Ireland v. Esposito

• Decision Date: 19 February 1981
• Docket Number: D,No. 79-1703,No. 3244,3244,79-1703
• Citation: 93 Ill.App.3d 584,417 N.E.2d 738,49 Ill.Dec. 48
• Parties: , 49 Ill.Dec. 48 Clement H. IRELAND and Agnes L. Ireland, his wife, and Ireland's Inc., an Illinois Corporation, Plaintiffs-Appellees, v. Angelo ESPOSITO, Pioneer Investment and Development Company, a corporation, and Parkway Bank & Trust Company, as Trustee under Trustefendants- Appellants.
• Court: United States Appellate Court of Illinois

Page 738

417 N.E.2d 738

93 Ill.App.3d 584, 49 Ill.Dec. 48

Clement H. IRELAND and Agnes L. Ireland, his wife, and Ireland's Inc., an Illinois Corporation Plaintiffs-Appellees, v. Angelo ESPOSITO, Pioneer Investment and Development Company a corporation, and Parkway Bank & Trust Company as Trustee under Trust No. 3244 Defendants- Appellants.

No. 79-1703.

Appellate Court of Illinois, First District, Fourth Division.

Feb. 19, 1981.

Angelo Ruggiero, Chicago, for defendants-appellants; Michael R. Esposito, Chicago, of counsel.

Edward W. Boehm, Jr., Garrett L. Boehm, Chicago, for plaintiffs-appellees; Boehm & Boehm, Chicago, of counsel.

LINN, Justice:

Plaintiffs, Clement and Agnes Ireland and Ireland's Inc., brought this action in the chancery division of the circuit court of Cook County seeking both equitable and legal relief from defendants, Angelo Esposito, Pioneer Investment and Development Co. (also known as Pioneer Development Corp.), and Parkway Bank and Trust Company.

In their counts for relief in equity, plaintiffs sought specific performance of a contract for the sale of plaintiffs' real estate and the restaurant business conducted on that real estate, prayed for an accounting from defendants to determine the amounts due under the sales contract, and sought to reform a $60,000 promissory note given to plaintiffs in connection with the contract by defendant Pioneer Investment and Development Co. In their count for legal relief, plaintiffs sought judgment for $60,000 due on the promissory note. After a bench trial, all of the essential relief requested by plaintiffs was granted to them, and defendants brought this appeal.

On appeal, defendants, contend: (1) that the trial court erred by refusing to invoke We affirm. The evidence presented at trial showed the following pertinent facts to exist.

[49 Ill.Dec. 50] the parol evidence rule to bar plaintiffs' testimony which contradicted the terms of the written contract; (2) that the orders for an accounting and specific performance are not supported by the evidence; and (3) the judgment entered on the promissory note is against the manifest weight of the evidence.

For many years, Clement and Agnes Ireland, through Ireland's Inc., owned improved real estate in Chicago on which they operated a restaurant. Though the Irelands enjoyed many years of success, by early 1975 the Irelands had suffered a string of severe financial set backs. The restaurant was losing money and the Irelands were unable to pay many of their bills. As a result several actions were brought against the Irelands and their corporation by creditors, including an action to foreclose the mortgage on their property. To rectify their problems, the Irelands decided to sell the real estate and the restaurant business. They listed the property and the business with a real estate broker seeking to sell both for a total of $225,000.

In response to an advertisement in a newspaper, defendant Esposito contacted the Irelands to tell them he was interested in buying the property and the business. In late March 1975, Esposito and Clement Ireland met at the restaurant. Esposito told Clement that he had been in the real estate business for many years and thought he could solve the restaurant's problems if he owned the business. Clement told Esposito about all the financial problems the Irelands were having and, according to Clement, he told Esposito he wanted to sell both the property and the business for $225,000 (according to Esposito this figure was $150,000). Esposito, after learning of many of the debts owed by the Irelands and the pending actions against them, said he would consider the deal.

Around April 1, according to Esposito, or on April 14 at about 5 p. m., according to the Irelands, Esposito returned to the restaurant to meet with Clement Ireland. The two of them sat at a booth and discussed the deal. Agnes Ireland was present during part of this discussion. There is substantial dispute as to the conversations that took place at this meeting. It is undisputed that Esposito had with him two documents which he had prepared and which he showed to the Irelands. The first was a standard form "Real Estate Sale Contract" on which Esposito had filled in the necessary blanks. The second was the $60,000 promissory note.

Besides all the standard terms found in such a contract, the real estate sale contract, which was dated "April, 1975" contained the following essential provisions with the filled in portions in italics and underlined:

"1. Angelo Esposito or his nominees (purchaser) agrees to purchase at a price of $150,000.00 on the terms set forth herein, the following described real estate * * *:

Legal description to be inserted commonly known as 800 North LaSalle, Chicago, Illinois * * *, together with the following property presently located thereon: all the existing and outstanding stock of the Illinois corporation known as Ireland's, Inc., which includes the exclusive use of the name Ireland.

3. Purchaser has paid $10,000.00 as earnest money to be applied on the purchase price, and agrees to pay or satisfy the balance of the purchase price, plus or minus prorations, at the time of closing as follows:

(b) The payment of $80,000.00 subtracting all outstanding bills of the corporation and the balance payable as follows: The buyer will assume the exist. mortgage of approx. $70,000.00 to be evidenced by the note of the purchaser * * *."

The contract also provided that closing would occur on May 1, 1975, and that the seller agreed to pay the real estate broker's The promissory note that Esposito had with him was a standard short-form collateral note dated "April 1, 1975." Under the note, "Pioneer Investment and Development Co." promised to pay to the order of "Clement Ireland and Agnes Ireland his wife" the sum of "$60,000" together with eight percent annual interest in four yearly installments of $12,000 plus interest with the first installment due May 1, 1976. The note also gave the Irelands a security interest in "All the equipment at 500 No. LaSalle pertaining to the restaurant only." At the time Esposito showed this note to the Irelands at the meeting, it was signed, "Pioneer Investment and Development Co. by Angelo Esposito, President."

[49 Ill.Dec. 51] commission. Esposito had already signed this contract as purchaser when he showed it to the Irelands at the meeting in the restaurant.

At the conclusion of the meeting, which lasted approximately one-half hour, the real estate sale contract was signed by Clement and Agnes Ireland. Esposito apparently kept the only copy of the contract but gave the note to the Irelands. The parties do not dispute that an agreement to sell the property and the business was reached at this meeting. The parties also do not dispute that Esposito and Clement Ireland agreed that Clement would stay on as Esposito's employee and manage the restaurant after May 1, 1975, the closing date of the contract.

Over objection, the Irelands were allowed to testify to the conversation they had with Esposito at the meeting. Both Irelands testified that the agreement reached by the parties was to sell the property and the business for $210,000. When they saw the contract and the note prepared by Esposito, the Irelands questioned him about the terms. They contended that Esposito told them the real estate contract was merely a contract to sell the building and the land for a price of $150,000 and that the note was intended to represent the sale of the restaurant business and its equipment for $60,000. Esposito allegedly said that it was better to carry out the transaction in this manner because the Irelands would then have to pay a brokerage commission only on the $150,000 in the real estate contract, and also because the Irelands would end up paying less income taxes on the sale if it was a bifurcated transaction. When asked why the note was signed by Pioneer Investment and Development Co., Esposito allegedly said that he was the sole owner of that corporation and he wanted the corporation to own the restaurant business rather than himself personally. Though the Irelands had some reservations, they signed the contract and the deal was completed. One of the reasons they signed so hastily was because the court hearing on the foreclosure of their property was to be held in a few days and Esposito promised to pay what was immediately owed on the mortgage, approximately $32,000, by the time of the hearing.

In defense, Esposito testified that the "Real Estate Sale Contract" was the final and complete agreement reached by the parties. He said the $150,000 purchase price in that contract was the price the parties agreed to for the sale of both the property and the business. In his attempt to explain the existence of the note, Esposito said this note was the one called for by the contract. He contended that the contract called for an $80,000 note less any outstanding debts owed by Ireland's, Inc. He said that Clement Ireland and he agreed that the outstanding debts of the business were approximately $20,000 and thus the $60,000 note represented the $80,000 amount less this approximation.

Esposito also testified that he gave the Irelands a $3,000 check at the meeting, representing part of the $10,000 down payment required by the contract. Esposito contended that he paid the remainder of the down payment at a later date in April. However, the Irelands did not testify that they received this $3,000 at the time the contract was entered into, and they apparently contended that Esposito paid the entire $10,000 down payment at a later date by paying one of the Irelands' creditors.

Following the making of the contract, the Irelands transferred title to the property to Esposito or his nominee and title is currently held by defendant Parkway Bank and Trust Co., as land trustee, with Esposito as the apparent beneficiary under the land trust.

On May 1, 1975, no closing was...