Elsberry Equipment Co. v. Short
| Decision Date | 27 October 1965 |
| Docket Number | Gen. No. 10641 |
| Citation | 63 Ill.App.2d 336,211 N.E.2d 463 |
| Parties | ELSBERRY EQUIPMENT COMPANY, a Corporation, Plaintiff-Appellant, v. Hickman SHORT, Ann M. Short, Newton Short and Laura Short, Defendants-Appellees. |
| Court | United States Appellate Court of Illinois |
J. Andy Zenge, Jr., Canton, Mo., Gilbert K. Hutchens, Carrollton, H. David Condron, Quincy, for appellant.
Robert H. Mehrhoff, Carrollton, George E. Sullivan, O'Fallon, Mo., for appellees.
In plaintiff corporation's action to recover upon a note, the trial court entered judgment for the defendants. Motions to vacate the judgment, or, in the alternative, for a new trial were denied. Upon appeal, plaintiff asks the reversal of such judgment and that judgment be entered for the plaintiff. The defendants cross-appeal praying that the judgment of the trial court be affirmed, or, in the alternative, that the order of the trial court denying defendants' motion to dismiss the cause of action be reversed and the cause of action dismissed.
The plaintiff is a Missouri corporation with its principal office in Elsberry, Lincoln County, Missouri. The defendants, Newton Short and Laura Short, conceded to be accommodation makers on the note, are residents of Greene County, Illinois. The defendants, Hickman Short and Ann M. Short, are residents of Missouri.
It is agreed that the roster of stockholders in plaintiff corporation is limited to the following named persons: The defendants, Newton Short and Laura Short, and I. L. Parks, his wife Gladys Parks, R. E. Parks, and his wife Margaret Parks, all of whom reside in Missouri.
On October 20, 1960, the shareholders of plaintiff corporation entered into the following agreement (hereinafter referred to as the shareholders' agreement):
'Agreement for Sale and Purchase of Corporate Shares of
Elsberry Equipment Company.
This agreement, made this 20th day of October, 1960, by and between R. E. Parks and Margaret Parks, his wife, of Lincoln County, Missouri, and I. L. Parks and Gladys Parks, his wife, of St. Louis County, Missouri (hereinafter called 'Parks'), and N. H. Short and Ann Short, his wife, of Lincoln County, Missouri (hereinafter called 'Shorts'), Witnesseth, That:
Whereas, it is the intention of the parties hereto that the Shorts will acquire the shares of stock of Parks in the corporation as of December 31, 1960, after the corporation has liquidated or substantially liquidated such of its assets as have been devoted to automotive sales and farming operations, pursuant to an agreement between the parties hereto and the corporation executed simultaneously herewith, it is therefore agreed that:
1. The cash of the corporation, not required for outstanding indebtedness, as of December 31, 1960, will be divided, 2/3 to Parks and 1/3 to Shorts. Shorts note to the corporation will be assigned to Parks after giving Shorts credit for 1/3 of the principal due on the note as his interest in it. Leases of business building and site will be assigned to Shorts.
2. Shorts will purchase the shares of stock of the corporation owned by Parks as of December 31, 1960, for $75.00 (2/3 of the cost of incorporating, as shown on the corporation's books), provided that the John Deere Company of St. Louis, Missouri, and the J. D. Street Company of St. Louis, Missouri, have approved the continued dealership by the Shorts or by the Elsberry Equipment Company operated by the Shorts, in handling John Deere Equipment and parts, and service station merchandise marketed by J. D. Streett Company.
3. Such other assets of the corporation as may not have been liquidated on December 31, 1960, shall be divided, in kind, 2/3 to Parks and 1/3 to Shorts, if they can then agree on the division. If they cannot agree, the Corporation will set such unliquidated assets up in a separate account for liquidation, and monthly remit to Parks 2/3 and Short 1/3 of the proceeds of such liquidation. For that purpose, Parks shall be considered agents of the corporation to participate in effecting the complete liquidation, but neither Parks, Short, or the Corporation shall be compensated for completing the liquidation.
4. Parks agree that they will not engage in the retail farm implement or petroleum products business within a fifty mile radius of Elsberry, Missouri, for five years after the date of this agreement.
5. Parks and Shorts further agree that if some liability of the corporation incurred prior to the date of this contract which is not shown on the corporate records, shall be established prior to the payment in full of Short's promissory note to Parks, that Parks will bear their two thirds of said liability and that in the event it is not paid to the corporation by Parks, Short shall have the right to deduct two thirds of said liability from the payments due under his note. Parks shall, however, not be liable to Shorts, or to the corporation, for any liabilities of the corporation as of December 31, 1960, shown on the books of the corporation, or for any obligations incurred by Short in the operation of his business, after the date of this contract.
In Witness Whereof, the parties hereto have set their hands by the day and year first above written.
(s) Gladys E. Parks.'
On the same date, plaintiff and the defendants entered into the following agreement (hereinafter referred to as the corporate agreement):
'Agreement for Sale and Purchase of Certain Corporate Assets
of Elsberry Equipment Company.
This Agreement, Made this 20th day of October, 1960 by and between Elsberry Equipment Co., a Corporation Seller, and N. H. Short and Ann Short, his wife, Buyers, Witnesseth:
1. Seller agrees to sell to Buyers, and Buyers agree to purchase of Seller the certain assets of Seller described in Exhibit A, hereto attached upon the following terms and conditions: The John Deere parts shall be purchased at IGN cost to Seller, Buyers shall also pay to Seller the prepaid freight charges on John Deere whole goods, calculated at carload rates. Petroleum products and tires, and allied equipment, shall be purchased at the costs thereof paid by Seller.
The remainder of said items shall be purchased for $10,500.00.
2. The parties agree that within three days after the total price, in dollars, has been determined, and after this agreement is approved by the John Deere Company and J. D. Streett Company of St. Louis, Missouri, Buyers will pay Seller $15,000.00 thereof, in cash, and execute and deliver to Seller their promissory note for the balance of the total price, said note bearing six per cent interest from January 1, 1961. Said note shall be signed by Newton Short and Laura Short, his wife, of Greenfield, Illinois, as accommodation makers. The interest shall be payable in monthly installments, beginning February 1, 1961, and the principal shall be paid in 10 equal consecutive annual installments beginning on November 1, 1961, with the privilege of prepayment, and acceleration in the event of default.
3. Seller agrees that upon said payment of $15,000.00 and delivery of said note, it will promptly proceed to liquidate its remaining assets and pay all outstanding indebtedness; that Seller will continue to employ R. E. Parks, for $100.00 per week, during the remainder of 1960, to conduct such liquidation. Buyers agree to cooperate with Seller in the collection of Seller's accounts receivable and liquidation of Seller's business.
4. Seller agrees to hold Buyers harmless from any liability incurred by Seller in connection with the purchase of the items hereby agreed to be sold to Buyers, and in connection with the operation of Seller's business, and Seller shall not be liable for any obligations incurred by Buyers in the operation of Buyer's business after the date hereof.
In Witness Whereof, Seller has caused these presents to be duly executed and Buyers have hereunto set their hands, the day and year first above written.
Approved
I. L. Parks, Director (s)'
The note, dated November 29, 1960, is in the principal sum of $26,830.00, and recites that it is for value received and payable to the order of fees with provisions for prepayment, but the detailed provisions of the note do not appear relevant to the issues in this case.
The trial court denied defendants' motion to dismiss the complaint to which copies of the shareholders' agreement and the corporate agreement were attached, the defendants alleging by affidavit the several matters and things hereinafter set forth as the defendants' answer. The answer filed by the defendants alleged complete or partial failure of consideration, denied that the plaintiff is the owner of the note, or is the proper party to bring suit, and alleged further that Hickman Short and Ann M. Short were to receive credit of 1/3 upon the...
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