Appeal from the Appellate Court for the First District; heard
in that court on appeal from the Circuit Court of Cook County,
the Hon. Reginald Holzer, Judge, presiding.
CHIEF JUSTICE CLARK DELIVERED THE OPINION OF THE COURT:
Rehearing denied January 30, 1987.
This appeal involves a suit for an alleged breach of a construction contract. W.E. Erickson Construction, Inc., and Wilbert E. Erickson (collectively referred to herein as Erickson), plaintiffs, brought a breach of contract action against the defendants, Congress-Kenilworth Corporation, James Adams and John Stafford (collectively referred to herein as Congress), to recover monies Erickson alleges are due under its contract to construct the "Thunder Mountain Rapids," a concrete waterslide in Crestwood, Illinois. Erickson also sought appointment of a receiver and equitable relief. Congress filed a counterclaim for damages due to alleged construction defects.
In the circuit court of Cook County, following a 22-day bench trial, a $202,000 judgment was entered in favor of Erickson on count II of its third amended complaint for breach of contract. The other five counts of Erickson's complaint and Congress' counterclaim were dismissed. Congress was awarded attorney fees from a fund held by the receiver who was appointed at Erickson's request at a pretrial hearing.
Both Erickson and Congress appealed to the appellate court. Erickson appealed from the award of damages, the dismissal of the remaining five counts of its amended complaint and the award of attorney fees to Congress. Congress filed a notice of appeal but did not pursue its appeal. 132 Ill. App.3d 260.
An earlier appeal in the appellate court involved these same parties on the issue of whether a receiver should have been appointed. In that appeal, the appellate court reversed the circuit court's order appointing a receiver. See W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp. (1983), 112 Ill. App.3d 847.
In the appellate court, in the appeal which is now before us, the appellate court held that although Erickson had substantially performed under the contract, the "trial court's award was not a proper method of computation of damages under the doctrine of substantial performance." (132 Ill. App.3d 260, 266.) The appellate court therefore vacated the judgment as to damages and remanded the cause for a recalculation of damages. The appellate court also held that Erickson was not entitled to interest because of Erickson's failure to comply with the contract provision requiring Erickson to make written application for monthly progress payments. The appellate court reasoned that since the right to interest was predicated on the submission of an application and Erickson failed to properly apply, interest was not due. 132 Ill. App.3d 260, 266.
Erickson had also proceeded in the appellate court on an alternative ground for recovery an account stated. The basis of the account-stated theory of recovery was a letter Congress' attorney had sent to Erickson allegedly acknowledging an indebtedness of $550,000. The appellate court held that the facts did not establish an account stated. 132 Ill. App.3d 260, 268.
Erickson also argued the theory of accord and satisfaction in the appellate court, but the court again found that there was not sufficient evidence to establish an accord and satisfaction. 132 Ill. App.3d 260, 269.
Erickson also maintained in the appellate court that the circuit court erred in denying Erickson's request for an equitable lien upon the waterslide and its proceeds. The appellate court held the Erickson was entitled to an equitable lien on the premises for the reasonable value of the permanent improvements Erickson placed on the premises because Erickson and Congress made a mutual mistake about the validity of a warranty deed which Erickson received from Congress as security for additional financing of the improvements. 132 Ill. App.3d 260, 270.
Lastly, Erickson argued that Congress was not entitled to the award of attorney fees out of the receivership fund because the receiver should only pay attorney fees for activities which benefit the receiver or protect and preserve the receivership fund. Erickson argued that Congress' contest of the receivership did not benefit the corporation. The appellate court rejected this argument and held that the attorney fees were properly awarded to Congress. The appellate court also held that the award of attorney fees to Congress would not be affected by the existence of Erickson's equitable lien. 132 Ill. App.3d 260, 272.
Both parties filed petitions for leave to appeal in this court (94 Ill.2d R. 315), and we have granted their petitions and consolidated the cause.
The appellate court opinion sets forth the relevant facts, and those facts will be restated only to the extent necessary to resolve the issues ...