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11/09/87 Larry N. Phillips Et Al., v. Shelby Britton Et Al.

November 9, 1987





516 N.E.2d 692, 162 Ill. App. 3d 774, 114 Ill. Dec. 537 1987.IL.1659

Appeal from the Circuit Court of Clay County; the Hon. Dennis L. Berkbigler, Judge, presiding.


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


Plaintiffs, Larry and Carol Phillips, filed a complaint in the circuit court of Clay County after defendants Shelby and Sylvia Britton allegedly failed and refused to complete the purchase of certain real property. The Phillipses' complaint was in four counts. Counts I through III were directed against the Brittons. Count I sought damages based on

breach of an oral contract, count II prayed for specific performance of that contract, while count III requested damages under the theory of promissory estoppel. Count IV, directed against defendant Ingraham State Bank, asked simply that the bank be required to act as escrow agent for the land in issue if the relief requested in counts I, II or III were granted.

The Brittons denied the allegations in the complaint and raised as an affirmative defense the Statute of Frauds (Ill. Rev. Stat. 1985, ch. 59, par. 2). They also filed a counterclaim alleging that the Phillipses had breached certain oral agreements relating to the Phillipses' right to reside on and to farm a parcel of the land involved in this dispute. The counterclaim requested that the Phillipses be ordered to vacate the premises and, following an accounting, to pay the Brittons a sum equal in value to one-third of the crops harvested from the land.

Following a bench trial, the circuit court entered judgment against the Phillipses on all four counts of their complaint. At the same time, it found moot the Brittons' request that the Phillipses be ordered to vacate the premises, but ordered the Phillipses to render an accounting to the Brittons regarding the crops harvested by them from the land in 1981 and to then pay the Brittons "the amount due as their net 1/3 landlord's share as customarily determined in Clay County cropshare leases of farm land." On the Brittons' timely post-trial motion, this judgment was subsequently modified with respect to the finding of mootness, and the Phillipses were ordered to vacate the premises.

The Phillipses now appeal, contending that the circuit court's judgment against them on their complaint and in favor of the Brittons on the counterclaim is contrary to the manifest weight of the evidence. The Phillipses further assert that the court committed reversible error in its rulings on the admissibility of certain evidence. For the reasons which follow, we affirm.

The record before us shows that in 1977 the Phillipses purchased a 25-acre tract of land in Clay County from Talmage Wood for $10,500 under a contract for deed. A $2,000 down payment was made on this transaction. The following year, the Phillipses purchased another tract of land in Clay County from Mr. Wood, this one measuring 80 acres. The 80-acre tract was also acquired under a contract for deed. It carried a purchase price of $88,000, on which the Phillipses made down payment of $10,000. The money for this down payment was obtained by the Phillipses through a loan from the Ingraham State Bank.

The Phillipses subsequently obtained a second loan from the bank in the amount of $13,000. Most of the proceeds of that loan were used by the Phillipses to repay the initial loan. The balance went to pay off the remaining amount then owed by the Phillipses to Mr. Wood on the purchase price of the 25-acre tract and to help repay miscellaneous debts they owed to others. The loan was secured by a $13,000 mortgage on the 25-acre tract.

In the period which followed, the Phillipses were able to reduce the balance due on the $13,000 mortgage to approximately $8,500 plus interest, but they made only one payment of $9,750 in principal and interest to Mr. Wood under the contract for deed covering the 80-acre tract, leaving a balance due on that obligation of $68,250. At the same time, they took out more than $12,000 in loans from the FHA secured by a chattel mortgage on their crops and machines, as well as a series of additional loans from the Ingraham State Bank. Testimony at trial established that by the end of June 1981, the Phillipses owed the bank some $111,000.

The Phillipses soon found that they were unable to meet the various debt obligations they had incurred. Larry Phillips thereupon began to search for additional financing. After contacting several lending institutions, he broached the subject with Shelby Britton, for whom he was then working. Phillips testified that he and Mr. Britton ultimately agreed that the Phillipses would sell both the 80-acre and the 25-acre tracts to the Brittons for $100,000 if the Brittons would also assume the contract for deed on the 80 acres. According to Phillips, the agreement further required that he and his wife pay off the balance of the mortgage on the 25-acre tract, which they planned to do using the proceeds of the $100,000 payment, so that the tract could be conveyed to the Brittons with a clear title. Phillips noted that Mr. Britton had asked if he would consider accepting an interest in an oil lease instead of cash, but claims that he rejected this proposal.

The Phillipses resided in a house on the 80-acre tract, and they understood that they would be permitted by the Brittons to remain there after the sale so long as they continued to pay the insurance and taxes. Mrs. Britton initially testified that she shared this understanding, but later modified her testimony to corroborate that of her husband, who stated that the agreement was to allow the Phillipses to remain in the house only so long as they also met the additional condition that Larry Phillips continue to work for Mr. Britton.

The Brittons differed from the Phillipses in their understanding of the terms of the land sale itself. The Brittons were admittedly interested in buying both the 80-acre and 25-acre tracts, but testified that they viewed these as independent transactions. According to the Brittons, the Phillipses were to transfer the 80-acre tract to them, in exchange for which the Brittons would assume liability for and pay off outstanding arrearages on the contract for deed with Mr. Wood. No additional monetary compensation was to be paid to the Phillipses, although, as noted, the Phillipses were to be permitted to continue to reside on the land under certain conditions. With respect to the 25-acre tract, the Brittons understood the agreement to be that if the Phillipses could deliver clear title, the Brittons would assign to them a one-quarter interest in an oil and gas lease as payment. Mr. Britton related that Larry Phillips had told him he proposed to pay off the encumbrances on that tract by selling his farm machinery.

Robin Todd, an attorney from Louisville, Illinois, represented both the Phillipses and the Brittons with respect to the sale of the land. Larry Phillips testified that he went with the Brittons to Todd's office on June 22, 1981, to discuss the transaction. Phillips claims that he told Todd of the existing debt against the 25-acre tract and explained that he needed the $100,000 in cash in order to pay off that debt and give clear title to the property. In Phillips' words,

"My understanding Robin [Todd] was to get all the paper work done to the effect when we went to Ingraham for the closing whatever, that it would be [Shelby Britton] would give me the $100,000 for the 105 acres and Shelby would assume the contract [for deed on the 80 acres] and I was to pay the mortgage on the ...

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