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Amato v. Edmonds

OPINION FILED AUGUST 12, 1980.

BENNIE AMATO ET AL., PLAINTIFFS-APPELLEES,

v.

HENDERSON EDMONDS, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Knox County; the Hon. WILLIAM K. RICHARDSON, Judge, presiding.

MR. JUSTICE BARRY DELIVERED THE OPINION OF THE COURT:

The only issue raised in this case is whether the Circuit Court of Knox County erred in granting the plaintiff contract sellers' motion for summary judgment in a forcible entry and detainer action brought against the defendant contract buyer when the defendant raised by way of counterclaim defenses relating to the plaintiffs' right to possession. We believe that it did err, and as a consequence we reverse and remand.

The facts of this case are relatively simple, and no detailed recitation of them is necessary. On August 25, 1977, the plaintiffs, Bennie and Clara Amato, entered into a contract for the installment sale of the Custer Hotel in Galesburg, Illinois, with the defendant purchaser, Henderson Edmonds. The purchase price of the hotel was $500,000. Under the terms of the installment sale contract, Edmonds was to make a $50,000 down payment, and pay the balance of the purchase price in monthly installments of $6,000. Accordingly, during the next twelve months Edmonds made monthly payments totaling $72,000 to the contract sellers. He also lived in and operated the hotel during this time.

In September of 1978 Edmonds failed to make the required $6,000 installment. Consequently, on October 23, 1978, the Amatos brought a forcible entry and detainer action against the defendant. Two days later, the plaintiff contract sellers filed a separate suit to have the hotel placed in receivership during the pendency of the forcible entry and detainer action. On October 31, the Circuit Court of Knox County entered an order appointing a receiver to operate the hotel during the pendency of plaintiffs' action to regain possession.

In response to the plaintiffs' forcible entry and detainer action, the defendant filed a motion to dismiss. This motion was denied. The defendant then filed an answer which included an affirmative defense and a five-count counterclaim. In his counterclaim the defendant sought either rescission or reformation of the installment sale contract on grounds which he summarized in his brief thusly:

"1. That plaintiffs made numerous misrepresentaions at the time of the formation of the contract so that the contract was unenforceable and invalid;

2. That plaintiffs never intended to sell the Hotel but entered into a deliberate course of conduct designed to interfere with the Hotel's operation in an effort to make defendant default on the contract;

3. That the contract terms were unconscionable;

4. That the actual value of the Hotel was so much less than the price stated in the contract, that the contract was void as based upon mutual mistake.

5. That the contract stated that plaintiffs had not received notice of dwelling code violations when in fact they had and that the sellers' failure to give notice pursuant to Chapter 29, § 8.22 of the Ill. Rev. Stat. rendered the Agreement for Deed voidable."

Subsequently, the plaintiffs filed a reply to the defendant's affirmative defense and an answer to the defendant's counterclaim, on which no ruling has been obtained.

In March 1979, the plaintiffs moved for summary judgment in their forcible entry and detainer action. The defendant responded to the plaintiffs' motion, and oral arguments on the motion were heard. On August 2, 1979, the trial court granted the plaintiffs' motion for summary judgment and ordered that a writ of restitution issue. It is from this judgment that the defendant now appeals.

The principal case relied upon by the defendant in support of his position that the plaintiffs' motion for summary judgment should not have been granted is Rosewood Corp. v. Fisher (1970), 46 Ill.2d 249, 263 N.E.2d 833. Rosewood involved a number of contract purchasers who eventually became dissatisfied with the terms of the installment contracts they had entered into with the plaintiff contract sellers. Consequently, the defendant purchasers ceased making installment payments. The plaintiffs then began forcible entry and detainer proceedings against the defendants, who interposed "by way of answer, counterclaim or affirmative defense, various matters going to the validity and enforceability of the contracts upon which plaintiffs based their claim of a right to possession." (46 Ill.2d 249, 255, 263 N.E.2d 833, 837.) The defendants alleged, inter alia, that the installment contracts were unconscionable, usurious, unenforceable, extracted and induced by fraud, and violative of their civil and various constitutional rights. On the plaintiffs' motion, however, the circuit court struck the defendants' defensive pleadings on the ground that they were not germane to the forcible entry and detainer action (Ill. Rev. Stat. 1967, ch. 57, par. 5). On appeal, the Illinois Supreme Court reversed and made the following statements highly pertinent to the case at bar:

"It is our opinion that the defenses going to the validity and enforceability of the contracts relied upon by the plaintiffs were germane to the distinctive purpose of the forcible entry and detainer actions and were improperly stricken. That purpose, to rrepeat, is to restore possession to one who is entitled to the right of possession. `Germane' has been judicially defined as meaning `closely allied,' and is further defined in Webster's New Twentieth Century Dictionary, p. 767, as meaning: closely related; closely connected; relevant; pertinent; appropriate.' Where as here, the right to possession a plaintiff seeks to assert has its source in an installment contract for the purchase of real estate by the defendant, we believe it must necessarily follow that matters which go to the validity and enforciblity of that contract are germane, or relevant, to a determination of the right to possession. This is particularly true for two reasons. First, because a contract buyer becomes the equitable owner of the property upon execution of an installment contract, (Shay v. Penrose, 25 Ill.2d 447, 449,) and thus by such an action may be stripped of his equitable ownership as well as possession; second, the contract purchaser is faced not only with the loss of possession, but, unlike a tenant, trespasser or squatter, is likewise faced with the loss of the equity accumulated by payments made on the contract. Here, for example, the Fishers had paid approximately $10,000 toward satisfaction of their total contract obligations. On the other side of the coin, a contract seller claiming and seeking to enforce a claimed right of possession should not be permitted to prevail on the basis of such contract so long as its validity and enforceability is questionable under the law. Should a contract purchaser not be permitted to defend upon the very contract upon which the ...


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