Antonides v. Plascon, Inc.

• Decision Date: 24 November 1981
• Docket Number: No. 81-208,81-208
• Citation: 430 N.E.2d 532,58 Ill.Dec. 500,103 Ill.App.3d 78
• Parties: , 58 Ill.Dec. 500 H. J. ANTONIDES, R. L. Dietchweiler, R. P. Feldsein and Leslie Fenczik, Plaintiffs-Appellees, v. PLASCON, INC., an Illinois Corporation, and William Reiland, Defendants- Appellants.
• Court: United States Appellate Court of Illinois

Page 532

430 N.E.2d 532

103 Ill.App.3d 78, 58 Ill.Dec. 500

H. J. ANTONIDES, R. L. Dietchweiler, R. P. Feldsein and Leslie Fenczik, Plaintiffs-Appellees, v. PLASCON, INC., an Illinois Corporation, and William Reiland,

Defendants- Appellants.

No. 81-208.

Appellate Court of Illinois, Third District.

Nov. 24, 1981.

Rehearing Denied Feb. 1, 1982.

Laurence J. Dunford, Chicago, for defendants-appellants.

Vincent P. Paulauskis Nutting, Thacker, Sacks & Paulauskis, Ltd., Kankakee, for plaintiffs-appellees.

BARRY, Justice.

Defendants Plascon, Inc., and William Reiland, present owner of Plascon, appeal from a summary judgment in favor of plaintiffs, H. J. Antonides and others, in an action on a note in the circuit court of Kankakee County.

This litigation arose out of plaintiffs' sale of the stock and assets of Plascon to defendant Reiland. The total sale price was $84,000 with $60,000 paid in cash at closing on April 18, 1977, and $24,000 to be paid one year later on April 19, 1978. A judgment note for $24,000 was executed on behalf of the corporation and guaranteed by Reiland. The contract for sale of the corporate stock contained the following provision:

"IT IS FURTHER AGREED that on or before sixty (60) days of the Closing Date, the parties shall make a determination of any income tax liability incurred by the corporation from the beginning of the present fiscal year to the closing date and any such sum found due shall be credited against a certain Promissory Note in the Amount of Twenty Four Thousand Dollars ($24,000.00) * * *."

At the closing, the corporation was obligated for $55,200 on a note to the First National Bank of Kankakee, and as agreed in the contract, plaintiffs paid the debt after the stock had been transferred to Reiland. When the $24,000 note became due, Reiland refused to pay and consequently plaintiffs filed a complaint and confession of judgment on June 1, 1978. After the summons to confirm the confessed judgment was issued and served, defendants filed an answer, affirmative defense and counterclaim. The counterclaim asserted a set-off of $18,000 against the note on the ground that the corporation had incurred additional tax liability for the fiscal year ending October 31, 1977, when plaintiffs paid the debt of the corporation. Defendants' theory is that the payment of the corporate debt was taxable income to the corporation. The trial court entered an order on October 6, 1978, opening the judgment.

On May 22, 1979, plaintiffs filed their first motion for summary judgment, alleging that the defendants' counterclaim was spurious because the Internal Revenue Service had not assessed any additional taxes against the corporate defendant for the fiscal year in question. After the defendants filed a response to the motion, the trial court ruled that there was no dispute as to $6,000 of the debt since the set-off and counterclaim involved only $18,000. Accordingly a partial judgment was entered in favor of plaintiffs in the amount of $6,610.42. That judgment was paid and is not at issue in this appeal.

After the trial court found that the amount of tax liability was in dispute, that part of the case was put on the pre-trial calendar, and finally on September 5, 1980, plaintiffs filed a second motion for summary judgment as to the contested amount. In this motion, plaintiffs alleged that they had sought an audit of tax liability from the Internal Revenue Service, that the Internal Revenue Service did not respond, and that, therefore, no additional tax liability had been incurred by the corporation. Defendants stood by...