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03/23/95 BRUCE CARLILE v. SNAP-ON TOOLS AND CHARLES

March 23, 1995

BRUCE CARLILE, PLAINTIFF-APPELLANT,
v.
SNAP-ON TOOLS AND CHARLES JOHNSON, DEFENDANTS-APPELLEES.



Appeal from Circuit Court of Sangamon County. No. 91L270. Honorable Stuart H. Shiffman, Judge Presiding.

Petition for Rehearing Denied and Released for Publication April 27, 1995. As Corrected May 2, 1995.

Honorable Robert W. Cook, J., Honorable James A. Knecht, P.j., Honorable John T. McCULLOUGH, J. Knecht, P.j., and McCULLOUGH, J., concur.

The opinion of the court was delivered by: Cook

JUSTICE COOK delivered the opinion of the court:

Plaintiff Bruce Carlile's second-amended complaint against defendants Snap-on Tools (Snap-on) and Charles Johnson alleged fraudulent misrepresentation and breach of contract with respect to Carlile's employment as a Snap-on dealer. The trial court entered summary judgment for defendants based upon a written release executed by the parties. Carlile appeals, contending (1) the release was obtained in furtherance of a fraudulent scheme perpetrated by defendants and is therefore unenforceable; (2) the release was a general release which did not bar plaintiff's unsuspected claim; and (3) the release was obtained through duress. We reverse and remand.

For purposes of this appeal we must accept as true the facts set out in plaintiff's unrebutted affidavits. Plaintiff is a high school graduate whose work experience through June 1986 consisted of service-oriented jobs, including retail sales manager and service manager of a Goodyear store and service writer at an Oldsmobile dealership. In 1986, he became interested in the possibility of becoming a Snap-on dealer after speaking with one of his fellow employees who was looking into a Snap-on dealership.

Snap-on is a Fortune 500 company and a manufacturer of hand tools sold to professional mechanics throughout the United States through a system of dealerships. Snap-on dealers buy tools and other products from Snap-on, then resell them to customers assigned each dealer by a "list of calls" covering that dealer's geographical area. Defendant Johnson is a Snap-on field manager who contacted plaintiff and made certain representations to plaintiff concerning a possible Snap-on dealership.

Carlile had three initial meetings with Johnson. During the first meeting, Johnson repeatedly asked plaintiff about his assets and what kind of capital he could obtain to finance a dealership, which Johnson claimed would require an initial investment of $65,000. When Carlile asked questions about the location and size of the territory, Johnson said, "we don't need to get into that right now. We'll do that later." Johnson told Carlile he could make "big bucks" with Snap-on and stated a survey he was performing indicated there were 300 customers in the proposed territory who would buy Snap-on tools if a dealer came around.

Craig Seelman, a Snap-on sales manager, was present at the second and third meetings. Johnson and Seelman represented that within a year, plaintiff could be making what a doctor or lawyer would make, or between $100,000 and $150,000. Carlile was also told the dealership was his own business and he would be responsible for making business-related decisions. He would require 175 to 225 actual customers to support his dealership but Seelman reiterated there would in fact be 300 customers in Carlile's territory. Seelman told Carlile that Snap-on was a "risk-free" investment because if Carlile ever wanted to get out of his dealership, Snap-on would buy back all his inventory and write him a check for the full amount. Snap-on would also help Carlile transfer his outstanding credit accounts to a successor dealer for collection.

Before he decided to become a Snap-on dealer, Carlile went on three "dealer rides," during which the dealers drove to their customers' places of business, collected outstanding accounts, and made some sales. Johnson accompanied Carlile to Carlile's local bank to obtain a loan, where Johnson reiterated the "risk-free" nature of the dealership because of Snap-on's policy to buy back inventory. On July 1, 1986, Carlile traveled to St. Louis, where he leased a van, stocked it with inventory, and signed a dealer agreement and other documents setting forth his rights and obligations as a Snap-on dealer. A clause in the dealer agreement stated that it "supersedes all agreements to date between the parties and together with any written supplements executed by both parties embodies all of the promises, undertakings, and obligations of the parties." The dealer agreement provided that if Carlile decided to terminate his dealership, he could, with Snap-on's consent, sell back to Snap-on any inventory in new and saleable condition at the price paid by Carlile.

Carlile was a Snap-on dealer for approximately 12 months. Three months into his dealership, a series of mechanical problems with his rented van prevented him from working in his territory for a combined period of between three and four weeks. Within six months as a dealer, he began to run short of money. Johnson's solution was to tell Carlile to extend his credit, buy more inventory, and increase his collections. Carlile was assured he could succeed if he followed these "basics." Carlile discovered that his "list of calls" actually numbered between 140 and 145. He also discovered that he was not an independent businessman, because Snap-on regulated his hours and policies. Carlile and his wife had initially invested $58,500, including all their savings, in the dealership and incurred other expenses as a result of refinancing their home. They lost $100,000 as a result of their dealership venture, including most of their original $65,000 bank loan. They sold two vehicles and were forced to move into a smaller house. Carlile stated, "by July 1987, I was facing personal financial ruin."

When Carlile decided to terminate his dealership, he drove his van to St. Louis and spent two days with Johnson checking in his inventory. During that time, Johnson never told Carlile he would be required to sign any documents before he could be reimbursed for his inventory. At the close of the second day, Carlile went with Johnson to Seelman's office. Seelman asked Johnson to leave the room. Seelman then presented Carlile with a form and instructed Carlile to write that the reason he was terminating his dealership was due to the mechanical problems he was having with his truck. Seelman then stated he could give Carlile a check for his returned inventory almost immediately, but it would take eight months or longer if Carlile did not write those words and sign the form. Carlile complied. The form, entitled "Termination Record," reads:

"I am leaving due to ongoing problems with my truck. The expense for the transmission repairs, is to [sic] much can not keep up with it. This problem deals with Gelco Vehicle Leasing Company. And not Snap-on Corp."

Carlile then read and signed a form entitled "Termination Agreement," which stated Snap-on agreed to pay Carlile for the return of his inventory at current dealer prices. The final paragraph of ...


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