Modern Tackle Co. v. Bradley Industries, Inc.

• Decision Date: 30 April 1973
• Docket Number: No. 56227,56227
• Parties: MODERN TACKLE COMPANY, an Illinois Corporation, Plaintiff-Appellant, v. BRADLEY INDUSTRIES, INC., an Illinois Corporation, and Morris Nozette, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 688

297 N.E.2d 688

11 Ill.App.3d 502

MODERN TACKLE COMPANY, an Illinois Corporation, Plaintiff-Appellant, v. BRADLEY INDUSTRIES, INC., an Illinois Corporation, and Morris Nozette, Defendants-Appellees.

No. 56227.

Appellate Court of Illinois, First District, First Division.

April 30, 1973.

W. Donald McSweeney, Robert J. Vollen, Chicago (Schiff, Hardin, Waite, Dorschel & Britton, Chicago, of counsel), for plaintiff-appellant.

James M. Goff, Harold C. Hirschman, Chicago (Sonnenschein, Levinson, Carlin, Nath & Rosenthal, Chicago, of counsel), for defendants-appellees.

EGAN, Justice.

This is an action for breach of an oral contract. Count I of the complaint alleged that through a course of conduct and conversation beginning on or about January 15, 1964, Bradley Corporation, acting through its authorized representative, Morris Nozette, entered into a contract with the plaintiff whereby the plaintiff was to find an acceptable purchaser of Bradley, and, upon the purchase of Bradley by any corporation found by the plaintiff, Bradley was to pay a fee computed at various rates depending on the amount of the purchase price; that acting under the authority of and pursuant to the terms of the contract with Bradley, the plaintiff proposed to Richardson-Merrill, Inc. that Richardson-Merrill acquire Bradley; that in January, 1966, Richardson-Merrill did purchase all of the outstanding shares of Bradley for $4,140.000. Count III alleged the same agreement but that it was between the plaintiff and Morris Nozette, individually; Nozette was the president of Bradley and the owner of at least 52% Of its stock. Count II was withdrawn at trial.

The case was heard by a jury; and the court reserved its ruling on the defendant's motion for a directed verdict. The jury returned a verdict in favor of the defendant, Bradley, on Count I and in favor of the plaintiff and against Nozette on Count III. After post-trial motions were heard, the court granted Nozette's motion for judgment notwithstanding the verdict; the reserved motion of Nozette for a directed verdict; and denied the plaintiff's motion for a new trial on Count I.

The plaintiff contends that a fact question was properly submitted to the jury on Count III; that it is entitled to a new trial on Count I because the court improperly instructed the jury and erred in ruling on the admissibility of evidence.

Martin Hayden was a vice-president of the plaintiff, Modern Tackle Company. He described his work: 'We work as a middle man to put a buyer and seller together and sometimes we put a buyer and seller together, and sometimes we represent the buyer and sometimes we represent the seller. We would in turn get a fee from whomever we represent.' His company was in the business of acquisitions and mergers. He first met Nozette in the latter part of 1963 in Nozette's office when he was representing a company (Gleason) that was considering the purchase of Bradley. He had contacted Nozette at the request of his client's president. After the meeting Nozette told Hayden that he would like to think about the deal and that Hayden should call him after a reasonable length of time. Hayden later called Nozette and met with him at his office about the 15th of January, 1964. When asked on direct examination what conversation he had with Nozette at that time, Hayden testified as follows:

A. At that meeting, Mr. Nozette told me that he was not interested * * * in the Gleason situation. * * *. He told me that, 'Lock, I am not interested in Gleason, but you are in this acquisition and merger situation. If you come across a company that meets my criteria, * * * one that will give me a solid tenant and my price, I am interested.'

* * * I said that, 'Wherein we were working with you to attempt a merger or acquisition in the Gleason matter, if we were to look for a buyer for you, we would expect to be compensated by you.' Mr. Nozette said, 'Well, what is your compensation?' And I said, 'Well, we work on a regular 5, 4, 3, 2, 1 schedule, and this is a schedule that the brokers use in the industry.' * * * And Mr. Nozette said, 'Well, I understand what the fee arrangement is, but what about costs?' I said, 'Well, what costs?' And he said, 'Well, how about expenses?' I said, 'There isn't any expenses. We will pay all of our expenses.' I said, 'If there is no deal you have no exposure.' He said, 'What about my price?' I said, 'Well, it is your price. If you don't accept the price, there is no deal. If there is no deal, you don't pay anything.' So he said, 'On that basis, you find me a buyer At my price and I am interested.' (Emphasis added.)

Parenthetically, we note that we have gone to the report of proceedings to determine the actual testimony because of a difference between the abstract and brief of the plaintiff and the brief of the defendants. The abstract and brief of the plaintiff show Nozette saying: 'You find me a buyer and I am interested.' The brief of the defendants shows his testimony to be: 'You find me a buyer At my price and I am interested.' (Emphasis added.) The defendants' version of the testimony is correct.

On cross-examination Hayden testified that he told Nozette that his fees were to be paid only in the event that he was instrumental in bringing a deal to Nozette that was concluded. Later Hayden wrote to Dennison Manufacturing Company informing them of the availability of Bradley; he called Nozette in the early part of 1964 and asked Nozette what the fee arrangement was. Nozette told him not to worry about the fee, that he would pay a fee if a deal was made and asked him the name of the potential buyer; when told the name, he said Dennison was an excellent company and told him: 'Go ahead with the deal.' Hayden wrote a letter on March 6, 1964, to the president of Dennison informing him that Nozette would forward three years' annual reports on Bradley and that Hayden would make arrangements for a meeting between Nozette and Dennison. On the same day, Hayden sent a letter to Nozette informing him that he had contacted the president of Dennison and reminded Nozette that he was to look to Nozette for his fees. On March 12 he got a letter from Dennison rejecting the deal, and he so informed Nozette, who said: 'Well, I am in no hurry. You just find me a buyer at my price, and you keep looking and we are an interested seller.' He had another contact with Nozette in the latter part of March at which time he received some annual reports from him. In April he sent a letter to H. R. Marschalk, the president of Richardson-Merrill, asking if they would be interested in acquiring another company. He received a letter from George Maginness of Richardson-Merrill informing him that they did not pay finder's fees; that it would be necessary for him to identify the organization he was representing so that they could advise him if the company had been brought to their attention from another source; that they were interested. He sent a copy of Bradley's annual report to Maginness. On May 11, 1964, Maginness wrote that they were not interested in acquiring Bradley and sent back the annual report. About the end of September Hayden wrote to Bemis Bag Company and after speaking on the phone to people from that company sent them some material on Bradley. On November 6, 1964, Bemis returned the material to Hayden and informed him that they were not interested in the acquisition of Bradley.

Hayden then arranged a meeting between a representative of MSL Industries, Nozette and Hayden at Nozette's office. At the meeting Nozette told the representative of MSL that he was expecting between $17 and $18 per share for the sale of Bradley. Another meeting was arranged in the early part of February, 1965, between the chairman of the board and executive vice-president of MSL, Nozette and Hayden. At this meeting Nozette was offered $14 per share. He told them that he would think about it and get in touch with them. About March 20, 1965, Hayden called Nozette and attempted to encourage him to make the deal. This was followed by a letter dated March 22, 1965, when Hayden sent Nozette a copy of MSL's annual report and again encouraged him to make the deal. In early April of 1965 Hayden met Nozette at the Packaging Show in Chicago, and again stressed the merits of the MSL deal to him. Nozette told Hayden that he was not interested unless MSL met his $18 price and not to fool around with the Bradley situation unless he was able to come up with a buyer at $18 a share.

After the incident at the Packaging Show, Hayden had no contacts with anyone concerning Bradley until after October 18, 1965. On that date Hayden noticed an article published in the Wall Street Journal concerning Richardson-Merrill's acquisition of Bradley. He called Nozette and told him that, since Modern Tackle was the broker of record in the deal, Nozette would want the release from Modern Tackle before the transaction was closed. This was the first time that Hayden ever mentioned anything to Nozette about his contacts with Richardson-Merrill. However, during the course of the negotiations between Bradley and Richardson-Merrill, Nozette was informed that they had been contacted by Hayden. Nozette told Hayden that he had paid JBM Consultants $80,000, and, if Hayden was willing to take $40,000, Nozette would try to get it for him from...