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La Salle Nat. Bank v. International Ltd.

SEPTEMBER 25, 1970.

LA SALLE NATIONAL BANK, ETC., PLAINTIFF-APPELLEE,

v.

INTERNATIONAL LIMITED, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT,

v.

PALATIAL BUILDERS, ET AL., THIRD-PARTY DEFENDANTS-APPELLEES, AND JOHN ANDERMANN AND MARIE ANDERMANN, PLAINTIFFS-APPELLEES,

v.

STERLINGSHIRE MANOR CO., INC., DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT,

v.

PALATIAL BUILDERS, ET AL., THIRD-PARTY DEFENDANTS-APPELLEES, RAYMOND GREEN, COUNTERCLAIMANT-APPELLEE,

v.

INTERNATIONAL LIMITED, AND STERLINGSHIRE MANOR CO., INC., COUNTERDEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of DuPage County, Eighteenth Judicial Circuit; the Hon. WILLIAM J. BAUER, Judge, presiding. Decree affirmed. MR. PRESIDING JUSTICE DAVIS DELIVERED THE OPINION OF THE COURT.

Rehearing denied November 19, 1970.

This is an appeal from a decree which was entered in two declaratory judgment actions, consolidated for trial, involving different, but related, parties, and parcels of real estate. In each action the plaintiff sought a determination that the defendant had improperly recorded a memorandum of sale contract, and sought an injunction restraining the defendant from claiming an interest in the land. In each action the defendant counterclaimed and filed a third-party action, claiming an interest in the land. The third-party defendants also counterclaimed and sought essentially the same relief as sought by the plaintiffs — a declaration that the defendants had no interest in the real estate.

The trial court entered a decree dismissing the original complaints, the third-party complaints, and all of the counterclaims except that of Raymond Green, a third-party defendant-counterclaimant. It found in favor of Green on his counterclaim, and by decree declared that the defendants had no interests in the real estate; that the contracts in question had been rescinded, and that the earnest money should be returned. The defendants — third-party plaintiffs — have appealed.

On April 21, 1966, three contracts were partially executed. Under the first agreement, Palatial Builders, Inc., as "Seller" agreed to sell to International Limited, as "Purchaser," 129 subdivided lots, for a total consideration of $606,300. The LaSalle National Bank, as Trustee under Trust No. 34919, was a party to the agreement as legal titleholder to the premises. All of the parties, except the LaSalle National Bank, as Trustee, executed the agreement. Under the second agreement, the LaSalle National Bank, as Trustee under Trust No. 34924, as "Seller" agreed to sell to Sterlingshire Manor Co., as "Purchaser," 70 unsubdivided nearby acres. This agreement was executed by Sterlingshire, but not by the Bank, as Trustee. The third agreement was between Palatial Builders and LaSalle National Bank, as Trustee of Trust No. 34924, as affiliated parties, and International and Sterlingshire, as affiliated parties. It provided, in part, that International would have the sole option of determining whether it would proceed to consummate the first transaction, but that Sterlingshire would have no option to purchase the real estate covered under the second agreement unless International consummated the first agreement. This agreement, likewise, was executed by all parties, except the Bank, as trustee.

The first agreement, which we shall call the "International Agreement," was a twenty-five page document, which provided for the conveyance of the 129 lots in four, take-out units: the first unit to be conveyed on the "closing date," the second within one year thereafter, the third within two years thereafter, and the fourth within three years thereafter. The "closing date" was defined as being fifteen days after the platting of all the lots and the receipt of a satisfactory preliminary report of title. The purchase price of $606,300 was to be paid as follows: $10,000 upon the execution of the agreement (which amount was paid on April 21, 1966); $163,900 upon the conveyance of the first take-out unit; and $4,700 per lot, upon the subsequent conveyances. Numerous other terms, many conditions and obligations were set forth in this contract, to which we shall refer herein when necessary.

The second agreement, which we shall call the "Sterlingshire Agreement," provided for the conveyance of 70 acres of land, nearby the property in the first agreement: 17 acres of which was to be conveyed on the "closing date," 17 acres on each of the first and second anniversaries of the "closing date," and the balance on the third anniversary thereof. The "closing date" was a date in 1966, to be inserted by the parties at a later time. The purchaser, Sterlingshire, agreed to pay $5,000 per acre for this land, or a total of approximately $350,000. The purchase price was to be paid as follows: $101,500 on the "closing date"; $85,000 on the first and second anniversaries thereof, and the balance on the third anniversary.

The third agreement, as we indicated above, referred to the first two agreements. It stated that the parties intended that both such agreements were to be consummated "if at all possible." This agreement related that International had the option, at its sole discretion, to determine whether to consummate the first agreement, but if it chose not to do so, it would lose its $10,000 earnest money payment. If International chose not to proceed, then Sterlingshire was not given the option of determining whether it wanted to consummate the Sterlingshire contract. But, if both parties to the Sterlingshire agreement determined to proceed, even though the International agreement was not consummated, then International was to have its earnest money refunded. In this manner, the third agreement spelled out the relationship between the first two agreements.

The parties to this litigation have devoted considerable space in their respective briefs with reference to the status of the legal title to the premises; to other agreements which affected the title to the various parcels of real estate, and to the question of who were the real parties in interest in the real estate. Suffice it to say that for the purpose of this opinion, the Bank held legal title to the premises, as trustee; Palatial Builders, Inc. acted as the true owner thereunder, and Raymond Green was the sole or substantial stockholder of Palatial and the ultimate interested party. Likewise, the Andermanns held legal title to the other parcel for the benefit of Raymond Green; and Sterlingshire and International were both controlled and owned by Bruno and Anthony Pasquinelli. So, in the final analysis, the plaintiffs and third-party defendants all represented the interest of Green and a close associate, and the defendants and third-party plaintiffs all represented the interests of the Pasquinellis. Each interest was acting, or contemplated acting, through corporate entities.

At the time the contracts were entered into, Palatial had commenced construction of four model homes, which, as a part of the transaction, International was to purchase at Palatial's net cost. Some time in June of 1966, International entered on the premises and continued the construction of these homes which Palatial had started.

The meeting of April 21, 1966, at which the agreements were signed, lasted from about 2:00 p.m., until about 11:00 p.m. The evidence was conflicting with reference to what transpired at this meeting, the intention of the parties relative to the purpose of the signed agreements, and what was to follow.

Witnesses for the Green, or seller interests, testified that at this meeting — which was attended by Green, the Pasquinellis, their respective attorneys and a realtor — the proposed agreements were discussed and changed throughout the nine-hour period; that a number of changes or additions were brought up late in the day, which the parties were unable to finalize; and that some of the discussed changes were: removing the sale of the houses from this transaction, and perhaps further separating the transactions so that the sellers would be assured of being able to obtain installment sale treatment for tax purposes, the grade of the roads and the costs if the roads were cut deeper, and the costs for water and sewer stubs. They further testified that Bruno Pasquinelli was leaving immediately for a Florida vacation; that he turned over his $10,000 earnest money check to his attorney and said that he wanted these agreements signed at that time so that he could enjoy his vacation, and that the lawyers could get together to firm the matters up and prepare the final agreements for signature.

The witnesses for the Pasquinellis, or purchaser interests, testified that the essential terms of the agreements were not to be altered after they were executed on April 21, 1966, and that the only changes to be made were those necessary to give the seller a more preferred tax treatment. They further testified that the sellers indicated that they could obtain the signature of the Bank, as trustee, to the agreements, the following day.

Among the changes in the subsequent contract drafts was the addition to the International Agreement of a provision which required the Purchaser to pay to the Seller a fee of $300 for a sewer tap-on for each residence at the time of the issuance of each occupancy permit, not to exceed 124 tap-ons. No such provision appeared in the first draft of the agreement, and it does not appear that this subject was discussed. The first agreement contained only a provision that no water tap-on fees would be charged, and this provision was retained in subsequent drafts.

Witnesses for the seller interests testified that the sewer tap-on fees were discussed at a meeting approximately one and one-half weeks subsequent to April 21, 1966, and that the purchasers objected at first to any sewer tap-on fee, but later, at this meeting, ...


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