Appeal from the Circuit Court of Cook County; the Hon. Henry
Budzinski, Judge, presiding.
JUSTICE MURRAY DELIVERED THE OPINION OF THE COURT:
This is an appeal from a final order in a citation proceedings brought by the executrix of the estate of Norman Kern, deceased, for delivery of money and other property of the estate of decedent. This is the second time the matter is before this court. It was originally before this court in Estate of Kern v. Handelsman (1983), 115 Ill. App.3d 789, 450 N.E.2d 1286.
The original case involved an appeal by the estate of Norman Kern from an order of the trial court granting summary judgment in favor of the respondents-appellees, Richard A. Handelsman, Kern Option Company, Inc., and A.G. Becker Company, Inc.
This court reversed the trial court order granting summary judgment and remanded the matter for further proceedings. In the original appeal, this court found that there were material questions of fact presented. On remand, the trial court heard testimony and received documents and entered judgment again in favor of respondents.
The estate again appealed.
The record discloses that the decedent (Kern) was a commodities broker and founder of the Kern Option Company, Inc. (Kern Option).
In 1976, respondent Handelsman, along with Richard Kushnir and Allen Resser, purchased all of the shares of Kern Option from decedent Kern for $700,000, payable $200,000 in cash and $500,000 in deferred payments pursuant to a consulting and non-competition agreement.
Three years later, after Kern's death and after the institution of these proceedings, respondent A.G. Becker and Company, purchased from Handelsman the shares of Kern Option for $4,652,202.69, payable $2 million plus in cash and $1,800,000 as consultant fees over a period of years.
The initial purchase agreement in 1976 between respondents Handelsman, Kushnir, and Resser, provided that the remaining $500,000 of the initial purchase price of $700,000 was to be paid to Kern over the next five years pursuant to a consulting and non-competition agreement with Kern Option.
Paragraph 2 of the agreement provided that Kern would provide consulting and advisory services to Kern Option for five years, subject to possible extensions, as compensation for his services. Kern would receive an annual sum equal to 12 1/2% of Kern Option's pretax profits, up to a maximum amount of $50,000. Over this five-year period, Kern could possibly receive a total of $250,000.
Paragraph 7 of the agreement provided that Kern would not compete against Kern Option in the stock option clearing business for five years. As consideration for his non-competition covenant, Kern Option agreed to pay Kern $50,000 per year. (This would also total $250,000.)
Paragraph 5 of the agreement provided that in the event of Kern's death, the payments for his consulting services would be continued for one year after his death and the non-competition payments would be prorated through the date of his (Kern's) death.
Paragraph 14 of the agreement provided that all subsequent modifications are to be in writing.
In 1977, a little over a year after the agreement, Kern met with Handelsman, Resser, and Kushnir, and on December 16, 1977, Kern executed a letter to Kern Option which stated that the meeting had resulted in an "understanding" of the manner of determining Kern's compensation for his consulting and advisory services. Kern's amendment letter stated further that "in view of the fact that Kern will have been paid less than $50,000 for the first agreement year (June 1, 1976, to May 30, 1977,) the agreement will be extended for at least one more year * * * on the same terms and conditions (except for the $50,000 annual payment for Kern's non-competition covenant under Paragraph 7 of the agreement) until Kern had received an aggregate of $250,000." Kern's letter concluded that it was to constitute an amendment of the 1976 agreement. The letter was signed by the decedent, Kern, and respondent Handelsman, the president of Kern Option. During the next year (1978), Kern received $50,000 in non-competition payments and $45,658 in consulting payments.
Kern died February 5, 1979. In March 1980, his wife as executrix instituted the initial proceedings, alleging that Kern Option owed Kern $327,452 that the company had invested in treasury bills and that Kern's estate was entitled to interest earned on these investments.
Respondents, Kern Option and Handelsman, responded contending they did not hold any treasury bills. They further contended that their accounting disclosed that respondents owed Kern only $84,383.56. Fifty thousand dollars of said amount was for Kern's consulting services, and $34,383.56 was for a final non-competition payment prorated through Kern's death. The estate filed a motion for partial summary judgment in the amount of $84,383.56 which was granted on August 4, 1980, and paid on August 15, 1980.
Respondents then filed their motion for summary judgment on the theory that all their obligations under the 1976 consulting and non-competition agreement had been met except for one final payment for Kern's consulting service in the amount of $29,166. In response, the attorney for the estate filed his affidavit stating that Resser, one of the original purchasers of Kern Option with Handelsman, would, on his return from Europe, execute an affidavit to the effect that the parties agreed in November and December of 1977, that in order to settle their disputes, Kern Option would execute such other agreements as to assume that Kern would receive the full $500,000 due him by reason of the sales.
In a post-judgment motion to vacate a summary judgment granted respondents, the estate did attach the affidavits of Resser and Kushnir which stated that, prior to the December 16, 1977, amendment letter, the officers of Kern Option "orally agreed to compromise and settle all those disputes with Norman Kern on the basis that * * * agreements would be entered into * * * as would be necessary to cause Kern Option Co., Inc., to pay to Norman Kern the total sum of $500,000 without regard to any abatement that might occur under the * * * [1976 consulting and non-competition ...