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Cosmopolitan Nat'l Bk. of Chicago v. Kobialka

OPINION FILED MAY 29, 1980.

THE COSMOPOLITAN NATIONAL BANK OF CHICAGO, TRUSTEE, ET AL., PLAINTIFFS AND COUNTERDEFENDANTS-APPELLEES,

v.

MICHAEL H. KOBIALKA ET AL., DEFENDANTS AND COUNTERPLAINTIFFS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. GEORGE J. SCHALLER, Judge, presiding.

MR. JUSTICE JIGANTI DELIVERED THE OPINION OF THE COURT:

The counterdefendants, Cosmopolitan National Bank of Chicago, as trustee under Trust No. 16477 (Cosmopolitan), and Morry Kogan and Fred Kogan, the beneficiaries of that trust, brought suit in the circuit court of Cook County to remove a cloud from the title to the apartment building which formed the res of the trust. The cloud consisted of an affidavit which had been filed in the recorder's office by the counterplaintiffs, Michael H. Kobialka and Joseph V. Farago. Kobialka and Farago answered the complaint and filed a counterclaim for specific performance of a contract of sale for the building.

Cosmopolitan and the beneficiaries filed a motion under section 45 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 45) to strike the answer to the complaint and for judgment on the complaint. They also filed a motion under section 48 (Ill. Rev. Stat. 1977, ch. 110, par. 48) to dismiss the counterclaim. The motion to dismiss alleged that the counterclaim was barred by the Statute of Frauds (Ill. Rev. Stat. 1977, ch. 59, par. 1 et seq.) because the Kogans did not sign the contract themselves and because they did not authorize anyone in writing to do so as their agent. The trial court granted the motions, removing the cloud from the title and dismissing the counterclaim for specific performance. Kobialka and Farago appeal from the order dismissing their counterclaim.

On appeal, Kobialka and Farago argue the Statute of Frauds cannot be raised as a defense because (1) the nature of the Kogans' interest, as beneficiaries, is personalty and the statute applies only to real property; (2) the Kogans ratified the actions of the alleged agent who executed the contract; and (3) the Kogans are estopped from denying the authority of their alleged agent to execute the sales contract.

The real estate sales contract which the counterplaintiffs seek to have specifically enforced is dated August 19, 1977. It is signed by Kobialka as purchaser. There are two spaces for the Seller's signatures. The first space reads "Cosmopolitan Bank & Trust U/T/A #16477" and the second space, directly below the first, is signed "By Michael Brown agent." The Kogans' names do not appear anywhere on the document. The counterclaim alleges that Brown is the Kogans' attorney. Additional facts will be related in connection with the ratification and estoppel issues.

Kobialka and Farago initially argue the Statute of Frauds does not apply here because the nature of the Kogans' interest is personalty while the statute refers to a contract for the sale of land. No authority is cited for his proposition.

The applicable section of the statute provides:

"No action shall be brought to charge any person upon any contract for the sale of lands * * * unless such contract or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized in writing, signed by such party." (Emphasis added.) Ill. Rev. Stat. 1977, ch. 59, par. 2.

• 1, 2 The statute and the case law make clear that where a contract for the sale of land is signed by an agent, the agent's authority to do must be in writing. (Lipkin v. Koren (1946), 392 Ill. 400, 64 N.E.2d 890; Leach v. Hazel (1947), 398 Ill. 33, 74 N.E.2d 797.) The record does not contain a writing authorizing Brown to sign the contract and the Kogans could thus validly raise the Statute of Frauds as a defense to its enforceability. Furthermore, although here the subject of the contract is property held in a land trust, the contract contemplated the conveyance of a deed to that real estate. The fact that the Kogans' beneficial interest is considered personalty does not bar application of the Statute of Frauds.

Kobialka and Farago next argue the Statute of Frauds does not apply when an attorney executes the contract as agent for the beneficiaries and his conduct is subsequently ratified. In support of their contention that the agent's conduct was ratified, Kobialka and Farago rely on various letters and contracts which are contained in the record and upon the contract which they seek to have specifically enforced.

On October 6, 1977, Donald Hanson, attorney for Kobialka and Farago, sent a letter to Michael Brown. The letter indicates that the August 19, 1977, contract would be cancelled if the earnest money was returned and if the trustee executed a right of first refusal to Kobialka.

A letter from Brown to Hanson, dated October 11, 1977, states a check is enclosed for the earnest money and that the letter shall stand as cancellation of the August 19 contract. It also states that if Hanson prepares the documents concerning the right of first refusal Brown would "cause them to be executed by my clients."

The record also contains a written direction to Cosmopolitan, as trustee, dated November 15, 1977, instructing the bank to execute a "Grant of Right of First Refusal" to Kobialka. This document is signed by the Kogans. The documents relevant to the right of first refusal apparently were never executed.

Based on these letters and documents, Kobialka and Farago argue the conduct of the Kogans in directing the execution of documents promised by Brown, their agent, ratified ...


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