APPEAL from the Circuit Court of Cook County; the Hon. CHARLES
R. BARRETT and the Hon. L. SHELDON BROWN, Judges, presiding.
MR. JUSTICE JIGANTI DELIVERED THE OPINION OF THE COURT:
Plaintiff, Western Land Corporation, a Delaware corporation (Western Land), was the owner of Faribo Plaza Shopping Center in Farribault, Minnesota. Harold and Fay Stickler are shareholders in Western Land and were added as plaintiffs in October 1973. A contract dated October 31, 1967, was entered into between Western Land and Gerald and Harriet Lichtenstein which provided for the sale of Faribo Plaza to the defendants Gerald and Harriet Lichtenstein, and a lease back to Western Land. Though the contract bears the date stated, the actual date of the signing is subject to some dispute. On May 11, 1971, Western Land filed a suit seeking recision of the contract and other relief alleging generally that Western Land lacked authority to sell property under section 271 of the Delaware Corporation Act (Del. Code Ann. tit. 8, § 271 (1967)) without shareholder approval and also charged the defendants with actual fraud, inadequacy of consideration tantamount to fraud, and conspiracy. Two other issues are raised and will be considered later in the opinion.
Western Land is a publicly held corporation with over 1000 shareholders. At the time of the contract its corporate headquarters were in Minnesota. Incorporated in Delaware in 1960, Western Land described its business purposes in its certificate of incorporation:
"The nature of the business, or objects or purposes to be transacted, promoted or carried on are: To purchase, option, acquire, hold, improve, subdivide, sell, convey, assign, exchange, release, mortgage, encumber, pledge, lease, hire, and by other means to deal in real and personal property of every name and nature * * *."
Forrest Miller, then a vice-president of Western Land, was in Chicago in October 1967 and was introduced to Gerald Lichtenstein by a mutual banking acquaintance. Gerald Lichtenstein, although a licensed attorney in Illinois, has virtually never practiced law. He has been in the retail business for nearly 40 years and for several years prior to this transaction has been involved in five commercial shopping center ventures. The preliminary contractual negotiations were conducted between Miller and Gerald Lichtenstein. Edward J. Callahan, Jr., attorney for Western Land and David Hoffman, attorney for the defendants, appear a short time later in these contractual discussions. However, only Gerald Lichtenstein and Hoffman testified at trial. Neither Miller nor Callahan nor anyone from the board of directors at the time of the contract testified. Gerald Lichtenstein testified that after an initial meeting he and Miller exchanged relevant financial data. At a second meeting, Gerald Lichtenstein testified that they discussed a price of $200,000 above the existing mortgage on the property. Gerald Lichtenstein requested that Western Land consider a lease-back because the shopping center could not be conveniently managed due to its distance from Chicago. Gerald Lichtenstein further testified that Miller replied that he thought Western Land would be receptive to the suggestion of a lease-back. Gerald Lichtenstein further testified that after Miller returned to Minnesota, Miller telephoned him and informed him that Western Land had a two-acre parcel of vacant land contiguous to the shopping center, that Western Land did not want to be left with this property and that it would be a condition of the sale that the land would be included and the purchase price would be raised to $230,000. Gerald Lichtenstein testified that he had no opportunity to negotiate this issue.
On October 25, 1967, Miller wrote to Gerald Lichtenstein setting forth what he described as the entire deal. The record does not reveal whether this letter was before or after the second meeting between Miller and Gerald Lichtenstein. Further, it does not reveal whether the letter was before or after the several more meetings they had in Chicago. The letter showed in summary that the total value of the buildings and paving was $797,121.04 and that there was a mortgage balance of $703,121.04 leaving a net equity of $94,000. In addition to paying the $94,000 the letter indicates that Gerald Lichtenstein was to pay interest over the period of the contract of $94,348.80 and a management fee of $42,000. The net income to Western Land over a six-year period was $230,348.80.
David Hoffman, attorney for Gerald Lichtenstein, testified that the contract was brought to his office in early November. He thinks the date was November 9. Certain pages of the contract were retyped and taken back to Minnesota by Miller and Callahan, the attorney for Western Land. Gerald Lichtenstein executed the contract sometime between November 9 and 10 and November 28, 1967. The date of October 31, 1967, was on the instrument when it was first submitted to David Hoffman and it was never changed. At the time prior to the signing of the contract and unspecified as to its relationship to the board of directors' meeting on November 10, 1967, the contract was changed in certain respects. What had been designated a management fee of $42,000 was changed to read "interest." The term of the lease-back was changed from 10 years to 13 1/2 years and the rentals were increased accordingly.
Western Land had a Board of Directors' meeting on November 10, 1967. Admitted into evidence over defendants' objection were what counsel for the defendants at trial termed "records from the files" of the corporation. Those records contained the "proposed minutes" drafted by Callahan, Western Land's attorney. The proposed minutes show that the Board resolved that the offer of Gerald Lichtenstein would be accepted on the terms and conditions contained in the purchase agreement on the lease which the proposed minutes say are attached to the minutes. What is attached to the exhibit is a breakdown of the purchase which shows that the sale price would net $230,000 payable over a period of six years. It further shows that the term of the lease was to be 10 years. Also as part of that exhibit is a certificate of the secretary of Western Land, Ellsworth Johnson, which shows that the Board of Directors resolved that the company should enter into an agreement to sell both the shopping center "with an adjoining tract of land held in fee by Western Land Corporation consisting of approximately two acres".
Section 271 of the Delaware Corporation Act (Del. Code Ann. tit. 8, § 271 (1967)) requires shareholder approval in instances where all or substantially all of the assets of the corporation are sold in other than the normal course of business. Defendants filed a motion for partial summary judgment on this issue which was allowed. Western Land appeals from that judgment. In doing so, it alleges that the sale constituted a sale of all or substantially all of Western Land's assets; the sale was not in the normal course of Western Land's business; and there were material issues of fact which would prevent a summary judgment.
• 1 In urging that the trial court was in error in finding the sale was not the sale of all or substantially all of its assets Western Land examines its own financial statement of October 1967. Through various interpretations it casts doubt on its own balance sheets. It also contends that a balance sheet is inappropriate in determining the value of assets. Defendants' motion includes affidavits that show Western Land sold its equity position in other shopping centers to generate cash so that it might further develop yet other shopping centers. There were other shopping centers in progress at the time of the sale of Faribo. In a letter to the Securities & Exchange Commission on April 11, 1968, Western Land stated that it was not disposing of a substantial portion of its assets. The letter pointed out that it was in the business of developing and selling shopping centers and using the proceeds to develop still more shopping centers. It asserted that during the fiscal year of 1967 it sold two shopping centers which amounted to 40% of its gross assets and it continued to hold several shopping centers after the sale. We do not believe that Western Land may now deny its own records. The court's ruling that there was no material issue of fact on this issue was proper.
• 2 We also believe that the court properly ruled that the sale was in the normal course of business. Western Land argues that although its officers said the sales were necessary to generate working capital that this was a change in corporate purpose. Western Land's purpose according to its articles of incorporation was to develop and sell property which it did here.
• 3 A threshold question exists concerning the order dismissing the fraud and conspiracy counts. The motion for partial summary judgment was ruled upon and the appeal taken from the order of Judge Charles R. Barrett. Judge Barrett also heard the evidence concerning the issues of fraud and conspiracy after ruling on the motion for partial summary judgment and on November 21, 1973, entered an order dismissing the fraud and conspiracy counts. In a letter to counsel transmitting the order Judge Barrett suggested that although he considered the order sufficient he would entertain a motion to vacate the order and enter an order containing expanded findings of fact. Western Land took advantage of the court's offer and made a motion to vacate and enter a new order continuing expanded findings of fact. On December 10, 1973, the court vacated the judgment order of November 21, 1973. The order stated that "the court shall in lieu of the order of November 21, 1973 herein vacated, enter a new order containing expanded findings of fact, with notice of the entry of said order being sent to all attorneys of record." Prior to any new order being entered, however, Judge Barrett resigned from the circuit court on January 31, 1974, and was appointed to the appellate court, first district, the following day. The defendants petitioned the court to reinstate the order of November 21, 1973, and Western Land objected. Judge L. Sheldon Brown entered an order reciting the fact that he had considered the plaintiffs' petition, answer and reply of the parties, heard oral argument and it being his opinion that expanded findings of fact were not necessary to the validity and effect of Judge Barrett's order, Judge Brown ordered that Judge Barrett's order of November 21, 1973, dismissing the cause be reinstated and reentered.
Western Land contends that Judge Brown, successor to Judge Barrett, had no authority to decide or make findings of fact in the case not tried by him. It cites as authority 48 C.J.S. Judges § 56(b) (1947) to the effect that where a case is tried by a judge and the issues remain undetermined by him, a successor cannot decide or make findings in the case without a trial de novo. Also cited is the case of Wainwright v. PH & FM Roots (1912), 176 Ind. 682, 97 N.E. 8, which Western Land asserts is parallel to the case at bar with one insignificant exception. In Wainwright the trial judge took the case under advisement and a couple of months later indicated that his findings would be favorable to the defendant. The judge told the clerk his findings were ready to be filed and he would file them the following day. That evening the judge died suddenly. Found in his office were the special findings of fact and the conclusions of law with his signature. We believe that the citation from Corpus Juris Secundum and the Wainwright case are distinguishable because in those cases judgments had not been entered. In the case at bar a judgment had been entered and was vacated merely for procedural purposes. Western Land in its motion to vacate the order of November 21, 1973, only asks that the order be vacated so that a new order containing expanded findings of fact may be entered. That motion did not challenge the order of dismissal. Special findings of fact are not necessary pursuant to Supreme Court Rule 366(b)(3)(i). (Ill. Rev. Stat. 1971, ch. 110A, par. 366(b)(3)(i).) The ruling of the court was proper.
In arguing that the dismissal of the actual fraud and inadequate consideration tantamount to fraud counts was improper Western Land asserts that the offer did not include the vacant land valued at $30,000 and it was never discussed with the directors. The record is not clear as to what exactly was discussed at the Board of Directors' meeting because Western Land never presented as a witness Miller nor any other person who was at the directors' meeting. The only evidence presented is what has been termed "records from the files" which indicate through the certificate of the secretary of Western Land that ...