McKown v. Davis

• Decision Date: 19 September 1983
• Docket Number: No. 82-687,82-687
• Citation: 118 Ill.App.3d 315,454 N.E.2d 1086,73 Ill.Dec. 837
• Parties: , 73 Ill.Dec. 837 William J. McKOWN and World Wide Travel Bureau, Inc., Plaintiffs-Appellees, v. Harold L. DAVIS, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 1086

454 N.E.2d 1086

118 Ill.App.3d 315, 73 Ill.Dec. 837

William J. McKOWN and World Wide Travel Bureau, Inc. Plaintiffs-Appellees, v. Harold L. DAVIS, Defendant-Appellant.

No. 82-687.

Appellate Court of Illinois,

Third District.

Sept. 19, 1983.

Rehearing Denied Oct. 26, 1983.

Kim Kelly and James D. Reynolds & Associates, Peoria, for defendant-appellant.

Robert A. Barnes, Jr., Barnes & Barnes, Lacon, for plaintiffs-appellees.

STOUDER, Presiding Justice:

This suit was brought by the plaintiffs-appellees, World Wide Travel Bureau, Inc. and William McKown, against the defendant, Harold Davis. The plaintiffs filed a complaint alleging Davis had breached an agreement with World Wide Travel Bureau to purchase three travel agencies for $240,000. The complaint alleged the terms of the agreement were memorialized in two separate documents. The first document was a purchase agreement in which Davis agreed to buy the travel agencies and pay the corporation $140,000. The second document was a personal note for $100,000 from Davis to McKown, who was then the president of World Wide Travel Bureau and owned approximately eighty percent of the corporation's stock. The defendant's answer alleged the personal note from Davis to McKown was inadmissible under the parol evidence rule. The defendant also alleged payment of $145,000.87 to the corporation on the contract and requested repayment of $5,000.87 as overpayment. The plaintiffs and defendant filed motions for summary judgment which were denied and the case proceeded to a bench trial.

At trial, McKown testified that Davis requested two separate notes so that Davis could hide the fact that the total consideration was $240,000 from his wife. Davis testified that McKown had requested the personal note because McKown had put so much of his life into the travel agencies that he wanted something out of it for himself. The parties were in agreement as to the amount of money paid on the purchase agreement and the note. It was agreed that Davis had paid $40,000 on the purchase agreement and $60,325 to McKown personally. It was disputed as to whether the corporation ever received the money paid to McKown.

The trial court found the purchase agreement was a valid, enforceable contract and that $100,000 was due and owing on it. It entered judgment for the corporation on that sum plus six percent interest, less $17,994.85 in set offs. The court also found the personal note to McKown was a fraud on the minority shareholders of the corporation and constituted an illegal and unenforceable contract. The court also found McKown and Davis to be in pari delicto as to the note and held that neither was entitled to a remedy from the other. The defendant and the appellants appealed from the order entered by the trial court. We affirm in part and reverse in part.

The first issue raised on appeal is whether the personal note should have been admitted into evidence. The defendant argues that admitting the note violated the parol evidence rule. The parol evidence rule provides that if an instrument appears complete, certain, and unambiguous, then parol evidence of a prior or contemporaneous agreement is inadmissible to vary the terms of that instrument. (Ireland v. Esposito (1981), 93 Ill.App.3d 584, 49 Ill.Dec. 48, 417 N.E.2d 738.) The defendant contends that because the purchase agreement did not mention the personal note, it was complete. Since the consideration in the purchase agreement was unambiguous, the defendant contends the parol evidence rule precludes the admission of the personal note. We disagree.

The rule of law applicable here is that where different...