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Abbott Electrical Const. Co. v. Ladin

OPINION FILED JUNE 24, 1986.

ABBOTT ELECTRICAL CONSTRUCTION COMPANY, PLAINTIFF-APPELLANT,

v.

ALAN B. LADIN ET AL., DEFENDANTS (FIRST NATIONAL BANK OF HIGHLAND PARK, AS TRUSTEE, ET AL., DEFENDANTS-APPELLEES).



Appeal from the Circuit Court of Lake County; the Hon. Terrence J. Brady, Judge, presiding.

JUSTICE HOPF DELIVERED THE OPINION OF THE COURT:

Rehearing denied July 29, 1986.

Plaintiff, Abbott Electrical Construction Co., Inc., performed electrical work for a lessee in a building owned by defendants, First National Bank of Highland Park (trustee), as trustee, and Larry and Elaine Klairmont (the Klairmonts). When Abbott did not receive payment for the work from the lessee, it filed a claim for lien and complaint for foreclosure against, among others, the trustee and the Klairmonts. The trial court held in favor of the defendants, and Abbott appealed.

On appeal Abbott asserts that the trial court erred in four ways: (1) in finding that the contractor's failure to supply the owner with a contractor's affidavit defeated plaintiff's claim; (2) in basing its final order, in part, upon an affirmative defense that was not set forth in defendant's answer; (3) in finding that plaintiff's claim was defeated because plaintiff could not separate lienable and nonlienable work; and (4) in failing to liberally construe the Mechanic's Liens Act despite plaintiff's compliance with the statutory requirements for a valid mechanic's lien.

Larry and Elaine Klairmont were the holders of the beneficial interest in Trust No. 1191 at First National Bank of Highland Park. The trust held the legal title to improved real estate located in Highland Park. The improvements consisted of a three-story building containing offices, shops, and a first floor restaurant. Prior to early 1982, the restaurant had been vacant for over a year and had been closed on two or three different occasions before that. Larry Klairmont had acquired the restaurant equipment through a foreclosure proceeding.

In April 1982 a real estate broker contacted Larry Klairmont, on behalf of defendant Alan Ladin, regarding the purchase of the assets of the restaurant. Klairmont ultimately entered into an agreement with Ladin whereby the two of them set up a corporation, named it Alan's Restaurant Corporation, and each contributed to capitalization. Alfred Klairmont, Larry's son, became the secretary of the corporation. The assets of the restaurant were sold to the corporation, and the corporation entered into a lease agreement with the trustee, First National Bank of Highland Park. Larry Klairmont accepted $25,000 down and a $125,000 chattel mortgage for the sale of the restaurant equipment.

Alfred Klairmont managed real estate properties for his father, Larry, who had his own real estate business. One of the properties Alfred managed was the Highland Park building which housed the restaurant relevant to this suit. As manager, Alfred attended to the day-to-day management, leasing, maintenance, et cetera, of his father's properties. He visited the properties on a regular basis. Also, in his capacity as secretary of Alan's Restaurant Corporation, Alfred discussed the opening of the restaurant with Alan Ladin.

Around the time Alan Ladin signed the lease for the restaurant, he contacted Marvin Kaplan of Abbott Electrical Construction Company (Abbott) about doing some work in the restaurant. Abbott applied for the city permit to do certain electrical work and reached an agreement with Ladin as to the work to be done. The job was to be charged on a time and material basis. Abbott completed the work by mid-July and billed Alan's Restaurant, but never received any payment. Apparently, the Alan's Restaurant venture did not succeed because, according to Alfred Klairmont's testimony, the restaurant remained in the Highland Park building for less than a year.

Abbott filed a claim for lien in the amount of $7,746 in October 1982 and a complaint for foreclosure of the lien in May 1983 against Alan Ladin, Alan's Restaurant Corporation, First National Bank of Highland Park as Trustee, Guaranty Federal Savings & Loan Association, and Larry and Elaine Klairmont. On September 18, 1984, after a bench trial, a default judgment was entered against Alan Ladin, Alan's Restaurant Corporation, and Guaranty Federal for the full amount of the lien. Judgment was entered in favor of First National Bank of Highland Park and the Klairmonts on grounds that plaintiff had not complied with the statutory requirements for a mechanic's lien. Abbott filed a motion to reconsider, and the court added, as a new ground for its judgment, a finding that the lien claim failed since plaintiff had not been able to separate lienable work from nonlienable work. After both parties briefed the issues the court denied plaintiff's motion to reconsider, and this appeal followed.

• 1 Abbott first argues that the trial court erred when it found that Abbott's failure to supply the Klairmonts with a statutorily prescribed contractor's affidavit defeated its claim. Abbott reasons that its duty to provide the affidavit was never triggered.

The "Act relating to contractors' and material men's liens, known as mechanics' liens" (Ill. Rev. Stat. 1983, ch. 82, par. 1 et seq.) (the Act), which becomes part of every construction contract between an owner and a contractor (Deerfield Electric Co. v. Herbert W. Jaeger & Associates, Inc. (1979), 74 Ill. App.3d 380, 392 N.E.2d 914), provides in pertinent part:

"It shall be the duty of the contractor to give the owner, and the duty of the owner to require of the contractor, before the owner or his agent, architect or superintendent, shall pay or cause to be paid to said contractor or to his order any moneys or other consideration, due or to become due such contractor, or make or cause to be made to such contractor any advancement of any moneys or any other consideration, a statement in writing, under oath or verified by affidavit, of the names and addresses of all parties furnishing materials and labor, and of the amounts due or to become due each." (Ill. Rev. Stat. 1983, ch. 82, par. 5.)

It is uncontested that Abbott did not give the Klairmonts a contractor's affidavit. Defendants maintain that the duty imposed upon the contractor by the Act constitutes a condition precedent to enforcement of a lien and ...


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