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Castle v. Hulcher

JUNE 10, 1974.




APPEAL from the Circuit Court of Montgomery County; the Hon. PAUL M. HICKMAN, Judge, presiding.


This is an action for a declaratory judgment and other relief brought by the plaintiff-appellant against the defendant-appellee. Relief was denied and plaintiff appeals.

In June 1965 Mr. C.H. Johnson signed an agreement with the plaintiff-appellant, James Castle, which authorized the latter "* * * as my agent to negotiate for the sale or lease of my quarry operations * * *." Acting on this authorization, Castle contacted defendant-appellee Hulcher, and on October 16, 1965, plaintiff-appellant, James Castle, and defendant-appellee Norman E. Hulcher signed as lessees a contract with Charles H. Johnson for the operation of the quarry owned by the latter. The lease was for 15 years with a renewal privilege. Limestone, roadrock, gravel and sand were to be mined and sold, the lessees to pay a 10-cents-per-ton royalty to the owner.

Paragraph 12 of the lease provided that "It is mutually agreed by all parties to this lease and contract that in the event the said Norman E. Hulcher desires to form and establish or does form and establish a corporation, the purposes of which said corporation includes the production and mining of limestone, roadrock, sand or gravel and the purposes of this lease and contract as are herein specified that this lease and contract will be sold, assigned, or transferred to the corporation at any time requested in writing by said Norman E. Hulcher."

Following the signing of the lease, Hulcher put in pumps to reduce the water level in the quarry. He asked Castle to find a contractor who would come in and operate the quarry. Castle found a contractor, Lyle Moushon, who operated the quarry at a loss for a year, producing about 60,000 tons. This was approximately one-half enough to meet royalty payments since the lessees were obligated to the owner to pay 10 cents per ton or a minimum of $6,000 each 6 months. Hulcher made these payments. The contract with Moushon, which had been only between Hulcher and Moushon, was terminated and Castle was asked to find another crusher. He found Kessen and a contract was signed with him, this time by both lessees. Kessen's production was not much better than that of Moushon and his relationship was terminated in February 1968. Hulcher made the minimum royalty payments. Hulcher then moved in his own machinery and equipment and commenced crushing in May or June of 1968. Following this, production expanded and the quarry became a paying operation.

On March 24, 1970, acting in accordance with paragraph 12 of the lease, Hulcher assigned "any and all rights granted under a contract dated October 16, 1965 between Charles H. Johnson and the aforesaid Norman E. Hulcher and James Castle to Hulcher Quarry, Inc., an Illinois corporation." Hulcher subscribed his name to this assignment.

For approximately 4 years following the signing of the lease, Castle devoted some time to the quarry — operating the scales and keeping trucking records. Also, he purchased trucks of his own with some financial assistance from Hulcher and during this same period of time operated an independent trucking business, hauling materials from the quarry. On March 14, 1969, Hulcher became angry at Castle because the latter was using Hulcher's mechanics to repair his own trucks, and Castle was told to take his trucks and get out and not come back. Two years later, in February 1971, Castle filed his complaint for a declaratory judgment claiming that he was a co-lessee entitled to 50% of the profits from the operation and asking for an accounting.

Castle contends that he is a co-lessee and in the absence of a specification of the interests of the lessees is entitled to one-half of the profits; that Hulcher's admission that the lease contract was executed by the owner, Castle, and himself is a judicial admission, and that he therefore cannot deny the effect of the lease as stated above. Also, Castle claims that he received no notice or consideration at the time Hulcher transferred the interests under the lease to the corporation and that therefore Castle's interest in the lease was not divested. Castle further states that over a period of 4 years he contributed a substantial amount of work to the quarry enterprise for which he has not been compensated.

Hulcher maintains, on the other hand, that there was never any intent that Castle be in fact regarded as a co-lessee, that this arrangement was made as a method of paying him for finding a lessee of the quarry for the owner. The evidence corroborates Hulcher's declarations that Castle invested nothing in the enterprise, that all of the operating capital and expenses of operation were paid by Hulcher, that Hulcher alone dealt with Johnson in paying royalties and in discussing matters that arose under the lease. Hulcher maintains that Castle was to receive 2 cents per ton in lieu of a commission from Johnson for finding a lessee and that this was credited to Castle in the quarry accounts. He further maintains that Castle has been paid everything due him under agreements accepted by both of them during the 4-year period of operation and that Castle, in effect, approved Hulcher's transfer of leasehold interests to the corporation by raising no objections for a period of more than 1 year.

The primary issue in this case is whether or not Castle is entitled to share in the quarrying enterprise as a co-lessee.

• 1 What was the purpose in mind when Castle was named a co-lessee, and what do the statements and actions of the parties indicate his interest was intended to be? Castle maintains that these questions cannot be explored since Hulcher has made a judicial admission of the existence of the lease and its contents. We do not agree. There is no magic in a judicial admission. It is simply a way of saying that one should not be permitted to refute something which it can be proved he has admitted. In this case Hulcher admitted the existence and the language of the lease. Beyond that he admitted nothing and it is obvious that substantial disagreement exists over the meaning of the lease. After all, the trial court did hear parol evidence from both parties regarding its meaning. None of the cases cited by Castle in support of his contention regarding a judicial admission involve the construction of an instrument. All are personal injury cases. In Rosbottom v. Hensley, 61 Ill. App.2d 198, 209 N.E.2d 655, the question was whether or not the plaintiff's statement to the defendant during a hospital visit that it was an "accident which could have happened to anyone" was a judicial admission barring the plaintiff's suit. The court did not regard this as a judicial admission. It said that the word "accident" must be defined in the context in which it is used. In Nowak v. Schrimpf, 44 Ill. App.2d 309, 194 N.E.2d 547, the plaintiff admitted that a third car caused a truck to swerve into his path. This was regarded as a judicial admission and rightly so. But we have here a simple statement, not a document to be interpreted. In Huber v. Black & White Cab Co., 18 Ill. App.2d 186, 151 N.E.2d 641, the plaintiff stated that the defendant with whom he was riding was driving at a proper rate of speed and slowed down at the intersection. He was later barred from controverting this and rightly so. Here again we have a simple statement, not a document to be interpreted.

Can extrinsic evidence be admitted to show the interests of the parties in the lease? In Sturdyvin v. Ward, 336 Ill. 594, 168 N.E. 666, the court said that a conveyance to two or more parties without a designation of interest creates the presumption that they take equal shares as tenants in common, but that evidence is admissible to show otherwise. Such evidence was admitted in the Sturdyvin case to show that one of two signatories on a mortgage was only a surety. Cases cited by Castle to show that the law presumes that they take equal shares as co-lessees also recognize that this is a rebuttable presumption. In Keuper v. Unknown Heirs of Mette, 239 Ill. 586, 88 N.E. 218, a husband attempted to show that his wife was a partner in a business conducted by him and a deceased co-owner thus entitling them to two-thirds of the property instead of one-half upon the decease of the co-owner. The court refused to allow their claim because the evidence did not show that the wife was in fact a partner. In Miller v. Mathias, 145 Ill. App. 465, the question was whether or not a conversation between one lessee and the deceased lessor was admissible to show that rent had been paid. The court rightly held that such was not admissible. In Shinn v. Shinn, 91 Ill. 477, the court held that so far as third parties are concerned joint purchasers of a certificate of purchase at a foreclosure sale are regarded as having equal shares, thus inferring that as between the parties evidence may be admitted to show a different division. In Porter v. Porter, 381 Ill. 322, 45 N.E.2d 635, the court did interpret language in a deed and in a habendum clause to the deed to determine whether a conveyance created a tenancy in common, a joint tenancy, or a life estate.

• 2 While we agree with Castle's statement that the court cannot establish a contract different from that expressed in the written agreement of the parties, this does not mean that extrinsic evidence cannot be introduced to show what the parties intended the contract to mean. In Freeland v. Edwards, 11 Ill.2d 395, 142 N.E.2d 701, cited by Castle, though the court states that "* * * we cannot establish a contract different from that expressed in the written agreement," it also says, "The primary object of construction is to give effect to the intention of the parties, greater regard being given to such intent, when clearly revealed, than to particular words or clauses of the contract." And in Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102, 133 N.E. 711, the court states, "* * * the real difficulty arises in determining in each case whether the language of the instrument is ambiguous, as shown either by the context or by the circumstances attending the same." (Emphasis added.)

We have no hesitancy in stating that it is proper to consider the actions of the parties and other extrinsic evidence in determining the share or interest of Castle in the quarry operation. In 12 I.L.P. Contracts § 232 it is stated that "Regard will be had to the practical construction, if any, which the parties by their acts or conduct have given the contract." In Vermont St. M.E. Church v. Brose, 104 Ill. 206, the court admitted extrinsic evidence to determine the meaning of the following phrases: "stone for the front and footing," "full and complete satisfaction," and "finished and completed." In Storey v. Storey, 125 Ill. 608, 18 N.E. 329, the court stated (quoting from the Brose case), "'It is always allowable to look to the interpretation the ...

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