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Zale Construction Co. v. Hoffman





Appeal from the Circuit Court of Cook County; the Hon. Benjamin Nelson, Judge, presiding.


This is an appeal from an order granting summary judgment for defendants in an action by plaintiff to recover money expended by it to construct an off-site waterline. Plaintiff contends that summary judgment was improperly granted because the contract established that defendants were to pay for installation of the off-site waterline or because the interpretation of that contract at least presented a question of fact which preluded summary judgment.

It appears from the record that both parties are residential real estate developers. In 1976, defendants contracted to purchase a 96.2 acre tract of land contiguous to the village of Northbrook and west of Sanders Road. They also obtained an option for an additional 18.3 acres east of Sanders Road. After several meetings of the Northbrook plan commission to discuss the annexation of both parcels to the village of Northbrook, an agreement, effective July 12, 1977, was entered into by defendants, the village of Northbrook and the party who had contracted to sell the properties to defendants. The agreement provided in part that the village agreed to "expeditiously review the engineering plans and plats which the Trusts and Developer may hereafter submit for the Property (or for portions thereof) and to reasonably approve said plans and plats or to notify Developer of reasonable proposed revisions or additional requirements." The portion of the agreement which specifically refers to the utilities is as follows:

"5. Utilities.

(a) Sewerage service for the Property is to be provided through a connection to the Metropolitan Sanitary District of Greater Chicago (`MSD') interceptor sewer at the intersection of Sanders Road and Walters Road, as depicted on the utilities Plan attached hereto as Exhibit H (`Utilities Plan') which the Village has tentatively approved. The municipal water system shall serve the Property by a connection to the existing main in Sanders Road right-of-way at Sunset Lane and in the Commercial Avenue right-of-way east of the Tri-State Toll Road, more particularly depicted on the Utilities Plan. With the Trusts and Developer compliance as required by Section 3 hereof, [recapture payments for prior water main improvements by others], the Village agrees that the Trusts and Developer, its successors and assigns, may, for the purpose of serving the Property, connect to such municipal facilities at the above described point or at such other locations as may be convenient to the Trusts and Developer and are reasonably adviseable and proper from an engineering standpoint at the time of the development of the Property, or portions thereof.

(b) The Developer shall obtain all necessary permits for the installation of the utilities system * * *. All extensions of existing sanitary and storm sewers and water mains necessary to serve the Property shall be constructed and installed at the expense of the Trusts and/or Developer, their grantees or assignees, in accordance with the Utilities Plan, all subject to approval by the Village Engineer." (Emphasis added.)

On April 28, 1978, defendants assigned to plaintiff their option to purchase the parcel east of Sanders Road. The relevant portions of that agreement are as follows:

"2. * * * At closing, Assignor [Hoffman] shall be entitled to a proration credit in addition to the Purchase Price equal to the share of `off-site' costs attributable to the Property which Assignor is required to pay as hereinafter provided in Paragraph 7 hereof.

7. Assignor at its sole cost shall have the responsibility of installing off-site storm and sanitary sewer and water lines of sufficient design and capacity to service the Property and the development thereof pursuant to the Preliminary PUD plan as approved by the Village as aforesaid. Assignee agrees that said utility lines shall be brought to the perimeter of the Property provided, however, that Assignor shall have no obligation to construct or install any sewer or water utility lines within the Property or install any taps, risers or house service lines connecting to any improvements on the Property. At the time of closing, Assignee agrees to execute any and all recapture agreements required by the Village relating to the costs of off-site utility lines and shall assign to Assignor any interest it may have, either as the owner of the Option Rights under the Contract, or of the Property, to reimbursement for the cost of installation of the off-site utility lines. Assignor shall use its best efforts and shall diligently attempt complete installation prior to closing but in the event that Assignor shall be unable to so complete the installation of the utility lines by such date, Assignor shall complete the installation as soon after closing as possible, weather, and other matters beyond the reasonable control of Assignor, permitting. The proration credit due Assignor at closing pursuant to Paragraph 2 hereof for the cost of utility lines allocated to the Property shall be determined pursuant to Paragraph 5 of the Rider to the Contract. In the event that said utility lines are incomplete at closing, the credit due Assignor shall be the amount of $100,000 provided, however, that Assignor shall, as a reproration, remit to Assignee the amount, if any, by which $100,000 exceeds the actual cost of the utility lines allocated to the Property as determined pursuant to the Contract.

8. Assignor upon closing of this transaction, hereby assumes and agrees to pay, and does hereby indemnify, defend and hold Assignee harmless from and against any and all loss, costs, claims, damages and expense (including reasonable attorney's fees), with respect to the prorata share attributable to the Property of the costs, charges, fees and donations imposed or agreed to be paid by Consolidated under and pursuant to:

(a) The Annexation Agreement * * *." (Emphasis added.)

Defendant also sent the following letter, dated August 15, 1978, to plaintiff with respect to certain portions of the assignment agreement:

"Reference is made to that certain Assignment and Option and Agreement dated April 28, 1978 between David Hoffman and Zale Construction Co., an Illinois corporation, pursuant to which you have agreed to purchase and the undersigned has agreed to sell all of its rights, title and interest in and to a certain option to purchase 18.33 acres of vacant land in Northbrook, Illinois.

This letter will confirm that the undersigned will install or cause to be installed off-site storm and sanitary sewer and water lines to the perimeter of the property at no cost to you and you will be under no obligation to pay any `recapture' or other costs with respect the construction and extension of such ...

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