APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND
S. SARNOW, Judge, presiding.
MR. JUSTICE WILSON DELIVERED THE OPINION OF THE COURT:
Rehearing denied November 6, 1981.
Plaintiff Edward Meyer brought this action to enforce an oral contract involving the sale of securities. The trial court granted defendants' motion for summary judgment, holding that the alleged agreement was unenforceable under the relevant Statute of Frauds. (Ill. Rev. Stat. 1979, ch. 26, par. 8-319.) On appeal, plaintiff contends that the trial court erred in granting summary judgment because he raised these genuine issues of material fact: (1) whether the parties entered a valid oral contract and (2) whether plaintiff's alleged performance of this contract removes the Statute of Frauds barrier. We reverse and remand.
The following information is derived from the pleadings and plaintiff's deposition.
In August of 1973, plaintiff owned 20 percent of the outstanding stock in both the Brock Tool Company and Brock Equipment Company. The Brockschmidt family owned the balance of stock in each corporation. At that time, the total worth of Brock Tool was approximately $900,000. Plaintiff had worked for both companies for many years and when the Brockschmidts decided to sell their 80 percent interest in Brock Tool, they gave plaintiff a veto power over any potential purchasers of their interest. This was important to plaintiff because he wished to remain with the company as its chief executive officer.
Initially, the Brockschmidts and plaintiff negotiated with a party other than defendants. Based on the $900,000 valuation of the corporation, the Brockschmidts were to receive $720,000 for their 80 percent interest in the company. During this time, however, defendant Logue learned of the negotiations and expressed interest in buying the company. Plaintiff told the Brockschmidts that he would prefer dealing with Logue rather than the prior party because Logue assured plaintiff he would be expected to stay on and run the company. Logue and the other defendants planned to borrow money to purchase the Brockschmidts' interest. To facilitate the transaction, plaintiff agreed to subordinate his interest in Brock Tool through a reorganization of the company's stock structure. This would allow defendants to purchase the controlling interest in the company for a nominal amount and pay the Brockschmidts with the bank loan, which was secured by the assets of the corporation. In return, defendants agreed to purchase plaintiff's interest in Brock Tool at the same rate as they paid the Brockschmidts.
According to plaintiff, the negotiations between defendants, the Brockschmidts and plaintiff culminated in the following agreement: (1) plaintiff would sell his interest in Brock Equipment Company to the Brockschmidts for $5,000 and an additional 20 percent of Brock Tool stock, so he would acquire 40 percent of Brock Tool; (2) plaintiff would consent to Brock Tool borrowing $560,000, using its own assets as collateral, to purchase and retire the Brockschmidts' interest in the company; (3) plaintiff would consent to a reorganization of Brock Tool stock into two shareholder classes, A and B. Plaintiff's 40 percent interest in Brock Tool would be decreased from 10,000 to 100 shares of Class A. Ten thousand shares of Class B would be issued, with plaintiff paying $4,000 cash for 4,000 shares, and defendants paying $6,000 cash for 6,000 shares. This would give defendants control of the corporation. (4) Plaintiff would retain the right, on demand, to require defendants to purchase his Class A shares in Brock Tool. These shares represented his 40 percent interest in the corporation and defendants were to purchase them at the same basis paid to the Brockschmidts for their interest. This amounted to $360,000, to be paid to plaintiff in a manner favorable in its tax consequences.
This alleged agreement was never reduced to writing. *fn1 Defendants, however, assured the Brockschmidts when they concluded the sale that they had an "understanding" with plaintiff.
When the ownership of the Brockschmidts' interest in Brock Tool had been transferred to defendants and the company had been reorganized, plaintiff met with defendant Hillsman, an accountant, to discuss the method of paying plaintiff for his Class A stock. Over a period of months, different methods of payment were considered, but Hillsman did not want to put anything in writing until he fully considered the options.
Plaintiff remained with Brock Tool Company as its president until April 7, 1975, when he resigned.
On June 18, 1975, plaintiff filed a complaint to enforce his alleged right to be paid $360,000 under the agreement. Defendants' answer denied the existence of any oral agreement. Defendants also filed a motion for summary judgment based on the Statute of Frauds (Ill. Rev. Stat. 1979, ch. 26, par. 8-319). In granting defendants' motion, the trial court stated, in its written order:
"THE COURT FINDS that the following facts are undisputed:
1. That the Complaint in this cause is based upon an alleged contract for the sale of stock by ...