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10/25/88 Bernard Allen Fried Et Al. v. Henry Barad

October 25, 1988

BERNARD ALLEN FRIED ET AL., PLAINTIFFS AND INTERVENING, DEFENDANTS

v.

HENRY BARAD, DEFENDANT AND INTERVENING DEFENDANT-APPELLANT (RUDY MARTINEZ, INTERVENING PLAINTIFF-APPELLEE)



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SECOND DIVISION

530 N.E.2d 93, 175 Ill. App. 3d 382, 125 Ill. Dec. 175 1988.IL.1567

Appeal from the Circuit Court of Cook County; the Hon. Albert Green, Judge, presiding.

APPELLATE Judges:

JUSTICE BILANDIC delivered the opinion of the court. SCARIANO and EGAN, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BILANDIC

Title to the real estate involved in this appeal was transferred to Henry Barad, the intervening defendant-appellant, by way of the underlying partition suit filed by his former co-titleholders, Bernard Allen Fried and Howard Weitzman. Rudy Martinez intervened in the partition action to assert his right to exercise an option to purchase that parcel of real estate from Barad. The trial court determined that Martinez had a valid option. Barad was ordered to convey the property to Martinez in accordance with the terms of the option. There is no dispute regarding the underlying partition. The only issue to be determined on this appeal is the matter of the rights and obligations of intervening plaintiff Martinez and intervening defendant Barad.

The record reveals that in 1980, Barad entered into an oral joint venture agreement to acquire, operate and deal in real estate with Bernard Allen Fried and Howard Weitzman. Pursuant to this oral joint venture agreement, they acquired the real estate which is the subject of this litigation. On or about November 25, 1980, legal title was placed in a land trust with a local bank as the trustee. The interest of each joint venturer was approximately one-third. Their respective beneficial interest in the land trust was held in the name of various nominees, but they reserved the power of direction. Weitzman, Fried and Barad orally agreed that Weitzman be authorized to manage the property.

The sole purpose of the land trust was to hold bare legal title. It is completely passive and has no function in the operation or maintenance of the property. The oral joint venture agreement was the dominant and operating force.

On March 28, 1983, a written lease was granted to Martinez as lessee covering this real estate. Fried, a lawyer, drafted the lease; Weitzman signed the lease "as agent not personally." It was for a term of five years, commencing April 1, 1983, and ending March 31, 1988. It contained an option to purchase.

The first option clause in the lease provided:

"22. The rent shall be $500.00 per month for the first 3 years of this lease, during which time, lessee is hereby granted the option to purchase the property for the sum of $80,000.00, on such terms as the lessor is willing to accept. For the following 2 years, the rent shall be $600.00 per month and the option to purchase shall thereupon be increased to $95,000.00."

The second option clause in the lease provided:

"6. Lessor does hereby give to the said Lessee and his heirs and assigns, the privilege of purchasing on or before the 31st day of March, 1988, the real estate described in Exhibit 'B' attached hereto and made a part hereof, situated in the City of Chicago, County of Cook, State of Illinois; at and for the price as described in Paragraph 22 of the Lease to which this Rider is attached"

Martinez took possession, paid rent and performed all of his covenants under the lease. Obviously, each joint venturer accounted for his share of gains, losses, tax shelters, or other income tax consequences to the appropriate government bodies annually. Therefore, each joint venturer could be charged with knowledge that Martinez was in possession, paid rent, and had a lease. Barad, however, denied the lease.

According to the trial court, Barad testified that he never agreed to the lease and option. His verified answer to Martinez' complaint for specific performance denied the facts of the lease and option and averred that Martinez' lease was invalid because it was not executed ...


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