APPEAL from the Circuit Court of Kane County; the Hon. JOSEPH
J. SUHLER, Judge, presiding.
MR. JUSTICE WOODWARD DELIVERED THE OPINION OF THE COURT:
R.J. Steven, a doctor of Mattoon, Illinois, is the plaintiff-counterdefendant-appellee and will be referred to herein as "Steven." Floyd Falese was involved in the various transactions leading to this litigation and during all times mentioned was a real estate broker in Dundee, Illinois, and will be referred to herein as "Falese." The defendant-counterclaimant-appellant estate of Floyd Falese, deceased, will be referred to as the "estate" and the defendant-counterclaimant-appellant Falese Land Company will be referred to as the "land company." In referring to both the estate and the land company, we will call them the defendants.
This litigation concerns various agreements between Steven and Falese and the acquisition, financing, development and subdivision of a 160-acre parcel of real estate in Kane County herein referred to as the Whitney Farm. Steven and Falese began this venture in 1962; in 1963, Falese organized the land company, a corporation wholly owned by him; it engaged in various business activities in which Falese was involved including the Whitney Farm; it was a subchapter S corporation for income tax purposes. Falese died on March 8, 1970, and Jacqueline Falese, his widow and the sole beneficiary of his estate, was appointed executrix and as such executrix is a defendant-counterclaimant-appellant in this proceeding and will be referred to as "executrix."
The transactions preceding this litigation began on or about February 13, 1962, when Steven received a letter from the attorney and agent for all the beneficiaries of a certain land trust of the Elgin National Bank wherein the beneficiaries offered to sell the Whitney Farm for $128,000. At this time, Falese owned a 40% beneficial interest in the land trust that held title to the property. Upon receipt of this offer, Steven and Falese entered into the first agreement pertaining to the development of the Whitney Farm; it provided that, if Steven accepted the pending offer of the beneficiaries of the land trust to sell, he would pay the full purchase price of $128,000; that title would be placed in his name and in the name of Falese as tenants in common; that Falese would subdivide the property into approximately 300 lots and would pay for the installation of roads, land planning, title charges, attorneys' fees and such other expenses as might be necessary to subdivide the property. This first agreement further provided that upon subdivision and sale of the lots, Steven would receive a sum equal to the cost of the land and thereafter Falese would receive $600 per lot in payment for the cost of subdividing and other charges enumerated above; lastly, any balance of funds would be divided equally.
After making this first agreement with Falese, Steven accepted the offer of sale submitted by the agent and attorney for the land trust beneficiaries. Then, Steven and Falese entered into a formal contract to buy the Whitney Farm for the sum of $128,000; the sellers designated in this contract were "Gertrude G. Holt, Floyd Falese and Francis T. Crowe as directing beneficiaries" of a certain trust with the Elgin National Bank, as trustee; Steven and Falese as tenants in common were designated as purchasers.
On March 23, 1962, a second agreement pertaining to the development of the Whitney Farm was entered into by Steven, Falese and Daniel A. Hoagland, which provided that Steven would pay the entire purchase price for the farm; that title would be held in a land trust which would provide that the power to direct conveyances would be exercised by both Steven and Falese and in the event of Steven's death, then Hoagland would succeed to his rights and power of direction; that in the event of Falese's death that Steven would have the sole power of direction. It was further agreed that the power of direction was not to be assignable nor would it pass to the heirs, successors, executors or administrators of the beneficiaries during the lifetime of the survivor of either of them. Falese was to pay for the installation of roads, the land planning, title charges, attorneys fees and such other improvements and expenses as necessary to properly subdivide the acreage. The beneficial interest in the trust was specified as 45% for Steven, 45% for Falese and 10% for Hoagland; it was also provided that if the property were sold prior to subdivision, Steven was to first receive $128,000 with interest at 5% and the balance was to be divided between the beneficiaries as stated above. After subdivision, upon sale of a lot or lots, Steven would be paid his proportionate share of the cost of the lot sold and then Falese was to receive $600 per lot for subdivision costs and the balance was to be distributed in accordance with the above specified percentages of the three beneficiaries.
Approximately one month after the second agreement, the purchase of the Whitney Farm was closed; Steven paid the earnest money of $12,000 and an additional $58,000; however, the balance of $58,000 was financed by a note of Steven and Falese payable to Holt and Crowe. It was secured by an assignment of Steven and Falese of the beneficial interest in the land trust that would hold title to the farm. Title to the farm was conveyed to Steven and Falese and they, in turn, conveyed to Elgin National Bank as trustee under a trust agreement dated May 1, 1962, and known as Trust No. 204. The terms of the trust followed the second (March 23, 1962) agreement and the power of direction specified "R.J. Steven and Floyd Falese, or the survivor of them." A rider to the trust agreement reiterated the provisions of the second agreement covering the disbursement of any proceeds of sale between Steven, Falese and Hoagland.
By November 1, 1964, the indebtedness to Holt and Crowe had been reduced to $43,500 by virtue of payments made by Steven. In order to secure an additional $12,000, Steven and Falese executed a new note for $55,500 dated November 1, 1964, and a new assignment of their beneficial interest in the Elgin National Bank Trust No. 204. This assignment provided that Holt and Crowe, the owners of the note, were to be paid $1,000 per acre for the partial release of land from the trust. The additional $12,000 secured by this refinancing was paid to Hoagland, who remained a beneficiary of the land trust until October 10, 1968, when he released all of his interest in the Whitney Farm; he is not involved in this litigation.
On September 1, 1965, Steven and Falese refinanced the Whitney Farm indebtedness for the second time in order to obtain an additional $25,000. A new note evidencing the indebtedness, now in the sum of $80,500, was signed by Steven and Falese; it was secured by the previous assignment of the beneficial interest in the Elgin National Bank Trust No. 204. In addition to the terms of payment, this note provided that Steven and Falese would take appropriate steps to subdivide and plat the property into lots not exceeding 1 acre; Crowe and Holt as owners of the note agreed to direct the partial release for lots from the land trust upon payment of $1,500 per acre. Two checks were issued representing the additional funds secured by this second refinancing; one check was payable to Falese individually in the amount of $23,674.14 and was endorsed by him with the language, "Payment of joint account, oil loan"; the second check was also payable to Falese in the amount of $1,325.86 and was endorsed by him and deposited in the account of the Falese Investment Company.
On March 3, 1966, Steven, Falese, Crowe and Holt directed a letter to Elgin National Bank as trustee under Trust No. 204 changing the previous terms governing the release or conveyance of lots out of the land trust. The new agreement provided that, as long as Holt and Crowe retained their security interest, the trustee was directed to convey lots on a per lot basis to Falese or his nominee upon the presentation of certified checks by Falese or the land company in the sum of $800 payable to Holt and Crowe and in the sum of $800 to Steven; it further provided that after Holt and Crowe released their security interest in the land trust, then the trustee was directed to convey lots on a per lot basis to Falese or his nominee upon the presentation of a certified check by Falese or the land company in the sum of $1,000 payable to Steven. Attached to this letter was an undated agreement signed by Steven and Falese as obligors on the September 1, 1965, note for $80,500 and signed by Holt and Crowe as the holders of said note and the assignees of the security interest in the land trust; this agreement set forth the same terms as the March 3, 1966, letter to Elgin National Bank as trustee. Also, attached to the undated agreement was a plat of survey showing a subdivision of the Whitney Farm.
A land planner hired by Falese prepared a subdivision plat of the Whitney Farm showing 285 lots; approximately one third of these lots were actually improved and platted of record; hence approximately two thirds of the farm is still raw acreage. The land company contracted and paid for the subdivision improvements that were made; it likewise participated in the sale of the lots that were platted. Subsequent to March 3, 1966, and prior to the death of Falese, approximately 55 lots were sold; since then, some lots were sold; however, other sales were frustrated because the parties were unable to agree upon the disbursement of the proceeds of sale. Since Falese's death the president of the land company stated that the company was not going to pay for developing and subdividing the balance of the raw acreage; Falese's widow has taken the same position. The acreage has been listed for sale on occasion but has not been sold.
This litigation began on October 5, 1970, when Steven filed three claims against the estate seeking $188,566.07 for alleged payments of principal and interest on the notes due Holt and Crowe and for his share of the proceeds of sale from Whitney Farm lots. On November 24, 1971, Steven filed a chancery action against the land company based upon the Whitney Farm agreements. On motion of the land company, the estate claims and the chancery proceeding were consolidated; neither Steven nor the estate made objection thereto. The land company filed an answer to the complaint and both defendants filed a counterclaim against Steven. The first count of the counterclaim prayed for an accounting and a judgment against Steven for sums received by him in excess to the monies he was entitled; a second count sought recovery on behalf of the estate against Steven on a note dated March 2, 1966, for $2,415. Steven's answer to the counterclaim denied defendants' right to an accounting and denied that he executed the alleged note. A second counterclaim was filed later by the defendants seeking specific performance of the Steven-Falese agreements and praying that Steven be directed to execute directions for conveyances of lots from the Elgin National Bank land trust upon payment of $1,000 per lot. It further prayed for an accounting and the assessment of actual and punitive damages against Steven for breach of agreement.
As previously stated, parts of the Whitney Farm had been subdivided and sold prior to the death of Falese; however, according to the trust agreement after Falese's death only Steven was authorized to direct conveyances out of the trust. The estate and the land company filed a petition in these proceedings on two occasions seeking permission to sell lots and for an order requiring Steven to direct conveyances of lots out of the land trust. At the urging of the trial court, an oral stipulation was reached by the parties permitting the sale of certain lots with the deposit of the proceeds in escrow. After Steven executed a direction, two lots were released by the trustee but the defendants refused to put the proceeds in escrow. Thereafter, Steven refused to release any additional lots and the court denied the petitions of the defendants seeking conveyances as they refused to escrow the proceeds, pending the outcome of this litigation.
The judgment order of the trial court determined that the various agreements between Steven and Falese described above should be construed together so that the later agreements only modified the prior agreements to the extent specifically provided therein; it held that the agreement of March 3, 1966, changed only the per lot payment to Steven until such time as he had recovered his investment. The trial court further found that the land company adopted, ratified and assumed all of the Steven-Falese agreements and therefore it was obligated to perform the agreements of Falese to subdivide and improve the remainder of the raw acreage of the Whitney Farm; it also found that the land company had breached the contract by its failure to subdivide and develop the remainder of the land and that Steven was accordingly entitled to damages therefor. The order also found that Steven was entitled to an accounting from the estate and the land company for all monies received from lot sales and for damages based on the court's construction and interpretation of the agreements as set forth above. Lastly, the court denied the relief prayed in the various counterclaims filed by the estate and the land company including the count based upon the purported note of Steven, dated March 2, 1966, for $2,415.
The trial court made no decision on the three claims filed by Steven against the estate; also the actual accounting between the parties and the assessment of damages to which Steven was entitled for the breach of the agreements was to be determined at a subsequent hearing. On motion of the defendants, the judgment order was amended to include a finding that there is no just reason for delaying the appeal. This appeal is perfected from this judgment order as amended.
After careful review of the pleadings, the record and the briefs submitted by the parties, this court has determined that the order of the trial court should be affirmed, except as to the finding on the counterclaim based on the $2,415 note. The various grounds for reversal set forth by the defendants will be considered hereafter along with the evidence pertaining to count II of the counterclaim.
• 1, 2 First, the defendants contend that the court did not have chancery jurisdiction in this matter as there was an adequate remedy at law; that the complaint failed to allege the lack of an adequate remedy at law; that Steven might have brought a declaratory judgment action to determine the rights and obligations of the parties under the various agreements; that, at best, Steven might have a claim against the estate for alleged breach of contract. This argument fails for several reasons. Falese never questioned the jurisdiction of the chancery court and, in fact, defendants sought equitable relief by filing a counterclaim for an accounting and for specific performance of the agreements in question. A party that invokes the equitable jurisdiction of the court is in no position to object thereto on appeal. (Clemmer v. Drovers' National Bank (1895), 157 Ill. 206, 217.) Furthermore, the subject matter of this litigation involved an Illinois land trust wherein there was a dispute ...