Meeker v. Fowler

• Decision Date: 21 January 1976
• Docket Number: No. 75--97,75--97
• Citation: 341 N.E.2d 412,35 Ill.App.3d 313
• Parties: Don MEEKER, doing business as Meeker's of Hidalgo, Plaintiff-Appellant, v. Nelson FOWLER and Florence Fowler, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 412

341 N.E.2d 412

35 Ill.App.3d 313

Don MEEKER, doing business as Meeker's of Hidalgo, Plaintiff-Appellant, v. Nelson FOWLER and Florence Fowler, Defendants-Appellees.

No. 75--97.

Appellate Court of Illinois, Fifth District.

Jan. 21, 1976.

William E. Aulgur, Eldorado, for plaintiff-appellant.

Conger & Elliott, Carmi, for defendants-appellees.

JONES, Justice:

This was a suit brought by the plaintiff to recover a balance owed on a promissory note executed by the defendants. Judgment was entered against defendants by confession for $15,000 principal, $1859.37 interest and $4298.17 attorney's fee, a total of $21,157.54. Thereafter, defendants filed a motion to open the judgment and an answer to the complaint in which they sought affirmative relief. The motion was granted, the judgment by confession was set aside and defendants' answer filed. Following trial on the merits the court entered judgment in favor of plaintiff in the amount of $8,820. Plaintiff appeals.

In 1965 the defendants obtained from the plaintiff dealer two grain bins. In connection with the transaction two instruments were executed, a purchase agreement dated June 26, 1965 and a lease agreement dated January _ _, 1965. Testimony indicated, however, that these instruments were executed at the same time despite the difference in dates.

The cost of the bins as listed in the purchase agreement was $12,390 to be paid in five annual installments of $2,990, falling due on October 1. Ninety dollars was paid down, leaving $2,900 due on the first installment for October 1, 1965. The lease agreement covering this same transaction states that the rental for these bins shall be $14,350 with $3,190 payable on or before October 1, 1965, the balance to be paid in four annual installments of $2,790, each falling due on October 1. Nothing in the testimony or in the record explains the difference in amounts between the two agreements. Though the purchase agreement was signed by both parties, it should be noted that the copy of the lease agreement retained by plaintiff was signed only by the defendants and the copy given to the defendants was signed only by the plaintiff.

On January 29, 1968 defendants purchased another grain bin. Again a purchase agreement and a lease agreement were signed, both dated January 29, 1968. The purchase agreement listed the price as $6,495 with an additional $190, apparently to cover higher horse power fans requested by the purchaser. The purchase agreement provided for a down payment of $95 with a balance of $1,590 to be due on July 1, the remainder of the purchase price to be paid in four installments due on July 1 of the succeeding four years in an amount of $1,595 per installment. The lease agreement covering this same transaction stated that the total rental for the term was $7,975 with $1,595 due on July 1, 1968, the balance to be paid in four annual payments of $1,595, falling due on July 1 of each succeeding year. It acknowledged that $95 had been paid down.

Defendants also purchased from plaintiff some additional items on open account.

On June 9, 1969, at which time defendants were delinquent in their payments under both transactions--that is, the two bins purchased in 1965 and the bin purchased in 1968--defendant Nelson Fowler met plaintiff Don Meeker at which time they agreed on the total amount due. Whether or not the total agreed upon represented all of the indebtedness of defendants under both contracts and the open account is one of the issues in this case. At this meeting, however, a sum of $17,357.56 was agreed upon as being due. Defendants executed a note for $15,000 and gave plaintiff a check for $2,357.56. It was on this note that confession judgment was rendered on November 8, 1973, following which defendants filed a motion to open the judgment and permit the filing of an affirmative answer seeking relief.

In the bench trial which followed, the court ruled that the note and check constituted an account stated settling all accounts between the parties on both contracts and that after deducting amounts paid by the defendants and a penalty for failure to comply with the Illinois Retail Installment Sales Act (Ill.Rev.Stat., ch. 121 1/2, sec. 501 Et seq.), the balance due was $8,820 plus interest and costs. The court also ruled that defendants were owners of the bins.

There are two issues to be considered on this appeal, (1) was the payment agreed to on June 9, 1969 in settlement of all accounts between the parties or in settlement only of the obligation under the first contract plus certain open accounts; and (2) were these transactions sales of the bins, as contended by defendants, or only leases, as contended by the plaintiff?

While the parties agree that the check and note given on June 9, 1969 were for an account stated, they do not agree on what obligations of the defendants were covered by the note and check. Plaintiff claims that only indebtedness connected with the first contract plus certain open account items are included, whereas defendants claim that all of their indebtedness under both contracts and under their open accounts are included and that the note and check were a complete substitute for all of these obligations. The trial court chose to adopt the defendants' contention and hold that the note and check were in substitution for all previous indebtedness. In view of the record, we are not disposed to disturb this finding.

Not only were the circumstances surrounding the transactions such as to make this a reasonable conclusion, but the testimony of both parties indicates that this was the intent. Defendant Nelson Fowler testified that this was his understanding of the transaction and plaintiff in paragraph 4 of his sworn reply of July 11, 1975 states inter alia:

'* * * for further answer unto paragraph 7. Plaintiff also states that on said date of June 9, 1969 an account stated was made and entered into by and between the plaintiff and the defendant Nelson Fowler whereby they did make an agreement as to the correctness of the accounts which represented their prior monetary transactions, upon which occasion a balance was struck and agreed upon by them * * *.'

Thus we do not find that the trial court's finding was against the manifest weight of the evidence.

It should be noted that the date on which an account stated was arrived at and on which the note and check were executed was after defendant had become delinquent under both contracts. And section 11 in both lease agreements states that 'In the event of any default in making any rental payment hereunder * * * all remaining rental payments hereunder shall at the lessor's option become due and payable forthwith.' This, coupled with the plaintiff's own statement that the account stated represented an agreement as to the correctness 'of the accounts which represented their prior monetary transactions,' could reasonably have induced the trial court to rule as it did despite plaintiff's contention that this was not in settlement of all accounts.

Plaintiff cites several cases in support of the view that an account stated does not supersede the amounts to be shown due under contracts between the parties. However, none of these cases square with the situation in the instant case. In Jucker v. Crowe, 241 Ill.App. 420, no note had been given and the evidence tended to show that there was in fact no agreement on an account stated. In Bennett v. Potter, 180 Cal. 736, 183 P. 156, a partition of land and an accounting were involved. Here again there was no written instrument of any kind giving evidence of an agreement on an account stated and the issue was in fact whether there had been an account stated. In Beebe v. Smith, 194 Ill. 634, 62 N.E. 856, defendant gave his father-in-law a note for $6,235. Later he claimed this covered $2,000 which he had borrowed to purchase corn. But in this separate contract it was agreed that the $2,000 would not be due until the corn had been sold. At the time of the settlement the corn had not been sold and there was nothing in their agreement which would accelerate the obligation. We see no reason here that would cause us to deviate from the general principle that an account stated is deemed conclusive at law and in equity unless fraud, omission or mistake are shown. Wood v. Davis, 2 Ill.App.3d 550, 276 N.E.2d 756; Brown v. Gill,343 Ill.App. 460, 99 N.E.2d 393.

Plaintiff contends that the agreements used in these transactions constituted a lease only of the bins; defendant claims that they established an installment sales contract. The trial court found for the defendants on this issue, a result with which we agree.

Two documents were involved--a 'purchase agreement' and a 'lease agreement.' The purchase agreement states, among other things, that '* * * seller hereby agrees to Sell to Nelson Fowler, Eldorado Purchaser, and said Purchaser here--by agrees to Purchase from seller the following equipment and services * * *.' (Emphasis added.) It incorporates the lease as the method of payment by stating 'That the purchaser shall pay the Total Price herein in the sum of $5-year lease to Seller.' Paragraph 7 of the purchase agreement also states that 'This agreement sets forth the entire agreement of the parties hereto. The parties hereby agree that no other agreements, express or implied, shall apply to this agreement.' Paradoxically, paragraph 19 of the lease agreement also states 'This instrument constitutes the entire agreement.'

The trial court found that the effect of the two instruments was such as to result in an installment sale. Not only is this a reasonable assumption in view of the fixation of these bins on concrete foundations and the cost involved in their movement, once erected, but there are other factors which lead to this conclusion. Paragraph 18 of both lease agreements contains an option-to-buy provision. In both leases this was stricken--apparently as being in conflict with...