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05/31/94 BYSOM ENTERPRISES v. PETER CARLTON

May 31, 1994

BYSOM ENTERPRISES, LTD., AN ILLINOIS CORPORATION, PLAINTIFF-APPELLEE,
v.
PETER CARLTON ENTERPRISES, LTD., AN ILLINOIS CORPORATION, ROBERT C. AULSTON, INDIVIDUALLY, WILLIAM C. GOODALL, INDIVIDUALLY, AND PETER CARLTON PROPERTIES, AN ILLINOIS GENERAL PARTNERSHIP, DEFENDANTS-APPELLANTS.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. Honorable PADDY MCNAMARA, Judge Presiding.

Rehearing Denied October 25, 1994. Petition for Leave to Appeal Denied February 1, 1995. As Modified on Denial of Rehearing October 31, 1994.

O'connor, Campbell, Manning

The opinion of the court was delivered by: O'connor

MODIFIED ON DENIAL OF REHEARING

Justice O'CONNOR delivered the opinion of the court:

Defendants, Peter Carlton Enterprises, Ltd., Robert C. Aulston, William C. Goodall, and Peter Carlton Properties (collectively "PCP" or "Seller(s)"), appeal the granting of summary judgment in favor of plaintiff, Bysom Enterprises, Ltd. (Bysom), in this breach of contract action. We affirm.

On August 31, 1987, PCP entered into a purchase agreement (the Purchase Agreement) with James Broderson and Ronald Stillman (the Buyer(s)), under which the Buyers agreed to purchase the business and assets of eight restaurants located in Chicago and doing business under the franchise name of "Popeye's Famous Fried Chicken and Biscuits" (the Restaurants). The Buyers assigned all their rights under the Purchase Agreement to Bysom. On November 30, 1987 (the Closing), Bysom took title to the Restaurants.

Paragraph 6 of the Purchase Agreement provided that PCP would sell to the Buyers "by a proper Bill of Sale certain personal property in its present "as is" condition, without warranties . . . including but not limited to equipment, kitchen fixtures, furniture, smallwares, inventory of goods, cleaning supplies, and other goods and supplies, used in the business. . . ." Among the equipment in two of the Restaurants was an AT&T telephone system. Subsequent to the Closing Date, Bysom began receiving monthly bills from AT&T for the telephone system, indicating it had not been owned by PCP; rather it was leased from AT&T. Bysom then purchased the system for $3,812.63.

Under Paragraph 11 of the Purchase Agreement, PCP warranted that:

(a) Sellers own and will convey merchantable title to Buyers of all specific property described herein.

(b) all property, sales, federal and state withholding and any and all other taxes are paid and current.

(g) the Sellers hereby agree to indemnify, save and hold harmless the Buyers from and against any and all liability or claims or losses or damages that the Buyers may sustain as a result of this purchase and due to the Sellers' fault.

At Closing, sales like this one were governed by the "Bulk Sales" provisions of the Uniform Commercial Code (UCC), (Ill. Rev. Stat. 1987, ch. 26, par. 6-101 et seq.). Under sections 6-105 and 6-106 of the UCC, (Ill. Rev. Stat, 1987, ch. 26, pars. 6-105, 6-106), in order to avoid the liabilities of the creditors of the Restaurants, Bysom was required to file a Bulk Sales Notice with the creditors. Pursuant to section 6-104, (Ill. Rev. Stat. 1987, ch 26, par. 6-104), PCP provided Bysom with a list of the Restaurants' creditors; however, that list did not include the State of Illinois or the City of Chicago. As a result, Bysom did not file a Bulk Sales Notice with the City of Chicago Department of Revenue (the City) or the Illinois Department of Revenue (the State).

On March 15, 1989, the State notified Bysom that because it had failed to file a Bulk Sales Notice with the State, it had a liability owing to the State in the amount of $2,179.78, which had been incurred prior to the Closing, for retailer's occupation taxes and various withholding, excise, and income taxes. On May 19, 1990, Bysom received a similar notice from the City regarding delinquent sales and employees' expense taxes incurred between January 1, 1987 and November 30, 1987 and ...


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