The Illinois Supreme Court recently reversed two court judgments that held a dealership is not allowed to sue a tractor company on the basis of "promissory estoppel," according to published reports in the Madison-St. Clair Record.
Justices unanimously sided with Newton Tractor Sales, an ag equipment dealership in Newton, Ill., and remanded the case back to a lower court.
A promissory estoppel prevents a party from arguing that its promise should not be upheld.
Newton began negotiations in 2002 to buy Vandalia Tractor and Equipment in Vandalia, Ill. Vandalia Tractor, owned by brothers Tim and Ron Emerick, already sold Kubota tractors.
After negotiations, Newton signed a purchase agreement in 2003 that, in part, allowed the company to back out if it couldn't get permission to sell New Holland, AGCO or Kubota products. To sell Kubota products, Newton was required to submit an application to Kubota's local representative, Michael Jacobson.
Following submission of the application, Newton officers met with Tim Emerick, and with Jacobson in 2003 and Jacobson informed Newton that he could not approve the sale of Kubota products unless the Emericks terminated their agreement with the company.
Tim Emerick agreed to sign the termination agreement — but only if Newton became an authorized dealer, according to court records.
"Newton alleges Jacobson responded by saying, 'They (Newton) will be the dealer,' "the opinion authored by Justice Rita Garman states. Although Newton's application was approved at Kubota's division level a few weeks later, it was denied by Kubota's corporate office.
Newton sued Kubota and Jacobson in Fayette County Circuit Court, and later in appellate court, claiming Kubota had reneged on their promise to make Newton an authorized dealer. Newton lost both court decisions.
But the Illinois Supreme Court reversed both rulings, saying a promissory estoppel is an affirmative cause of action in Illinois, not just a defense.
The Supreme Court refused to rule on whether Newton established a promissory estoppel claim and remanded the issue back to circuit court.