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Frey Corp. v. Gilldorn Mortgage Midwest





Appeal from the Circuit Court of Peoria County; the Hon. Calvin R. Stone, Judge, presiding.


Plaintiffs, Frey Corporation and Sinnco, Inc., brought a complaint on November 14, 1983, in the circuit court of Peoria County, seeking to recover damages for the alleged breach of a contractual duty owed by defendant, Gilldorn Mortgage Midwest Corporation, successor in interest to Percy Wilson Mortgage and Finance Corporation. Gilldorn, through its attorney, filed a special and limited appearance and moved to transfer the cause for proper venue to the circuit court of Cook County. The motion was denied, and defendants petitioned for leave to appeal in this court. (87 Ill.2d R. 306(a)(1)(iv).) We granted defendant's petition and now affirm the trial court's denial of the motion to transfer.

Plaintiff Frey, through its president Brian Frey, retained M.E. Hoffman Company in 1979 to act as the mortgage banker/broker for a construction project in Peoria known as Lexington West Apartments. Hoffman was a Springfield (Sangamon County) based firm. Its vice-president, Marion Ring, called upon Frey at Frey's offices in Peoria and formalized their relationship with respect to the project on April 20, 1979, when Ring accepted Frey's check for $4,509, representing the application fee for obtaining a "Firm Commitment for Insurance of Advances" from the Department of Housing and Urban Development. The firm commitment was to be secured and extended, as necessary, until work on the project began. The HUD office serving the Peoria area is located in Chicago, Cook County. On November 21, 1979, HUD approved Hoffman's application and issued to Hoffman a firm commitment in the amount of $1,496,400 for funding the Lexington West project. The contract for the commitment as it appears in the record before us was amended on December 5, 1979, and March 7, 1980. It lists the sponsor for the project as "Sinn, Inc. et al" of Peoria.

Subsequently, on June 29, 1981, Hoffman entered into an agreement with Percy Wilson Mortgage and Finance Corporation in which Hoffman assigned its interests in the Lexington West project to Percy Wilson. It appears from the record before us that the assignment document was brought by Ring to Peoria for plaintiff's signature on the consent portion of the form. Also while in Peoria, Ring introduced plaintiffs to Patricia Rose, a senior officer of Percy Wilson. The assignment was consented to in Peoria by Ronald Sinn for "Sinn, Inc.," as sponsor, on July 2, and in Chicago by the Federal Housing Administration on July 22, 1981.

Thereafter, plaintiffs paid Percy Wilson a nonrefundable commitment fee in the amount of $37,038 to secure the commitment previously obtained by Hoffman.

On September 29, 1982, the firm commitment expired, allegedly as a result of Percy Wilson's breach of a duty to secure timely extension or to take reasonable steps to re-open the expired firm commitment. In addition to the loss of fees paid to the mortgage bankers/brokers, plaintiffs allege substantial damages for loss of syndication fees and other costs related to the proposed construction project.

In this appeal, Gilldorn argues initially that the trial court erred in denying its transfer motion by applying a forum non conveniens analysis when the issue was, instead, one of proper venue. The record before us contains no transcript of proceedings or other common law document to substantiate defendant's position that the trial court was confused about the theory upon which defendant's motion to transfer was based. In fact, the record on appeal directly refutes the defendant's contention. The sole document reflecting the trial court's consideration of the issue is the court's order of March 1984, denying the defendant's motion. That order states as follows:

"The Court previously heard and took under advisement the defendant's motion to transfer to proper venue. The Court is now ready to announce its decision.

It is order that defendant's motion to transfer to proper venue be and is hereby denied." (Emphasis added.)

The balance of defendant's arguments on appeal challenge the correctness of the trial court's order on grounds that the transaction out of which plaintiff's cause of action arose occurred exclusively or primarily in Cook County, rather than in Peoria County. Plaintiffs take the position that while proper venue could lie in Cook County, venue is also proper in Peoria County because a significant part of the transaction out of which their cause of action arose occurred there.

• 1 The issue before us requires interpretation of the Illinois venue statute (Ill. Rev. Stat. 1983, ch. 110, par. 2-101) in terms of the operative facts of this case. That statute, in relevant part, states as follows:

"Except as otherwise provided in this Act, every action must be commenced (1) in the county of residence of any defendant who is joined in good faith and with probable cause for the purpose of obtaining a judgment against him or her and not solely for the purpose of fixing venue in that county, or (2) in the county in which the transaction or some part thereof occurred out of which the cause of action arose."

Since plaintiffs do not dispute defendant's contention that it and its predecessor in interest, Percy Wilson, resided only in Chicago, the relevant inquiry focuses upon where the "transaction or some part thereof occurred out of which the cause of action arose."

Defendant first advances its position on the theory of novation, contending that the only transaction out of which the contract at the heart of this cause of action arose was the assignment of commitment agreement whereby defendant's predecessor in interest accepted Hoffman's assignment in Chicago, and plaintiffs consented to it, thereby working a novation and extinguishing the prior agreements between Hoffman and plaintiffs. The Federal Housing Administration's later consent to the assignment in ...

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