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Tantillo v. Janus

OPINION FILED JULY 25, 1980.

ANTHONY J. TANTILLO ET AL., PLAINTIFFS AND COUNTERDEFENDANTS-APPELLEES,

v.

EDWARD J. JANUS ET AL., DEFENDANTS AND COUNTERPLAINTIFFS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. DONALD J. O'BRIEN, Judge, presiding.

MR. JUSTICE MEJDA DELIVERED THE OPINION OF THE COURT:

Plaintiffs brought this action for specific performance of a real estate contract for the purchase of a single-family residence owned by defendants. Defendants filed a counterclaim seeking rescission of the contract and asking that title to the property be cleared of any claim by plaintiffs. Following a bench trial, the court found in favor of plaintiffs on both the complaint and counterclaim and ordered specific performance of the contract. On appeal, defendants contend that: (1) plaintiffs are not entitled to specific performance because they failed to redeem their promissory note and obtain a mortgage within the time specified in the contract; (2) plaintiffs did not establish that they were ready, willing and able to perform; and (3) specific performance is not equitable under the facts of the case. We affirm. The pertinent facts follow.

Defendants are owners of a single-family home located in Chicago. Leslie Burton, a licensed real estate broker, learned that defendants were contemplating the sale of their home and requested permission to show it to plaintiffs. After viewing the home, plaintiffs offered to buy it for $98,500. Defendants accepted and the parties signed a real estate sale contract dated June 24, 1976.

The contract provided, inter alia, that plaintiffs had paid $9800 (sic) by a promissory note which was to become a cashier's check within three days. The promissory note, in the amount of $9850, or 10 percent of the purchase price, was dated June 24, 1976, and bore a due date of June 28. The earnest money, in the form of the note and, later, the check, was to be held by Burton's real estate office. A mortgage contingency clause allowed plaintiffs to avoid the contract if they were unable to procure a $19,000 mortgage commitment within 30 days and so notified defendants in writing. Defendants, however, retained the option to keep the contract in effect if, within 30 days of receiving notice from plaintiffs, defendants either secured a mortgage commitment for plaintiffs or agreed to accept a purchase money mortgage. The contract also provided that time was of the essence of the contract.

Plaintiffs' mortgage application was approved by Peerless Federal Savings and Loan Association on August 13, 1976, and plaintiffs signed the acceptance of the terms of the loan on August 27. According to the records on file at Peerless, plaintiffs' first documented contact with them was made on August 3, 1976. Plaintiffs' mortgage application was dated August 5, although plaintiff Anthony Tantillo testified that he had contacted Peerless within a few days after signing the contract and had received a verbal mortgage commitment from them some time during July.

On September 8, 1976, Evelyn Janus, one of the defendants, asked plaintiffs to extend the closing date from September 23, 1976, to October 26, because of her health problems. Plaintiffs agreed and all five parties to the contract signed a contract modification prepared by defendants' attorney. The contract was modified two more times, each time postponing the closing date, first to November 30, 1976, then to February 28, 1977. The parties again signed contract modifications which were prepared by defendants' attorney. The last modification was made on November 22, 1976. According to Anthony Tantillo, all three extensions were made at the request of Evelyn Janus, although she testified that she asked only for the first and that Tantillo had initiated the latter two extensions.

On December 2, 1976, defendants' attorney sent a letter to Burton, their broker, informing him that he represented defendants and inquiring whether the promissory note had ever been redeemed. Plaintiffs had not yet redeemed the note as provided in the contract, and Tantillo testified that on the occasions Burton had asked him about the earnest money he had told him the cash would be there when needed and expressed his belief that the note was as good as cash. Tantillo also testified that Burton had mentioned the earnest money in late June or early July but first asked for it toward the end of November. Burton testified that he had asked Tantillo for the earnest money several times, as early as three days after the contract was signed, and that Tantillo reassured him and told him he would get the money, although he never did. Burton further testified that he did not tell defendants that plaintiffs had not redeemed the note.

On December 6, 1976, defendants' attorney sent another letter to Burton, asking him to confirm that plaintiffs had deposited the promissory note with Burton on June 24, 1976, and that it had been redeemed. The attorney received no written response from Burton; however, the attorney testified that he had lunch with Burton on December 13 or 16 and that Burton then showed him a copy of plaintiffs' check for $9850. Defendants' attorney again wrote to Burton on December 22, once again asking Burton to inform him, in writing, of the status of the earnest money.

On January 5, 1977, defendants' attorney sent Burton a letter notifying him that defendants had elected to declare the contract null and void because of plaintiffs' failure to redeem the promissory note as provided in the contract. A copy of the letter was also sent to plaintiffs' attorney, who responded in a letter, dated January 7, which stated that plaintiffs had complied with the terms of the contract and remained ready, willing and able to perform. He also asked defendants' attorney to prepare the necessary documents and arrange the closing. In a letter to plaintiffs' attorney on January 14, defendants' attorney restated his clients' cancellation of the contract and accordingly refused to set a closing for the sale.

The trial court found that the extensions of the contract were requested by defendants, that plaintiffs had always indicated their readiness to perform, that the mortgage contingency was for plaintiffs' benefit as buyers, and that the failure to redeem the promissory note within three days was not a material breach. The court found that plaintiffs had proved the allegations of their complaint, denied relief to defendants on their counterclaim and ordered specific performance of the contract. Defendants have appealed.

OPINION

Generally, a party will be entitled to specific performance of a contract for the conveyance of real estate only upon establishing either that he has performed according to the terms of the contract or that he was ready, willing and able to perform but was prevented, and thus excused, from doing so by the acts of the other party. H.M.R., Inc. v. Boeckenhauer (1962), 24 Ill.2d 65, 68, 179 N.E.2d 613, 615; Kingsley v. Roeder (1954), 2 Ill.2d 131, 117 N.E.2d 82.

Defendants first contend that plaintiffs are not entitled to specific performance because they were not in compliance with the terms of the contract. Specifically, defendants point to the contract provisions, pertaining to depositing the earnest money and procuring a mortgage, which required that plaintiffs redeem their promissory note and obtain financing within stated periods of time. Plaintiffs redeemed the note and obtained a mortgage commitment after the times specified in the contract and defendants accordingly maintain that plaintiffs' actions constituted a material breach of the contract's "time is of the essence" provision. We conclude, however, that defendants have waived their right to enforce the time-is-of-the-essence clause and that plaintiffs have performed according to the contract.

Defendants rely on Horan v. Blowitz (1958), 13 Ill.2d 126, 148 N.E.2d 445, in support of their argument that the earnest money and mortgage provisions are material and that plaintiffs' failure to perform within the time specified is consequently a material breach. In Horan, the purchaser was to deposit $2000 earnest money and pay the balance of the purchase price at the time of conveyance. However, the purchaser deposited only $500 and refused to pay the balance of the earnest money until closing. The purchaser had also failed to obtain financing within 15 days as provided in the contract. Specific performance was nevertheless refused to the seller, the court finding that both parties were in default on the stipulated date in a contract in which time was of the essence. Horan ...


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