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Kohenn v. Plantation Baking Co.

SEPTEMBER 12, 1975.

JULES J. KOHENN, PLAINTIFF AND COUNTERDEFENDANT-APPELLEE,

v.

PLANTATION BAKING COMPANY, DEFENDANT AND COUNTERPLAINTIFF-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. LESTER JANKOWSKI, Judge, presiding.

MR. JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:

Defendant appeals from a judgment awarding plaintiff damages for breach of a real estate sale contract and from denial of its counterclaim for breach of the same contract. It contends that the trial court erred because: (1) the factory building was not materially and incurably damaged; (2) the "time is of the essence" provision in the contract was waived; and (3) its counterclaim should have been granted.

On August 4, 1969, plaintiff filed a complaint seeking to recover the $6500 earnest money deposit he had given defendant under a real estate sale contract for the purchase of defendant's factory building. Attached to the complaint was a copy of the real estate sale contract, dated December 17, 1968, which provided that plaintiff was to purchase defendant's factory building for $65,000 with $6500 being deposited as earnest money; that time is of the essence and the closing date is "January 1, 1969, or sooner providing that at least thirty days notice is given buyer or seller that premises are ready for occupancy" provided title, as evidenced by a title insurance policy furnished by the seller five days before closing, is good or accepted; that possession is to be delivered at closing; and that:

"If this contract is terminated without Purchaser's fault, the earnest money shall be returned to the Purchaser, but if the termination is caused by the Purchaser's fault, then at the option of the Seller and upon notice to the Purchaser, the earnest money shall be forfeited to the Seller and applied first to the payment of the Seller's expenses and then to payment of broker's commission; the balance, if any, to be retained by the Seller as liquidated damages."

Additionally, the contract provided:

"If prior to closing, the improvements on said real estate shall be destroyed or materially damaged by fire or other casualty, this contract, at the option of the Purchaser, shall become null and void and the earnest money shall be returned to Purchaser."

Defendant filed an answer denying that plaintiff was entitled to return of his earnest money and also filed a counterclaim for damages for breach of the real estate sale contract. Attached to the counterclaim was a copy of a contract defendant had subsequently entered into with a third party for sale of the factory for $50,000. Plaintiff answered the counterclaim denying that he had breached the contract.

The following pertinent evidence was adduced at the bench trial.

Melvin Kaufman under section 60.

He is President of defendant Plantation Baking Company. In the fall of 1968, defendant placed an advertisement for the sale of its factory. Plaintiff answered the advertisement and on October 12, 1968, signed an agreement to purchase the factory, depositing $1000 as earnest money. Subsequently, on December 17, 1968, they signed the real estate sale contract which is the subject matter of the instant case and plaintiff gave him an additional $5500 as earnest money. Defendant intended to apply the proceeds of the sale to its outstanding mortgage on the property. Although defendant still had some of its equipment in the building in January of 1969 and the building was not ready for occupancy until the end of January, defendant was prepared to close on January 1, 1969.

He received a letter from plaintiff dated January 21, 1969, in which plaintiff rescinded the real estate sale contract and demanded return of his earnest money. Plaintiff complained in his letter that:

"The premises are filthy. They have not been vacated; an oven and assorted miscellany are still on the premises. A large pile of trash and garbage is moldering in the back. The floor is slimy and slippery from the years of accumulation of spilled syrups and flour and other ingredients of your baking operation. A sour odor of decay assails the nostrils as one enters. As a result of not keeping the heat up, the water pipes have frozen and burst in places and, in thawing, are now dripping water over the floor to the point of making it hazardous to attempt to walk through the plant. The boiler has burst and is flooding the boiler room."

He also received a letter from plaintiff dated January 26, 1969, and a telegram dated February 3, 1969. Both reconfirmed plaintiff's rescission of the contract and demanded return of his earnest money. On January 28, 1969, defendant mailed ...


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