Hansen v. Johnston

249 N.E.2d 133, 111 Ill. App. 2d 88, 1969 Ill. App. LEXIS 1255
CourtAppellate Court of Illinois
DecidedJune 16, 1969
DocketGen. 68-153
StatusPublished
Cited by5 cases

This text of 249 N.E.2d 133 (Hansen v. Johnston) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hansen v. Johnston, 249 N.E.2d 133, 111 Ill. App. 2d 88, 1969 Ill. App. LEXIS 1255 (Ill. Ct. App. 1969).

Opinion

MR. JUSTICE SEIDENFELD

delivered the opinion of the court.

Defendant appeals from an adverse judgment for $30,000, arising from a breach of contract action heard by the court.

The court found for plaintiff on the theory that the defendant had made the following contract impossible of being performed:

“AGREEMENT
“This agreement dated May 22, 1963, by and between Kenneth J. Hansen, Kenneth Johnston and Chestnut Hills Resort, Inc.
“Witnesseth
“1. Kenneth J. Hansen hereby agrees to vacate the premises he now occupies at Chestnut Hills Resort, Inc., within one week from the date of this agreement.
“2. Kenneth Johnston hereby agrees that he will pay to Kenneth J. Hansen for all his right, title and interest in and to any stock that he may own in Chestnut Hills Resort, Inc. the sum of $30,000.00. This sum shall be paid as follows:
“(a) If Kenneth Johnston secures financing in the sum of $350,000 he will pay the $30,000 to Kenneth J. Hansen when the loan proceeds of $350,000 are disbursed.
“ (b) If Kenneth Johnston is unable to secure financing in the sum of $350,000 then the $30,000 will be paid after all corporate debts due of this date are repaid. It is agreed between the parties that in this instance the $30,000 will be paid from corporate profits.
“3. The parties agree that Kenneth J. Hansen shall have the right to secure a mortgage for the Corporation for $350,000 and if he succeeds he shall receive his $30,000 as hereinabove provided.
“4. Kenneth J. Hansen shall be released from all personal liability to the State Bank of Freeport and the Elizabeth State Bank. Any collateral at these banks belonging to Hansen shall likewise be released.
“5. Hansen hereby agrees to release to Johnston any and all records in his possession pertaining to Chestnut Hills Resort, Inc.
“6. Hansen hereby agrees to resign as an officer of Chestnut Hills Resort, Inc. and further agrees that he has no right, title or interest to any property of the said Chestnut Hills Resort, Inc.
“7. The Chestnut Hills Resort, Inc. hereby agrees to pay all legitimate outstanding debts of the Corporation as of this date and to relieve Hansen of all responsibility for the same.
“8. Hansen hereby agrees that he will not go into the ski business or ski resort business in any capacity or be employed by a ski lodge or ski resort in any capacity, within a radius of 50 miles from the location of Chestnut Hills Resort, Inc. for a period of 18 months. This provision shall not prohibit Hansen from selling or manufacturing ski equipment within the above defined area.
“9. Hansen and Johnston agree that if Chestnut Hills Resort, Inc. shall be sold before Hansen receives his $30,000, then Hansen and Johnston shall participate equally in the selling price, after the payment of all corporate debts and obligations. If Hansen has received the $30,000 he shall have no interest in the selling price. Johnston shall have the right to pay the $30,000 at any time after the execution of this agreement.
“In witness whereof the parties hereto have placed their hands and seals the day and date first above written.
/s/ Kenneth J. Hansen (Seal) /s/ Kenneth Johnston (Seal) Chestnut Hills Resort, Inc. By /s/ Kenneth Johnston President”

On August 3, 1964 defendant recorded a trust deed on the property in the amount of $485,000, which secured a note payable to bearer in monthly installments of $3,-474.79 with 6% interest, the entire amount being due by August 1, 1984, if not sooner paid.

It appears from the testimony that Hansen as a partner with another and later as a principal stockholder, had operated the ski lodge and resort. There were financial difficulties and lack of operating capital which threatened the continuance of the venture. Hansen pledged his stock in the corporation to Johnston to secure over $280,000 which Johnston had avanced to the corporation. Johnston also acquired other outstanding stock of the corporation.

The operation of the business was not going well, Hansen and Johnston could not agree on management — the former wanting to make a smaller winter operation, the latter to expand and upgrade the facilities and to promote a more sophisticated year-around facility.

Hansen stayed in possession of an apartment at the lodge and refused to vacate as requested by Johnston.

As of the date of the agreement the corporate debts were approximately $205,000, and Hansen was individually liable for a portion of this amount. In addition, there was the cost of a sixty room addition to the motel and furnishings in the amount of $200,000 represented by advances of Johnston. After that date a swimming pool was completed, air conditioning installed and the dining room and bar finished. The cost of these items was some $50,000.

The $485,000 note was made up of that $50,000, corporate debts, then reduced to $85,000, and the moneys advanced by Johnston both before and after the May 2 agreement.

The agreement was typed out in the office of the lodge by an attorney who was Johnston’s personal counsel as well as that of the corporation. Hansen was not represented by an attorney. After the execution of the agreement Hansen vacated the apartment on the premises.

Defendant testified that the business at the time of trial was presently losing money, possibly $20,000 the last year, and that he had not been able to secure financing or sell the property.

Defendant claims that the judgment below is erroneous because none of the contingencies expressed in the agreement have been fulfilled and that the agreement has not become impossible of performance as to any one or all of the conditions. He suggests that the agreement be found capable of being performed and that we determine a reasonable time within which performance is to occur.

The principal issue is whether the recording of the $485,000 trust deed made the agreement impossible to perform. Defendant argues that it was only sound business practice to secure himself for advances made to the corporation and that in any event the trust deed should be considered legally subordinate to the agreement, and, if not, we should consider that he expressed a willingness to subordinate the trust deed in a post-trial motion.

It is clear that when performance of an agreement is rendered impossible by the willful acts of one of the contracting parties, the agreement to pay becomes absolute. Foreman Trust & Savings Bank v. Tauber, 348 Ill 280, 286,180 NE 827 (1932).

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Bluebook (online)
249 N.E.2d 133, 111 Ill. App. 2d 88, 1969 Ill. App. LEXIS 1255, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hansen-v-johnston-illappct-1969.