APPEAL from the Superior Court of Cook County; the Hon. GEORGE
M. FISHER, Judge, presiding.
MR. JUSTICE BRISTOW DELIVERED THE OPINION OF THE COURT:
Hazel R. Weber, defendant, appeals from a decree of the superior court of Cook County for specific performance of a contract to purchase real estate growing out of an option contained in a lease. The decree also granted injunctive and other relief. Since the necessary result of the decree is that appellees gain and appellant loses a freehold estate, the cause is properly here on direct appeal. Rose v. Dolejs, 1 Ill.2d 280; Rawlins v. Bogusiewicz, 397 Ill. 548.
The plaintiffs, Alfons A. Bonde, Elling H. Runden, Jr., Charles W. Jensen, Milton D. Thompson, Charles M. Gabler, William R. Fullen, Alfons A. Bonde, Jr., and James R. Bonde, co-partners doing business under the name and style of Accurate Spring Manufacturing Company, and Frank D. Weber, individually, by their complaint in equity filed in the superior court on April 8, 1953, against the defendant, allege that in 1938 Frank D. Weber, then the husband of the defendant, purchased a factory site and building located at 3811-23 West Lake Street in the city of Chicago for which he paid $28,000, taking title in his name individually; that thereafter Weber improved the building at a cost of $15,000 making his total cost $43,000, and rented it to Accurate Spring Manufacturing Company, an Illinois corporation, of which he was the principal stockholder, at an annual rental of $3000; that on March 10, 1945, Frank D. Weber conveyed the property to the defendant, and on the same date the defendant delivered to the corporation a written instrument containing a ten-year lease on the premises expiring on March 9, 1955, with an option to purchase for an agreed consideration of $43,000 in cash provided that on or before February 1, 1955, it notified the defendant in writing that it would accept and exercise the option.
The complaint further alleges that on August 21, 1946, the corporation, by Alfons A. Bonde, its vice-president, notified the defendant, in writing, that it would accept and exercise the option; that on February 10, 1947, Frank D. Weber entered into an agreement with Alfons A. Bonde, Michael Ruman, Elling H. Runden, Jr., Charles W. Jensen, Milton D. Thompson and William R. Fullen, which recited the sale of 26,800 shares of the corporate stock by Weber to the others and by which they agreed to cause the corporation to complete the purchase of the property under the option and immediately thereafter give Weber an option to purchase it at the same price paid by the corporation, but reserving an option to the corporation to lease after March 10, 1955.
The complaint then alleges that on March 3, 1947, the plant was completely destroyed by fire; that the sum of $55,000, being the proceeds from the fire insurance policies carried on the building, was paid to the defendant, who in turn, paid it over to the contractor as rebuilding progressed; that the cost of rebuilding was over $90,000; that the additional amount above the amount of the insurance was paid by the corporation at its own expense with the knowledge and consent of the defendant to insure a better, more fire resistant building; that the corporation expended its own funds relying upon the promise of the defendant to sell according to the option and the notice of acceptance already given; that on December 1, 1947, Alfons A. Bonde, Charles W. Jensen, Milton D. Thompson, Elling H. Runden, Jr., William R. Fullen and Michael Ruman formed a co-partnership by written agreement to engage in the business under the firm name of Accurate Spring Manufacturing Company following which the corporation was dissolved on December 31, 1947, and the assets delivered to the partners, who were also the shareholders of the corporation, as a liquidating dividend.
The complaint also alleges that contemporaneously with the change in the form of the business on December 31, 1947, an agreement in writing was made to which the corporation, the partners, Frank D. Weber, and the defendant were parties; that by this agreement the corporation assigned all its rights under the lease to the partnership, and the partnership assumed all obligations under the lease; that Frank D. Weber guaranteed payment of all rent under the lease and the defendant consented to the assignment; that on the same date as the aforesaid agreement the partners entered into an agreement in writing with Frank D. Weber by which they agreed to complete purchase under the lease and give Weber an option to buy at the price stipulated in the lease subject to their right of further occupancy.
The complaint then states that on or about August 23, 1948, one of the co-partners, Michael Ruman, was expelled from the co-partnership and Charles M. Gabler was substituted in his place; that the partnership continued to do business as before and the tenancy established was continued, all of which was known to defendant; that defendant, knowing of the change, continued to accept the monthly payments of rent under the lease; that she had cashed all rent checks except those for January, February and March of 1953, which had been returned uncashed; that the partnership had performed all of the conditions and covenants under the lease and stood ready to pay the entire balance of rent reserved under the lease and the full purchase price of $43,000.
The complaint then charges that the defendant entered upon a plan or scheme to destroy and render ineffective the rights and interests of the partners by virtue of the lease under which Frank D. Weber was and is the ultimate party to benefit; that by way of carrying out her plan or scheme, defendant caused her son-in-law, an attorney, to write certain letters to Frank D. Weber by which it was proposed that he cooperate in securing an increased rental from the partners under threat of cancellation of the lease for breach of its terms because of an alleged assignment due to the change of personnel in the partnership; that Frank D. Weber refused to join in the plan, whereupon the defendant served the partners with a notice to quit as well as a demand for possession and brought forcible entry and detainer proceedings in the circuit court of Cook County against them; that the acts and doings of the defendant were fraudulent and designed to further her dishonest scheme. The complaint recites a tender into court of the purchase price and all remaining sums due under the lease and prays for an injunction restraining defendant from the prosecution of her forcible entry and detainer proceeding, for specific performance of the contract to purchase and for incidental relief.
The answer of the defendant admits the existence of the lease and the receipt of the notice from the corporation dated August 21, 1946, but denies its purported effect and states that it did not constitute an exercise of the option. The answer further states that the corporation expended money in rebuilding after the fire, to induce the defendant to consent to rebuild; that the consent to the assignment executed by her was expressly conditioned by a provision that there be no further assignment; that the change in the partnership occasioned by the retirement of Ruman and the addition of Gabler was unknown to defendant and that she did not consent thereto; that upon learning the facts, she elected to terminate the lease. The answer admits that the letters were written to Frank D. Weber by defendant's attorney, as alleged in the complaint, but denies that their purpose was to carry out a plan or scheme, or that the proceedings to terminate the lease and gain possession are in furtherance of any scheme. The affirmative portion of the answer states that the notice of August 21, 1946, does not constitute an acceptance of defendant's offer to sell or an exercise of the option because it states an intention to exercise the option at a future time; that by its terms the offer in the lease cannot be accepted prior to March 9, 1955; that none of the plaintiffs had ever notified the defendant they will accept and exercise the option on March 9, 1955, and that conveyance could not be compelled in any event until that date.
On April 10, 1953, the trial court entered a temporary order restraining defendant from prosecuting her forcible entry and detainer action. Defendant's motion to dissolve the injunction was overruled on June 26, 1953, and after defendant had answered, the cause was referred to a master in chancery to take proof and report his findings. The master found that the option was accepted and exercised on August 21, 1946, by the lessee corporation, resulting in a valid contract for the purchase and sale of the property that vested equitable title in the corporation; that this contract was assigned to the co-partnership; that the serving of the notices of termination followed by the bringing of the forcible entry and detainer action constituted a plan to cheat and defraud plaintiffs and render ineffective their rights and interests in the property and constituted an anticipatory breach of the contract of purchase and sale entitling plaintiffs to specific performance at that time. The master further recommended that the injunction should be made permanent, and that proof be taken after arguments before the court on the allowance of attorney's fees to which he found plaintiffs entitled. The decree of the court was in accordance with the findings and recommendations of the master except that the decree orders that conveyance be made on March 9, 1955, rather than prior to that time and ordered that plaintiffs keep their tender good until that date, and found that plaintiffs were not entitled to an allowance of attorney's fees, and conveyance was ordered to be made by the defendant to Frank D. Weber to avoid circuitry of action.
The principal questions presented by this appeal are: (1) Did the corporation exercise the option contained in the lease resulting in a binding contract of purchase and sale between the corporation and the defendant? (2) Did the assignment agreement transfer the rights of the corporation in the contract to the partnership? (3) Did the subsequent withdrawal of one partner and the substitution of another operate to destroy the rights of the partners under the instrument? (4) Did the conduct of the defendant amount to an anticipatory breach of the contract of sale, entitling the plaintiffs to maintain their action for specific performance at the time it was filed? (5) Did the plaintiffs, under proof of tender as shown in the record, prematurely bring suit for specific performance? (6) Are the plaintiffs entitled to an allowance of attorney's fees?
The lease between the defendant and the corporation dated March 10, 1945, is for a term from March 10, 1945, to March 9, 1955, at a total rental of $90,000 payable in monthly installments of $750 each. The lease grants to the lessee "an option to purchase the demised premises, including the land forming a part thereof, on March 9, 1955, for Forty-three Thousand Dollars ($43,000.00) in cash, provided Lessee on or before February 1, 1955, notifies Lessor in writing, that it will accept and exercise said option." ...