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07/06/87 K. Eugene Reich Et Al., v. Mildred V. Tharp Et Al.

July 6, 1987

K. EUGENE REICH ET AL., INDI

v.

AND D/B/A GENE'S MEN'S WEAR, ET AL., PLAINTIFFS,

v.

MILDRED V. THARP ET AL., DEFENDANTS (DENNIS HILL ET AL., FOR THE USE AND BENEFIT OF COUNTRY MUTUAL INSURANCE

MILDRED

v.

THARP, CROSS-DEFENDANT AND, APPELLEE)



APPELLATE COURT OF ILLINOIS, FIFTH DISTRICT

Company, Cross-Claimants and Appellants;

521 N.E.2d 530, 167 Ill. App. 3d 496, 118 Ill. Dec. 248 1987.IL.957

Appeal from the Circuit Court of Jasper County; the Hon. Robert F. A. Stocke and the Hon. Michael R. Weber, Judges, presiding.

APPELLATE Judges:

JUSTICE WELCH delivered the opinion of the court. KARNS, P.J., Concurring. JUSTICE HARRISON,* Dissenting in part.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WELCH

This appeal and cross-appeal arise ultimately out of an action brought for damages caused by a fire on December 25, 1980, that was alleged to have originated in the second-floor apartment of the defendant Mildred Tharp. The fire damaged not only the building in which her apartment was located but also personal property, namely, merchandise, dry goods, and materials, which was associated with the first-floor business, known as Hill's Shoe Store and Ready to Wear, operated by the defendants Dennis Hill and Carolyn Hill. The fire also damaged the nearby premises of the plaintiff Ruby Hester and the plaintiffs K. Eugene Reich and Latricia Reich, individually and d/b/a Gene's Men's Wear. At the time of the fire the Hills were purchasing from Mildred Tharp under a contract for deed the real property where their business and her apartment were located. Mildred Tharp had reserved a life estate in the second floor of the premises, in the basement, and in half of a carport.

The articles of agreement providing for the sale, which agreement is attached as an exhibit to various of the pleadings included in the record, was executed on May 1, 1979, by the Hills and Mildred and Hubert Tharp, since deceased, and specified, inter alia, that

"the Grantees [Hills] further covenant and agree to have the building upon the said premises insured against loss of fire and other hazards in the sum of Forty Thousand Dollars ($40,000.00) or to its insurable value with policies to be issued in the names of the Grantors [Tharps] and Grantees with loss made payable to both parties according to the respective interest [ sic ] as they shall appear at the time of the loss.

Should the Grantees fail to pay taxes or provide insurance as required hereunder the Grantors may do so and add the cost thereof with interest as required on the principal to the amount due on the next payment date of interest on the said contract."

Insurance was obtained from Country Mutual Insurance Company (hereafter referred to as Country Mutual) in the names of Carolyn and Dennis Hill d/b/a Hill's Shoe Store and Ready to Wear and was in effect at the time of the fire. Neither of the Tharps was named as an insured. After the fire Country Mutual paid the Hills $117,500, and the Hills paid Mildred Tharp the balance due and owing on the contract at the time of fire.

Following the filing of the complaint by the Reichs and Ruby Hester against the Hills and Mildred Tharp, the Hills counterclaimed against Mildred Tharp seeking, in count I, contribution and, in count II, indemnification. In an amendment to their counterclaim against Mildred Tharp, the Hills added a third count in which they, for the use and benefit of Country Mutual, sought judgment in the amount of $117,500, plus costs of suit, the amount, as we have indicated, that Country Mutual paid the Hills. That amount included damage alleged to have occurred to the building in which the Hills' store was located, the fixtures attached thereto, and the personal property located therein. The Hills alleged that by certain negligent acts and omissions Mildred Tharp had violated the provision of the articles of agreement requiring her to assume responsibility for "all interior repair and decoration as well as maintenance on the premises retained by [the Tharps]."

Mildred Tharp counterclaimed against the Hills seeking judgment for the amount of all costs, damages, sums of money, and attorney's fees that she might be required to pay as a result of the litigation against her, occasioned, she claimed, by the Hills' breach of the covenant in the articles of agreement requiring them to list her as an additional insured under the policy of insurance they had obtained.

Mildred Tharp moved to dismiss the three counts of the Hills' counterclaim against her, of which the trial court dismissed count III. In a motion to reconsider the Hills asked the court "to reconsider the same to the extent of a claim in that Count in the sum of $67,600.00 in lieu of $117,500.00," which reduced amount represented the amount paid them by Country Mutual for the loss of fixtures and personal property allegedly suffered by them as a result of the fire "and would not be any claim for damages as a result of loss or damage to the building." The trial court denied the Hills' motion to reconsider.

The Hills had also moved to dismiss Mildred Tharp's counterclaim against them. The trial court granted that motion, allowing her to file an amended counterclaim, which she filed, seeking the same relief she had sought in the counterclaim. The Hills moved to dismiss her amended counterclaim and, for the use and benefit of Country Mutual, amended count II of their counterclaim against her, seeking judgment in the amount of $67,000, plus the costs of suit, representing the amount of the damage caused to their personal property by the fire and paid by Country Mutual. They alleged, as they had in count III, that Mildred Tharp had assumed under the articles of agreement responsibility for "all interior repair and decoration as well as maintenance on the premises retained by [the Tharps]" and that "notwithstanding said responsibility" Mildred Tharp had committed certain negligent acts or omissions and had thereby caused the fire. Mildred Tharp moved to dismiss the Hills' amended count II of their counterclaim and sought sanctions, maintaining that the amended count II realleged substantially all of the allegations of count III of the counterclaim, which the trial court had dismissed with prejudice and which dismissal the trial court had considered adversely to the Hills.

Following a hearing the trial court in an order entered January 14, 1986, granted the Hills' motion to dismiss with prejudice Tharp's amended ...


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