Stofer v. First Nat. Bank of Effingham

571 N.E.2d 157, 212 Ill. App. 3d 530, 156 Ill. Dec. 570, 1991 Ill. App. LEXIS 605
CourtAppellate Court of Illinois
DecidedApril 11, 1991
Docket5-89-0626
StatusPublished
Cited by10 cases

This text of 571 N.E.2d 157 (Stofer v. First Nat. Bank of Effingham) 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
Stofer v. First Nat. Bank of Effingham, 571 N.E.2d 157, 212 Ill. App. 3d 530, 156 Ill. Dec. 570, 1991 Ill. App. LEXIS 605 (Ill. Ct. App. 1991).

Opinion

JUSTICE WELCH

delivered the opinion of the court:

Plaintiffs, Robert and Marcia Stofer, appeal from summary judgment entered by the circuit court of Effingham County on August 14, 1989, in favor of defendants, First National Bank of Effingham, Bernard 0. Nelson, Sam P. Sgro, Jack W. Graham, Eugene E. Gibson, George G. Danks, Leonard H. Dust, Max H. James, James R. McDaniel, Frank H. Schniederjon, Paul F. Taylor, Lowell D. Samuel, Norbert R. Pudenz, and Paul Stockman. The court entered summary judgment in favor of all defendants although only Nelson, Graham and Stockman had filed a motion for summary judgment. The remaining defendants except Sgro had filed a motion to dismiss plaintiffs’ second amended complaint. The complaint as amended alleged in its five counts the following causes of action: intentional interference with the right to dispose of one’s property, tortious interference with a business expectancy of economic gain with plaintiffs’ dealership customers, tortious interference with franchise contracts between plaintiffs and General Motors (GM), conspiracy, and tortious interference with plaintiffs’ contractual relationship and business expectancy with their two corporations. The bases for summary judgment which Nelson, Graham, and Stockman argued and with which the court below agreed, were collateral estoppel as a result of and judicial admissions of plaintiffs in United States v. Bob Stofer Oldsmobile-Cadillac, Inc. (S.D. Ill. Oct. 8, 1987), No. 83—4086, one of the many cases which this unfortunate set of facts has engendered. Because resolution of the issues plaintiffs raise on appeal turn upon the Federal courts’ opinions in United States v. Bob Stofer Oldsmobile-Cadillac, Inc. (S.D. Ill. Oct. 8, 1987), No. 83—4086, aff'd (7th Cir. 1988), 853 F.2d 1392, our recitation of facts shall be based on transcripts of testimony therefrom and the findings of fact in the judgment orders therein, both of which have been made part of the appellate record in the instant case.

Plaintiffs operated an automobile dealership known as Bob Stofer Oldsmobile-Cadillac, Inc., and an automobile leasing company known as ROLA, Inc., in Effingham, Illinois, for a number of years. Plaintiffs were the sole shareholders in each corporation. Plaintiffs individually owned the business real estate which they in tarn leased to the corporations. Their personal residence and the business property were mortgaged to the Small Business Administration to secure a $667,000 mortgage note. The First National Bank of Effingham as well as the Effingham State Bank held used- and leased-car inventory of the two corporations as security for other loans to plaintiffs. In May 1982, after agents of First National Bank of Effingham had come to the dealership to check coUateral, plaintiffs admitted to the bank’s president, Eugene Gibson, that they had sold certain vehicles which were part of the banks’ security without turning over the proceeds thereof to reduce their debt with the banks.

Gibson called a meeting between plaintiffs and representatives of the two banks. Gibson and Banks represented First National, and Jack Graham and Frank Kabas represented Effingham State Bank. Plaintiffs confessed to the bank representatives that the amount of collateral sold “out of trust” was approximately $200,000 but that they had found it necessary to apply the collateral proceeds to other expenses in order to keep the two corporations afloat. The parties concluded at the end of this meeting that it was in their respective best interests to keep the businesses viable for the time being, but the banks would require plaintiffs to agree to certain supervision and to put up substitute collateral. The dealership operations would be supervised by Graham, who had formerly operated a Chrysler franchise, and his assistant Paul Stockman, and Graham’s name was to be added as a required signature to the corporate checking accounts. Plaintiffs were also required to place both the business property and their personal residence in a land trust with the First National Bank as trustee and holder of the beneficial interest. Plaintiffs testified at the Federal trial and allege in the instant complaint that they only agreed to the banks’ demands because they were threatened with involuntary bankruptcy, with the bringing of criminal charges, and that they could have their children taken from them. The Federal court found that at this point in time it was clear that the Stofers were in the midst of a serious financial crisis, that the banks were exerting a fair amount of pressure on them to come up with a method of insuring solvency or finding someone willing to support or buy the business, that the seriousness of the actions of selling off secured automobiles without paying off the obligations was driven home hard to the Stofers by bank representatives, and that the banks were concerned that a sizable investment was about to go under and were searching for a method to save it.

Robert Stofer contacted Sam Sgro, an acquaintance from Springfield, Illinois, in the automobile business, to see if he would be interested in investing in the dealership. Although Sgro decided not to invest in the corporation, he was interested in purchasing it. In this regard, he and Bernard Nelson, another automobile dealer, met with Stofer to discuss a sale of the business to them. The negotiations involved a sale of the corporate stock and contemplated transfer of all assets, including the business property, in return for assumption of all liabilities. When negotiations broke down during the first week of July 1982, Eugene Gibson of the First National Bank served as an intermediary among the parties. Gibson arranged for the bank’s attorneys to prepare the purchase contracts and reassured the attorney drafting the agreements that Stofer had agreed to cooperate in gaining an award of the General Motors franchise to the buyers. Plaintiffs’ franchise agreement disallowed an outright transfer of the franchise and provided that if there was a transfer of ownership the franchise agreement would terminate.

Plaintiffs were represented in the negotiations after July 4, 1982, by their present attorney, Mr. McGaughey. The banks were putting considerable pressure on the Stofers to sell the business, and McGaughey was brought in to counter the pressure. McGaughey kept in very close contact with the Stofers during the negotiations. He was successful in obtaining a cash payment of $20,000 for the Stofers as part of the final agreement, which was executed on July 8, 1982. In this agreement, plaintiffs deeded their interest in three parcels of real estate described in the agreement and transferred the stock of both corporations in exchange for the cash payment of $20,000 and an assumption and indemnification agreement by Sgro and Nelson for all liabilities, including the Small Business Administration mortgage.

Sgro became disenchanted with the agreement shortly after its execution because he felt Stofer had misrepresented the amounts of certain business liabilities. In order to prevent a collapse of the deal, Gibson was successful in convincing Jack Graham to step in. Sgro and Nelson assigned all their interest as buyers in the July 8, 1982, agreement to Graham, with Nelson agreeing to operate the dealership in exchange for an opportunity to purchase stock from generated profits.

Although Bob Stofer initially cooperated with Sgro and Nelson in their application to obtain a transfer of the General Motors franchise, his attitude abruptly changed in late July 1982.

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Bluebook (online)
571 N.E.2d 157, 212 Ill. App. 3d 530, 156 Ill. Dec. 570, 1991 Ill. App. LEXIS 605, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stofer-v-first-nat-bank-of-effingham-illappct-1991.