Appeal from the Circuit Court of Cook County; the Hon. Albert
S. Porter, Judge, presiding.
JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:
Rehearing denied July 25, 1983.
This is an appeal by defendants (Wallace Erickson, Gwendolyn B. Erickson and Wallace A. Erickson & Co.) from an order granting plaintiffs' (American National Bank and Trust Company of Chicago, Kenneth C. DeGon and Ruth Getz) motion for summary judgment in the amount of $4,546,618. The issues presented for review are whether the trial court erred in granting summary judgment for plaintiffs and whether the trial court erred in measuring damages.
Initially, we note that the separate appeals filed by Wallace A. Erickson (Wallace) and Wallace A. Erickson & Co. (the Company), and Gwendolyn Erickson (Gwendolyn) have been consolidated because they relate to the same summary judgment order.
In 1969, Wallace and Gwendolyn each owned 50% of the outstanding common stock of the Company. American National Bank loaned the Company $500,000 which was personally guaranteed by plaintiffs' decedent, William Getz. On May 2, 1969, Getz entered into a written agreement (agreement) with Wallace and Gwendolyn. The agreement provided that Getz loan Wallace 17,000 shares of Teledyne Corporation common stock for a period of two years. As security for the loan, all the outstanding shares of Erickson & Co. were pledged to Getz. During the two-year period, Wallace enjoyed full power to dispose of the shares restricted only by the requirement that he retire the $500,000 American National Bank loan upon any transfer or disposition of the shares.
The repayment provision of the agreement is particularly relevant to this appeal. Paragraph 1(g) provided:
"On or before two (2) years, [Wallace] shall deliver to Getz * * * (1) stock certificates representing the number and class of shares of Teledyne (or such other corporation into which shares of Common Stock of Teledyne shall have been converted) which Getz would then hold had he (aa) owned * * * 17,000 shares of Common Stock of Teledyne on [May 2, 1969] and (bb) had he not transferred any said shares or any non-cash distributions * * * and (2) an amount of money * * * equal to the total cash dividends, if any that Getz would have received * * *."
The agreement further specified that:
"It is the intention of the parties with respect to the foregoing that on or before two (2) years after the date of this Agreement [Wallace] shall deliver to Getz shares of stock and cash so as to replace Getz in exactly the same position with respect to the
shares loaned pursuant to this Agreement as he would be had he had not loaned the shares to [Wallace] and had he continued to have said
shares of Common Stock of Teledyne and all distributions made with respect thereto, but without interest."
Wallace failed to deliver the stock certificates and cash dividends, as required, on May 2, 1971. The following day, Wallace wrote Getz and acknowledged his default. He also proposed a modification of the agreement, whereby he agreed to repay the loaned Teledyne shares and to transfer to Getz the outstanding stock of Erickson & Co., which had previously been pledged as security. The modification was accepted. In 1974, Wallace repaid 1,000 shares of loaned Teledyne stock, leaving 17,035 shares still due and owing (18,035 shares was owed to Getz on May 2, 1971, by virtue of two 3% stock splits).
In January 1976, Getz commenced this action by filing a verified complaint seeking repayment of the loan. The present plaintiffs were substituted after Getz died and his estate was closed. On May 7, 1976, defendants filed a verified answer which admitted all of the material allegations of facts pledged in plaintiffs' verified complaint. Thereafter, plaintiffs moved for summary judgment based upon defendants' verified answers. Defendants were granted ...