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Harrington v. Kay

OPINION FILED SEPTEMBER 6, 1985.

DONNA

v.

HARRINGTON ET AL., PLAINTIFFS-APPELLEES,

v.

MICKEY KAY, A/K/A ROSE KAGAN ET AL., DEFENDANTS (KENNETH R. STEVENS, DEFENDANT-APPELLANT).



Appeal from the Circuit Court of Cook County; the Hon. Richard L. Curry, Judge, presiding.

JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:

Plaintiffs Donna Harrington and James Harrington brought this action for specific performance of a real estate contract for the sale of a multiple-unit apartment building to defendant-appellant Kenneth R. Stevens. Following trial, the circuit court entered judgment for plaintiff in the amount of $39,441.48.

Defendant Stevens has appealed, contending: (1) plaintiffs were not entitled to specific performance because they failed to establish that the sellers had tendered certain documents to Stevens as required by the contract; (2) the court erred in finding that defendant had waived his rights under a contractual provision in which the sellers warranted that they had received no notice of building code violations; (3) even if Stevens did waive strict compliance with the building code violation warranty he was still entitled to setoffs for the costs of curing these violations; (4) the trial court erred in finding that there had not been a subsequent substitution of contract; (5) the plaintiffs' claim should have been barred by laches; (6) it was error to award prejudgment interest to the plaintiffs.

We affirm all but the prejudgment interest portion of the judgment, and remand the cause for an award of prejudgment interest based on simple interest rather than compound interest.

Plaintiff Donna Harrington and defendant Mickey Kay each owned a 50% beneficial interest in a multiple-unit apartment building held in a land trust by defendant Lawndale Trust & Savings Bank and located at 4878 North Magnolia Avenue in Chicago. Plaintiff James Harrington, Donna's father, was the building's manager and Mickey Kay's business partner. It is undisputed that Donna Harrington, Kay, and Stevens entered into a written agreement for Stevens to purchase the property for an effective price of $60,000 to be paid in monthly installments of $450 to be divided equally by Donna and Kay. Plaintiffs contended at trial that, although Stevens received an assignment of beneficial interest from Donna and took title and possession of the building, he never paid Donna any money. Stevens testified that because he discovered numerous building code violations in the building after signing the contract he orally renegotiated separate agreements with Donna and Kay, paying $5,000 in cash to Donna in return for the assignment of her beneficial interest to him. The trial court did not believe Stevens' testimony and awarded judgment on the contract to Donna. We will summarize any additional pertinent testimony and evidence as required in our discussion of appellant Stevens' arguments on appeal.

• 1 Stevens contends that plaintiffs are not entitled to specific performance because they failed to tender certain papers which Stevens contends were necessary to give him full ownership of the property. The written contract between the parties specified that the following documents were to be transferred: (1) a bill of sale for items such as screens, refrigerators and ranges contained in the premises; (2) a warranty deed or trustee's deed conveying clear title; (3) an affidavit of title; (4) either a duplicate certificate of title or a title insurance policy. however, on appeal the only specific documents that Stevens contends were not given to him are the bill of sale and a title insurance policy. Stevens has cited no authority suggesting that the omission of these documents affected his title. More importantly, Stevens' conduct following execution of the contract clearly establishes his waiver of this provision.

Parties to a contract have the power to waive provisions placed in the contract for their benefit. (Lempera v. Karner (1979), 79 Ill. App.3d 221, 223, 398 N.E.2d 224, 225.) Such a waiver may be established by conduct indicating that strict compliance with the contractual provision will not be required. (Lempera v. Karner (1979), 79 Ill. App.3d 221, 223, 398 N.E.2d 224, 225.) Additionally, as held in Kane v. American National Bank & Trust Co. (1974), 21 Ill. App.3d 1046, 1052, 316 N.E.2d 177, 182, an implied waiver of a legal right may arise when the conduct of the person against whom the waiver is asserted is inconsistent with any other intention than to waive it.

Shortly after this contract was signed, Stevens appeared in housing court and advised the court that he had assumed ownership of the building. In the trial court in this proceeding Stevens testified that he was the sole owner of the building and had invested about three-quarters of a million dollars in its repair and renovation. We find that these actions and statements by Stevens provide ample support for the trial court's determination that Stevens had waived all contractual provisions concerning delivery of documents relating to title.

Stevens also contends that the trial court erred in holding that Stevens had waived a contractual provision in which the sellers warranted that they had received no notice of any building code violations existing prior to the execution of the contract.

At trial Kenneth Stevens, who testified that he was the sole owner of the building, denied that James Harrington ever told him about code violations before the contract was signed on June 14. His first meeting with Harrington was in the building's office and lasted only 10 minutes. He testified that he did not recall looking at the building that long, although he did note the building's condition "wasn't good." Indeed, he believed it to be the worst building on the block. Stevens recalled next looking at the building at the end of May 1975. He inspected three apartments and three of the common areas for about 20 minutes, and also walked around the front of the building. Stevens noticed that the paint needed work, there was some missing glass, the carpeting was torn, and there were plaster problems, but at this time he was ready to buy the building.

According to Stevens, a tentative deal for $180,000 (actually $60,000 after allowing for the assumption of two mortgages) was struck on June 7. After some modifications were made, Stevens had a revised contract drafted and on June 14 gave it to James Harrington to have Donna sign it. At that time Mickey Kay signed the contract. Stevens testified that to this point James had never said anything about building code violations. However, he also testified that when he inspected the building before buying James Harrington affirmatively told him there were no building code violations.

Stevens testified that on June 16 or 17 he learned of the building code violations. He spoke to James by phone, who told him he (Harrington) had another buyer and Stevens had lost a good deal. But subsequently on June 26, at Stevens' home, they consummated a cash deal in which James Harrington gave Stevens an assignment of beneficial interest (signed by Donna Harrington on June 23 or 24 in Stevens' presence) in return for $5,000 that Stevens kept in a gun case. No receipt and no other instrument memorialized this transaction. According to Stevens he had previously negotiated a deal with Mickey Kay, who had been told by James Harrington to make her own deal.

Stevens testified that the building was not finally dismissed out of housing court until 1979. Some of the violations involved hazardous rear porches, broken glass, torn carpeting, and plumbing defects. He estimated that since 1975 he spent approximately $800,000 on repairs and renovations; the building in his estimation was worth $1.25 million to $1.75 million at the time of trial.

James Harrington testified that before he and Stevens agreed to a contract they met five or six times at the building. At the first meeting James showed Stevens "a few" of the 50 units. They discussed the building's problems, including code violations. One specific problem area discussed was the building's eight back stairs. According to Harrington, half of them were not completely constructed. In direct contradiction of Stevens' testimony, Harrington testified that at a second meeting he showed Stevens the list of the building's code violations which had been received from the city of Chicago. Stevens also ...


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