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.

Jack Frost Sales v. Harris T. & Sav.

OPINION FILED JANUARY 28, 1982.

JACK FROST SALES, INC., PLAINTIFF-APPELLEE,

v.

HARRIS TRUST AND SAVINGS BANK, TRUSTEE, ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. EUGENE L. WACHOWSKI, Judge, presiding.

JUSTICE ROMITI DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 26, 1982.

Plaintiff allegedly lost an opportunity to sell its lease on a building because the landlords refused to agree to an assignment. It filed suit against the landlords for both damages sustained from the loss of the sale and damages sustained by being forced to continue operating in the location. The jury found for the plaintiff and defendants appeal. We find that the jury could reasonably have found that defendants did refuse or at least fail to consent to the lease. We also find that there was some evidence from which a jury could possibly conclude plaintiff did have an assignee on the day in question but that the court erred in refusing to instruct the jury that for a consent to an assignment, there had to be an assignee to receive the lease. Finally and most importantly, we find that there was no evidence from which the jury could determine that the assignee was commercially reasonable. Accordingly, we reverse and render judgment for the defendants.

The property at issue was, at the time in question, held in a land trust for various members of the Cuneo family. Francis J. Cuneo (Cuneo) managed the property. The plaintiff is a corporation which leased and operated a bar on Rush Street in Chicago called The Store. The building has now been demolished and a high-rise called Newberry Plaza has been built in its place. (After the attempted sale which is the subject of this litigation plaintiff sold its lease to the developers for $13,700.) On July 19, 1972, plaintiff entered into an agreement with John Barnes individually and for and on behalf of a corporation to be formed for the sale of the tavern business and for certain specified personal property.

The contract contained the following material conditions:

"7. Liquor License & Lease. This sale is conditional upon the approval thereof by all necessary agencies and upon the issuance thereof to the Purchaser or the corporation to be formed of an appropriate liquor license or licenses. An application for said liquor license for the sale of liquors, wines and beers by the Purchaser or the corporation to be formed shall be made with all diligence. Any lack of diligence on the part of the Purchaser or the corporation to be formed in prosecuting such application shall constitute a default hereunder.

Further, this sale is conditional upon the Purchaser or the corporation to be formed securing an assignment of the remaining leasehold interest of the Seller from the Lessor of said premises of a lease agreement dated June 23, 1965, or the negotiation of a new lease agreement with said Lessor.

8. Pending issuance or denial of an appropriate liquor license to the Purchaser or the corporation to be formed by appropriate governmental authorities and the assignment of the Seller's remaining leasehold interest in the premises by the lessor or the negotiation of a new lease in the premises with the said lessor, the monies deposited under this agreement shall be held in escrow by the Chicago Title & Trust Company, upon the following terms:

(b) If an appropriate liquor license is denied to the Purchaser or the corporation to be formed or if there is a failure of assignment of the Seller's remaining leasehold interest from the said lessor or a failure of the Purchaser or the corporation to be formed to secure a new lease agreement upon said premises because of any act or omission or other fault of the Purchaser or the corporation to be formed, the Purchaser shall forfeit, as liquidated damages, all monies deposited under this agreement and upon satisfactory proof to the escrow agent of such denial of disapproval, the escrow agent shall forthwith pay over to the Seller the purchase money held by it and the escrow agent shall thereupon be discharged from all liability therefor, and all rights of the Purchaser and the Seller under this agreement shall thereupon terminate.

(c) If an appropriate liquor license is denied to the Purchaser or the corporation to be formed or if an assignment of the Seller's remaining leasehold interest in said premises to the Purchaser or the corporation to be formed is disapproved by the said lessor or alternatively, if there is no new lease agreement concluded, and if such denial, disapproval or failure is not due to any act or omission or other fault of the Purchaser or the corporation to be formed, then upon satisfactory proof thereof to the escrow agent and the Seller both the escrow agent and the Seller shall forthwith pay over to the Purchaser the purchase money held by them, and the escrow agent and the Seller shall thereupon be discharged from all liability therefore, and the rights of the Purchaser and the Seller under this agreement shall thereupon terminate.

10. Seller shall permit Purchaser a reasonable opportunity to inspect or have inspected, the business records and books of said business dealing with The Store. If a review of said records discloses that gross sales for the past fiscal year does not equal or exceed $200,000.00 then Purchaser shall have a right to terminate this agreement and all monies paid upon the purchase price shall be returned to the Purchaser by the escrow agent and the Seller."

The only issues before this court are (1) whether the defendants refused to assign the lease to the alleged purchasers and (2) whether, if he did, this refusal was unreasonable, i.e., whether plaintiff had carried its burden of producing a commercially reasonable purchaser. While there were other witnesses who testified as to such matters as damages sustained, only the testimony of Anders Doe, president of plaintiff, William Serpico, the alleged purchasers' attorney, Barry Holt, the plaintiff's original attorney, Francis J. Cuneo, John Barnes, Theresa Bornes and Margerie Bornes, the three stockholders of the would-be purchaser, is material to the consideration of the issues before this court. Doe, Serpico and Holt were all called by the plaintiff; the others by the defendants.

Anders Doe, the president of Jack Frost, testified that the bar was losing money in 1972. It was in bad financial condition. Accordingly, it decided, in April of that year, to sell the business. It found two purchasers, John Barnes and Margerie Bornes. They were to pay $60,000 for the business, $30,000 to be paid into escrow immediately; the balance to be paid upon the conclusion of the deal. It was in fact agreed that if the remainder was paid within 90 days of closing of the transaction, then the agreed purchase price would be reduced by $5,000. The witness also executed a bill of sale agreeing to give good title and sell to buyers a 25-ton air conditioner, although the lease provided that all air conditioning equipment whether placed on premises at time of lease or thereafter should be considered as part of the premises and belonging to the lessor.

Late in August or early in September, Doe contacted Cuneo to try to secure his consent to an assignment of the lease. Cuneo said he was not going to consent to the assignment, that "there was another deal pending and that we didn't have a deal."

William Serpico, an attorney, was contacted by the purchasers to arrange both the purchase of The Store and the incorporation of the business. Serpico drafted the final purchase contract. He did not remember if the earlier contract provided for an option for a new lease. It could have. He did not remember if he drafted any other contract before the one his client finally signed. He testified that after the agreement was signed and executed he organized the corporation. The certificate of incorporation was issued. The stated capital was merely $1,000. There had not been any activity or capitalization in the account. He could not remember if the $1,000 was paid into a certain account, or if the corporation ever had any money. It never got into business.

After the certificate of incorporation was issued, Serpico and Holt opened up the escrow account. They then attempted to conclude the deal, the next step being to secure the assignment of the sellers' leasehold interest. Serpico contacted Cuneo by telephone to set up a meeting; he probably called Cuneo's office, but he did not remember when this took place.

They had a meeting face to face sometime in July or August. It took place in Cuneo's office. Margerie Bornes, Theresa Bornes, John Barnes, Victor Goulet, Barry Holt, the witness and Cuneo were all there. Serpico did not remember if he arrived with Barry Holt. He did not know if his clients arrived before him. Most likely they came to his (Serpico's) office. He did not know if the meeting started before he arrived. He did not "expect" that his clients would have started without him even if they went there before him. He did not recall if they sat in a waiting room of some kind.

Serpico had no recollection of any conversations about the lease other than what his stated purpose was. He was attempting to secure an assignment of the remaining term of the lease or negotiate a more favorable lease on his clients' behalf. He told Cuneo they were interested in purchasing the business and the condition of the purchase would be to get an assignment, and they were prepared to take an assignment of the lease. Serpico did not remember if he discussed a five year option. He did not have a specific recollection of the terms discussed with Cuneo. He had no recollection of anything that was said between his clients and Cuneo.

Serpico could not remember if he ever specifically said, "Will you give me an assignment." He also could not remember if Cuneo ever specifically said, "I will not give you an assignment." There was some conversation pertaining to the construction and erection of a building on the property which foreclosed any prospect of renegotiating the lease. Serpico did not remember any specifics other than Cuneo did not agree to assign the lease.

There was some question as to the financial ability of his clients to be responsible for the undertaking. Around the time of the meeting Serpico forwarded a resume to Cuneo. This resume was introduced into evidence. It showed that Barnes, who would own 49% of the shares of the corporation and be its president, had worked in seven Playboy or Al Hirt Clubs from 1961-1972 as some form of manager. Margerie Bornes would be the majority stockholder and the principal financial source. She had a AAA ...


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.