintiff believed there had been compliance and continued to make preparations for a December 31, 1964, closing.

On December 17, 1964, Duane P. Benson, one of the BMFC attorneys, met with representatives of All-Steel and advised them that the Briegels were no longer obligated under the offer to plaintiff and were free to negotiate with All-Steel. At the same time, Benson sought to negotiate on the basis of a purchase by All-Steel without need of a release from Tonchen, but was informed that All-Steel would not be interested in a purchase until a release was obtained. In an affidavit filed in opposition to the motions of defendants for summary judgment, Dyke's attorney stated that he and his client had gone to Benson's office on December 31, 1964, for the purpose of closing but were told the deal between the Briegels and plaintiff was off.

During the next three months Dyke and Benson had several meetings and exchanges of correspondence. On the one hand, Dyke adopted the position that the Briegels' offer was binding upon them and sought to suggest various ways in which a final closing could be agreed upon and made; Benson, on the other hand, embraced a position that the offer was not binding, but that the Briegels were willing to hear and consider any new proposal Dyke might have. The exchange terminated, and Dyke did not negotiate further, after Benson wrote on March 3, 1965: "If you have any serious proposal to make to the company, I repeat at this time you should have your attorney draw up a definite offer of purchase."

Late in March, 1965, Benson started direct negotiations with Tonchen to settle the latter's claims, and when success appeared imminent he contacted All-Steel and was assured that the figures employed in All-Steel's proposal of October, 1964, were still firm. On March 30, 1965, the Tonchen matters were cleared up to the apparent satisfaction of all concerned. Subsequently, on April 15, 1965, final negotiations were entered into with All-Steel and the latter purchased BMFC about May 15, 1965.

This action was started by Commercial Products on November 8, 1965, and, as has been noted, was culminated in the trial court with the entry of a summary judgment for the defendants. The purpose of summary judgment procedure is not to try facts, but to determine whether a genuine issue exists as to any material fact which would require a trial (Allen v. Meyer, 14 Ill.2d 284, 152 N.E.2d 576; Welsh v. Centa, 75 Ill. App.2d 305, 221 N.E.2d 106), and thus the scope of our review is to determine if the trial court correctly decided there were no such factual issues in this case.

Count I of the complaint proceeds on the theory that the Briegels' offer to sell their stock ripened into an enforceable contract by virtue of plaintiff's compliance with its conditions within the time limited (see: Keller v. Reed, 347 Ill. 645, 180 N.E. 459; Arentsen v. Sherman Towel Service Corp., 352 Ill. 327, 185 N.E. 822), and prays for specific performance. And it is apparent that Counts II and IV of the complaint must stand or fall with Count I, for each is predicated on the existence of the contract. Specifically, Count II seeks to recover $100,000 in damages from the Briegels for damages and expenses allegedly incurred by plaintiff as a result of their failure to perform, while Count IV alleges that plaintiff became the equitable owner of the Briegel stock by virtue of the contract and prays that All-Steel be required to give an accounting or, in the alternative, that the sale to All-Steel be declared a nullity. In entering summary judgment, the trial court necessarily found that an enforceable contract had not come into being, and our first inquiry must be as to whether there existed a genuine issue of fact with respect to such question.

Pertinent background shows that the Briegel offer, or option, of November 9, 1964, provided in part:

"This letter is given as assurance to you that if on or before December 1, 1964, you are able to obtain from one Stephen Tonchen a full release of all his claims and demands against the B.M. Fitting Corporation (herein called BMFC), its officers, directors and stockholders, Briegel Method Tool Company (a partnership) and the latter's partners, in form satisfactory to our counsel (it being understood, however, that you may take an assignment from Mr. Tonchen of his existing note and mortgages against BMFC), that the undersigned parties will sell to you all of their capital stock in BMFC on the following terms and conditions:

"4. It is agreed and understood that you will notify either the undersigned parties or their attorneys (in either Wyoming or Moline, Illinois) in writing of any settlement on or before December 3, 1964. Failure to effect such notice and deliver attendant settlement papers on or before that date shall release the undersigned from any obligation incident to the fulfillment of this obligation." (Emphasis added.)

In response to the foregoing conditions, plaintiff, through its president Dyke, entered into an agreement with Tonchen which, among other things, provided: (1) That Tonchen, upon being notified that the Briegels had placed 75% of their stock in the hands of an escrow agent and upon being paid $100,000, would assign his real and chattel mortgages to plaintiff; and (2) that Tonchen would deliver to the escrow agent a release of all his claims against BMFC, its officers, directors and stockholders. Other provisions validated the disputed claims that Tonchen was making for salary and royalties and stated that they would be paid out of the profits of BMFC after its purchase by plaintiff. And although the agreement was dated December 1, 1964, it is patent from the record that it was not finalized and executed until December 2, 1964, one day after the date fixed in the offer. ...

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