State ex rel. Donahue v. Perkins & Will Architects, Inc., 79-2385

• Decision Date: 05 November 1980
• Docket Number: No. 79-2385,79-2385
• Citation: 45 Ill.Dec. 696,413 N.E.2d 29,90 Ill.App.3d 349
• Court: United States Appellate Court of Illinois
• Parties: , 45 Ill.Dec. 696 STATE of Illinois ex rel. Robert L. DONAHUE, Chairman, Capital Development Board, Plaintiff-Appellant, v. PERKINS & WILL ARCHITECTS, INC., a Delaware Corporation; Miller-Davis Company, a Michigan Corporation; Engineered Erection Co., Inc., an Illinois Corporation, Defendants; and Temp-Tech Industries, Inc., an Illinois Corporation, Defendant-Appellee.

Page 29

413 N.E.2d 29 90 Ill.App.3d 349, 45 Ill.Dec. 696 STATE of Illinois ex rel. Robert L. DONAHUE, Chairman,
Capital Development Board, Plaintiff-Appellant,
v.
PERKINS & WILL ARCHITECTS, INC., a Delaware Corporation;
Miller-Davis Company, a Michigan Corporation;
Engineered Erection Co., Inc., an
Illinois Corporation, Defendants;
and
Temp-Tech Industries, Inc., an Illinois Corporation,
Defendant-Appellee. No. 79-2385. Appellate Court of Illinois, First District, Second Division. Nov. 5, 1980.

[90 Ill.App.3d 350]

Page 30

[45 Ill.Dec. 697] William J. Scott, Atty. Gen., Chicago, for plaintiff-appellant.

Arthur M. Solomon, Vito M. Evola, Griffin, Fiedler & Pascucci, Ltd., Chicago, for defendant-appellee.

Saul A. Epton, Sp. Asst. Atty. Gen., for Capital Development Board; Epton, Mullin, Segal & Druth, Ltd., Chicago, of counsel.

STAMOS, Justice:

Plaintiff State of Illinois has filed suit against four defendants, contractors and architects for a state facility, alleging numerous defects in the construction of that facility. In the instant appeal plaintiff challenges the pretrial dismissal of one defendant, Temp-Tech Industries, Inc. The trial court dismissed Temp-Tech, a window manufacturer, on the ground that Temp-Tech had not assumed the liabilities of T-O-W Industries, Inc., which had manufactured the allegedly defective windows installed in the state facility.

Prior to 1976, T-O-W Industries manufactured and sold insulated window glass under the trade name Therm-O-Window. T-O-W, in the course of its business, had supplied double pane windows for installation in the Howe Developmental Center, a mental retardation facility then under construction in Tinley Park. The windows subsequently formed condensation between the panes, rendering them translucent but not transparent.

During this period, T-O-W was experiencing financial difficulties. In August 1973, T-O-W had obtained a substantial loan from a group of six leaders. It is not clear from the record whether the loan came before or after the delivery of the defective windows. The record does indicate that T-O-W had received notice of the condensation problem by June 28, 1974. In the course of the loan transaction, the lenders obtained a security interest in all the assets of T-O-W, and caused Harold Wright, T-O-W's president and sole shareholder, to put his T-O-W stock in a voting trust. This device assured the lenders voting control of the corporation, but they did not immediately exercise this control.

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[45 Ill.Dec. 698] T-O-W's fortunes continued to decline, and by mid-1975, the corporation was insolvent. The six lenders (five small business investment corporations and one individual) then used their voting power to install their own representatives as directors of T-O-W. The new directors ousted Harold Wright as president, and hired a new president (Thomas Reinhart) and controller (Frank Laikis). Unlike the new directors and the trustees of the voting trust, Reinhart and Laikis were not employees of the corporate lenders. By late 1975, it was clear that T-O-W would founder. The six lenders had a security interest in all the assets of T-O-W, but other [90 Ill.App.3d 351] creditors (principally, glass suppliers) were unsecured. The lenders, again using the voting power afforded them by the voting trust, caused T-O-W's assets to be transferred to an assignee for benefit of creditors. This assignee, Bernard Chaitman, was independent of both the lending group and Harold Wright, T-O-W's sole shareholder...