Appeal from the Circuit Court of Cook County; the Hon. NATHAN
M. COHEN, Judge, presiding. Affirmed in part, reversed in part,
and remanded with directions.
MR. PRESIDING JUSTICE MCCORMICK DELIVERED THE OPINION OF THE COURT.
In 1923, when John Booth was fifteen years old, he began working for Morris Cole, owner of a music publishing business then known as M.M. Cole Publishing Company. In 1935 the name of the company was changed to the Cole Corporation, and in 1964 was again changed back to M.M. Cole Publishing Company as a sole proprietorship of June Stern.
In 1958 the Cole Corporation executed pension contracts with John Booth and two other employees, Ambrosine Schuham and Charles Fine. Booth's contract provided in substance that when the corporation retired him he would receive $50 a week for the rest of his life, with payments to cease upon his death. At the time Booth was receiving $100 a week. Morris Cole died a few months after the contract was made, and his widow, Leona Cole, continued to operate the business until her death in 1963.
Leona Cole's estate was distributed through use of a "family settlement agreement" in which the corporate assets were given to her two children; the music publishing business to June Stern, and beneficial ownership of the building to Charles Cole. Max Becker, a certified public accountant, and the executor of Leona Cole's estate, testified that this method of distribution was chosen in order to minimize estate taxes. He stated that the contract with the plaintiff in no way affected the decision as to the method of distribution.
The "family settlement agreement" amounted to a liquidation of the corporation. The executors of the estate were secured against claims by the deposit by June and Charles of over $300,000 with the executors. The plaintiff asserts that the corporate liquidation accelerated his right to receive his pension funds and that the corporation treated the pension contract as a matured debt when it set aside $42,149.46 in the estate tax return for the contingent liability of the "Booth contract." (The Internal Revenue Service reduced this figure to $34,730.78.) Plaintiff contends that he was retired when the corporation was liquidated; that his debt matured at that time, and that he is therefore now entitled to a lump sum payment based on the weekly pension payments multiplied by his life expectancy.
The theory of plaintiff's case rests upon the alteration in the form of ownership of the Cole business. Had Leona Cole simply given each child one half of the stock in the existing corporation, Booth would have remained in the employ of the same entity; however, for tax purposes the assets were distributed to June and Charles in kind. The plaintiff contends that such distribution amounted to a breach of Cole Corporation's obligation to him, thereby maturing the contract and making immediately due approximately $34,000. He argues that he could not be required to remain in the employ of any other than a corporate successor of Cole Corporation to be eligible for his pension rights, and that the sole proprietorship of June Stern was not such a successor.
While the 1958 agreement stated that "Booth has been serving the Corporation as Stock Manager more than thirty-five (35) years last past; . . . ." that statement technically was inaccurate, since from 1923 to 1935 Booth had worked for the M.M. Cole Publishing Company, which then became the Cole Corporation, and he had worked for that company from 1935 to the time of the 1958 contract. Thus, he had really worked for the Cole Corporation twenty-three years at the time of the contract, although he had been in the employ of the company business for thirty-five years at the time of the 1958 contract.
We call attention to this fact in order to show that the contracting parties themselves were apparently not concerned about the name under which the family business was continuing or the technical form of ownership of the business. It then appears that when the contract stated that Booth had worked for "the Corporation" for thirty-five years, it was meant that he had been with the family organization for that long, although the organization had undergone a technical alteration in name and perhaps in form of ownership.
We believe this is relevant because the plaintiff has based most of his argument on the fact that subsequent to the 1958 contract with "the Corporation" the form of ownership was changed to a sole proprietorship, which alteration amounted to a breach of his pension contract with "the Corporation." We feel, however, that the parties showed their intent that the form of ownership not be considered a critical factor; rather, the important question was whether Booth worked for the family company, regardless of the form.
Our conclusion is not reached only because of the loose terminology in the contract, but we consider that the contract also provided for the performance of the corporation's obligation by "heirs, executors, administrators, or successors." The chancellor seized upon this language to determine that the contract intended that the obligation to pay Booth the pension would not terminate upon Booth's death, but rather, that the pension should be payable to Booth's "heirs, executors, administrators, or successors." However, this interpretation is contrary to the language of the contract which states: "Beginning with the first week of such retirement and continuing thereafter until his death, . . . the Corporation shall pay to Booth the weekly sum of Fifty ($50.00) Dollars. Upon the death of Booth during his retirement . . . payments provided hereunder shall cease and terminate. It is not intended by the parties that the benefits of this agreement be assigned or anticipated or made available to anybody other than Booth, so that any payments to be made hereunder shall cease and terminate with the death of said Booth." It is true that the last clause reads, "This agreement shall be binding upon the parties hereto, their heirs, executors, administrators, or successors." However, it would be a wholly unjustified conclusion to say that the "binding" clause shows that the payments were to go to Booth's heirs upon his death. The contract could hardly be made more clear on the point that the obligation to make the pension payments to Booth was to cease upon his death.
It would appear that the purpose of the "binding" clause was to make the obligation one which would be imposed on any subsequent successor in interest of the Cole Corporation, which conclusion is consistent with the general tenor of the contract. The parties appear to have used the term "corporation" loosely with reference to the Cole family business, and the pension contract seems to have carried through in the same manner. In other words, regardless of the form of ownership, those carrying on the business would still be bound by the contract.
The trial judge concluded that the contract had not matured and accelerated; nevertheless, the judgment gave the plaintiff practically all he was seeking, under a different theory. The court determined that the 1958 pension contract "does not accurately express the intention of the parties" and that "the attorney who drafted this extraordinary document was guilty of mistake or fraud." According to this view, the court reformed the contract to include, inter alia, the following:
1) The plaintiff was to have the right to retire at any time he chose although his employer could retire him only after he reached the age of 65;
2) The plaintiff was to be paid $300 per month until a total of $35,000 was paid him, and if he died prior to the total payment the ...