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Grand-kahn Electric v. Transportation Bldg. Corp.

OCTOBER 19, 1973.

GRAND-KAHN ELECTRIC, INC., PLAINTIFF,

v.

TRANSPORTATION BUILDING CORPORATION OF CHICAGO ET AL., DEFENDANTS. BELL FEDERAL SAVINGS AND LOAN ASSOCIATION, PLAINTIFF,

v.

TRANSPORTATION BUILDING CORPORATION OF CHICAGO ET AL., DEFENDANTS. QUALITY REFRIGERATION AND AIR CONDITIONING CO., INC. ET AL., THIRD-PARTY PLAINTIFFS-APPELLANTS,

v.

CHICAGO CITY BANK AND TRUST COMPANY, THIRD-PARTY DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. CHARLES R. BARRETT, Judge, presiding.

MR. JUSTICE ENGLISH DELIVERED THE OPINION OF THE COURT:

Quality Refrigeration and Air Conditioning Co., Inc. (Quality), and Mid States Air Conditioning Equipment, Inc. (Mid States), third-party plaintiffs, appeal the trial court's order dismissing their amended and supplemental third-party complaint. The underlying action with which the third-party actions were consolidated, had been brought to foreclose a mortgage and a mechanic's lien against the Transportation Building and is not here involved.

The facts which follow are those alleged in the third-party complaints.

While the foreclosure suits were pending, Quality was negotiating with Illiana Corporation, a long-term lessee of the Transportation Building, and Sherman Construction Co., a general contractor, for the installation of 45 Typhoon air conditioning units. Pursuant thereto, Quality received a quotation of $146,300 for the units (later reduced to $118,000) from the Typhoon distributor, Mid States. The quotation, however, was on the condition that there be a firm and unconditional commitment by a Chicago bank or lending institution to pay for the units within 30 days of billing. Similarly, while Quality was negotiating a total contract of $414,000 for the air conditioning units and installation with Illiana and Sherman, it had advised Illiana and Sherman

"* * * it was unwilling to enter into a contract with them for for such installation, and that Mid States had informed it that Mid States was unwilling to supply said Typhoon air conditioning units, unless they were assured of their respective payments out of a firm loan commitment to Illiana from a Chicago bank or lending institution, Quality to be paid monthly 80% for work and material furnished and Mid States to be paid said sum of $146,300.00 within 30 days from billing."

Subsequently, a document dated February 21, 1969, but not signed until mid-March of that year, between Quality, Illiana and Sherman contained the following language:

"The terms of payment shall be as follows: The total amount of $414,400.00 shall be available from an open loan held by and in a Chicago bank or lending institution and said amount shall be specifically allocated for Quality Refrigeration and Air Conditioning Co. Inc., general contractor's sworn affidavit setting forth that Quality Refrigeration and Air Conditioning Co. Inc. is the air conditioning contractor for the above described job and has said amount due them, all monies due under this contract shall be released by said bank, directly to Quality Refrigeration and Air Conditioning Co. Inc. on the following terms:

(Interim payments of 80% described)

Notwithstanding, the preceding paragraph relating to interim payments, it is specifically agreed by and between all the parties hereto that upon delivery of the 45 Typhoon air conditioning units to 608 South Dearborn Buildings, a payout of $146,300.00 shall be released, made out to Quality Refrigeration and Air Conditioning Co. Inc. on or before 30 days from the date of invoice billing for said equipment from Mid States Air Conditioning Equipment Inc. to Quality Refrigeration and Air Conditioning Co. Inc. A final payment of the total balance due shall be made on or before June 10, 1969, or within ten days after completion of our contract, whichever is the latter."

On March 1, 1969, a first mortgage leasehold commitment for $2,650,000 was executed between Chicago City Bank and Illiana, in consideration of $53,000 paid to the bank by Illiana. That commitment provided that approximately $2,000,000 of the total amount would be used for remodeling of the Transportation Building for occupancy by the U.S. Government under a sublease.

Illiana and Sherman then informed Quality that a firm loan commitment had been obtained from Chicago City. Thereupon, based on oral assurances from Chicago City Bank to Quality that the air conditioners and work would be paid for when installed, Quality and Mid States entered into an oral agreement with the bank to proceed with delivery and installation of the 45 air conditioning units.

When the units arrived in early April, 1969, Quality informed the bank of their arrival and again asked for assurance that it would be paid because Mid States hesitated to make delivery unless it knew the money was available for payment by the bank. On April 7, 1969, the following letter was sent to the president of Quality from the bank:

"Re: The Transportation ...


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