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Executive Centers of America v. Bannon

OPINION FILED AUGUST 2, 1978.

EXECUTIVE CENTERS OF AMERICA, INC., PLAINTIFF-APPELLANT,

v.

WILLIAM BANNON, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Peoria County; the Hon. JAMES D. HEIPLE, Judge, presiding.

MR. PRESIDING JUSTICE BARRY DELIVERED THE OPINION OF THE COURT:

This appeal arose out of a contract dispute between the plaintiff, Executive Centers of America, Inc., and the defendant, William Bannon. Plaintiff brought an action in the Circuit Court of Peoria County for declaratory judgment requesting a declaration that defendant was in breach of the written contract entered into, that the plaintiff was free from any further obligation under the agreement, and for a money judgment for the costs of storing and preserving the golf carts which were one of the subject matters of the contract. Defendant, William Bannon, filed a counterclaim seeking a declaration that plaintiff was in breach of the same contract, a declaration of the rights and liabilities of the parties pursuant to the agreement, and a money judgment against the plaintiff for the value of the golf carts. After a bench trial, the trial court entered judgment for the defendant on his counterclaim and dismissed plaintiff's complaint.

Plaintiff timely brought this appeal which raises three issues for review:

(1). Whether the judgment of the trial court dismissing plaintiff's complaint and awarding judgment to defendant on his counterclaim was against the manifest weight of the evidence, and contrary to statutory law;

(2). Whether the trial court erred in granting defendant a money judgment on his counterclaim;

(3). Whether the trial court erred in refusing to admit certain of plaintiff's exhibits, purporting to be appraisals, into evidence, and in admitting one of defendant's exhibits, also a purported appraisal into evidence.

In April of 1972, the defendant, William Bannon, was engaged by the plaintiff to act as and perform services as golf professional at Pine Lakes Country Club in Morton, Illinois. In connection with that employment, plaintiff and defendant entered into a written agreement which embodied their employer-employee relationship and the duties and obligations of each party. That written agreement also contained a provision by which the defendant was required to purchase 20 used golf carts from the plaintiff to be used at the Pine Lakes Country Club for $13,700. The written agreement also provided that in the event that the employment of defendant by the plaintiff was cancelled the plaintiff would be obligated to repurchase the golf carts. The written agreement, in paragraph 11 thereof, concerning the subject matter of the repurchase of the golf carts provided:

"Said [golf] carts are to be carried upon accounting records at actual cash value (cost less depreciation) with depreciation of [sic] schedules to be followed pursuant to accepted accounting principles as agreed to in advance by [Plaintiff] and [Defendant]. If this Agreement is cancelled pursuant to its terms, [Plaintiff] will be obligated to purchase the said motorized cart fleet of twenty carts at book value, less any unreasonable wear and tear, or for the reasonable appraised value, whichever is lower. In the event [Plaintiff] elects to determine appraised value, each of the parties to this Agreement shall name an appraiser, and the average of these two appraisals shall be considered the appraised value."

Defendant's employment as a golf professional at Pine Lakes Country Club with the plaintiff, and the written agreement, were terminated in December 1974. The repurchase clause of the written agreement then became operative. The underlying dispute in this case involves an interpretation of the repurchase clause of the parties' written agreement and specifically whether either or both of the parties fully complied with the terms of said written agreement. Inherent in such a determination is also a question of what the parties meant by the term "book value" of the golf carts.

Following the termination of their business relationship defendant tendered to the plaintiff a document captioned "Depreciation Schedule — Golf Carts — Pine Lakes Country Club," which purported to reflect the book value of the 16 carts then owned by the defendant for the purposes of plaintiff's repurchase. *fn1 This depreciation schedule was prepared independently for purposes of the repurchase clause. This schedule was prepared by the defendant, and his father who had assisted him in accounting and tax preparation, and was prepared after the termination of the written agreement. No schedule of depreciation other than the one offered initially by defendant to plaintiff was ever maintained. Defendant's Federal income tax returns for the years 1973 and 1974 were not prepared using the depreciation schedule tendered to plaintiff. Defendant's bookkeeping and the depreciation schedule tendered to plaintiff used a four-year useful life for the golf carts with a $200 salvage value with which to arrive at book value for purpose of the repurchase provision, in the written agreement. Defendant's tax returns for the two years used a three-year useful life for the golf carts with no salvage value.

Dissatisfied with the book value as initially presented by the defendant, the plaintiff advised the defendant that it wanted an appraisal of the golf carts pursuant to the terms of their written agreement. Following the parties inability to settle the matter pursuant to the terms of their own agreement, the present lawsuit which originated this appeal began.

• 1, 2 Plaintiff's first argument is that the written agreement of the parties, and particularly the purchase and repurchase clause, is governed by the Sales Article of the Uniform Commercial Code (Ill. Rev. Stat. 1973, ch. 26, par. 2-101 et seq.). We disagree. The written agreement signed by both plaintiff and defendant is a contract by which the defendant was employed by the plaintiff to act as a golf professional at Pine Lakes Country Club. The arrangement was one whereby the plaintiff agreed to pay defendant for his professional services. The agreement recites many terms concerning the various duties and obligations of both parties to the agreement. Incidental to the defendant rendering the services of a golf professional, part of the consideration for the agreement was that he purchase the 20 electric golf carts from plaintiff to be operated upon the golf course as a service to its customers. The language of the written agreement is peculiar to services and employment relations, and not a sale of goods. The test of the applicability of the Uniform Commercial Code is whether the predominant purpose of the contract is services or sale of goods. (Bonebrake v. Cox (8th Cir. 1974), 499 F.2d 951.) We perceive the purpose of the disputed agreement to be one of rendition of services, and only incidentally the sale of goods. The Uniform Commercial Code and the various remedies which plaintiff seeks pursuant to it are not applicable to the present factual situation.

The plaintiff's next argument on appeal is that the judgment of the trial court in favor of the defendant finding plaintiff in breach of the repurchase clause of the written agreement is contrary to the manifest weight of the evidence. It appears from the facts in the record that the dispute over what was meant by "book value" in the agreement arose from defendant's use of one book value for price determination under the parties' agreement and another book value for Federal income tax purposes, and led to the plaintiff's decision to elect the alternate method of computing the repurchase price pursuant to the terms of the agreement by averaging appraisals. The terms of the written agreement are clear with regard to this optional method of pricing the golf carts upon repurchase. The language of the contract and the optional pricing method itself shows that the parties contemplated the possibility of a dispute over the term "book value" as used in the agreement. Upon the plaintiff's rejection of defendant's tendered book value of the golf carts, the optional method of setting the repurchase price by appraisal became operative.

• 3 The record clearly supports the conclusion of the trial court that the plaintiff breached the contract to repurchase the golf carts. Defendant did deliver at plaintiff's request an appraisal of the golf carts by David Ogilivie. Mr. Ogilivie testified at trial and identified the appraisal of the carts that he had rendered. The trial court accordingly admitted the appraisal into evidence. Plaintiff had prepared and offered two purported appraisals, both of which were refused admission into evidence by the trial court. Plaintiff's first purported appraisal consisted of a letter from P.B. Schuecking, president of R.S.C., Inc., a golf cart company. Mr. Schuecking's letter was an offer to buy the golf carts in controversy. At trial Schuecking testified that his letter did not represent an appraisal of the golf carts and that plaintiff had not requested him to make an appraisal. Plaintiff's second purported appraisal was a letter from Jack Kropf, branch manager of E-Z-Go Car Division of Textron, Inc. This letter and its ...


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