Olson v. Etheridge

Facts

The four plaintiffs, Karen Olson, Nancy Stites, Cheryl Stevenson, and Carolin Polson, were the owners of Heitzler, Inc., a John Deere dealership in Walnut, Illinois. In 1979 they sold all the stock in Heitzler, Inc., to a group of three buyers, including Dean Etheridge, for $350,000 pursuant to the terms of a stock purchase agreement and a corresponding promissory note, hereinafter referred to as Agreement I and Note I. Agreement I and Note I obligated the buyers to make annual payments to the plaintiffs on December 1 of each year, along with 9% interest. The buyers’ payments were to be made directly to the plaintiffs’ checking account at a bank in the Walnut Bank. The three buyers changed. The corporate name of Heitzler, Inc., to Woodley Implement, Inc., and continued operation of the business. Nearly four years later, in August of 1983, Dean Etheridge and the appellant, August Engelhaupt, executed a written agreement wherein Etheridge sold one-half of his stock in the corporation to Engelhaupt, hereinafter referred to as Agreement II. In Agreement II, Engelhaupt agreed to assume one-half of Etheridge’s liability and obligation under Agreement I, which included the obligation to satisfy Note I. In exchange, Etheridge assigned one-half of his rights in Agreement I over to Engelhaupt. This assignment of rights was made subject to the terms of Agreement I. The entirety of Agreement I was incorporated by reference into Agreement II. Agreement II obligated Engelhaupt to make annual payments on December 1 of each year, along with 9% interest, directly to the Walnut Bank. These payments were to be credited toward Etheridge’s balance due to the plaintiffs under Agreement I and Note I. In 1986 the plaintiffs filed a complaint against the original purchasers of the corporation, including Etheridge, and against Engelhaupt.