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Hux v. Raben

AUGUST 31, 1966.




Appeal from the Circuit Court of Hamilton County; the Hon. FRANK P. HANAGAN, Judge, presiding. Judgment for plaintiff reversed and cause remanded.


Defendants appeal from the decree of the Circuit Court of Hamilton County ordering the specific performance of a contract for the sale of real estate.

Plaintiff, John D. Hux, is the assignee of an option to purchase the real estate involved in this litigation. On April 17, 1964, defendants, husband and wife, signed a printed form headed "Option to Purchase Real Estate." The instrument recites the receipt by defendants of the sum of $1,000, in consideration of which, R.L. Merrick, described as purchaser, his heirs and assigns, are given "the exclusive right to purchase, upon the terms and conditions hereinafter set out, on or before the 1st day of Jan. 1965," property known as the Denis Raben farm, of 440 acres, more or less. The land is described as being in designated sections in Hamilton County, but no detailed description is set out. It is stated in the document that the price is $100,000, $4,000 to be paid June 30, 1964, "Balance to be paid Jan. 1, 1965."

The following provisions, among others, are included in the option:

"Dennis Raben to retain all rent from farm for 1964 as part of purchase price.

"2. With (sic) ten days after exercise of this option the seller shall furnish to the Purchaser an abstract of title certified to date, showing merchantable title of record vested in Seller. The Purchaser shall have fifteen days thereafter to have the abstract examined and within said time shall notify the Seller, in writing, of any defects therein, and any defects in the abstract not so noted, except liens of record, shall be deemed waived. The Seller shall correct any such defects within a reasonable time, provided if the defects are not corrected within ninety days after notice thereof, the Buyer upon written notice may avoid this contract, and provided further, if the defects cannot be corrected this contract shall be void and the money paid to the Seller for this option shall be returned to the purchaser.

"7. The deed shall be delivered and the sale closed within thirty days after the exercise of the option, provided that if title is not acceptable at that time, the sale shall be closed within three days after title is accepted by the Purchaser.

"8. If this option is not exercised by notice in writing prior to midnight of the 1st day of January, 1965, the same shall expire and the consideration paid therefor shall be retained by the Seller.

"Dennis Raben agrees to carry 2nd Deed of Trust in the amount of $25,000.00 for 10 yrs., equal payments with 6% interest per annum."

Plaintiffs' complaint is in two counts; in Count I plaintiffs allege the execution of the option on April 17, 1964, and the payment of $1,000 on that date, the payment of $4,000 on June 30, 1964, and further allege that after the payment of the sums of money and the removal of the crops by defendants, defendants delivered possession of the land to plaintiffs and plaintiffs have planted 200 acres of wheat and have expended $12,989.40 for land clearing and improvements, of which defendants knew, and to which they consented. Plaintiffs further allege that they are assignees of the option, that they have performed all the conditions of the agreement by them to be performed, and that defendants have failed and refused to deliver a warranty deed to the premises.

In Count II, plaintiffs repeat the allegations of Count I, and pray for abatement of the purchase price in an amount to be fixed by the court, because of defendants' inability to deliver fee simple title, in that certain mineral rights were reserved to, and are owned by, a prior owner.

The evidence shows that Reginald L. Merrick (named as R.L. Merrick in the option), on May 14, 1964, assigned to Harold Hahn, all of his right, title and interest under the option agreement. The assignment recites a consideration of $5,000, payable $500 on May 14, 1964, and $4,500 on August 1, 1964. The assignee agrees therein to pay the purchase price, perform the terms and conditions of the option, and idemnify Merrick and hold him harmless from any claim arising by reason of failure to so perform. The assignment also states, "This agreement is subject to the ability of the Second Party (the assignee) to obtain a loan from some insurance company in the sum of $150.00 per acre, with the usual provisions in the Promissory Note and Deed of Trust."

On November 3, 1964, by written assignment, Harold Hahn and spouse assigned to plaintiff, John D. Hux, all of the right, title and interest of Merrick under the option agreement. This document recites a consideration of $1 and other valuable considerations. It contains no indemnity agreement or provision for financing.

Merrick, called as a witness for plaintiffs, testified that he is a real estate broker and buys and sells real estate in southern Illinois. He identified the option, and two checks evidencing the payments of April 17, and June 30, 1964. After he assigned the option to Hahn "he had nothing further to do with the property." In October or November he asked defendant, Denis Raben, to bring the abstract up-to-date so he could get title insurance. Defendant, Denis Raben, brought the abstract to plaintiffs' attorney, Frank Bonan, who is a lawyer and abstracter in Hamilton County. Mr. Bonan extended the abstract to date, and at the direction of Mr. Merrick, submitted it to Chicago Title & Trust Company on December 11, 1964. On December 28, 1964, Chicago Title & Trust Company sent Mr. Bonan a preliminary report of title enumerating various objections. There is no mention in the option of title insurance, nor of Chicago Title & Trust Company. The only provisions made for evidence of title are set forth in the above quoted paragraphs of the option.

On December 29, 1964, Merrick sent defendants a letter notifying them of his intention to exercise his option "as provided in said April 17, 1964, agreement." The letter concludes with the following paragraph:

"If you will prepare the necessary documents and furnish us with an abstract of title certified to date as provided in said agreement, we shall, within 15 days after receipt thereof, be ready to close this ...

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