APPEAL from the Circuit Court of Winnebago County; the Hon.
DAVID SMITH, Judge, presiding.
JUSTICE HOPF DELIVERED THE OPINION OF THE COURT:
This case concerns the meaning of purchase options on two machine lathes leased by plaintiff Lathom Tool & Machine Company, Inc. (Lathom), from defendant Mutual Leasing Associates, Inc. (Mutual), predecessor to intervening petitioner Northbrook Leasing Company (Northbrook). The trial court found that the terms of the options entitled Lathom to set the value, and as its president, W.R. Lathom, had set the value at $1, it was entitled to each machine upon tender of this amount.
The lease for each machine ran seven years. The lease on one machine ran from February 27, 1974, and the other from December 27, 1974. On December 27, 1974, as a part of the consideration for the second lease, purchase options for both machines were given to Lathom. Each purchase option stated that at the end of the lease Lathom had the option to purchase the machine leased for "the purchase option price of * * * `Fair Market Value' determined by W.R. Lathom Tool & Machinery Co."
After the leases terminated Lathom informed Northbrook, Mutual's successor in interest, that it chose to purchase the machines, and tendered a check for $1. This was refused by Northbrook and Lathom brought this action, seeking a declaratory judgment that the purchase options provide a determination of fair market value by Lathom and by no other means of appraisal or setting. Lathom further prayed that the court order documents transferring title to it.
Evidence was adduced at trial about the leases and the negotiations and intentions that prompted the parties to agree to the options. Evidence depositions of three witnesses were also submitted to the trial court. W.R. Lathom testified that Mutual had executed and delivered to Lathom a written purchase option giving it the option to purchase the tool lathes for $1 each. Such option was not offered into evidence at trial. W.R. Lathom testified he had no idea of its whereabouts.
At the conclusion of the hearing Lathom amended its complaint, alleging in the alternative to its allegations of rights under the purchase options upon which it based the original complaint, that Mutual executed and delivered to Lathom a written purchase option for $1. The amendment to the complaint prayed for judgment as previously requested.
The trial court stated its findings in open court, consisting in pertinent part as follows:
"[Representations made by Mutual salesman and Mutual's president at the time Mutual leased the second lathe to Lathom] led the plaintiff, Mr. Lathom, to believe that the `fair market value as determined by the lessee' meant that the lessee could place whatever value he wanted on the goods. Otherwise, it doesn't have any meaning. If you say `fair market value', fair market value would be fair market value. * * * The lease was prepared by the lessor.
I previously indicated that I didn't think that [the $1 purchase option about which W.R. Lathom testified] existed. In other words, [the option] wasn't a dollar. It was `fair market value as determined by lessee.' There was testimony that a dollar figure did apply, but I can't find that from the evidence.
I think that the plaintiff's conduct is somewhat inconsistent when he went out and in fact got * * * some appraisals on the goods, but * * * most of the appraisals would indicate that the property had little or no value as far as for sale purposes. It was pretty much obsolete machinery that other people would normally not want to buy. However, there is no question that to the plaintiff it would have considerable value because he's been using them for years and probably has stock or whatever that was used * * * with that equipment. And for him to have to replace it with something else or ones of like value, it would have * * * a relatively high market value.
And I'm going to find that the plaintiff did have the right to set the value and that by setting it at a dollar * * * the title of the machinery * * * should be turned over to the plaintiff * * *."
In its written order the court found that pursuant to the purchase options Lathom had the right to set the value of the equipment. Lathom set the price at $1 and tendered that amount and was therefore entitled to both machines upon payment of $2 ($1 each).
Northbrook argues that the language of the purchase options is clear and unambiguous and the court's construction of the contract was inconsistent with its meaning. Further, Northbrook argues that as the purchase options were unambiguous, the court erred in considering parol evidence of the intent of the parties.
Finally, Northbrook argues that assuming there is ambiguity in the language of the purchase options, the decision of the trial court is contrary to the manifest weight of the evidence, even considering the parol ...