Wickstrom v. Vern E. Alden Co.

• Decision Date: 28 August 1968
• Docket Number: Gen. No. 52695
• Citation: 99 Ill.App.2d 254,240 N.E.2d 401
• Parties: George WICKSTROM, Sr., Plaintiff-Appellee, v. VERN E. ALDEN COMPANY, a partnership, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 401

240 N.E.2d 401

99 Ill.App.2d 254

George WICKSTROM, Sr., Plaintiff-Appellee, v. VERN E. ALDEN COMPANY, a partnership, Defendant-Appellant.

Gen. No. 52695.

Appellate Court of Illinois, First District.

Aug. 28, 1968.

James A. Dunkin, Baker & McKenzie, Chicago, for defendant-appellant.

Leonard E. Newman, Chicago, for plaintiff-appellee.

DAVIS, Justice.

This is a contract action wherein the plaintiff sought to recover certain amounts by virtue of the defendant's failure to make retirement payments pursuant to contract between the parties. The case was tried on an agreed statement of facts and briefs. The court entered judgment on the complaint against the defendant and in favor of the plaintiff in the sum of $6,105.13 and costs of suit, and entered judgment on the counterclaim in favor of the defendant-counterclaimant and against the plaintiff in the sum of $730.44 and costs of suit, and ordered said sum setoff against the plaintiff's judgment, thereby reducing the same to $5,374.69 and costs of the suit. The defendant appealed.

The plaintiff, a partner in the defendant partnership, served as Chief of Mechanical Design for approximately eleven years prior to his retirement. Paragraph 6.05 of the Partnership Agreement provided that 'in the event a Partner resigns, the Senior Partners will work out an agreement on the basis of which the current balance in his capital account will be returned to him.' The amount of cash paid to any Partner upon resignation would not exceed 20% Of the balance in his capital account, and the remaining balance thereof could be paid in participation certificates or promissory notes, which notes would bear interest at the rate of 6 per cent per annum.

Paragraph 12.03 of the Partnership Agreement provided:

'Involuntary Resignation. Nothing in this agreement shall prevent a majority of the Partners from terminating the relationship between the Partnership and a Partner; that is to say, that if in the judgment of a majority of the Senior Partners, it becomes necessary to sever the relationship between the Partnership and any Partner, it is agreed that the Partners, acting by a majority, may request the resignation of such a Partner.'

Vern E. Alden, a Senior Partner, apparently acting on behalf of the majority of the partners, sought the plaintiff's resignation. To secure that end, he drafted and submitted to the plaintiff a certain contract dated September 12, 1958. It stated that in the judgment of the Senior Partners, the plaintiff could not continue to discharge the responsibilities as Chief of Mechanical Design in an acceptable manner; that the Senior Partners believed it best that the plaintiff retire and they agreed to certain conditions which would make it easier for him to retire, among which were:

'(1) Beginning September 15 you will receive retirement pay at the rate of $300 per month * * * for a period of ten years. In the event of your death during this period * * *, Vern E. Alden Company would continue to pay $300 per month to your wife, Vera, for the balance of the ten year period. In the event of your death, followed up by the death of Vera, then the retirement pay would stop one month after Vera's death.

'(2) There is a balance of approximately $31,000 in your capital account. We are willing that you withdraw, if you care to do so, $1000 on October 15, $1000 on February 1, 1959, and $1000 on April 1, 1959. The remaining $28,000 will be converted into 10-year 12% Participation Certificates which will mature December 31, 1967. * * * You will receive interest at an annual rate of 8% On any cash balance in your capital account and you will, beginning September 15, receive interest at the annual rate of 12% On the $28,000 invested in Participation Certificates. * * *.

'(3) Virginia will arrange for you to take over and pay the premiums on the amount of group life insurance which is now carried in your name.

'(4) You will have the right to seek other employment. * * * We ask, however, that for each $1000 that you receive from other employment you permit us to shrink by 20% Or $200--the $3600 per year of retirement pay which we have agreed to pay you for ten years' time. We think you will accept this condition as being reasonable. * * *.

'(5) * * * you will accept the one other condition that in the years which lie ahead you will not say or do anything which will hurt Vern E. Alden Company and you will not reveal any confidential information which you have which bears on the operations of any one of the clients of Vern E. Alden Company.'

The threshold factual question of whether the plaintiff's resignation was voluntary is presented, and must be determined in that the doctrine of promissory estoppel invoked by the plaintiff cannot aid his cause unless such circumstance is present. The pertinent portions of the partnership agreement heretofore mentioned, the agreed statement of facts, and the contract, are the only evidence on this issue. The plaintiff contends and the defendant denies that the resignation was voluntary. The contract, prepared by the defendant, stated that the 'Senior Partners have agreed to certain conditions which will make it easier for you to retire.' The second condition of retirement set forth therein was the provision for the repayment of the plaintiff's capital account. Such repayment appears to be predicated on the provision of Paragraph 6.05 of the Partnership Agreement that 'in the event a Partner resigns, the Senior Partners will work out an agreement on the basis of which the current balance in his capital account will be returned to him.' We thus conclude that the plaintiff's resignation was voluntary.

The plaintiff accepted the provisions and conditions of this contract and submitted his resignation. It was admitted by the defendant that the plaintiff performed the terms and conditions of the contract, and it is undisputed that the defendant repaid to him the entire amount of his capital account, plus interest, as provided for in the foregoing contract.

The defendant's answer to the complaint contained an affirmative defense that the agreement between the parties was not supported by consideration so as to constitute a legal and enforceable contract. The defendant also filed a counterclaim for insurance premiums which it advanced on behalf of the plaintiff. The agreed statement of facts specified the amount of said sum and the amounts paid to the plaintiff as retirement pay during the years in question, the respective earned income credits arising by virtue of the plaintiff's employment in certain years, and the balance claimed due by the plaintiff pursuant to such computation.

The main issue presented for review is whether the agreement of September 12, 1958, is supported by consideration so as to constitute a legal and enforceable contract. The defendant contends: (1) that there was no consideration for the promise to make retirement payments to the plaintiff and that such promise was gratuitous and unenforceable, and (2) that consideration must be that promise, act, or forbearance which one party specifically seeks and requests from the other party in exchange for a promise, act or forbearance on his part.

These contentions find support in both case law and treatises. Corbett v. Cronkhite, 239 Ill. 9, 15, 16, 87 N.E. 874 (1909); Bartlett v. Lauff, 271 Ill.App. 551, 555, 556 (1933); Restatement of the Law, Contracts, sec. 75, Comments: (b) and (c); 1 Williston on Contracts (3rd Ed.) sec. 139.

The plaintiff urges that consideration may be an act or forbearance either bargained for or induced; and that it consists of some right, interest, profit or benefit accruing to one party, or some forbearance, detriment or loss suffered or undertaken by the other. Such principle of law is likewise supported by case law and treatises. Rosenberg, Inc. v. Carson Pirie Scott & Co., 28 Ill.2d 573, 584, 192 N.E.2d 823 (1963); Lipkin v. Koren, 392 Ill. 400, 406, 64 N.E.2d 890 (1946); Bredemann v. Vaughan Mfg. Co., 40 Ill.App.2d 232, 242, 188 N.E.2d 746 (1963); 1 Williston on Contracts (3rd Ed.) sec. 140; 1 Corbin on Contracts, sec. 194.

Consideration for a promise has been defined in the Restatement of the Law of Contracts, sec. 75, as:

'(1) Consideration for a promise is

(a) an act other than a promise, or

(b) a forbearance, or

(c) the creation, modification or destruction of a legal relation, or

(d) a return promise,

bargained for and given in exchange for the promise.'

It is well settled, as a general rule, that consideration is an essential element of, and is necessary to the enforceability or validity of a contract. 17 Am.Jur.2d, sec. 86 and cases there cited. However the doctrine of consideration embraces many theories, beliefs and definitions. As articulately stated by Professor Corbin in 1 Corbin on Contracts, sec. 109:

'Knowledge of what the early law and custom were has much lively historical interest and would have some practical value, also, to courts and lawyers and clients. We must be content, however, without this knowledge, and must discover our contract law and our doctrine of 'consideration' from the reports and...