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Farwell Construction Co. v. Ticktin

OPINION FILED APRIL 14, 1978.

FARWELL CONSTRUCTION COMPANY, PLAINTIFF-APPELLANT,

v.

HAROLD J. TICKTIN ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. JAMES C. MURRAY, Judge, presiding. MR. PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:

Rehearing denied May 24, 1978.

After a bench trial, judgment was entered against plaintiff in its action for damages because of an alleged breach of a real estate sales contract and against defendants on their counterclaim. Only plaintiff has appealed, and it presents the following issues: (1) whether the court erred (a) in holding that no contract existed because plaintiff had failed to exercise an option and (b) in allowing defendants *fn1 to amend a pleading after judgment to deny their prior admission that the option was exercised; (2) whether the court erred in denying plaintiff's request for fees and expenses in the defense of defendants' claim; and (3) the evidence demonstrated defendants' breach of contract so that a judgment could be entered for plaintiff here.

On August 17, 1972, the parties entered into an agreement whereby plaintiff paid defendants $10,000 for a 60-day option to purchase for $340,000 a real estate development package known as Brush Hill Apartments. The package consisted of property located in Naperville, Illinois, the architectural working papers, survey, soil test reports, engineering studies, defendants' future contractual rights to construction loans, and an application for mortgage insurance pending with the Federal Housing Administration (FHA).

The financial viability of the project depended on the issuance by FHA of a mortgage insurance commitment based on the architectural plans submitted, which had to meet prescribed FHA construction standards to obtain the commitment.

On the day of the execution of the option agreement, the parties also entered into a side letter agreement under which defendants warranted that the plans entitled "Brush Hill Apartments, December ____, 1971 * * *" were approved by and met the requirements of FHA. The side letter agreement also provided that in the event FHA, prior to its initial endorsement of the insured mortgage note, requires "any changes, refinements or modifications" in said plans which shall increase construction costs by more than $20,000, defendants will pay at the initial endorsement the full amount of any increased construction costs in excess of $20,000. The parties use the term "initial endorsement" to mean the time when the mortgage insurance commitment was issued by FHA and the first loan proceeds were disbursed.

Later, in a letter to defendants dated November 10, 1972, plaintiff stated that it was exercising the option and, in the same letter, it informed defendants that the architectural plans did not meet FHA requirements; that the cost to do so would be in excess of $20,000; that the exact amount of the cost would be provided "when a closing date was established"; and that payment of those costs would be expected "at the initial endorsement of the F.H.A. mortgage."

Then, on January 29, 1973, plaintiff sent a letter to defendants enclosing a list of 12 changes plaintiff stated were required by FHA. The letter also informed defendants that plaintiff was claiming a credit for the estimated construction costs for those changes of $122,069.76 (total cost of $147,069.76 less the $20,000 deductible) and that plaintiff was ready to close the transaction by a payment to defendants of $212,930.24 (the purchase price of $340,000 less the claimed credit of $122,069.76). A suggested closing date of February 8, 1973, and an escrow date of February 5, 1973, were suggested by plaintiff in the letter. Defendant replied on February 1, 1973, agreeing to the February 8 closing and a February 5 meeting to draw up the escrow, but denied that plaintiff was entitled to the credits mentioned in its January 29, 1973, letter.

Plaintiff then brought suit on February 15, 1973, for specific performance and defendants, in a motion to dismiss, asserted that they had no legal or equitable title to the property. Upon learning this, plaintiffs filed a verified amended complaint seeking damages for breach of contract and, in their verified answer thereto, defendants admitted the exercise of the option. Subsequently, defendants sought damages against plaintiff in a counterclaim in which defendants alleged that plaintiff had exercised the option and had breached the agreement. Thereafter, the counterclaim was amended to include a count alleging that plaintiff had tortiously interfered with a contract between defendants and American Housing Partners (AHP). On October 25, 1976, the trial court entered judgment against plaintiff in its action and against defendants on their counterclaim. In a memorandum filed with the judgment order, the court stated that it found against plaintiff because the option had never been exercised. After its judgment, the trial court on February 4, 1977, granted defendants' motion to amend their answer to deny a prior admission that the option was exercised but denied plaintiff's post-trial motion and its motion for the taxation of its expenses and attorneys' fees in defending the counterclaim. Plaintiff is appealing from the October 25, 1976, judgment against it and from the February 4, 1977, order. Defendants have not cross-appealed.

OPINION

In stating its first contention, plaintiff argues that the trial court erred in finding that the option agreement had not been exercised and in allowing defendants to amend a pleading after judgment to deny a prior admission by defendants that plaintiff had exercised the option.

In support of its position, plaintiff points to the following: (1) that defendants received its letter of November 10, 1972, in which plaintiff wrote:

"Pursuant to a certain Grant of Option dated August 17, 1972 granted by you to the undersigned and a letter dated August 17, 1972 from you to the undersigned, the undersigned [plaintiff] does hereby exercise the option therein described";

(2) that after the November 10 letter, the parties took numerous steps toward the closing of the transaction, which indicated their belief that the option had been exercised; (3) that all of the other evidence, including the trial theory of defendants, supported the fact that the option was exercised; (4) that in their verified answer to plaintiff's verified amended complaint, defendants admitted the option had been exercised; and (5) that in their counterclaim, defendants asserted that plaintiff had exercised the option. In response thereto, defendants make only the following argument — that the November 10 letter, while stating that plaintiff exercised the option, also "mentioned unspecific additional construction costs for which it expected a reduction in the purchase price, and defendants had a right to assume that plaintiff did not intend to claim unjustified increase. Unknown to defendants, plaintiff was in fact changing the terms of the contract, therefore there was no meeting of the minds." We see no merit in this argument — not only because it appears clear from the language in the letter that the statement of plaintiff that it was exercising the option was not conditioned on any agreement as to the credits for additional construction costs, but also because defendants judicially admitted the exercise of the option.

• 1 Once a statement of fact has been admitted in the pleadings, it constitutes a judicial admission and makes it unnecessary for the opposing party to introduce evidence in support thereof. (Western Life Insurance Co. v. Chapman (1975), 31 Ill. App.3d 368, 334 N.E.2d 806, cert. denied (1976), 424 U.S. 927, 47 L.Ed.2d 337, 96 S.Ct. 1140; Vincent v. Wesolowski (1967), 87 Ill. App.2d 477, 232 N.E.2d 120; Precision Extrusions, Inc. v. ...


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