Stull v. Hicks

• Decision Date: 25 April 1978
• Docket Number: No. 77-246,77-246
• Citation: 16 Ill.Dec. 874,375 N.E.2d 981,59 Ill.App.3d 665
• Parties: , 16 Ill.Dec. 874 E. R. STULL, Plaintiff-Appellant, v. J. Ellis HICKS, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 981

375 N.E.2d 981

59 Ill.App.3d 665, 16 Ill.Dec. 874

E. R. STULL, Plaintiff-Appellant, v. J. Ellis HICKS, Defendant-Appellee.

No. 77-246.

Appellate Court of Illinois, Fifth District.

April 25, 1978.

Philip C. Zimmerly and James M. Lanagan, Champaign, for plaintiff-appellant.

C. Michael Witters, Mt. Carmel, for defendant-appellee.

KARNS, Justice.

Plaintiff, E. R. Stull, appeals from the judgment of the Circuit Court of Montgomery County, granting the motion of the defendant, J. Ellis Hicks, for summary judgment.

In his complaint for damages for breach of contract, the plaintiff alleged that the defendant, J. Ellis Hicks, had refused to perform an option of resale of securities held by the plaintiff by virtue of a contract executed by the parties some ten years earlier. The question presented is whether the option, requiring the defendant to repurchase the securities in question, was timely exercised. The trial court found as a matter of law that no genuine issue of fact was presented, denied plaintiff's motion for judgment on the pleadings and entered summary judgment for defendant.

The underlying facts of the instant cause are not in dispute. On June 24, 1966, the plaintiff and defendant entered into a written contract for the exchange of certain securities whereby plaintiff received 5,000 shares of stock of Security Savings & Loan Association of Hillsboro, Illinois and the defendant received 25 shares of stock in the First National Bank of Sumner, Illinois. The option to resell, given to the plaintiff as additional consideration for the exchange and contained in the second clause of the written agreement, provided:

"It is further agreed that the first party, (Defendant) will purchase from second party (Plaintiff) the original Five Thousand (5,000) shares of Security Savings and Loan stock for $50,000 ten years from date, providing that second party wishes to sell the original stock of said association at that time."

On August 12, 1976, the plaintiff, by a letter to the defendant, demanded performance in accordance with the above quoted paragraph. According to the defendant, this letter was the first communication or correspondence from the plaintiff in the nature of a demand notwithstanding the plaintiff's recitals in his affidavit that he had made several attempts to reach the defendant by phone and in person during June, July and August, 1976.

The parties are in agreement that the question presented on this appeal is one of law and turns on the meaning of the second clause of the written agreement between the parties. Thus, we are asked to determine the meaning of the defendant's agreement to repurchase the Security Savings & Loan stock "ten years from date" if the plaintiff wishes to sell "at that time."

An option is an agreement by which one binds himself to perform a certain act, usually for a stipulated price within a designated time, at the sole power and discretion of the optionee to accept upon the terms specified at which time it is converted from a unilateral contract into a bilateral contract. (Johnson v. Whitney Metal Tool Co., 342 Ill.App. 258, 96 N.E.2d 372 (2d Dist. 1950).) It is the defendant's position that the language of the agreement pertaining to the option to resell is clear and specific, calling for the repurchase of the stock on, or at least not later than a day certain, i. e. June 24, 1976. The defendant contends that time is of the essence in an option contract and, thus, the plaintiff was bound to undertake the exercise of the option within the time specified therein, that being ten years from the date the agreement was executed. Therefore, it is the defendant's view that summary judgment was properly granted as it is undisputed that the plaintiff's demand was approximately six weeks after the expiration of the ten year term.

We agree with the defendant that time is of the essence in an option contract. However, we note that in determining the meaning of the terms of the option pertaining to notice and acceptance a court is to ascertain the intent of the parties from the instrument "in light of the language employed and the surrounding facts and circumstances attendant upon the transaction. (Northern Illinois Coal Corp. v. Cryder, 361 Ill. 274, 284, 197 N.E. 750, 755 (1935).) In this regard, the plaintiff asserts that the obvious intent of the parties, ascertainable from the instrument, is that he would have the opportunity to resell the stock on or after the tenth anniversary of the agreement, not before the tenth anniversary date. The plaintiff contends that to rule that in the exercise of his option he was limited to a single day (June 24, 1976) would be an extremely strained and restrictive construction of the language used in the option clause.

We are mindful of the fundamental principle that a court may not make a new contract for the parties or...