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02/03/87 J.F., Incorporated, v. S.M. Wilson & Company

February 3, 1987

J.F., INCORPORATED, PLAINTIFF-APPELLEE AND CROSS-APPELLANT

v.

S.M. WILSON & COMPANY, DEFENDANT-APPELLANT AND CROSS-APPELLEE (BERNARD M. KEENEY ET AL., DEFENDANTS-APPELLEES)

THE ILLINOIS SUPREME COURT HELD IN CARSON PIRIE SCOTT & CO

v.

PARRETT (1931), 346 ILL. 252, 258,


APPELLATE COURT OF ILLINOIS, FIFTH DISTRICT

504 N.E.2d 1266, 152 Ill. App. 3d 873, 105 Ill. Dec. 748

February 3, 1987 Filed

Appeal from the Circuit Court of Madison County; the Hon. William E. Johnson, Judge, presiding. 1987.IL.106

APPELLATE Judges:

JUSTICE WELCH delivered the opinion of the court. JONES and HARRISON, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WELCH

Following a jury verdict in the circuit court of Madison County, the defendant, S. M. Wilson & Company, appeals and the plaintiff, J.F., Incorporated, cross-appeals. The jury returned a verdict in favor of the plaintiff on the theory of third-party beneficiary in the contract between defendant and the Illinois Capital Development Board (Capital). On appeal, defendant raises the issue of whether the contract between Capital and defendant for certain portions of a construction project conferred third-party-beneficiary status upon the plaintiff, who contracted with Capital for other portions of the construction project. We find that the plaintiff was not a third-party beneficiary to the contract between defendant and Capital and accordingly reverse.

In September 1973 Capital awarded separate prime contracts for the construction of two buildings for the Alton Area Career Development Center. In the contract, Capital was called the owner. The Alton Community Unit School District No. 11 became the ultimate user. Capital awarded to plaintiff the heating and electrical contract and to defendant, the general construction contract. Both contracts were for fixed amounts, with identical language and completion dates. General obligations of the parties were set out in the contracts, and the specific contractual requirements were established in the specification book and the drawings. The contract documents specified 500 calendar days for completion, which would have been January 25, 1975. However, because of various delays on the project, the project did not receive a certificate of final acceptance until August 1976.

Since plaintiff incurred costs for various delays, it filed suit against defendant on the contract between defendant and Capital alleging that it had third-party-beneficiary status. Plaintiff also sued the architect and the soils engineer for negligence and Capital on the contract. Plaintiff voluntarily dismissed the soils engineer. The trial court dismissed the suit against Capital, finding that the Court of Claims had exclusive jurisdiction over suits against the State. Defendant counterclaimed on the same theory as the plaintiff.

At the Conclusion of the jury trial, the jury returned a verdict against the defendant on the contract count for $37,000 and $5,000 against the plaintiff on the defendant's counterclaim. From this verdict the parties appeal.

Although defendant raises several issues on appeal, the issue which this court finds significant is whether the construction contract between Capital and defendant conferred third-party-beneficiary status upon another prime contractor (J.F., Incorporated) contracting to do other portions of the same project and as such permits J.F., Incorporated to sue upon the contract for delay damages.

"The rule is, that the right of a third party benefited by a contract to sue thereon rests upon the liability of the promisor, and this liability must affirmatively appear from the language of the instrument when properly interpreted and construed. The liability so appearing can not be extended or enlarged on the ground, alone, that the situation and circumstances of the parties justify or demand further or other liability." (346 Ill. 252, 258, 178 N.E. 498, 501.)

It is not necessary that the contract identify the third party, but rather define the third party by description of a class or be identified at the time of performance is due. (Altevogt v. Brinkoetter (1981), 85 Ill. 2d 44, 55-56, 421 N.E.2d 182, 187.) However, since Carson, the courts have recognized that the intention of the parties must be gleaned from the contract as a whole and the circumstances surrounding the parties at the time of its execution. Metro East Sanitary District v. Village of Sauget (1985), 131 Ill. App. 3d 653, 657, 475 N.E.2d 1327, 1330; Illinois Housing Development Authority v. Sjostrom & Sons, Inc. (1982), 105 Ill. App. 3d 247, 254-55, 433 N.E.2d 1350, 1356.

Since the facts of this case are rather unique to Illinois courts, it is important to present an overview of the established cases in the area. In our search, this court has found that the courts have followed a strict interpretation of the rule ...


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