Loewenthal Securities Co. v. White Paving Co.

259 Ill. App. 612, 1930 Ill. App. LEXIS 801
CourtAppellate Court of Illinois
DecidedJanuary 27, 1931
DocketGen. No. 34,372
StatusPublished
Cited by1 cases

This text of 259 Ill. App. 612 (Loewenthal Securities Co. v. White Paving Co.) 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
Loewenthal Securities Co. v. White Paving Co., 259 Ill. App. 612, 1930 Ill. App. LEXIS 801 (Ill. Ct. App. 1931).

Opinion

Me. Justice Keener

delivered the opinion of the court.

Complainant by its bill asks that a certain writing-executed by the City of Chicago and the defendant, The White Construction Company, may be decreed to be in fact the contract of said City of Chicago and the defendant White Paving Company, or to have been made for the benefit of said White Paving Company and that the contract be specifically performed and for an injunction. The court found the facts in favor of the complainant and entered a decree March 1,1930, that the complainant recover from the defendants and each of them. $210,458.76. The present appeal followed.

The complainant is an investment banking house in Chicago, engaged in financing contractors by purchasing from them, at a discount, special assessment improvements bonds and vouchers issued by the City of Chicago to contractors in payment for work done by contractors for the city, and reselling such bonds and vouchers on the open market. The defendant White Paving Company is a contracting firm which has engaged extensively in public improvement work in Chicago of the kind paid for by special assessments levied against benefited property, confining its activities entirely to the City of Chicago. The other defendant is also a contracting firm engaged in road building, its activities having been confined exclusively to territory outside the City of Chicago. It had never bid for a job in the City of Chicago prior to the one in question. The complainant had had business relations with White Paving Company prior to May 23, 1922, the date of the contract in question, purchasing from it, pursuant to contract, special assessment bonds and vouchers.

September 30, 1921, complainant entered into a contract with White Paving Company whereby the latter agreed to sell to it at 90 cents on the dollar all its special assessment bonds and vouchers delivered to it by the City of Chicago. This contract also provided that White Paving Company would sell to complainant the complete issue of paper received by it in payment for work awarded White Paving Company by the City of Chicago during the year 1922. In the early part of 1922, H. B. Detweiler, associated with the White Paving Company, approached George Freudenthal, president of complainant, and attempted to repudiate that part of the contract of September 30, 1921, which permitted complainant to purchase the complete issue of paper received by the paving company from the City of Chicago for work during the year 1922, claiming that he" had signed the contract without consulting Michael E. White and without White’s authority. White was the controlling figure in the White Paving Company and The White Construction Company. Freudenthal told him that the contract was entered in good faith and that he expected the paving -company to carry it through. Shortly thereafter Freudenthal was approached by F. J. Herlihy, vice president of White Paving Company and general manager of The White Construction Company, who informed Freudenthal that Michael E. WTiite had not realized that the contract of September 30, 1921, gave complainant the right to purchase paper issued for work done on contracts let in 1922, and that White wished to cancel the contract and enter into a new contract for that reason and for the further reason that the City of Chicago was proposing to issue 6 per cent paper as well as 5 per cent paper. Herlihy also stated that unless complainant acceded to White’s request for a change of terms in the contract, White would bid for the City of Chicago’s special assessment work in the name of The White Construction Company. Freudenthal replied that complainant had a bona fide contract.

Shortly after these conferences, between Herlihy and Freudenthal, Freudenthal left the city, and upon his return found that the contract of September 30, 1921, was canceled and a new contract had been entered into dated May 23, 1922. This is the contract involved in this cause. This contract fixes the price of 5 per cent paper at 92 instead of 90, and the price of 6 per cent paper at 95, and permits White Paving Company to dispose of or retain for itself, an amount not in excess of $300,000 worth of paper which it may receive from the City of Chicago.

About the middle of September, 1922, Herlihy was sent by Michael E. White to complainant’s office where he told Freudenthal that several large jobs were soon to be let'by the City of Chicago and that White wished to have those jobs eliminated from the contract, particularly mentioning the Broadway sewer job and a new Ogden Avenue job. Herlihy was told that complainant had no intention of making any further change in the contract. Herlihy then informed Freudenthal that White had instructed him to say that unless those two jobs were excluded from the contract they would bid for the work under the name of The White Construction Company. The evidence also discloses that when White learned of the prospect of the Broadway sewer job he said he felt he could get a better price for the pa/per than he was getting under the contract with complainant and that if complainant agreed to exclude the Broadway sewer job, White would continue to bid for the work under the name of White Paving Company. 1

There were but two bidders for the Broadway sewer, The White Construction Company and the American Sewer & Drain Construction Company.

The evidence discloses that The White Construction Company had never built a sewer and that it had never bid for any work let by the City of Chicago prior to the time when Michael E. White had made his demand and threat through Herlihy. All the bids in the year 1922 up to the time of Herlihy’s call on Freudenthal in the middle of September had been put in by White Paving Company. The first letting after White’s threat was on September 26, 1922. The bid was in the name of The White Construction Company and the contract was awarded to that company. The bidding for the balance of the year was done by The White Construction Company; and that company was the successful bidder on twelve different jobs between September 26, 1922, and December 31, 1922. At the beginning of 1923, White immediately commenced bidding in the name of White Paving Company and The White Construction Company never thereafter bid for any City of Chicago work. ■ It further appears that the work on The White Construction Company contract was done by the White Paving Company’s crews.

The City of Chicago awarded the Broadway sewer work to the defendant, The White Construction Company, and a contract was entered into on October 28, 1922. About that time Herlihy again called on Freudenthal and told him that White had done just exactly as he stated they were going to do; that they had-bid for the Broadway sewer and the balance of the 1922 paving jobs under the name of The White Construction Company; that he had with him a proposal executed by The White Construction Company which eliminated from the contract the special assessment vouchers which were to be received in payment for the Broadway- sewer, and if Freudenthal would sign it, they would deliver the paper which they were to receive on the paving jobs. Freudenthal refused to sign the document.

A majority property owners’ protest had postponed the starting of the work over three years. September 11, 1926, The White Construction Company entered into a contract with the South Shore Investment Company by which it sold the entire issue of the Broadway sewer special assessment paper for 97% on the dollar.

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Bluebook (online)
259 Ill. App. 612, 1930 Ill. App. LEXIS 801, Counsel Stack Legal Research, https://law.counselstack.com/opinion/loewenthal-securities-co-v-white-paving-co-illappct-1931.