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S.t. Enterprises, Inc. v. Brunswick Corp.

OPINION FILED MAY 29, 1974.

S.T. ENTERPRISES, INC., APPELLEE,

v.

BRUNSWICK CORPORATION, APPELLANT. — DANIEL S. WELCH ET AL., APPELLANTS,

v.

BRUNSWICK CORPORATION, APPELLEE.



No. 45843. — Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County; the Hon. Daniel A. Covelli, Judge, presiding.

No. 45844. — Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County; the Hon. Walter P. Dahl, Judge, presiding.

MR. JUSTICE GOLDENHERSH DELIVERED THE OPINION OF THE COURT:

Rehearing denied June 28, 1974.

Kenart M. Rahn and George S. Stansell, of Chicago, for appellants.

Robert L. Stern and George W. Hamman, of Chicago (Mayer, Brown & Platt, of counsel), for appellee.

In cause No. 45844 Daniel S. Welch and David I. Hoffman, d/b/a Rand Road Development, Not Inc., an Illinois limited partnership, and Thunderbird Bowl, Inc., a corporation (hereafter plaintiffs), together with Pala, Inc., a corporation, and La Salle National Bank, as trustee under Trust No. 30288, appealed to the appellate court from the judgment of the circuit court of Cook County entered in favor of Brunswick Corporation (hereafter Brunswick), in plaintiffs' action seeking a declaration of rights, reformation of certain contracts and injunctive and other equitable relief, and from the judgment entered in favor of Brunswick in its action in replevin seeking to recover possession of certain bowling equipment, damages for its wrongful detention, and a deficiency judgment. The cases were consolidated for trial and decided in a single judgment order.

In cause No. 45843 Brunswick appealed to the appellate court from the order of the circuit court of Cook County entered in an action brought by S.T. Enterprises, Inc. (hereafter S.T.), enjoining Brunswick "from seizing or effecting the seizure of possession of the said goods and chattels described in exhibits `A' and `B' to the complaint herein [the bowling equipment involved in 45844], and from instituting any action of replevin against plaintiff herein for the possession of said goods and chattels, where the claim or cause of action asserted by Brunswick Corporation is predicated upon any happenings prior to the time of the filing of the present suit."

In 45844 the appellate court affirmed (10 Ill. App.3d 693) the judgment entered in favor of Brunswick in plaintiffs' action against Brunswick. In the appeal from the judgment in the replevin action the appellate court affirmed the judgment but reduced the award of damages for the wrongful detention of the property and remanded the cause to the circuit court for further proceedings.

In 45843 the appellate court affirmed the order of the circuit court but modified it to provide that the injunction order be conditioned upon S.T.'s payment to Brunswick of the sum of $92,243.05. (10 Ill. App.3d 705.) We have allowed Brunswick's petitions for leave to appeal, and, although separately briefed and argued, the causes were ordered consolidated for opinion.

This litigation arises out of a transaction in which Brunswick sold to Thunderbird Bowl, Inc., equipment for a 36-lane bowling establishment in Mt. Prospect, Illinois. The record shows that Thunderbird is part of a business combination of various individuals, corporations and trusts, all of which are managed and controlled by Rand Road Development, Not Inc., a limited partnership, in which Daniel S. Welch and David I. Hoffman are the general partners. Thunderbird's interest in the equipment was assigned to Pala, Inc., another corporation controlled by the limited partnership, and a conditional-sale contract between Brunswick as seller, and Pala, as buyer, was executed on August 6, 1962. The conditional-sale contract provided for a purchase price of $610,042.70 payable $45,000 at the time of the execution of the contract and the balance of $565,042.70 in 95 monthly installments of $5,885 and a 96th monthly installment of $5,967.50. With Brunswick's consent, Pala's interest under the contract was transferred to La Salle National Bank as trustee under its Trust No. 30288. The deferred time balance of $565,042.70 represented the principal obligation in the amount of $456,017.60 together with interest at the rate of 6% per annum on the unpaid principal from time to time remaining due. In February 1964 Brunswick and Pala agreed to extend the schedule of payments. Payments were discontinued in February 1966, none have been made since that time, and $379,690 of the original purchase price remains unpaid.

On October 11, 1966, Brunswick served its demand for repossession of the equipment covered by the conditional-sale contract, and on the same day plaintiffs filed a three-count complaint against Brunswick. In count I plaintiffs sought a declaration of rights, reformation of the contract documents to provide that Pala would be required to pay Brunswick only if there were funds available from the bowling operation after the payment of operating expenses, a temporary injunction to maintain the status quo, and general equitable relief. Count II sought damages of $1,000,000 for fraud, and count III sought damages of $1,831,000 for breach of warranty.

Effective October 1, 1967, Chicago Title and Trust Company as Trustee, Thunderbird Bowl, Inc., Oak Park Trust and Savings Bank, as Trustee, and La Salle National Bank, as Trustee under its Trust No. 30288, as lessors, leased to La Salle National Bank, under its Trust No. 36941, as lessee, certain real estate and the bowling equipment here involved. Also effective October 1, 1967, La Salle National Bank, under its Trust No. 36941, as lessor, leased to S.T., as lessee, the premises and the bowling equipment. The second lease provided that upon completing rental payments totaling $305,333.03 S.T. had the option to purchase the equipment for $500. S.T. took possession of the equipment on October 31, 1967, and continues in possession.

An agreement between plaintiff Welch and his brother, plaintiff Hoffman and his father, and S.T., dated April 28, 1971, recites the pending litigation, and states that S.T. has purchased the Brunswick equipment subject to defects in the landlord's title. It also recites that since La Salle has purchased certain of the parcels of real estate described in the prime lease, and a subsidiary of S.T. has purchased the bowling alley, both the prime lease and sublease are terminated. The agreement further provides that $305,333.03 ($140,000 cash rent already paid and a $165,333.03 S.T. note) shall be held in escrow, that payments on the note shall be placed in the escrow and that the Welchs and Hoffmans personally assure S.T. they will cause defects in the title to the equipment to be cured upon payment of the S.T. note. The obligation to cure the defects becomes effective upon the termination of this litigation or payment of the last note installment, whichever occurs first.

On April 17, 1967, Brunswick filed its replevin action. The affidavit of its assistant secretary stated that the value of the equipment was $74,000, and it posted a replevin bond in the amount of $148,000. A forthcoming bond, also in the amount of $148,000, was furnished by Thunderbird Bowl. The complaint in the replevin suit was later amended by adding count II in which Brunswick sought a deficiency judgment in the amount of the balance due under the conditional-sale contract, interest from the date of default, and attorney fees, less the net amount to be recovered from the sale of the replevied equipment. Brunswick also added a third count in which it alleged that La Salle National Bank, without consideration, had conveyed certain real estate from Trust No. 30288 and that the conveyance constituted a fraud as to Brunswick, and it moved for the issuance of a ...


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