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Hall v. Humphrey-lake Corp.

JUNE 5, 1975.




APPEAL from the Circuit Court of Cook County; the Hon. ABRAHAM W. BRUSSELL, Judge, presiding.


Decker Hall was a shareholder in the Humphrey-Lake Corporation, an operator of laundry and dry-cleaning stores. In July 1969 he agreed to sell his 98 shares of stock to the company for $36,000 — $28,000 in principal and $8,000 in interest — payable in 48 monthly installments of $750 each. The contract was signed by Hall and by the company's vice-president, the defendant Whitfield Hughes.

The company complied with its obligations for 17 consecutive months — making payments totaling $12,750 — but made none after December 1, 1970. In April 1971 Hall died and his widow, the plaintiff Ruth Hall, sought payment of $23,250, the balance due under the contract, first as the administrator of his estate and then as the assignee of the claim — an assignment approved by the Probate Division of the Circuit Court.

No further payments were made and, in February 1973, Mrs. Hall filed a complaint against the company. In July 1973 she filed an amended complaint and named Hughes, individually, as a co-defendant. In August 1973 she assigned, with the consent of the Probate Court, a 50-percent interest in the Hall-Humphrey-Lake-Hughes suit to Gertrude White, a creditor of her husband's estate.

The amended complaint was for the sum of $14,750 and was based on an alleged agreement made in February 1971, to reduce the balance from $23,500 to $14,750 on condition that Hughes would personally guarantee payment of the lesser amount. Copies of the 1969 contract and the purported agreement of 1971 were appended to the pleading. The latter exhibit, which was found among Decker Hall's papers after his death, was signed by Hughes but not by Hall.

In their answer to the amended complaint the defendants admitted execution of the 1969 contract and payment of only $12,750 toward the purchase price of Hall's stock, but asserted that the corporation's obligations under the contract were terminated,

"* * * by reason of failure of consideration in the underlying subject matter in that the business of the corporation changed dramatically, unexpectedly and adversely shortly after the agreement was signed, without fault on the part of either party."

The answer denied there was a supplementary agreement. It stated that a guarantee in exchange for a lower sum had been proposed by Hughes and another stockholder, James Borne (now deceased), but had not been accepted by Hall. An affidavit filed by Hughes elaborated on this denial. It explained that the amendment was prepared by his own attorneys, without the knowledge or consent of Hall, in order to present him a modified proposal reduced to writing and ready for his signature, but that Hall had rejected the proposition.

Mrs. Hall moved for judgment on the pleadings, asking $23,500 from Humphrey-Lake under the original contract for $14,750 from Humphrey-Lake and Hughes pursuant to the amended agreement. The trial court awarded her $14,750 against each defendant. The court found that "the allegations and contents of the two exhibits attached to plaintiff's pleadings show liability as a matter of law and control over any general allegations of defendant corporation's answer." The defendants appealed from both judgments.

• 1, 2 The plaintiff concedes that her husband refused to sign the proposed amendment to the original contract and that the judgment against Hughes must be reversed. Further, the assignment to her of claims in her husband's estate was restricted to "* * * claims of this estate against Humphrey-Lake Corporation and Hughes Equipment Company * * *" and made no mention of claims against Hughes personally. Mrs. Hall therefore acquired no right as an individual to enforce the guarantee provision of the amended agreement.

The remaining defendant has mounted a multifarious attack on the exhibits relied upon by the court. We consider three of the points asserted: first, the purported amendment did not in fact memorialize any agreement by the parties to modify their first contract; second, since the amendment was the sole instrument upon which judgment was predicated, this court may not look to the original agreement to justify affirmance; third, even if the original contract is considered, no balance is due on it because the agreed price was based upon a mutual mistake as to the value of the stock sold to Hall.

• 3-5 In support of its first contention, Humphrey-Lake proposes that "[w]here a contract is to be signed by more than one person and one of said persons does sign and the other does not sign it, the contract does not become binding on the one who signed it." While the plaintiff's brief did not respond to the point, we are forced to note that if such a rule exists it finds no support in the authorities to which the defendant's appellate counsel has referred us. Those cases applied the principle that in order to bind one or more coparties to their joint undertaking, they must all have signed the agreement. For example, a lessee cannot enforce a lease signed by only one of the two colessors named in the instrument. (Santelli v. Lev (1927), 324 Ill. 454, 155 N.E. 278.) Similarly, a contract for the conveyance of real property by a husband and wife does not bind the husband who signs unless his wife has also signed. (Jackson v. Torrence (1890), 83 Cal. 521, 23 P. 695.) These authorities have no relevance to the present issue of the probative value of the amending instrument and, since the instrument was signed by all the parties sought to be bound, it was, at the time the trial court considered it, a sufficient memorandum to comply with the requirements of the Statute of Frauds. Ill. Rev. Stat. 1971, ch. 59, par. 1; First Presbyterian Church v. Swanson (1902), 100 Ill. App. 39.

However, a writing sufficient to comply with the requirements of the Statute of Frauds is neither necessarily nor presumptively a valid contract (3 Williston on Contracts § 448 (3rd ed. 1961)), but only evidence of one. The instrument does not conclusively prove its own character and validity. In every case it is a question of fact whether the parties adopted a writing as their agreement and it may always be shown by parol that a writing, however complete on its face, was never executed or delivered as a contract. 4 Williston on Contracts § 634 (3rd ed. 1961); 3 Corbin on Contracts § 577 (1960); Kilcoin v. Ortell (1922), 302 Ill. 531, 135 N.E. 16.

• 6 The answering allegation by the defendants, that this document was only a proposal drawn up and signed by Hughes and Borne but rejected by Hall, raised a question of fact as to the validity of the amending agreement, rendering it error for the court to grant judgment on the pleadings based upon that exhibit. All well-pleaded facts and all fair inferences which can be drawn from the opposing litigant's pleadings are taken as admitted ...

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