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Inland Real Estate Corp. v. Christoph





APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR L. DUNNE, Judge, presiding.


Rehearing denied July 19, 1982.

Plaintiff Inland Real Estate Corporation appeals from the dismissal of its complaint for specific performance of a contract for the sale of two parcels of real estate. Defendants Robert Christoph and Bruce McLaren are real estate developers and controlling partners in defendant Partnership Concepts, a general partnership. The Foxboro defendants are limited partnerships formed by Partnership Concepts. The defendant bank is the land trustee of the property in question.

Defendants moved to dismiss the complaint pursuant to sections 45 and 48 of the Civil Practice Act. (Ill. Rev. Stat. 1979, ch. 110, pars. 45 and 48.) The section 45 motion stated that the alleged contract was subject to a condition precedent which had not been fulfilled. The section 48 motion recited that the Statute of Frauds barred specific performance of the contract, alleging that essential terms were absent from the writing. Defendants additionally maintained that the Statute of Frauds barred the action since the general partner, Christoph, lacked written authority to sell the property.

In dismissing the complaint under section 45, the trial court found that the parties intended not to be bound until the later execution of a formal contract.

A section 45 motion is limited to the face of the pleadings, and admits the truth of all well-pleaded facts therein. (O'Fallon Development Co. v. Ring (1967), 37 Ill.2d 84, 224 N.E.2d 782.) Apart from the complaint and attached exhibits no new matter presented by way of affidavit or otherwise may be considered. (Mutual Tobacco Co. v. Halpin (1953), 414 Ill. 226, 111 N.E.2d 155; Arthur Rubloff & Co. v. Leaf (1952), 347 Ill. App. 191, 106 N.E.2d 735.) In the present case, defendants must show that the parties intended a condition precedent to contract formation which did not occur. Defendants successfully argued in the trial court and urge here that the following handwritten portion of the printed and executed letter of intent attached as an exhibit to the complaint shows such a condition precedent:

"The contracts alone shall be the binding documents. (At which time this letter shall be null and void.)"

• 1 Whether a writing which contains all the essential terms of a contract but which contemplates the later execution of a formal document is itself a contract or merely negotiation depends on the intent of the parties. (Interway, Inc. v. Alagna (1980), 85 Ill. App.3d 1094, 407 N.E.2d 615.) Where the terms of the letter of intent are ambiguous, parol evidence is necessary to ascertain whether the parties intended to be then bound. (Huegel v. Sassaman (1979), 75 Ill. App.3d 414, 393 N.E.2d 1361.) In Terracom Development Group, Inc. v. Coleman Cable & Wire Co. (1977), 50 Ill. App.3d 739, 365 N.E.2d 1028, we held that the intent of the parties not to be bound was clear where the writing expressly stated that the agreement would not be binding until the later execution of a contract satisfactory to the parties. In Harris v. American General Finance Corp. (1977), 54 Ill. App.3d 835, 368 N.E.2d 1099, on the other hand, we held that a letter of intent constituted a binding contract despite the failure to execute a contemplated document where the defendants signed below the word "accepted."

• 2 In the present writing, an ambiguity exists as to the parties' intent. The clause "at which time this letter shall be null and void" evinces the intent to be then bound, for we fail to see the necessity for a provision nullifying or voiding a writing in the future if the parties never intended for that writing to be binding from its inception. In contrast, the clause "the contracts alone shall be * * * binding" evinces an intent not to be then bound. The juxtaposition of these conflicting statements clearly gives rise to a question of fact as to the parties' intent not properly resolved by a section 45 motion. (Chicago Investment Corp. v. Dolins (1981), 93 Ill. App.3d 971, 418 N.E.2d 59.) Accordingly, the trial court erred in dismissing the complaint on this basis. We therefore must consider an issue not reached by the trial court: whether the action is barred by the Statute of Frauds. Ill. Rev. Stat. 1979, ch. 59, par. 2.

Section 2 of that statute provides in pertinent part:

"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."

In this regard, defendants initially contend that specific performance of the letter of intent is precluded by the omission of essential terms from the writing.

• 3 Unlike a section 45 motion, a section 48 motion may be based on facts extraneous to the pleading and if "the grounds do not appear on the face of the pleading attacked the motion shall be supported by affidavit." (Ill. Rev. Stat. 1979, ch. 110, par. 48(1).) Like a section 45 motion, however, a section 48 motion concedes the truth of the allegations in the complaint. (Kirk v. Financial Security Life Insurance Co. (1977), 54 Ill. App.3d 192, 369 N.E.2d 340.) Unlike the question whether a condition precedent to contract formation exists, the issue whether a contract for sale of land is unenforceable due to absence of material terms from the writing is properly raised by a section 48 motion since such a contention does not contravene the allegations of the complaint. To be specifically enforceable, a contract for the sale of the land must contain in writing the essential contract terms such as the names of the vendor and vendee, the price, the terms and conditions of the sale. (Chicago Investment Corp. v. Dolins.) A contract which recites the aggregate purchase price of more than one parcel of land is specifically enforceable. Chicago Investment Corp. v. Dolins.

• 4-6 The present letter of intent does not lack material contract terms. The names of both the vendor and vendee are listed. Defendants maintain, however, that the omission of the following essential terms from the writing precludes specific performance: the condition that the sale of the property would be subject to the approval of a majority of the limited partners of each limited partnership; the allocation of the stated purchase price and cash down payment for both parcels of real estate between each parcel; and the amount of purchase money mortgage on each parcel. The first alleged omission cannot be resolved by way of motion. The complaint recites that a binding contract was formed between the parties upon the execution of the letter of intent. Whether there in fact existed a condition precedent to contract formation which was wholly omitted from the writing is a question of ultimate fact which must be ascertained by a trial on the merits and not by way of a motion to dismiss. The failure to allocate the price and cash down payment of each of the two parcels at issue does not render the contract indefinite since the total price and cash down payment are indicated. (Chicago Investment Corp. v. Dolins.) Nor does the absence of a provision in the letter of intent for a purchase money mortgage render it unenforceable. The writing clearly provides the details of the terms and conditions of the sale. In addition to the aggregate cash down payment and purchase price, the letter of intent states that existing mortgages will be assumed by the purchaser. The amounts of these mortgages and terms of payments are detailed. The balance owed on the property is to be paid by interest-only payments of 7 percent quarterly with the principal balance due January 4, 1986. The agreement's silence as to any mortgage simply precludes plaintiff from introducing any evidence as to a parol agreement pertaining to a mortgage. (Kendall v. Kendall (1978), 71 ...

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