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Stewart v. Meyers

December 8, 1965


Hastings, Chief Judge, Duffy, Circuit Judge, and Mercer, District Judge.

Author: Mercer

MERCER, District Judge.

Plaintiffs appeal from a judgment entered upon the verdict of a jury finding the issues for the defendants in this suit for damages for the alleged breach of a contract for the conveyance of real estate. Their motion for judgment notwithstanding the verdict or for a new trial was denied by the court below.

Under date of September 30, 1959, plaintiffs and defendants entered into an agreement for warranty deed whereby defendants covenanted to convey to plaintiff by a good and sufficient warranty deed certain residence property therein described for a stated purchase price payable in installments by plaintiffs. A common driveway, located in part on the subject premises and partly on an adjoining lot had been in existence for some years prior to the date of that contract. Under date of October 1, 1959, defendants executed a joint driveway agreement with the owner of that adjoining lot which had the effect of creating mutual easements over the north seven feet of the adjoining lot and over the south three feet of the subject premises. Plaintiffs entered into possession of the property immediately and moved into the residence house on October 30, 1959. They continued to reside in the house until the time of trial.

On May 30, 1961, plaintiff, Walter Stewart, sent a letter to the defendant, Joseph Meyers, stating that it was his understanding that the easement created by the joint driveway agreement over the south three feet of the land which he had contracted to purchase was an encumbrance on the land which rendered it impossible for defendants to convey the land free of all encumbrances in accordance with the covenants of their agreement. He therein contended that defendants had breached the agreement for warranty deed. Further correspondence ensued, after which on July 3, 1962, plaintiffs filed their complaint herein.

The amended complaint alleged that the contract was executed as above outlined, that the contract was then executory, that plaintiffs had complied with all covenants undertaken by them under the contract, and that notwithstanding the defendants' covenant to convey the premises by a good and sufficient warranty deed, the defendants had by executing the joint driveway agreement on October 1, 1959, encumbered the south three feet of the subject premises, thus placing themselves in a position which rendered them unable to convey the premises free of encumbrances as the agreement for warranty deed required the defendants to do. By their complaint, the plaintiffs tendered possession of the real estate to the defendants, demanded reimbursement for all money paid on the purchase price of the property, demanded reimbursement for the reasonable value of all improvements made on the premises by the plaintiffs and alleged certain special damages which plaintiffs allegedly had sustained. The complaint prayed damages of $50,000.00.

By their answer, defendants admitted execution of the contract and the execution by defendants of the joint driveway agreement as alleged in the complaint. They generally denied the other allegations of the complaint. The answer further averred that the driveway agreement was executed by defendant at the request of the plaintiff, Walter Stewart, and as a condition precedent demanded by Stewart before he would agree to purchase the property in issue. Defendants contend that plaintiffs did by their conduct waive their right to assert the driveway agreement as a breach of the contract.

The principal issue on this appeal is the question whether plaintiffs may, as a matter of law, rely on the joint driveway agreement as a breach of defendants' agreement to warrant title to the real estate as a fact creative of a legal right in plaintiffs to rescind their contract to purchase the real estate affected thereby.

At the outset of discussion of this issue certain legal principles and conclusions applicable thereto are stated. An easement creates an interest in land and an encumbrance upon the title of the land affected. Boland v. Walters, 346 Ill. 184, 188, 178 N.E. 359. Under Illinois law, a warranty deed includes a covenant to convey land free from all encumbrances. Ill.Rev.Stat.1959, c. 30, ยง 8. The joint driveway agreement executed by the defendants clearly has the effect of creating an easement in favor of an adjoining property owner over the south three feet of the premises which defendants agreed to convey to the plaintiffs. Upon the face of their agreement, defendants undertook and covenanted to convey the subject premises free from all encumbrances. Eppstein v. Kuhn, 225 Ill. 115, 80 N.E. 80, 10 L.R.A., N.S., 117.

Thus the contract on its face created a legal right in the plaintiffs to receive title to the premises free from encumbrances. Plaintiffs argue that that fact forecloses all other considerations and leads to judgment in their favor as a matter of law. That argument is misconceived.

We may assume, without so deciding, that the tender of possession of the property first made in the complaint itself was sufficient under Illinois law to constitute a rescission at law of the contract as the plaintiffs argue. See Farwell v. Hanchett, 120 Ill. 573, 578, 11 N.E. 875. Plaintiffs' argument on this point goes astray in their contention that the defense of waiver is not available to the defendants because this is an action at law rather than an action in equity.*fn1

A party to a contract may by express agreement or by his own course of conduct waive his legal right to insist on strict performance of the covenants of the contract. Chicago Sugar Co. v. American Sugar Refining Co., 7 Cir., 176 F.2d 1, 7; Baxter v. Metropolitan Life Ins. Co., 318 Ill. 369, 371-372, 149 N.E. 243; Aetna Life Ins. Co. v. Sanford, 200 Ill. 126, 130, 65 N.E. 661; 55 Am.Jur., Vendor & Purchaser, Sec. 287. Although the question as to what facts are sufficient to constitute a waiver is a question of law, the question whether such facts exist in any given case is a question of fact for the jury. Chicago Sugar Co. v. American Sugar Refining Co., supra; Baxter v. Metropolitan Life Ins. Co., supra.

Though there is some conflict in the evidence with relation to the acts and conduct of the parties at the time of the execution of this agreement and in their negotiations immediately prior thereto, one fact here stands out with stellar clarity: that is the fact that the joint driveway agreement was executed by defendants at the insistence of the plaintiff, Walter Stewart, that his right to use the driveway over the adjoining lot be made a matter of record before he would enter into the contract for the purchase of the real estate. Mr. Stewart testified that it was obvious to him on first seeing the property that the driveway used by the occupants of the property lay astride the boundary line between the lot involved and an adjoining lot, and that the major portion of the driveway was on the lot lying immediately south of the lot which was the subject to this contract. When plaintiffs were first shown the premises by a real estate broker, a Mr. Lambrakis appeared on the scene and stated to Mr. Stewart and the broker that his sister owned the adjoining lot and that she intended to erect a fence along her lot line which would run down through the existing common driveway. After Mr. Lambrakis left the premises Stewart told the broker that he was interested in the house but that he would have to have the right to use the existing common driveway made a matter of record.

Stewart testified that he did not see the joint driveway agreement prior to the time when plaintiffs executed the contract, but his testimony was disputed by the testimony of the attorney who prepared both the contract and the joint driveway agreement that when the contract was submitted to Stewart for his inspection Stewart asked if the joint driveway agreement had been prepared. The attorney further testified that Mr. Stewart inspected the driveway agreement at the time and said that it was all right. Certain changes were made in the contract at the instance of Mr. Stewart, after which the down payment on the purchase price was made and the contract for sale of the premises were executed by the plaintiffs and defendants. Though the September 30th date was perpetuated on the agreement for warranty deed, the attorney testified that it was, in fact, executed on October 1, 1959, after necessary changes in ...

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