First Nat. Bank of Chicago v. Victor Comptometer Corp.

• Decision Date: 17 April 1970
• Docket Number: Gen. No. 53166
• Citation: 123 Ill.App.2d 335,260 N.E.2d 99
• Parties: The FIRST NATIONAL BANK OF CHICAGO and Edna S. Schram Hirsh, as Trustee under the Last Will of Jack A. Schram, Deceased, Plaintiffs- Appellees, v. VICTOR COMPTOMETER CORPORATION, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 99

260 N.E.2d 99

123 Ill.App.2d 335

The FIRST NATIONAL BANK OF CHICAGO and Edna S. Schram Hirsh, as Trustee under the Last Will of Jack A. Schram, Deceased, Plaintiffs- Appellees, v. VICTOR COMPTOMETER CORPORATION, Defendant-Appellant.

Gen. No. 53166.

Appellate Court of Illinois, First District.

April 17, 1970.

Vernon R. Loucks, Peterson, Lowry, Rall, Barber & Ross, Chicago, for defendant-appellant; Timothy G. Lowry, Owen Rall, John R. Porter, Chicago, of counsel.

Leibman, Williams, Bennett, Baird & Minow, Clausen, Hirsh, Miller & Gorman, Chicago, for plaintiffs-appellees.

GEORGE J. MORAN, Presiding Justice.

This is an appeal by the defendant, Victor Comptometer Corporation, from a summary judgment entered by the Circuit Court of Cook County which ordered the defendant to deliver 1282 shares of its stock to the plaintiff.

Prior to March 24, 1959, Jack Schram and William Schaffner were owners of Burke Golf Equipment Corporation, Burke Golf Sales, Inc., and National PGA Distributors, Inc., a subsidiary of the sales company. These companies were engaged in the manufacturing and marketing of golf equipment. In early 1959 Schram and Schaffner entered into negotiations with Comptometer Corporation (predecessor of defendant) concerning the sale of the businesses to Comptometer. On March 3, 1959 the parties executed a Memorandum of Intent which specified the details of the transaction. Subsequently, on March 24, 1959, the 'Agreement' was executed. Under the terms of this agreement the defendant acquired all of the stock of the Burke Companies. In addition to other consideration, the agreement provided:

'4. Issuance of Additional Common Shares in respect of Earnings. Comptometer agrees, as additional consideration for the shares of capital stock to be purchased under Subdivision A of Paragraph 2 of this Agreement that, if during each of the three fiscal years of the Equipment Corporation, ending September 30, 1960, September 30, 1961 and September 30, 1962, the aggregate net earnings of the Equipment Corporation and the Sales Company consolidated before provision for Federal income taxes, are in excess of $135,000, (or if, on a cumulative basis, such net earnings for any two or three of said three years averages $135,000 or more per year) Comptometer will issue to the Sellers, within 60 days after the close of each such fiscal year, in equal proportions, one Comptometer Common Share, par value $1 per share, for each $13 of such excess net earnings; provided that the maximum aggregate number of Common Shares issued with respect to such excess net earnings in any such fiscal year shall not exceed 2,564 Common Shares, and with respect to said three years, shall not exceed an aggregate of 7,692 Common Shares.'

For the fiscal year ending September 30, 1960, the net earnings were $221,973.83 and for 1961, $165,969.82. After each of these fiscal years the defendant issued 1282 shares to both Schram and Schaffner, or 2564 per year for a total of 5128. The net earnings for fiscal year 1962 were $54,423.00. No additional stock was issued.

The plaintiff's complaint and amended complaint alleged that it is the executor of the estate of Jack A. Schram, deceased; that it has not received an accounting of the results of the operation of the Equipment Corporation for the fiscal year ending September 30, 1962; that on information and belief the aggregate net earnings exceeded the sum of $135,000 for fiscal year 1962, or, alternatively, averaged at least $168,332; and that the plaintiff was entitled to 1282 additional shares of Victor Comptometer stock in accordance with paragraph 4 of the agreement. The defendant's answer denied these allegations.

Subsequently the plaintiff filed a motion for summary judgment. The motion alleged that the defendant had furnished the plaintiff a financial statement and that in accordance with the plain provisions of Paragraph 4 of the Agreement and the contents of the financial statement, Victor was obligated to issue to plaintiff the 1282 shares of Victor. After an answer to the motion and a reply to the answer, and various affidavits were filed, the court ordered the motion for summary judgment granted. In its decree the court stated:

'4. That, solely for the purposes of Plaintiff's motion, the net earnings of Burke Golf Equipment Corporation and Burke Golf Sales, Inc., for the fiscal year ended September 30, 1969, amounted to $221,973.83; that solely for the purposes of plaintiff's motion, the net earnings of said two companies for the fiscal yeard ended September 30, 1961, amounted to $165,969.82; that the aggregate net earnings of said two companies for the said two fiscal periods were $387,943.65 and that the average net earings of said two companies for the said two fiscal periods amounted to $193,971.82.

5. That applying the formula set forth in the parenthesis appearing in the first sentence of Paragraph 4 (of the agreement) quoted above, the average excess net earnings of said two companies for the fiscal year ended September 30, 1960, after deducting the sum of...