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Imm Accep. Corp. v. First Nat'l Bk & Tr.

OPINION FILED OCTOBER 28, 1986.

IMM ACCEPTANCE CORPORATION, PLAINTIFF-APPELLANT,

v.

FIRST NATIONAL BANK AND TRUST COMPANY OF EVANSTON, ET AL., DEFENDANTS-APPELLEES.



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

JUSTICE SCHNAKE DELIVERED THE OPINION OF THE COURT:

In this action IMM Acceptance Corporation (plaintiff) sought specific performance or, in the alternative, money damages, for breach of an alleged oral contract to convey the beneficial interests in two Illinois land trusts. Plaintiff also sought damages for the tort of misrepresentation of authority. On July 3, 1985, the trial court held that the Statute of Frauds (Ill. Rev. Stat. 1985, ch. 59, par. 1 et seq.) applied to the sale of a beneficial interest in an Illinois land trust and dismissed plaintiff's amended complaint with prejudice. Plaintiff thereafter filed this appeal.

Plaintiff filed its initial complaint on May 3, 1985. Named as defendants were First National Bank and Trust Company of Evanston (as trustee under trust No. R2343), First National Bank of Highland Park (as trustee under trust No. 2685), Venture Service Corporation (Venture), Horizon Federal Savings Bank (Horizon) and Jerry C. Lagerquist. Horizon was the parent and sole shareholder of Venture. Venture was the sole owner of the beneficial interests of both land trusts. Lagerquist was vice-president and general counsel of Horizon.

In its complaint, plaintiff alleged that it had entered into an oral agreement with Lagerquist, as agent for Venture, for the sale of certain parcels of real estate which were held in two land trusts and that defendants had breached the contract by selling the property to a third person. Count I of the complaint prayed for specific performance of the contract. Count II of the complaint sought money damages for the alleged breach of contract. Count III of the complaint sought compensatory and punitive damages against Lagerquist for the tort of misrepresentation of authority.

More specifically, plaintiff's complaint alleged that on or about January 28, 1985, plaintiff entered into an oral agreement with Venture, through its agent, Lagerquist, to purchase three parcels of real estate then held in two Illinois land trusts. The purchase price was tentatively set at $1 million but could be reduced according to an agreed-upon formula if the area of the property held under the land trusts should later be determined to be less than 97 acres. Additional terms of the agreement included: (1) an earnest money deposit of $25,000 to be paid upon acceptance of the contract; (2) a down payment of $225,000 to be paid at closing; and (3) the balance of the purchase price to be paid in 10 equal annual principal installments plus interest at the rate of 10% per annum, commencing one year from the date of closing.

Plaintiff further alleged that on March 19, 1985, Lagerquist advised it that he had plats and surveys which indicated that the property held in trust could be substantially less than 97 acres and that he wished to fix a purchase price. On April 19, 1985, the parties agreed to eliminate the previously agreed-upon formula and agreed upon a fixed price of $930,000 regardless of actual acreage. Thereafter, on April 26, 1985, Lagerquist contacted plaintiff's counsel and advised him that Venture would not sell the property to plaintiff as Venture had previously contracted to sell the land to a third party. Lagerquist then had a $25,000 check issued which constituted the return of plaintiff's earnest money, which Venture had accepted on or about January 28, 1985.

On June 5, 1985, defendants filed a motion to strike and dismiss plaintiff's complaint pursuant to sections 2-606, 2-615 and 2-619(a)(7) of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, pars. 2-606, 2-615, 2-619(a)(7)) on the basis of section 2 of the Statute of Frauds (Ill. Rev. Stat. 1985, ch. 59, par. 2). Plaintiff thereafter filed an amended complaint recharacterizing the alleged contract as an oral agreement to sell the beneficial interests in two land trusts. Defendants allowed their motion to strike and dismiss to stand as their motion to dismiss the amended complaint.

On July 3, 1985, the trial court dismissed plaintiff's three-count amended complaint, holding that the Statute of Frauds was applicable to the sale of a beneficial interest in an Illinois land trust. Thereafter, plaintiff filed this appeal that same day. Lastly, by this court's orders of November 5 and 25, 1985, plaintiff's appeal as to count I of its amended complaint was dismissed as moot pursuant to Supreme Court Rule 305(i) (87 Ill.2d R. 305(i)).

I

The first issue raised is whether the Statute of Frauds applies to the sale of a beneficial interest in a land trust. Section 2 of the statute states in relevant part:

"No action shall be brought to charge any person upon any contract for the sale of lands, tenements or hereditaments or any interest in or concerning them, for a longer term than one year, unless such contract or some memorandum or note thereof shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized in writing, signed by such party." Ill. Rev. Stat. 1985 ch. 59, par. 2.

• 1 Plaintiff argues that the beneficial interest in an Illinois land trust is personal property and not an interest in real property. Therefore, plaintiff contends, the sale of a beneficial interest does not fall within the Statute of Frauds. Defendants argue that this issue was decided contrary to plaintiff's argument in Cosmopolitan National Bank v. Kobialka (1980), 85 Ill. App.3d 1.

In Kobialka the purchaser countersued the trustee and beneficiaries of an Illinois land trust for specific performance of a written contract to sell an apartment building which formed the res of the trust. The court held that the contract was unenforceable against the seller because, while the contract was in writing and signed by the seller's agent, the agent's authority to act was not in writing as required by the Statute of Frauds. In finding that the Statute of Frauds was applicable to the case, the court stated:

"Furthermore, although here the subject of the contract is property held in a land trust, the contract contemplated the conveyance of a deed to that real estate. The fact that the Kogans' beneficial interest is considered personalty does not bar application of the Statute of ...


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