APPEAL from the Circuit Court of Du Page County; the Hon.
CHARLES A. NORGLE, Judge, presiding.
MR. JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT:
The plaintiff, Robert A. Allabastro, appeals from a judgment which forfeited his rights under an installment contract for the purchase of real estate and permitted the seller to retain all monies paid as liquidated damages.
The direct subject of the forfeiture and of this litigation is a tract of land consisting of 37.432 acres located at the northwest corner of St. Charles Road and Gary Avenue in Du Page County. However, this property is part of the original transaction between the parties entered into on May 25, 1970. The agreement was entitled "Option and Real Estate Sale and Purchase Agreement" and related to the purchase of 125.725 acres known as the Modaff Farm. The title holder of the property was the Wheaton National Bank as trustee under its Trust No. 871. The beneficiaries of the trust were various members of the Modaff family represented by John Modaff.
The agreement provided for a 180-day option in consideration of the payment of $10,000. The option was exercised on July 11, 1972. Under the original agreement, plaintiff's payment for the option was to be applied against the total purchase price if the option were exercised; conveyance of the farm was contemplated to be in four separate "take-out parcels" at specified prices per acre for each to be paid by plaintiff at the time of conveyance; plaintiff was to pay interest on the unpaid principal at the rate of 8% per annum; $62,437.50 of the plaintiff's first payment which he made on November 29, 1972, was, under the agreement, a reduction of the principal balance but was not to be credited against the purchase price for the purpose of allowing conveyances to the plaintiff until the closing of the last take-out parcel. The original agreement also contained a clause which provided:
"5. Should the Purchaser not take out any parcel in any one calendar year, i.e. after the first take out, then and in that event, the Seller will keep, as liquidated damages, all purchase monies previously paid to Seller by Purchaser and this contract shall be null and void."
The closing date of the first take-out was originally set for June 13, 1972, and provided that at that time the purchaser would pay an additional $415,000 and the seller would convey title to what was described as "take-out parcel No. 1." The agreement further provided that on or before one year from the date of taking out parcel 1 that the purchaser would take out parcel 2 for the sum of $347,537.50; on or before two years after taking out parcel 1, the purchaser would pay $336,950 for the purchase of take-out parcel No. 3; and on or before three years from the date of payment of take-out parcel 1, he would pay the sum of $356,587.50 for the purchase of take-out parcel No. 4.
The closing date of the take-out of the first parcel was extended until November 29, 1972, pursuant to a written amendment. There followed a second amendment dated November 29, 1972, a third amendment dated December 31, 1973, a fourth amendment dated December 31, 1974, a fifth amendment dated April 14, 1975, and a sixth amendment was dated October 7, 1975. In general, the amendments changed the take-out parcels and closing dates on each of the take-outs, made various other changes as to interest and permitted a 6.093 acre take-out from the last parcel prior to the date specified. The last take-out parcel was for the purchase price established by the original contract at $12,500 per acre or a total of $467,900.
Prior to April 1, 1976, plaintiff had paid for and defendant had conveyed 88.293 acres in three separate take-out parcels; plaintiff had made all principal payments due prior to April 1, 1976; plaintiff had made all interest payments on the unpaid principal balance for the period prior to October 7, 1975; had paid the real estate taxes on the farm for the years 1972 through 1974; and had paid the sum of $62,437.50 to be applied against the purchase price of the last take-out parcel.
In addition, plaintiff has improved the adjoining land purchased in the first three installments and has installed two 10-inch sanitary sewers and a one-eighth-inch water main on the final installment parcel. He testified that he has spent in excess of $65,000 in improving the final installment property, but the record does not specifically show if and to what extent the utilities installed by plaintiff enhanced the value of the last take-out parcel. There is testimony in the record that approximately $37,000 was allocable to the 6.093-acre tract which was originally part of the last take-out parcel and the remaining approximately $20,000 allocable to over-sizing utilities for the purpose of serving the last take-out parcel. The seller also admits that a portion of the utilities may have been extended upon the last take-out parcel, but claims that the record is not clear as to the extent of such extension, and the trial court made no specific findings on these issues.
The plaintiff testified that in early March of 1976 he called Modaff and informed him that he had negotiated a $500,000 loan to pay off the complete remaining balance in cash. He further testified that in the latter half of March Modaff called and suggested the possibility of splitting the payments, one to be paid during the calendar year of 1976 and the second part to be made in the calendar year 1977. It is not disputed that the parties discussed the cash payment of approximately $253,000 to be paid in 1976 and the acceptance of a note for the balance, which was to be secured with a letter of credit from a federally chartered financial institution.
Defendant's attorney sent a letter to plaintiff dated April 26, 1976, recapping the conversation. Included in the letter was a form draft of a letter of credit, a copy of escrow instructions and a form of promissory note. The form of the letter of credit was stated to be in the amount of $213,589.04. It included a provision for the deposit of a $200,000 promissory note to accompany the draft on closing. The name of the issuing bank was left blank. The covering letter, however, advised Allabastro that Modaff had a "concern" over the lending limits of the State Bank of Lombard which Allabastro had indicated in his conversation, and would "prefer if possible" that the letter be issued by the correspondent bank, the Continental National Bank of Chicago. A draft of an escrow was also enclosed which included, among the other provisions, a reference to an irrevocable letter of credit "by the Continental Bank or the State Bank of Lombard." Modaff testified that he had not authorized the unsigned escrow in this form.
Allabastro testified that he consulted with the State Bank of Lombard and proceeded to secure participation financing from another bank. He said he procured a loan from the Commercial National Dank to pay off a prior loan to Lombard and said he secured a commitment from the Plaza Drive-In Bank to participate in the Lombard Bank's loan because the loan exceeded Lombard's legal limit. He further testified that he so advised Modaff in June of 1976 but that Modaff said he wanted to come in and discuss it. Allabastro testified that when Modaff came in on June 14 or 15 he made a call to an executive of the Lombard Bank to confirm the loan and that Modaff participated in the conversation through an amplified phone. According to Allabastro the officer testified that all was in readiness except the receipt of the additional approval from the participating bank. He said that Modaff did not raise any objection and in fact said that he was glad that the transaction was coming to a conclusion.
Allabastro testified that at a further date, in the latter half of June or the first part of August, Modaff took the position that he would not accept a letter of credit from the Lombard Bank and the participating bank because he did not feel the banks were sufficiently large enough to honor the commitments and that the only acceptable institutions would be the Continental or the First National Bank of Chicago. Allabastro also testified that on previous take-outs Modaff had accepted the cash on letters of credit drawn on the State Bank of Clearing. Modaff testified that he first suggested that they use a letter of credit issued by the First National Bank of Elgin, which was Modaff's employer, but found that because of his relationship with the bank the tax benefit would be destroyed; that Allabastro then offered a letter of credit from the Plaza Drive-In Bank in Norridge but that he replied that it would not be acceptable and that he wanted letters of credit issued by major banks in Chicago to satisfy his family as to the risk. He said he named the Continental, the First National Bank of Chicago, the Northern Trust and the Harris Trust as acceptable. Modaff testified that probably in mid or late May, Allabastro called and said he wasn't able to accomplish this, that he then told Allabastro that he would have to go ahead with the cash transaction, and that Allabastro said that he would do so.
Modaff also testified to a further conversation with Allabastro in which he advised the purchaser that the letter shown to him was not a letter of credit from the Plaza Bank but merely an expression of intent to participate in the loan by issuing a letter of credit directed to the State Bank of Lombard. He confirmed the conversation with the officer of the Lombard Bank as testified to by Allabastro, but said that the officer merely said they were "arranging" a loan. He also testified to a further conversation in which he claimed that plaintiff suggested that the Modaff family participate with the Lombard Bank but that this was not acceptable. He said that in further conversations with Allabastro in July, August and early September Allabastro promised to get the cash payment. He also said that on the 29th of August he told Allabastro on the telephone that there was to be a family reunion of the 13 beneficiaries of the land trust to discuss what would be done. He testified that Allabastro told him that he didn't have all the money at that point. And after the meeting, in early September, Modaff said he told Allabastro that the original contract ...