Magnuson v. Schaider

• Decision Date: 12 May 1989
• Docket Number: 2-88-0683 and 2-88-0684,Nos. 2-88-0682,s. 2-88-0682
• Citation: 183 Ill.App.3d 344,538 N.E.2d 1309,131 Ill.Dec. 753
• Parties: , 131 Ill.Dec. 753, 9 UCC Rep.Serv.2d 815 Gerald MAGNUSON, Plaintiff-Appellee, v. Alan P. SCHAIDER, Defendant-Appellant (Alan P. Schaider, Plaintiff-Appellant; Magnuson Industries, Inc., Defendant-Appellee and Plaintiff-Appellee; Gerald Magnuson et al., Defendants- Appellees).
• Court: United States Appellate Court of Illinois

Page 1309

538 N.E.2d 1309

183 Ill.App.3d 344, 131 Ill.Dec. 753,

9 UCC Rep.Serv.2d 815

Gerald MAGNUSON, Plaintiff-Appellee, v. Alan P. SCHAIDER, Defendant-Appellant (Alan P. Schaider,

Plaintiff-Appellant; Magnuson Industries, Inc.,

Defendant-Appellee and

Plaintiff-Appellee; Gerald

Magnuson et al.,

Defendants-

Appellees).

Nos. 2-88-0682, 2-88-0683 and 2-88-0684.

Appellate Court of Illinois,

Second District.

May 12, 1989.

Theodore Liebovich (argued), Liebovich & Weber, P.C., Rockford, for Alan P. Schaider.

David L. Martenson (argued), Martenson & Associates, Rockford, for Gerald Magnuson, Magnuson Industries, Inc., and Stuart Magnuson.

Justice DUNN delivered the opinion of the court:

This is a consolidated appeal from orders of summary judgment entered in three cases. The three cases involve disputes arising from an agreement in which Alan Schaider purchased a tavern from Gerald Magnuson and Magnuson Industries, Inc. (Industries). Schaider appeals from judgments against him in all three cases. In No. 87-L-210, the court granted summary judgment to defendants Gerald Magnuson, Stewart Magnuson, and Industries, in Schaider's suit for breach of contract. In No. 87-L-225, summary judgment was entered in favor of Industries in its suit against Schaider for $9,200 for four months' rent and $10,924 for fraudulent misrepresentation. In No. 87-L-192, summary judgment was entered for Magnuson on a confession of an installment judgment note against Schaider for $164,171.67. Schaider raises six issues on appeal. Schaider's essential contentions on appeal are that the court erred in dismissing all but one count of his complaint and that summary judgment should not have been granted in any of these cases because there remains material disputed questions of fact. We affirm in part and reverse in part.

Schaider purchased from Gerald Magnuson and Industries a bar called the Mating Place. The agreement was comprised of four documents: a stock purchase agreement, a purchase and sale agreement, an installment judgment note for $100,000, and a lease. Under the stock purchase agreement, Schaider purchased from Gerald Magnuson all the stock of the Mating Place, Inc., for $170,000, $100,000 to be paid by a promissory note. Also, in consideration for the $170,000, under the purchase and sale agreement, Schaider received all of the assets and fixtures of the bar from Magnuson and Industries. The promissory note was an installment judgment note for $100,000 which provided that Schaider would make monthly payments of $1,266.76 to Gerald Magnuson for 10 years. Under the lease Schaider rented the bar premises from Industries for 36 months for $2,300 a month. Also under the lease, Schaider was required to maintain dramshop insurance for himself and the landlord, Industries.

The contracts provided for remedies upon default. The lease provided Schaider with a right to notice and 10 days to cure a rental default and 20 days to cure any other defaults. The stock purchase agreement provided Schaider 15 days to cure a default, but also contained a provision which allowed Gerald Magnuson to take immediate possession upon default. The stock purchase agreement also provided that Schaider's promissory note would be secured by a purchase money security interest covering all assets of the bar. The installment judgment note provided that upon default the holder could declare the entire balance due without notice.

On June 6, 1986, Gerald Magnuson and Industries sent notice to Schaider that he was in default on the installment note, the lease, and the stock purchase agreement. The notice did not specify how and when Schaider defaulted. The notice demanded full payment on the note, payment of all amounts due under the lease, payments due under the stock purchase agreement, and stated an intent to terminate the lease and exercise all rights under the lease unless the default was corrected within the time allowed under the lease.

The evidence is undisputed that when notice of default was sent, Schaider owed two months' rent, two months' on the note, and did not have dramshop insurance as required under the lease. In his deposition, Schaider stated that sometime in May 1986 he told Gerald Magnuson, president of Industries, that he had a cash-flow problem, and Magnuson told him he could delay his payments until the first of June. When that time arrived, Schaider was told by Stuart Magnuson, Gerald's son and an agent of Industries, that Gerald was out of town and Schaider could make his payments after he returned from his trip to Hawaii, for which he was leaving June 6, 1986. Schaider also stated he told Stuart he was having trouble with his dramshop insurance premium, and Stuart told him he knew of another company that he could arrange to provide him with insurance. Stuart told him he would take care of it. Schaider told Stuart to seek payment for the insurance from his manager Curt Cleaveland.

Stuart Magnuson, in an affidavit, denied telling Schaider that he could defer his payments until his return from Hawaii.

On the night before the notice of default was sent, June 5, 1986, Gerald Magnuson visited the tavern and talked with Curt Cleaveland, who managed the bar for Schaider. According to Cleaveland's deposition, Magnuson told him that the dramshop insurance on the bar had been canceled and that Cleaveland should close the bar. At the end of the night, Cleaveland told the employees that the bar would be closed until Schaider returned from Hawaii. Cleaveland stated that it was his decision to close the bar. He did not contact Schaider before he made this decision. Cleaveland also stated that Magnuson told him that night that he would pay him $6,000, the amount Schaider owed him for loans he made to Schaider. Magnuson also told Cleaveland he would pay him $400 a week $100 more than Schaider paid him, to keep an eye on the bar while it was closed.

Warren Johnson testified in a deposition that he used to be part owner of the tavern with Schaider prior to June 1986. He received a phone call from an employee of the tavern on June 6 who told him that the bar had been closed after Gerald Magnuson spoke to Cleaveland. Johnson phoned Schaider, who was at the airport waiting for a flight to Hawaii. When Johnson told him what happened, Schaider asked him to do what he could to keep the bar open. Johnson stated that he had many conversations with Schaider on this morning.

Johnson also talked to Cleaveland, who told him the bar was closed because the dramshop insurance expired. Johnson told Cleaveland that Schaider requested that Cleaveland use the money Schaider left him to pay for the insurance. Schaider stated in his deposition that he left Cleaveland $3,000. Kathy Culich, Schaider's insurance agent, stated in a deposition that she needed $1,260 to renew the insurance. Johnson told Cleaveland that he would help pay for the insurance if Cleaveland did not have enough money. Johnson also called Kathy Culich to let her know that Cleaveland would be contacting her about renewing the insurance. Later that day, Cleaveland told Johnson that he had contacted Culich to discuss the insurance, but he also stated to Johnson that more was involved than dramshop insurance; Schaider owed Magnuson money. Johnson contacted Stuart Magnuson and offered to pay him the funds to keep the tavern open. Magnuson told him not to get involved because there was more going on than he knew about. Johnson talked to Culich again. She stated Cleaveland indicated that he would deliver the money for the insurance but never did so. Johnson himself did not offer to pay Culich. Johnson talked with Schaider later in the day, and Schaider told him to "let it go." Schaider had spoken with his attorney, who told him the situation was more involved than it appeared.

Kathy Culich stated in her deposition that Schaider called her on June 6, 1986, and she told him that his insurance had been canceled. Schaider told her to call Cleaveland immediately because he had money to pay for reinstating the insurance. Culich said that on June 6, 1986, Cleaveland told her he would bring the money, but he did not do so. Culich went to the bar to find Cleaveland but could not locate him. On June 9, 1986, Culich received a call from Schaider, who told her not to renew the insurance because he had learned that there was more involved than reinstating his insurance.

Tim Gill stated in a deposition that he was Schaider's attorney in June 1986. After Schaider returned from Hawaii, he met with Schaider and Cleaveland. Cleaveland told them that he was paid by Magnuson to close the tavern but that he would never testify to that in court because he was now working for Magnuson.

Schaider stated in his deposition that while in Hawaii he tried to contact Cleaveland by phone but was unable to reach him. When he returned from Hawaii on June 15, 1986, he went to the bar and found that all cash on hand was missing, as well as promotional items such as shirts, and all his books and records. He did not know who took these items. Schaider stated that he removed some inventory and sold it at this time. He did not attempt to reopen the bar when he returned.

Case No. 87-L-210--Schaider v. Magnuson et al.

In No. 87-L-210, Schaider sued Gerald Magnuson, Stewart Magnuson, and Magnuson Industries, Inc. (Industries) for breach of contract, alleging five counts: breach of the lease, breach of covenant of quiet enjoyment, breach of the purchase and sale agreement, wrongful replevin, and breach of the stock purchase agreement. Defendants moved to dismiss under section 2-619 of the Code of Civil Procedure (Ill.Rev.Stat.1987, ch. 110, par. 2-619). The trial count granted the motion on all counts except count III, which alleged breach of the purchase and sale agreement; however, the trial court dismissed the request for punitive damages on this count. Schaider filed an amended complaint which was also dismissed except for count...