Appeal from the Circuit Court of Winnebago County, Seventeenth
Judicial Circuit; the Hon. JOHN S. GHENT, JR., Judge, presiding.
MR. JUSTICE ABRAHAMSON DELIVERED THE OPINION OF THE COURT.
Rehearing denied December 23, 1970.
The plaintiffs sold real estate formerly occupied by the Bishop Cafeteria, in Rockford, Illinois, to Smorgas-Brickan Developers, Inc., under Agreement for Deed. Smorgas-Brickan, thereafter, contracted with various contractors to renovate the building. Smorgas-Brickan, soon after occupying the building as a cafeteria, found itself in financial difficulties and went into bankruptcy.
With this as the background, the plaintiffs (owners of the property), on December 8, 1967, filed suit to restrain each of the contractors, who took part in renovating the building, from removing property from plaintiff's building and for an accounting of all claims and for judgment against Smorgas-Brickan. The defendant-contractors each answered and filed counterclaims, asserting mechanics' liens against the real estate owned by the plaintiffs.
The Circuit Court of Winnebago County, on October 31, 1969, entered a decree finding that the plaintiffs, by and through their agents and representatives, had knowledge of the improvements, alterations and modification contemplated by the defendant Smorgas-Brickan, and of the necessity therefor, and knowingly permitted the improvements involved in the lien claims of the defendants; that Smorgas-Brickan had become bankrupt and gone through bankruptcy in Federal Court and had forfeited all interest in and into the premises which it had contracted for; and ordered that the plaintiff's complaint be denied and granted liens against the premises for the work performed by the contractor-defendants.
The owners have appealed to this court on the basis that the original Agreement for Deed did not permit Smorgas-Brickan to authorize work which would result in mechanics' liens, and the owners did not consent or knowingly permit the work of the claimants to be done.
We first dispose of the issue of whether the contractors are bound by a provision in the original Agreement for Deed which stated that:
"The buyer . . . 2. Shall not permit to be done upon said premises anything out of which a mechanic's lien could arise or attach thereto except with the previous written consent of sellers."
The owners did not record the Agreement for Deed. A provision in a lease of which third parties have no knowledge that a lessor's interest shall be exempt from mechanics' liens is void as against such third parties. Friebele v. Schwartz, 164 Ill. App. 504, 507, 508; Boyer v. Keller, 258 Ill. 106, 112, 101 N.E. 237; Love, Illinois Mechanics' Liens, 2nd edition, pages 94 and 95. As these contractors had no knowledge of the agreement provision, it is void as to them.
As to the owner's contention that they did not consent or knowingly permit the work of the claimants to be done, it is clear that if they did consent or knowingly permit the work of the claimants to be done, the land in question would be subject to the liens for work done, under the provisions of chapter 82, section 1, entitled: "Person entitled to lien Extent of lien," Ill Rev Stats 1967.
When the Agreement for Warranty Deed in question was entered into on March 15, 1967, the building was over 40 years old and had been used for 37 years by Bishop Cafeteria, the lessee. Also, at the time the Agreement for Deed was entered into, the owner of the premises had died and the new owners were all nonresident devisees. These devisee owners were represented by a Rockford Lawyer and a Chicago lawyer with regard to the legal matters pertaining to the sale, and by a Rockford realtor, a Mr. Levis, who had been manager of the building since 1961, and represented them in the sale. It does not appear that any of the devisees had ever seen the inherited premises. The Contract for Deed was negotiated by a Mr. Dahlberg, a realtor representing Smorgas-Brickan Developers, Inc., with Mr. Levis.
Mr. Levis testified that he has had 16 years of experience as a real-estate broker, and had managed the building up until April 1, 1967, when he was informed by the owners that his services as a manager were no longer needed. His office was located about half a block north of the building in question, and as managing agent, it was his responsibility to be familiar with this property. He also stated that Bishop Cafeteria, the former tenant, had only done minor upkeep work on the premises for many years.
Mr. Levis was first contacted by Smorgas-Brickan in December, 1966, and he was given a document setting forth the prospective lessee's requirements concerning renovating the building, but the lease was never signed. Instead, the sales contract was negotiated by Mr. Levis, representing the seller, and Mr. Dahlberg, representing Smorgas-Brickan. Mr. Levis testified that they had discussed, in general terms, the repairs to the interior that the purchaser intended to make after he took possession.
The seller's Chicago attorney expressed concern about the proposed sales contract, and Mr. Dahlberg furnished Mr. Levis with a letter from Sun-Ray Manufacturing Co. This letter quoted a figure of $85,000 which, supposedly, was to represent the sum total that ...