Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Kfk Corp. v. American Continental Homes

OPINION FILED APRIL 30, 1979.

KFK CORPORATION, PLAINTIFF-APPELLEE AND CROSS-APPELLANT,

v.

AMERICAN CONTINENTAL HOMES, INC., ET AL., DEFENDANTS-APPELLANTS AND CROSS-APPELLEES.



APPEAL from the Circuit Court of Du Page County; the Hon. BRUCE R. FAWELL, Judge, presiding.

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

This appeal arises from the sale of a partially completed real estate development located in Wheaton, Illinois. The contract of sale was executed on June 8, 1972, and the sale was closed on July 5, 1972. The development consisted of an area of single-family homes known as Casa Solana and an area of multiple-family condominiums known as Heritage Lake Estates. The seller was KFK, an Illinois corporation which was in the business of developing residential realty in the Du Page county area. The purchaser was American Continental Homes, a Delaware corporation (hereinafter ACH) which was seeking to enter the residential housing market in northern Illinois during 1972. Also involved in the transaction, but solely as a guarantor for the contractual obligations of ACH, was its corporate parent, American Financial Corporation, also a Delaware corporation (hereinafter AFC.)

This litigation began on September 16, 1974, when KFK filed a complaint for specific performance against both ACH and AFC. That complaint alleged that under the provisions of section 3(f)(iv) of the contract of sale the two defendants should be ordered to purchase 46,380 shares of unregistered ACH common stock from KFK for the fixed price of $850,000. The two corporate defendants were represented by the same counsel and, in a joint answer, denied that they had any duty to purchase stock from KFK. In addition, ACH counterclaimed for damages arising from an alleged breach of contractual guarantees by KFK. AFC filed its own counterclaim for $500,000 in overdue principal on a promissory note, executed by KFK and subsequently held in due course by AFC. *fn1

After an extensive bench trial on the conflicting claims of the parties, the trial court entered an order on April 14, 1977, which found as follows:

"A. That the material issues relative to the Complaint for Specific Performance are with the plaintiff, K.F.K. CORPORATION, and against the defendants, AMERICAN CONTINENTAL HOMES, INC. and AMERICAN FINANCIAL CORPORATION.

B. That the material issues relative to the Counterclaim filed by the defendants, AMERICAN CONTINENTAL HOMES, INC. and AMERICAN FINANCIAL CORPORATION, are with the plaintiff, K.F.K. CORPORATION, and against the said defendants.

IT IS HEREBY ORDERED, ADJUDGED AND DECREED by the Court that a judgment be and the same is hereby entered in favor of the plaintiff, K.F.K. CORPORATION, and against the defendants, AMERICAN CONTINENTAL HOMES, INC. and AMERICAN FINANCIAL CORPORATION, and each of them, jointly and severally, in the amount of THREE HUNDRED FIFTY THOUSAND DOLLARS ($350,000.00), together with plaintiff's costs of suit.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Counterclaim filed by the defendants, AMERICAN CONTINENTAL HOMES, INC. and AMERICAN FINANCIAL CORPORATION, and against the plaintiff, K.F.K. CORPORATION, be and the same is hereby dismissed with prejudice."

All three corporations which are parties to this litigation have appealed. ACH and AFC, represented by the same counsel, filed a joint notice of appeal as well as joint appellants' briefs. In those briefs they contend first that KFK was not entitled to specific performance because it had allegedly failed to perform various conditions precedent and, second, that ACH was entitled to damages arising out of alleged breaches of warranty by KFK. In its cross-appeal KFK contends that it should have received statutory prejudgment interest on the purchase price of the stock from the date the stock should have been purchased to the date of judgment.

We have carefully examined both the arguments of the parties and the record herein. As a result of that examination we conclude that this opinion must be divided into two broad areas of examination. The first is whether the findings of the trial court are beyond the manifest weight of the evidence. The second is whether the relief ordered by the trial court properly reflected the rights, duties and liabilities of the three separate parties as established by the court's findings of fact.

We now turn to the first broad area of examination where we initially examine KFK's claim for the specific performance of a provision contained in the realty sales contract. It is the provisions of that contract which both create and define the scope of relief available to KFK, if any. The specific contractual provisions which are necessary to a proper determination of this point are as follows:

"(f) ACH agrees and American Financial Corporation hereby becomes a party to this Contract for the sole purpose of guaranteeing the commitment of ACH contained in this sub-paragraph 3(f).

(i) If prior to December 31, 1973, ACH has made available to KFK the Registration opportunity set forth in the immediately preceding sub-paragraph and the Registration Statement made available to KFK has become effective prior to said December 31, 1973, and in the further event that the market value of an ACH Common share as of December 31, 1973 (computed in the same manner as sub-paragraph 3(e)) when multiplied by the number of shares of ACH Common Stock issued to KFK under the terms of sub-paragraph 3(e) is less than Eight Hundred Twenty-Five Thousand Dollars ($825,000), then within Ten (10) days after December 31, 1973, ACH or American Financial Corporation as guarantor shall pay to KFK the difference between Eight Hundred Twenty-Five Thousand Dollars ($825,000) and the number of shares of ACH stock issued pursuant to sub-paragraph 3(e) multiplied by the market value of ACH stock on December 31, 1973, as computed in sub-paragraph 3(e); and ACH and American Financial Corporation as guarantor shall have no further obligation to KFK with respect to the ACH shares issued under this Agreement.

(ii) If prior to December 31, 1973, ACH has made available to KFK the Registration opportunity set forth in the immediately preceding sub-paragraoh and the Registration Statement made available to KFK has become effective prior to said December 31, 1973, and in the further event that the market value of ACH Common Stock on December 31, 1973, (as hereinabove computed) when multiplied by the number of shares of ACH Common Stock issued pursuant to sub-paragraph 3(e) is in excess of Eight Hundred Twenty-Five Thousand Dollars ($825,000), then ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.