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Scholwin v. Johnson

OPINION FILED AUGUST 4, 1986.

WILLIAM A. SCHOLWIN, JR., ET AL., PLAINTIFFS-APPELLANTS,

v.

KARIN JOHNSON ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Lake County; the Hon. Bernard E. Drew, Jr., Judge, presiding.

JUSTICE SCHNAKE DELIVERED THE OPINION OF THE COURT:

Rehearing denied October 27, 1986.

On August 1, 1977, plaintiffs, William and Betty Scholwin, along with defendants, Donald and Carolyn Baranowski, entered into an installment contract to purchase certain real estate from the McHenry State Bank, as trustee under trust No. 716. Defendants Karin and Kenneth Johnson are beneficiaries of that trust. The contract included a forfeiture clause which gave the seller the right to declare a forfeiture if the purchasers failed to make two consecutive payments.

The Scholwins and the Baranowskis entered into a separate agreement which defined their rights and obligations inter se with respect to the installment contract. This separate agreement apportioned the payments between the purchasers and provided that the Scholwins would own and occupy the southeast lot, and the Baranowskis would own and occupy the northwest lot. Because there was only one well on the property, located on the northwest lot, the agreement also provided that the parties would contribute equally to the cost of constructing a new well on the southeast lot.

The Scholwins and the Baranowskis moved onto their respective lots, but the new well was never built. The Baranowskis allowed the Scholwins to use water from the well on the northwest lot.

Eventually, the Scholwins fell behind in their payments on the installment contract, and in October of 1981 they listed their portion of the property with Welcome Mat Realty. Defendant Carolyn Baranowski was a realtor with that company. During 1982 the Scholwins became dissatisfied with the efforts of Welcome Mat, and they then listed their property with Coldwell Banker Real Estate.

On April 25, 1983, the Scholwins, along with defendant Kenneth Johnson, entered into a contract to sell the southeast lot to Richard Sochor, who apparently had been located by Coldwell Banker. The contract required the Scholwins, five days before the closing, to furnish Sochor with a commitment for title insurance. The contract also provided that at the closing Johnson would furnish an agreement, signed by himself and the Baranowskis, whereby Sochor would be entitled to receive water from the well on the northwest lot for $10 per month "for a period of 10 years or until a well is installed" on the southeast lot. The title insurance company subsequently informed the Scholwins that it would not provide the commitment unless the Baranowskis quitclaimed any interest they might have in the southeast lot. According to the Scholwins, the Baranowskis refused to execute a quitclaim deed, and refused to discuss "the shared well or the sharing of expenses for the installation of a new well" on the southeast lot. According to the Scholwins, this conduct on the part of the Baranowskis prevented the sale of the southeast lot to Sochor. The Scholwins did, however, vacate the premises on the southeast lot in anticipation of closing the sale.

Subsequently, on July 28, 1983, the Scholwins and the Baranowskis were sent a "Notice of Intention to Declare Forfeiture." It stated that payments on the installment contract were in arrears in the amount of $3,381, and that unless the default was cured by September 5, 1983, the purchasers' rights under the contract would be forfeited. The default was not cured by the date specified, and on September 10, 1983, the McHenry State Bank, as trustee under trust No. 716, sent the Scholwins and the Baranowskis a declaration of forfeiture. The Johnsons subsequently took possession of the property and sold it to defendant McHenry State Bank, as trustee under Trust No. 2852.

The Scholwins brought this action in January 1984. As against the Johnsons and the McHenry State Bank, as trustee under trust No. 2852, the Scholwins' complaint, as amended, sought reinstatement of the installment contract and an opportunity to cure the default. As against the Baranowskis, it sought damages for intentional interference with contractual relations.

After the parties had conducted discovery, both the Scholwins and the Johnsons filed motions for summary judgment in regard to the portion of the complaint which sought reinstatement of the installment contract and an opportunity to cure the default. The trial court denied the Scholwins' motion and granted that of the Johnsons'. The Baranowskis filed a motion to dismiss the complaint against them for failure to state a cause of action. The trial court granted that motion. Both orders entered by the trial court included the language from Supreme Court Rule 304(a) (87 Ill.2d R. 304(a)) that there was no just reason for delaying enforcement or appeal, and the Scholwins have appealed them both.

We first consider the summary judgment entered in favor of the Johnsons on that portion of the Scholwins' complaint which sought reinstatement of the installment contract and an opportunity to cure the default. The Scholwins' challenge to that summary judgment has several parts. First, they contend that the "Notice of Intention to Declare Forfeiture" was legally insufficient because it was signed by the attorney for the beneficiaries rather than by the trustee of trust No. 716, or its agent, and because it did not accurately state the amount past due. Second, they maintain that there is a genuine issue of material fact regarding whether they tendered performance prior to the forfeiture. Finally, they maintain that there are genuine issues of material fact regarding whether they should receive equitable relief from the forfeiture under the guidelines set forth in Aden v. Alwardt (1979), 76 Ill. App.3d 54, 394 N.E.2d 716.

In the instant case the parties agree that the "Notice of Intention to Declare Forfeiture" was a necessary step in the forfeiture procedure. The vendor had previously accepted late payments. As our supreme court has stated:

"The rule is that a vendor may, by his conduct, waive his right to declare forfeiture of a contract of which time is the essence. [Citations.] Though the conduct of the vendor may not necessarily be an absolute waiver of the right, yet in a court of equity it amounts to a suspension of the right of forfeiture which can be resumed only by giving definite and specific notice of an intention to require performance of that feature of the contract. [Citations.]" Forest Preserve Real Estate Improvement Corp. v. Miller (1942), 379 Ill. 375, 382, 41 N.E.2d 526.

• 1 The notice in the instant case was signed by Russell Ray, as "Attorney for Beneficiary" of trust No. 716, and it stated, among other things, that "It is the intention of Seller [the trust] to declare all your rights under the Contract to be forfeited" unless the default was cured in 39 days. The Scholwins note that under the installment contract, the only party that could declare a forfeiture was the trust. They argue that the notice of intent to declare forfeiture was legally insufficient because it was not signed by the trustee or its agent. They note in this regard that ...


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