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Supreme S. & L. v. Lewis

OCTOBER 1, 1970.




Appeal from the Circuit Court of Cook County; the Hon. DANIEL A. COVELLI, Judge, presiding. Judgment reversed.


Plaintiff seeks to set aside a redemption from a foreclosure sale or, in the alternative, to recover damages for malicious interference with a contractual relationship which it is charged existed between plaintiff and Walter Janas and Loretta, his wife. The cause was referred to a master in chancery to take testimony and report the same to the court together with his conclusions of fact and law. At the conclusion of plaintiff's case the defendants moved for a finding in their favor under section 64 (5) of the Civil Practice Act. The master thereupon heard arguments on the motion, found in favor of defendants and made his report to the court, recommending that the suit be dismissed. Plaintiff filed objections which were overruled by the master and ordered to stand as exceptions to the report. The chancellor found that plaintiff had established a prima facie case, upheld plaintiff's exceptions and referred the case back to the master with directions to proceed with the taking of evidence. Defendants chose not to introduce any evidence and by stipulation proofs were closed. The master then filed his report recommending, contrary to his previous report, that plaintiff recover damages against defendants. That report was approved by the chancellor and plaintiff was awarded damages against the defendants Lewis and Lisowski in the sum of $18,296.67. By a separate decree, Count I of plaintiff's complaint, which sought to set aside the redemption and Count III alleging an unlawful conspiracy to effect a redemption, were dismissed for want of equity. Since no cross-appeal has been taken, the only issue before this court is whether the evidence established a case of malicious interference by the defendants with plaintiff's contractual rights. The facts follow.

Plaintiff originally was the holder of a first mortgage on improved real estate at 2117 West Melrose Street, Chicago, and in 1962 filed suit for foreclosure. The premises were then occupied by one Gladys Vincent, the mortgagor. Pursuant to a decree of foreclosure entered on June 12, 1962, a sale was held by a master in chancery, at which plaintiff's bid of $9,500 was accepted. The sale was approved and a certificate of sale issued, stating that a deed to the premises would be forthcoming on June 12, 1963, unless sooner redeemed. A duplicate certificate of sale was recorded on June 22, 1962.

In March 1963, the plaintiff listed the premises in question for sale with several realtors including Palmer Realty Associates, Inc. That was more than three months before the plaintiff was entitled to a deed or in actual position to sell the property. In the latter part of March, the premises were shown by Palmer Realty to Walter and Loretta Janas. The Janases signed a contract of sale, and a meeting was set at the plaintiff's office for April 11. Before that meeting took place, the Janases sought the advice of defendant Lisowski, an attorney and real estate broker, and asked his assistance in the transaction. On April 11, 1963, the Janases together with Lisowski and one Jaffe of Palmer Realty met with Peter Kezon, president of Supreme Savings and Loan Corporation. Kezon told them that the documents signed by the Janases were not satisfactory since no provision had been made for the possibility that a redemption might be effected before the expiration of the twelve-month statutory period, which would prevent the plaintiff from conveying title to the Janases. It was agreed that plaintiff's attorney would prepare a new agreement to provide for such contingency. Both of the Janases testified, in contradiction of Kezon, that at that meeting no explanation was offered as to why the property was not for sale nor was any suggestion made that another contract would be drafted by plaintiff. Lisowski testified that at the April 11 meeting Kezon stated that the property was not yet for sale, but that he would inform the Janases when it would be.

After Lisowski left plaintiff's office, he had a conversation with the Janases in which they said they wanted the property and he told them they could not have it prior to the expiration of the statutory redemption period. Lisowski testified that he asked the Janases if they would consent to his taking title to the property, apparently with the understanding that he was to convey it to them and that Walter Janas said, "Yes." The Janases testified that this conversation dealt only with the fee that Lisowski was to charge for his services.

On May 1, 1963, after notification from plaintiff that the contract of sale and a closing statement were ready, the Janases picked up the documents and took them to Lisowski for examination. Lisowski struck out a paragraph in the contract which prohibited the Janases from recording the contract of sale and returned the papers to them. That contract was expressly conditioned upon the issuance of a deed after expiration of the redemption period. The Janases returned to plaintiff's office and signed the necessary papers for the purchase of the property, depositing $1,200 as earnest money.

On May 10, 1963, Lisowski on behalf of his stepson Theodore Lewis purchased the second outstanding mortgage against the property for $200. He also acquired the interest of Gladys Vincent, whose mortgage had been foreclosed by the plaintiff as hereinbefore stated, for $200. The purpose of those transactions was to enable Lisowski to redeem the property in question. On May 14, 1963, Lisowski paid the necessary amount to the master who had issued the certificate of sale to the plaintiff and secured a certificate of redemption. On July 15, 1963, plaintiff returned to the Janases the earnest money it had been holding and "cancelled" the contract between them. On July 23, 1963, Lisowski and his wife entered into a contract with the Janases to convey the property to them for $14,500, which was $500 less than the amount they had agreed to pay the plaintiff under the terms of the contract which was dependent on plaintiff's acquiring title. The issue before us is whether the facts constitute a proper case for application of the doctrine of malicious interference with contract.

The first case recognizing the existence of a cause of action for malicious interference with the contractual rights of another is the English decision of Lumley v. Gye, 2 Ell & BL 216 (1853). There the defendant "maliciously intending to injure the plaintiff" was held liable for persuading a renowned opera singer to abandon her exclusive contract with the plaintiff. The unique character of the services involved largely induced the court's decision. The principle of law which has evolved from Lumley is now established in Illinois and a defendant will be held liable if he intentionally and without justification induces another to breach his contract with a third party. Herman v. Prudence Mut. Cas. Co., 41 Ill.2d 468, 244 N.E.2d 809; Loewenthal Securities Co. v. White Paving Co., 351 Ill. 285, 184 N.E. 310; Doremus v. Hennessy, 176 Ill. 608, 52 N.E. 924; Graff v. Whitehouse, 71 Ill. App.2d 412, 219 N.E.2d 128. There are reservations, however, in the application of the doctrine and a right or privilege to interfere in contractual relationships may exist under certain circumstances.

In Herman v. Prudence Mut. Cas. Co., supra, the court strongly indicated that where a complaint is sufficient to state a cause of action for malicious interference with contract, the question of privilege must be carefully examined before any liability can be imposed. As noted in Herman, the Restatement of the Law of Torts (ed 1939) outlines the factors to be weighed in each case and upon which the existence of a privilege to interfere must depend. We quote from page 63 of that treatise as follows:

"In determining whether there is a privilege to [induce a third person not to perform his contract with another], the following are important factors:

"(a) the nature of the actor's conduct,

"(b) the nature of the expectancy with which his conduct interferes,

"(c) the relations between the parties,

"(d) the interest sought to be advanced by ...

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