Corby v. Seventy-One Hundred Jeffery Ave. Bldg. Corp.

• Decision Date: 10 April 1945
• Docket Number: Gen. No. 42649.
• Citation: 325 Ill.App. 442,60 N.E.2d 236
• Parties: CORBY v. SEVENTY-ONE HUNDRED JEFFERY AVENUE BUILDING CORPORATION.
• Court: United States Appellate Court of Illinois

325 Ill.App. 442

60 N.E.2d 236

CORBY

v.SEVENTY-ONE HUNDRED JEFFERY AVENUE BUILDING CORPORATION.

Gen. No. 42649.

Appellate Court of Illinois, First District, Third Division.

March 21, 1945.

Rehearing Denied April 10, 1945.

Appeal from Superior Court, Cook County; Peter H. Schwaba, Judge.

Action by Francis Corby against Seventy-one Hundred Jeffery Avenue Building Corporation for breach of contract of employment for the management of a building owned by the defendant, which filed a counterclaim for moneys held by the plaintiff and belonging to the defendant which plaintiff had retained to apply on his claim for damages. From a judgment for plaintiff for $7250.57 and costs and a judgment for costs for plaintiff against the defendant on defendant's counterclaim, the defendant appeals.

Judgment affirmed upon filing of a remittitur in the sum of $5901.24; otherwise reversed and remanded with directions to proceed in a manner not inconsistent with opinion.Rathje, Hinckley, Kulp & Sabel, of Chicago (Joseph J. Sullivan, Jr., of Chicago, of counsel), for appellant.

Johonson & Wiles, of Chicago (Walter E. Wiles and Frederick W. Eisenstein, both of Chicago, of counsel), for appellee.

LUPE, Justice.

This was a suit for damages for breach of a contract of employment for the management of a building owned by defendant corporation. Defendant filed a counter-claim for moneys admittedly held by plaintiff belonging to the defendant which plaintiff retained to apply on his claim for damages against the defendant. The cause was tried by the court without a jury, resulting in a finding and judgment for plaintiff in the sum of $7250.57 and costs and a finding and judgment for costs for plaintiff against the defendant on defendant's counter-claim. Defendant brings this appeal.

The property in question was located at 7100 Jeffery Avenue, Chicago, Illinois, and was the subject of a reorganization proceeding in the United States District Court for the Northern District of Illinois, under section 77B of the Federal Bankruptcy Act, 11 U.S.C.A. § 207. The building consisted of eight stores, ten offices and sixty-four apartments. A plan of reorganization was adopted on July 5, 1938 in the District Court which provided amongst other things that a voting trust be created with three trustees, the trust res to be the common stock of the defendant corporation amounting to 2115 shares. There were outstanding 2800 shares of preferred stock of the corporation. Francis Corby, plaintiff, Charles S. Banks, and George D. Bockus were named by the court as a trustees under the trust agreement. The District court on July 15, 1938 by its order confirmed the plan of reorganization and ordered, ‘the management and operation of the building of the debtor be under the direction and control of Francis Corby.’ Pursuant to this order a contract of employment was entered into by plaintiff with defendant on December 15, 1938, wherein the plaintiff was employed as manager and rental agent of the property for a period commencing December 15, 1938, and expiring July 15, 1948, a copy of which contract is marked Exhibit A and attached to the complaint filed herein. Under the terms of the contract the plaintiff was given general supervision of the property and was authorized to procure and maintain adequate liability insurance covering all persons that may be employed in and about the property, and in addition thereto, plaintiff as manager was to perform such other services as are usually and customarily rendered by agents operating similar properties in the city of Chicago; that he was to devote so much of his time as may be necessary for the successful operation of the building. It further provided that the corporation would pay plaintiff as manager as and for compensation for his services 3 1/2 per cent of the gross cash receipts from the building, excluding, however, the rents obtained under the Walgreen drug store lease and from said lease he was to receive the sum of 1 1/2 per cent of the rents received. He was charged with the duty of keeping books showing income and disbursements made by him and to render statements and monthly accounts to the corporation. The corporation was given the right to terminate the contract prior to its expiration upon the happening of: (1) the purchase by the corporation or the retirement of all its outstanding preferred stock; (2) should the corporation make a bona fide sale of its property prior to the 15th day of July, 1948; (3) if the corporation be dissolved; and (4) in the event the manager shall not perform his duties as manager in a faithful, diligent and efficient manner. It was further provided by the contract that in the event the manager desired to resign from the management of the property he may terminate the agreement at any time upon giving thirty days' written notice to the corporation. Clause 8 of the contract provided that the contract would be terminated without any further action either on the part of the manager or on the part of the corporation on the day default occurred under the terms, provisions and conditions of a mortgage under date November 14, 1938 to The Equity Life Assurance Society of the United States, which was executed to secure the payment of the corporation's note for the sum of $180,000.

On March 14, 1940, plaintiff ordered and placed fire and extended coverage insurance in the sum of $165,000 for the protection of the property in question. The new insurance was written in other companies than was the previous insurance and was for a term of five years, whereas the previous insurance was for the term of three years. The premium for the five-year term amounted to the sum of $4580.40. The record shows on May 13, 1940, plaintiff paid on account of said insurance the sum of $1138.12, and on said date furnished to the treasurer of the corporation a statement showing the transaction and the payment made. On September 19, 1940, the defendant canceled and terminated plaintiff's contract of employment. Defendant contends that the plaintiff's contract of employment did not authorize him to insure defendant's property or to determine the amount, term or company in which the insurance should be placed; that plaintiff's contract with defendant only authorized plaintiff to procure and maintain adequate liability insurance covering employees, and therefore it was justified in terminating plaintiff's contract.

The record shows that after the employment of plaintiff by the corporation, plaintiff addressed a letter, under date January 5, 1939, to his co-trustees Charles S. Banks and George D. Bockus, suggesting to them that the three meet and discuss the general policy of carrying out the court's wishes concerning the property, and informing them that he had received a report from John Naghten & Company, insurance engineers, in reference to coverage by insurance of the personal and real property of the building corporation and various other kinds of insurance; that he had obtained binders for certain insurance which was a temporary coverage until he had an opportunity to meet with his co-trustees to make a final decision in the matter. In pursuance to said letter, on January 12, 1939, a meeting was had of plaintiff, Banks, and Bockus, as co-trustees. Plaintiff testified that at this meeting he submitted the insurance survey to his co-trustees and that they agreed that he order various kinds of insurance including fire and extended coverage on the property of the company. This, however, was denied by Banks and Bockus. From the testimony of Banks it appears that he agreed that $200,000 fire insurance was the amount that should be placed on the property, and he testified further if he remembered correctly he thought that Corby had read the insurance survey to those present at the meeting. Bockus, however, testified that the question of fire insurance was not discussed and he had no recollection that the insurance survey had been submitted. On January 27, 1939, plaintiff wrote his co-trustees a letter (Plaintiff's Exhibit 6) wherein he reiterated the subject-matter of the conference and listed the insurance coverage which he testified had been agreed upon by the three trustees in their conference of January 12, 1939. There appears in this list fire and extended coverage on the building in the amount of $200,000. The other form of insurance listed in Plaintiff's Exhibit 6, other than the fire and extended coverage, was procured from time to time by the plaintiff and the charge therefor is shown on the monthly statements rendered to the corporation by the plaintiff, to which the record shows no objection on behalf of the officers of the corporation. When plaintiff became manager of the property it was covered by insurance amounting to $165,000, $115,000 of which would expire on May 13, 1940, and $50,000 on June 26, 1940. In February of 1939 Banks was made treasurer of the corporation and Bockus secretary. The record indicates that Mathilda Hackel was president of the corporation but that plaintiff dealt with Banks and Bockus as officers and trustees with reference to the operation of the property. On March 14, 1940, plaintiff ordered $165,000 of fire and extended coverage insurance for the protection of the property. The new insurance was written in other companies and was for a term of five years, whereas the previous insurance was for a term of three years. The premium for the five-year term amounted to the sum of $4580.40. On May 13, 1940, plaintiff paid on account of the premiums on $115,000 of said insurance the sum of $1138.12 and furnished to the treasurer of defendant a statement showing the transaction and the payment made. On June 4, 1940, the directors of the corporation passed a resolution instructing the president to inform the plaintiff, ‘that he was without authority to have written the policies of fire insurance totaling $115,000; further that he was without authority to pay the...