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Kuska v. Folkes





APPEAL from the Circuit Court of Lake County; the Hon. ROBERT K. McQUEEN, Judge, presiding. MR. JUSTICE RECHENMACHER DELIVERED THE OPINION OF THE COURT:

Clarence E. and Mary E. Folkes sold a house to Stephen W. and Susan B. Kuska. The Kuskas subsequently sued the Folkes for fraud and breach of contract. Jury was waived and the judge granted summary judgment for the Folkes on the breach-of-contract count of the complaint and this result was not appealed. However, after trial, the judge ruled against Folkes on the fraud count of the complaint and entered judgment in the amount of $3,200. The Folkes appeal this judgment contending that the trial court's finding was against the manifest weight of the evidence.

Under our view of the case, the dispositive question is whether the Kuskas introduced sufficient evidence of justifiable reliance to sustain a cause of action based upon an alleged intentional misrepresentation by the Folkes. A brief outline of the evidence adduced at trial will serve to highlight this issue.

In June of 1974, the Folkes entered into a contract to purchase a house and property in Lake Zurich from the Bank of Rolling Meadows. In connection with this transaction, the firm of "Arnold's Sewer and Septic Service" checked the septic system on the property and issued a receipt which contained the following language:

"Pump septic tanks, check and inspect septic field at 8 Summit, Lake Zurich — $75.00. Septic okay, will pass any inspections. (Signed). Arnold."

The property had been vacant for some months at the time of this inspection.

In July of 1974, the Folkes entered into a contract to sell this property. Although this transaction was never consummated, due to the prospective purchasers' inability to procure financing, Edward Cremerius, who was then acting as the Folkes' attorney, wrote a letter to the Lake County Health Department requesting an inspection report. On August 5, 1974, the health department responded by sending Cremerius a letter which stated that "[a]s the house has been empty for sometime there was no indication of any septic effluent surfacing at this time," but that an inspection of April 15, 1974, had shown that "[a]t that time this particular system was failing and covered a big portion of the backyard." The letter concluded:

"Before this house can be sold, the septic system must be repaired or money put in escrow for the repair of the system or for hooking to the Lake Zurich Public Sewers. These repairs to be completed as soon as possible."

Clarence Folkes listed the property for sale with Kole Real Estate, a firm which employed him as its manager. Sometime near the end of August of 1974, a cooperating realtor showed the property to the Kuskas. The Kuskas later sent an offer to purchase the property, dated September 26, 1974, to the Folkes. In the margin of this offer, Mr. Kuska wrote, "Seller warrants the septic to be in good working order."

On or about the same time, Mr. Folkes sent a letter to the Lake County Health Department, stating that "the septic system has been checked and found in good working order"; a copy of the "Arnold's" statement was enclosed with the letter. Folkes also, through the realtor, sent the Kuskas a counteroffer which provided, "This property being sold as is," and eliminated any reference to the septic system. The counteroffer was presented to the Kuskas by the cooperating realtor; it was accompanied by a copy of the "Arnold's" statement, which had been given to the cooperating realtor by an "unknown individual from Kole Realty." The counteroffer contemplated an installment sale of the subject property, with articles of agreement for deed to be prepared by the sellers' attorney "in a form to be approved by the purchaser or his attorney." This counteroffer was accepted by the Kuskas.

On September 3, 1974, the Lake County Health Department sent a letter to the Folkes which stated that:

"* * * Although your letter from the Arnold Septic people stated that the septic system is working properly, it could be due to the house being vacant.

This Department feels that, when the house is occupied, a septic failure will again occur. On April 15, 1974, the entire backyard was covered with septic effluent. Before this house can be reoccupied, it must be connected to the sanitary sewers, as we feel there is not adequate room for repairs."

On October 29, 1974, the parties signed an "Installment Agreement for Warranty Deed," and an attached "Supplemental Agreement." The printed form installment agreement contained the following provision:

"* * * Seller warrants to purchaser that no notice from any city, village or other governmental authority of any dwelling code violation has heretofore been ...

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