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Miles Homes, Inc. v. Mintjal

FEBRUARY 21, 1974.




APPEAL from the Circuit Court of Logan County; the Hon. JOHN T. McCULLOUGH, Judge, presiding.


Plaintiff Miles Homes, Inc., filed a second amended two-count complaint. Wrongful declaration of forfeiture of an agreement for deed and conspiracy were alleged. Plaintiff requested that it be permitted to redeem from the forfeiture and for specific performance. Upon motion of defendants, the second amended complaint was dismissed and judgment entered for defendants. Plaintiff appeals.

The motions to dismiss the second amended complaint alleged: (1) the complaint showed no duty on behalf of the defendants to the plaintiff because plaintiff had no interest in the property in question; (2) equitable defenses of laches and unclean hands; and (3) the complaint was vague, indefinite, conclusionary, and unsupported by any allegations of facts.

From the allegations of the complaint and the attached exhibits, it appears that in September 1964 Virgil D. Mileham and Gertrude Mileham, his wife, entered into an agreement for warranty deed to sell a lot in Logan County to John W. Wilkerson and Norma J. Wilkerson, husband and wife. The purchase price was $2750, with $400 down, and the balance in monthly payments of $25. Monthly payments were made from October 1964 to August 1966.

On November 6, 1964, the Wilkersons borrowed the sum of $9396 from the plaintiff. As security, the Wilkersons gave plaintiff a mortgage on the lot. This mortgage was recorded on November 30, 1964. The existence of the mortgage was known to all defendants in this action. The money loaned to the Wilkersons by the plaintiff was used to build a house on the lot.

Plaintiff is still owed $9396 on the note. When the payments on the lot were ended in August 1966, the unpaid balance on the lot stood at about $2000.

After discovering the Wilkersons' default on the installment contract, an agent for plaintiff in March 1968 offered to pay to the Milehams all sums due them under the installment land contract. This payment was refused. Shortly thereafter, without notice to plaintiff, the Milehams declared a forfeiture of the contract and obtained possession of the lot.

The lot was then deeded to defendant Joseph Mintjal by the Milehams for an amount greater than the $2000 still owed them by the Wilkersons, but for an amount less than the value of the property as improved. The conveyance to the defendant Mintjal is alleged to have been the result of a conspiracy between the defendants.

• 1 Plaintiff's complaint must allege facts which if proved would support a judgment. (Donehue v. Duvall, 41 Ill.2d 377, 243 N.E.2d 222.) In examining the complaint, this court is obliged to accept as true all facts properly pleaded as well as all reasonable inferences that can be drawn from these facts. Psychogios v. Village of Skokie, 4 Ill. App.3d 186, 280 N.E.2d 552.

Plaintiff has attached as exhibits a copy of the agreement for deed, the mortgage agreement, and a record of the Wilkersons' payments made on the property. The agreement states that the purchasers agree to do no act which would permit a lien to be made a charge against the lot. The purchasers also agree to make no improvement costing more than $25 without the written consent of the vendors. Payment for all improvements made are to be in cash and receipts exhibited therefor. Written consent of the vendor is required to any assignment of the purchaser's interest. The contract purchasers have the right of full or partial pre-payment.

The contract permits the vendors to declare a forfeiture for a breach. The vendors were permitted to treat any payments made as rent and liquidated damages. Written notice served upon the purchaser, his heirs, representatives or assigns of such forfeiture and election to re-enter and regain possession was set forth by the agreement as sufficient evidence of such election. The agreement also stated waiver of any of the rights of the vendor under the contract would not preclude the vendor from treating the contract at an end for any subsequent breach.

Plaintiff and defendants assert that the Illinois Supreme Court decision in Eade v. Brownlee, 29 Ill.2d 214, 193 N.E.2d 786, is dispositive of the issue of whether or not the facts allege a duty owed to the plaintiff by the defendants. The court there held that by reason of the doctrine of equitable conversion a purchaser in possession of realty under a contract for the purchase of the realty has an equitable estate which he can mortgage. The mortgagee will succeed to all the purchasers legal and equitable rights in the property at the time of the mortgage. However, the supreme court found the doctrine of equitable conversion not to be applicable where equitable considerations intervened or where the intent of the parties was that it would not apply. Such was the fact in Eade.

In Eade, the action had been brought by the vendor to confirm a forfeiture of the articles of agreement for warranty deed. The purported mortgagees had counterclaimed, seeking to pay the balance of purchase money due on the contract and for foreclosure of mortgages given by the purchaser. The supreme court affirmed the declaration of forfeiture. Because equitable conversion did not apply, the purchaser had no estate to mortgage. Therefore, the mortgagees had nothing on which they could foreclose. Additionally, the vendor had properly declared the forfeiture before the mortgagees offered to pay in the purchase money due. As a final matter, the court noted the equities of the case were not with the mortgagees due to the fact that "* * * the mortgages were for shoddy improvements at a ridiculous cost." 29 Ill.2d at 220.

Defendants argue that the facts in this case are so similar to those in Eade that the plaintiffs had no interest in the lot in question. The agreement in this case did not specifically state that the purchaser took no title, either legal or equitable. Unlike the situation in Eade, the money loaned by plaintiff was used for substantial improvements. Also, plaintiff offered to pay the ...

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