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Mcmillan v. Ingolia

OPINION FILED AUGUST 13, 1980.

GUY C. MCMILLAN, JR., ET AL., PLAINTIFFS-APPELLEES,

v.

DUANE INGOLIA ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Peoria County; the Hon. RICHARD E. EAGLETON, Judge, presiding.

MR. JUSTICE BARRY DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 24, 1980.

This is on appeal from an order of the Circuit Court of Peoria County granting to the plaintiffs specific performance of a repurchase option contained in a deed. For the reasons stated hereafter, we reverse.

Early in 1960, the Shell Oil Company decided to expand its service station located at the corner of Western and Laurel Avenues in Peoria. Consequently, it became interested in purchasing the home of defendants Duane and Ann Ruth Ingolia, which was located next to and south of the service station. Ron Hall of Shell Oil and Frank Schlehuber of Commercial National Realty approached the defendants about the sale of their property to Shell Oil, and initially met with no success. However, the Ingolias eventually did agree to sell their Western Avenue property to Shell Oil for $16,500. As part of the transaction, the Ingolias were to purchase from Shell Oil an adjoining parcel of land, as improved for their residence, on Laurel Avenue (the Laurel Avenue property, which is at the center of this controversy) for $9,000. Shell accordingly obtained options on both the Western Avenue property and the Laurel Avenue property. Subsequently, both of these options to purchase were assigned to plaintiff, Guy McMillan.

Following the exercise of the option to purchase the Laurel Avenue property, the plaintiff grantors conveyed the Laurel Avenue property to the Ingolias on June 29, 1961. The deed conveying this property contained the following provision:

"Reserving, however, to the Grantors or either of them, or to their successors in interest, that is the owners from time to time of the described real estate, the right to purchase the property herein conveyed to Grantees at any time within five (5) years from today's date, for the sum of $10,000.00, and thereafter the right to purchase at any time within 15-1/2 years from today's date for the price of $11,000.00; said purchase prices to adjust for taxes and special assessments, if any, to the date of purchase."

Representing the Ingolias in the real estate transaction was attorney Edward O'Donnell. Prior to the closing, O'Donnell received from McMillan's attorney, Joseph Sudow, the proposed deed and an accompanying letter indicating that in the deed plaintiffs were "reserving to the McMillans and their successors in interest the right to repurchase." Sudow further stated in his letter to O'Donnell that if the deed met with his approval, he would have it executed by the grantors and ready for exchange at the closing. No evidence was presented during the trial on plaintiffs' second amended complaint for specific performance either proving or disproving that O'Donnell had received and read Sudow's letter. O'Donnell died before the trial began. However, it appears that O'Donnell was present at the closing, and accepted the deed on the Ingolias behalf. Neither Duane nor Ann Ruth Ingolia attended the closing.

After the closing, the deed was delivered to the Peoria Title Company, which recorded it. The recorded deed was then returned to the Ingolias, who placed it in a safety deposit box. Although the deed remained in the Ingolia's safety deposit box until August of 1976, neither of the Ingolias had read it prior to that time.

On November 30, 1976, nearly 15 1/2 years after the sale of the Laurel Avenue property to the Ingolias, the McMillans sent letters to both Duane and Ann Ruth Ingolia indicating their desire to exercise the repurchase option contained in the deed. The Ingolias refused to sell for the $11,000 offered by the McMillans pursuant to the terms of the repurchase option, and as a result the McMillans brought suit for specific performance.

At the trial, the Ingolias testified that it was not until August of 1976, when the deed was examined in conjunction with divorce proceedings, that they had knowledge of the repurchase option. They further testified that prior to the closing they had no discussion with anyone concerning an option to repurchase, nor would they have agreed to buy the property had they known of it. In addition, Mrs. Ingolia testified that in her opinion the Laurel Avenue property was worth $35,700. On May 21, 1979, an order granting the plaintiffs specific performance of the repurchase option was entered. It is from this order that the defendants appeal.

Basically, two issues are raised by the defendants for our consideration. First, have the plaintiff McMillans proven the essential elements of an oral contract (i.e., the repurchase option) by clear and convincing evidence; and second, if the answer to the first question is in the affirmative, does the recitation of the terms of the repurchase option in the warranty deed conveying title in the Laurel Avenue property to the defendants satisfy the requirements of the Statute of Frauds (Ill. Rev. Stat. 1977, ch. 59, par. 2).

• 1 "An option, originally is neither a sale nor an agreement to sell, but is merely a contract by which the owner of property agrees with another person that he shall have the right to purchase the former's property at a fixed price within a certain period." (Barnett v. Meisterling (1927), 327 Ill. 564, 570, 158 N.E. 806, 808.) Because an option is a contract, all of the elements necessary for the creation of a contract must exist.

• 2 The plaintiffs, relying upon the case of Moehling v. Pierce (1954), 3 Ill.2d 418, 121 N.E.2d 735, take the position that the warranty deed constitutes the contract and that consequently the existence of a contract to repurchase apart from the deed need not be proven. We find Moehling to be factually distinguishable and inapposite to the instant case. In Moehling, the Illinois Supreme Court affirmed a decree of specific performance compelling conveyance of a parcel of land pursuant to a repurchase option contained in a deed. However, unlike the case at bar, in Moehling a real estate sale contract executed prior to the execution of the deed contained the repurchase provisions. In short, in Moehling, there was a written contract providing for the repurchase option. In the instant case, there is no other writing containing the necessary terms of the option contract outside of the deed. The repurchase agreement was essentially parol, and consequently the plaintiffs have the burden of proving all of the essential elements of the contract by clear and convincing evidence. "[T]o justify a decree of specific performance of an oral contract to convey or devise real estate, the proof of the contract must be clear, conclusive, and so convincing as to leave no doubt in the mind of the court * * *." Moehling v. W.E. O'Neil Construction Co. (1960), 20 Ill.2d 255, 265, 170 N.E.2d 100, 106.

The two elements the defendants contend are lacking are mutuality of assent and consideration. With regard to the latter, the deed recites that the consideration for the conveyance to be "one dollar and other good and valuable consideration in hand paid." We find this nominal consideration, given in exchange for both the conveyance and the promise to keep open for 15 1/2 years an offer to repurchase, to be sufficient. "[I]f a bargain was intended, the mere fact that the price exacted for the promise ...


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