W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp.

Congress-Kenilworth Corp. (CK) (defendant) operated a water slide as an amusement business. CK contracted with W.E. Erickson Construction, Inc. (Erickson) (plaintiff) to construct the concrete water slide. CK did not make the progress payments as agreed, and Erickson agreed to receive the deed to the property as security for payment on the project. The project was completed and opened to the public on July 4, 1981. At the end of the project, CK owed Erickson $550,000 under the construction contract. Shortly after the project was finished, the three principal stockholders of CK formed a new corporation, Thunder Mountain Rapids Corp. This new corporation essentially took over operation of the water slide. All of CK’s bank accounts were closed. The revenues from the water slide were collected by Thunder Mountain and deposited in their accounts. CK also entered into a management contract with Thunder Mountain. The water park closed at the end of its season on Labor Day. During that first season, the water park generated $224,000 in gross revenue, and Erickson was paid $150,000. The parties then discovered that CK didn’t own the land, and, therefore, the deed given to Erickson was worthless. Erickson sued CK for breach of contract and requested that a receiver be appointed for fear that monies generated by the water slide would be diverted. The trial court held a four-day hearing on the matter. Erickson did not introduce any additional evidence regarding its fear that funds would be diverted. The trial court granted the request and appointed a receiver over CK. CK appealed to the Illinois Court of Appeals.