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07/29/87 Mcdonald's Corporation, v. Butler Company Et Al.

July 29, 1987





511 N.E.2d 912, 158 Ill. App. 3d 902, 110 Ill. Dec. 735 1987.IL.1085

Appeal from the Circuit Court of Du Page County; the Hon. S. Bruce Scidmore, Judge, presiding.


JUSTICE INGLIS delivered the opinion of the court. LINDBERG, P.J., and DUNN, J., concur.


This action was brought by plaintiff, McDonald's Corporation (McDonald's), for declaratory judgment, injunction, specific performance, and reformation of contract against defendants, Butler Company and Jorie Butler Kent, Michael Butler, and Frank O. Butler II, as administrators of the estate of Paul Butler, deceased, in their capacities as successors in interest to the Butler Company. The trial court held for plaintiff and against defendants. We affirm.

McDonald's and Butler Company (Butler) entered into an agreement for the sale and exchange of real property dated July 10, 1980 (July 10 agreement). Under the July 10 agreement, Butler agreed to sell to McDonald's certain real property in the village of Oak Brook upon which McDonald's planned to develop its headquarters. In consideration for the property, McDonald's agreed to pay cash and to convey other real property to Butler. One of the parcels McDonald's conveyed to Butler was a 14-acre field known as Autumn Oaks. The July 10 agreement further provides that McDonald's will be entitled to repurchase Autumn Oaks:

"[if] within five (5) years after the closing . . . [Butler] . . . shall not have commenced the development of a substantial improvement.

'[Commencement] of development of substantial improvements' shall be conclusively deemed to have occurred upon the execution of a contract for the construction of such improvements and the commencement of grading and excavation for foundations; but only if seller shall thereafter diligently prosecute the erection of the foundation of a building on the premises, subject only to excusable delay due to acts of God or matters beyond seller's reasonable control."

The agreement further provides that Autumn Oaks is to be used and developed only as permitted under the present residential zoning classification or such other use as may be permitted by the village of Oak Brook. Further, the agreement prohibits Butler from developing Autumn Oaks in a manner which unreasonably interferes with future development of McDonald's adjoining premises. The agreement also states that McDonald's desires to establish a general plan for the orderly development of Autumn Oaks. Accordingly, McDonald's restricts Autumn Oaks to the following terms and conditions:

"1. No . . . [improvements] shall be commenced, . . . upon the Autumn Oaks Premises, until the final exterior plans and specifications therefore shall have been submitted to and approved by [McDonald's] in writing with respect to harmony of design, materials, location and relation to surrounding land uses, structures, improvements, topography and landscaping."

McDonald's failure to reasonably disapprove preliminary or final plans within 30 days following their submission constitutes approval of the plans submitted, but any revisions of such plans are to be submitted to McDonald's for further approval. Notice of disapproval is to be in writing and include reasons for the disapproval along with suggestions as to how the plans might be revised in order to gain approval.

On July 11, 1980, McDonald's and Butler closed on their sales agreement, at which time the two parties exchanged letters. One of the letters, from McDonald's to Butler, gave Butler an easement over McDonald's property. The other letter, by Paul Butler, president of Butler, agreed that Butler would limit development of Autumn Oaks to a "village retail center." That letter stated:

"This will confirm our agreement, made to induce you to enter into our July 10, 1980, Real Estate Agreement, that we plan to develop the captioned premises as a village retail center. We also agreed that we will not develop them for a different use, even if permitted by the Village of Oak Brook, unless you have not exercised your option to purchase, within the thirty day period provided in the agreement, after the expiration of five years, after the closing without having commenced development of substantial improvements."

In November 1984, Butler sent to McDonald's development plans for Autumn Oaks. McDonald's responded, advising Butler that the proposal, in terms of the uses to be made and general layout, was in keeping with the intent of the parties to the contract and amendment thereto.

In a letter dated March 13, 1985, Butler informed McDonald's of revised plans for Autumn Oaks, which included its intention to move a house (Natoma) onto the property. The letter stated, in pertinent part:

"The revision to the preliminary concept plan and the final concept plan for Phase I relate to the intention of Butler Company to move the Natoma residence from the headquarters property to the subject property. For the foreseeable future, the Natoma residence will continue to be utilized and occupied as a single-family residence consistent with the present zoning of the subject property. In the future, Natoma may become a historical museum reflecting the origins, growth and development of the Village of Oak Brook and the role played by leading developers, such as Paul Butler. Whether such a historical museum is a part of the village retail center, or part of some other type of commercial development ...

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