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Nat'l Super Markets v. First Nat'l Bk.





APPEAL from the Circuit Court of Sangamon County; the Hon. I.J. FEUER, Judge, presiding.


Rehearing denied June 26, 1979.

Plaintiff, National Super Markets, Inc. (National), filed an action for specific performance of a real estate contract. This contract was the result of National's alleged exercise of an option to purchase the property which option was granted by the defendant First National Bank of Springfield (Trustee) as trustee under a land trust created by defendant-beneficiaries Edsell and Mayme Sutton. The trial court entered judgment in favor of National ordering the Trustee to specifically perform the contract.

At the hearing, National introduced into evidence a copy of an option agreement granted to National by the Trustee which gave National the option to purchase certain real estate held in trust for the Suttons. The agreement provided for a purchase price of $4,000 with $100 presently paid as consideration for the option. The option was effective for a period of 60 days "and continuing, thereafter, until the Seller sends written notice * * *, to Purchaser to cancel this option at least 30 days prior to the cancellation date stated in said notice, * * *."

On March 15, 1976, the agreement was modified to extend the time within which National could exercise the option from 60 days to 102 days. In exchange for this extension, the purchase price of the property was increased to $4,500 and an additional down payment of $100 was paid to the Trustee by National. These amendments were made by interlineation and each was initialed by Willard Thompson, the trust officer for the defendant Trustee. The provision of the original agreement, that the option would continue after the expiration of the initial period until 30-day notice of cancellation was received, was neither deleted nor otherwise modified.

David Clippard, a real estate representative for National, testified that prior to seeking this extension, National, with the approval of the Suttons, had filed a petition to reclassify the property zoning from a residential to a commercial use. Prior to the expiration of the initial 60 days of the option, it became apparent to National that the reclassification might not be accomplished within the option period if the Trustee were to immediately give the 30-day notice of termination. According to Clippard, this was the basic concern of National in seeking the extension of the option period.

On April 28, 1976, attorneys for National appeared before the Springfield Plan Commission to present National's petition to rezone the subject property. No objections were raised at the hearing. On this same day, National, by a letter dated April 26, delivered notice to the Trustee of its intention to exercise the option as per the terms of their agreement.

On April 27, 1976, the Trustee sent notice to National's real estate agent, Robert Ingerson, stating that the option to purchase had expired on April 26, that the Suttons, as beneficiaries, did not intend to extend the option, and that the option was considered cancelled. National's real estate representative Clippard testified that he received the letter on April 29 or thereafter. He denied that he was aware of the notice of cancellation prior to that and admitted only that the trust officer, Thompson, mentioned the letter at the time he (Clippard) delivered notice of intent to exercise the option.

Thereafter, National advised the Trustee, by a letter delivered on June 24, 1976, that it would tender the $4,300 remaining purchase price on June 25. National tendered a check in that amount which was refused.

It is first contended by the defendants that the Trustee was not authorized to extend the option beyond 102 days or April 26, 1976, and that National should have known that the Trustee's authority was so limited. Thus, they contend that National failed to exercise the option to purchase within the time permitted.

The evidence clearly demonstrates that the Suttons authorized the execution of the original option agreement and the subsequent modifications. Both the trust officer Thompson and Edsell Sutton testified that the Trustee was authorized and directed to enter into the original agreement on January 15, 1976. Thompson testified that the beneficiaries agreed to extend the option period to April 26 in return for the increased purchase price and the additional $100 for the option itself. On the Trustee's copy of the instrument, Edsell Sutton signed his name under the written statement indicating his approval of these modifications. Although disputed by the Suttons, it is evident that the agreement as amended was approved by the Suttons as beneficiaries.

The real thrust of the defendants' argument is that the parties intended the option period, under the modified agreement, to terminate absolutely and without notice on April 26, 1976. A plain reading of the amended agreement discloses that the option period would continue indefinitely after the expiration of the initial period (i.e., on April 26 which was 102 days after the making of the agreement), until 30-day notice of cancellation was given. The trust officer and Edsell Sutton both testified, however, that it was their understanding that April 26 provided an absolute termination date. It is asserted that this understanding is evidenced by the notations made on the Trustee's copy of the agreement. On the Trustee's copy was a handwritten statement reciting that Edsell Sutton authorized the Trustee "to extend the option to 4/26/76." This provision, however, is of little aid in determining the parties' intent in view of the explicit language requiring 30-day notice of termination which was not modified in either National's or the Trustee's copy of the agreement. In any event, the Trustee's copy was never shown or presented to National.

Additionally, the defendants argue that the parties' intention, to limit the option period to April 26, is demonstrated by the date when National sought to exercise the option. Defendants contend that if national had interpreted the option period as effective beyond April 26 it would not have written the letter of intent to exercise the option on the 26th and delivered it on the 28th, since rezoning of the property had not yet been accomplished. This action by National is somewhat at odds with its supposed purpose in seeking an extension of the option. Nevertheless, although this fact weakens the evidence favoring National, we do not believe it compels a disturbance of the trial court's finding.

• 1 The defendants' argument ignores the more persuasive evidence of National's interpretation of the agreement. Of greatest significance is the Trustee's failure to modify or delete the explicit requirement for continuation of the option until 30-day notice of cancellation is delivered. Thompson specifically admitted that he was never directed to nor did he consider changing or striking this language. His explanation, that his failure to delete the notice requirement was a mere oversight, is rather unsatisfactory in view of the precise modifications made within the same paragraph of the agreement. Further there was no testimony offered by either Thompson or Sutton that National was ever specifically informed of the beneficiaries' understanding that April 26 established an absolute termination date. Thus, National, which had no reason to know of the misunderstanding, should not be made to suffer the burden of any unilateral mistake or misapprehension resulting from the Trustee's failure to ...

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