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Giannini v. First National Bank





Appeal from the Circuit Court of Cook County; the Hon. Albert S. Porter, Judge, presiding.


John Giannini, d/b/a J.G. Sewer Contractors (Giannini), executed an agreement to purchase a condominium unit in the Castilian Courts Condominium Complex to be constructed in Glenview and paid $62,330 in earnest money on the property. Although the building in which his unit was located was subsequently constructed, it was never formally declared a condominium and as a result the terms of the agreement were never fulfilled.

Giannini filed a two-count complaint against First National Bank of Des Plaines (Des Plaines Bank), the record title holder of the complex pursuant to a land trust agreement; Frank R. Stape Builders, Inc. (Stape Builders), the developer of the project and signer of Giannini's purchase agreement as agent of the beneficiary of the trust in which title to the complex was held; and Unity Savings Association (Unity), *fn1 a mortgage holder on the property. His complaint requested specific performance of the purchase agreement by Unity, Stape Builders and Des Plaines Bank (count I) and money damages from Stape Builders and Des Plaines Bank (count II).

Pursuant to Unity's motion to dismiss based upon certain affirmative defenses or matters, Unity contended specific performance was not an appropriate remedy and that the agreement was invalid. (Ill. Rev. Stat. 1981, ch. 110, par. 2-619(a)(9).) The trial court dismissed the specific performance count as to Unity but refused to render its order final and appealable under Illinois Supreme Court Rule 304(a) (87 Ill.2d R. 304(a)). Eleven months later, Giannini motioned the court for leave to file an amended complaint. This proposed document consisted of counts which sought specific performance (count I), money damages (count II), imposition of a constructive trust (count III), and foreclosure of a vendee's lien (count IV). The trial court denied the motion and found that there was no just reason to delay enforcement or appeal. Giannini now appeals both from the order which dismissed count I and the order which denied him leave to file the amended complaint.

The record contains the following relevant pleading and documentary evidence. Giannini filed his complaint on October 19, 1981. In the count for specific performance, he alleged in pertinent part that on or about March 27, 1980, he entered into a written agreement with Stape Builders as agent for the beneficiaries of the land trust to purchase a specified condominium unit for the sum of $79,515. He stated that although construction of the premises had been completed, Stape Builders and Des Plaines Bank refused to perform their obligations under the terms of the purchase agreement. He also alleged that Unity had or purported to have an interest in the unit. Giannini claimed that he was ready, willing, and able to fulfill his obligations under the agreement and requested specific performance of the contract because he had no adequate legal remedy.

Giannini attached a copy of the purchase agreement to his pleadings and incorporated it therein by reference. The document clearly designated Stape Builders as "Seller" and as such the "Agent of Beneficiaries of First National Bank of Des Plaines, not personally, but as Trustee under Trust No. 73711759." The contract specified the particular unit which Giannini was to receive (unit B-70), set forth its common and legal description, stated a total purchase price of $79,515, and required Giannini to pay $62,330 as earnest money. *fn2

The contract further recognized that the entire project was on-going and in the course of construction, such that adjacent parcels might be subsequently developed, annexed to the condominium area, and submitted to condominium ownership through supplementation or amendment of the Condominium Declaration.

The record reflects that the property was placed in land trust with the Des Plaines Bank pursuant to trust agreement dated January 31, 1977. The document named "First Charter Service Corp., an Illinois corporation" (First Charter), as owner of the beneficial interest in the trust. The agreement recited that the beneficial owner's interest "shall consist solely of a power of direction to deal with the title to said real estate and to manage and control said real estate as hereinafter provided, and the right to receive the proceeds from rentals and from mortgages, sales or other disposition of said real estate * * *." It further provided that the "right in the avails of said real estate shall be deemed to be personal property, and may be assigned and transferred as such * * *."

First Charter assigned its beneficial interest pursuant to written agreement to Frank R. Stape Builders, Inc., on February 28, 1977. Stape Builders subsequently assigned its beneficial interest to Frank A. Stape pursuant to written agreement on January 12, 1980. A notation on each of the documents indicated receipt of a duplicate copy thereof by Des Plaines Bank.

Roughly a year later, on April 10, 1981, Frank A. Stape executed a power of direction to convey title to specified property at the Castilian Courts Complex to Janet Strong Wade through conveyance of a trustee's deed. A notation on the power of direction indicated that Unity acknowledged and accepted the conveyance. Des Plaines Bank complied with the direction in a trustee's deed dated April 10, 1981. According to the affidavit of an officer of Des Plaines Bank submitted by Giannini to the trial court, this conveyance pertained to all remaining property in the land trust and rendered the trust empty of any property. *fn3

Stape Builders was involuntarily dissolved by the Secretary of State of the State of Illinois on December 1, 1981, for failure to pay franchise taxes.

Unity apparently obtained title to the complex in lieu of foreclosure of its mortgage on the property. Although the exact date upon which Unity began its foreclosure action in Cook County circuit court is unclear from the record before us, documents presented by Giannini revealed the following pertinent information in this regard.

On April 13, 1981, Unity filed in the foreclosure proceeding its motion to dismiss Des Plaines Bank and Stape Builders, to terminate a receivership over the property, and to voluntarily dismiss the foreclosure action. Unity's motion alleged in relevant part that it had "succeeded to the rights of [Des Plaines Bank and Stape Builders] [to the condominium complex] and, therefore, can manage, operate and control the property involved in this cause by itself." The trial court entered its written order which granted Unity's motion on April 16, 1981. The court specifically noted that it had heard "testimony from Mr. Howard Harris, an officer of [Unity] of its intention to complete the project," and further stated that it was "relying on these representations, a transcript of which will be filed herein * * *." The court also stated that it would "retain jurisdiction hereover to see to the completion of the matter left pending hereby." According to Giannini, no transcript as specified by the court was ever prepared.

Although Unity thus apparently agreed in its foreclosure action that it would carry out the development plans of Stape Builders, it nevertheless argued, inter alia, before the trial judge presiding over Giannini's complaint that specific performance should not be ordered because it would be uneconomical to Unity in view of poor real estate conditions. In support of this contention, Unity presented the affidavit of Mrs. Virginia Erikson, real estate administrator for Unity responsible for various matters at the Castilian Courts Complex. In her affidavit, Erikson stated that the entire condominium project consisted of five buildings (A, B, C, D, and E) with a total of 256 units. She stated that although all buildings were originally intended to be condominiums only buildings D and E had been so recorded; buildings A, B (in which Giannini's unit was located) and C were instead rental buildings. Erikson stated that these other buildings had not been declared as condominium buildings because of the poor economy and in particular "the unsalable real estate and condominium market."

A copy of a declaration of condominium ownership made and recorded by Des Plaines Bank was submitted to the trial court by Giannini. The document had been executed by the bank on February 28, 1980, and specified Stape Builders as developer of the complex. In part relevant to this appeal, the declaration contained a provision for annexation of additional property to be declared as part of the condominium project. Paragraph 1 of article X of the declaration stated that the developer reserved "the right from time to time and in any order, within ten (10) years of the date of the recording of this Declaration, to annex and add to the Condominium area created by this Declaration, all or any portion of the real property" in the development area. Subsequent paragraphs set forth the manner and procedure by which adjustments in a unit owner's interest in the common elements would be made upon amendment of the declarations as well as provision for further understandings and agreement not pertinent here. Attached to the declaration there also appeared the acknowledgement and acceptance of the declaration by Unity as mortgage holder on the Castilian Courts Condominium Complex. The record does not disclose whether any subsequent amendments to this Declaration have ever been executed or recorded.

Unity filed its motion to dismiss count I of the complaint on the basis of affirmative matter which avoided the legal effect of or defeated the claim stated in that count (see Ill. Rev. Stat. 1981, ch. 110, par. 2-619(a)(9)) on April 14, 1982. As ultimately amended, the motion claimed in pertinent part that specific performance was improper for several reasons. These grounds for dismissal were: (1) the unit did not exist since the building in which the unit was located had not been declared a condominium in accordance with the provisions of the Condominium Property Act (Ill. Rev. Stat. 1981, ch. 30, pars. 301 et seq.); (2) the condominium unit was not so unique to require specific performance of a purchase agreement of the unit; (3) specific performance would be unprofitable to Unity in view of poor real estate market conditions; (4) specific performance would be too burdensome and time-consuming for the court to enforce because it would require that the court issue a mandatory injunction to complete conversion of the building into a condominium; (5) the purchase agreement was invalid and unenforceable because it was neither signed by the trustee of the trust nor the beneficiary of the trust; and (6) the purchase agreement was invalid and unenforceable because it did not expressly provide that the beneficiary would exercise his power to direct the land trustee to convey the real estate to the purchaser at closing.

Upon consideration of the parties' pleadings, documents, and written and oral argument, the trial court granted Unity's motion to dismiss count I of the complaint as to Unity. In its oral pronouncement, the court concluded that specific performance was improper because: (1) there was no condominium "in existence" which Unity could be ordered to convey to Giannini; (2) the remedy would be economically disadvantageous to Unity; and (3) the remedy would be cumbersome and time-consuming because it would obligate the court to supervise conversion. The trial court denied Giannini's oral motion in open court to find that ...

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