The Oilgear Company v. Hitt

Dist. Ct. did not err in granting plaintiff’s motion for entry of declaratory judgment that it was entitled to defer payment of $430,000 that was owed to defendant pursuant to contract to purchase defendant’s stock in plaintiff’s company, where parties had entered into agreement with plaintiff’s creditor (Bank) in which parties had acknowledged that plaintiff’s debt to defendant was subordinate to plaintiff’s debt to Bank, and that defendant would not be paid while plaintiff was in default of its obligation to Bank. Record showed that plaintiff was in default to Bank at all relevant times, and that Bank did not give plaintiff permission to pay defendant as was required by parties' agreement with Bank. As such, since plaintiff’s debt to defendant was junior to plaintiff’s debt to Bank, defendant must wait for payment from plaintiff until either Bank consents to plaintiff’s payment to defendant or until plaintiff cures its default of its debt to Bank.