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03/02/89 Gerald L. Kiest Et Al., v. June Esmond Et Al.

March 2, 1989

GERALD L. KIEST ET AL., PLAINTIFFS

v.

JUNE ESMOND ET AL., DEFENDANTS AND THIRD-PARTY, PLAINTIFFS-APPELLANTS (CHICAGO TITLE INSURANCE COMPANY ET AL., THIRD-PARTY, DEFENDANTS-APPELLEES; THE VILLAGE OF



Before we are able to consider the Esmonds' argument, it is necessary to address Chicago Title's contention that the trial court properly dismissed the claim because of improper joinder. In support of this argument, Chicago Title cites section 2-406(b) of the Illinois Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-406), which was designed to implement third-party practice in Illinois. Section 2-406(b) provides, in pertinent part, as follows:

APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

North Utica et al., Defendants)

535 N.E.2d 490, 179 Ill. App. 3d 1055, 128 Ill. Dec. 979 1989.IL.264

Appeal from the Circuit Court of La Salle County; the Hon. Thomas R. Flood, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE STOUDER delivered the opinion of the court. WOMBACHER and SCOTT, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE STOUDER

Appellants, June and Truman Esmond, appeal from the dismissal of count VII of their third-party complaint, which alleged a cause of action for

The Esmonds were engaged in developing two subdivisions in La Salle County. The Esmonds constructed Oak Bluff Estates Subdivision Unit 2 (Unit 2), in which they intended to offer certain lots for sale.

On May 1, 1979, ordinance No. 79 -- 4 was passed by the village board approving the preliminary plat of Oak Bluff Estates. In November 1980, formal action was taken by the village board approving for sale several lots in Unit 2, including lot 38. On February 3, 1981, ordinance No. 81 -- 2 was passed by the village board approving the annexation of Unit 2, subject to the performance by Esmonds of the terms of a preannexation agreement.

On April 15, 1981, the Esmonds sold lot 38 to Gerald L. and Anne E. Kiest. The Esmonds purchased a commitment for title insurance from the third-party defendants, Chicago Title and Buchner and O'Toole Title Company, and delivered their executed warranty deed conveying fee simple title of the subject real estate to the Kiests. The commitment did not make reference to the adoption of ordinance No. 81 -- 2.

On April 25, 1981, ordinance No. 81 -- 8 was passed by the village board, superseding ordinance No. 81 -- 2, waiving the rights of the village under a portion of the preannexation agreement to the extent necessary to carry out ordinance No. 81 -- 8, and stating that the Esmonds shall not be barred from selling any improved lot or lots except as noted.

On June 7, 1983, the Kiests were refused a building permit by the village board. The Kiests then filed a claim under their commitment for title insurance. On February 6, 1984, James K. Weston, vice-president and regional counsel for Chicago Title, wrote to the Kiests' attorney, stating that "Ordinance 81 -- 8 is invalid and of no legal effect." On February 8, 1984, the Kiests filed a claim against the title company based on the fact that the commitment for title insurance was issued without reference to the restrictions placed on the lots by ordinance No. 81 -- 2 and the preannexation agreement. The Kiests sought damages, and although Chicago Title denied liability, they paid the Kiests $4,000 on a covenant not to sue. As a result of these events, Truman Esmond contends he heard from a number of persons that title to the lot was no good and that Chicago Title had admitted as much and made a settlement with the Kiests.

On June 22, 1984, the Kiests filed a complaint against the Esmonds alleging that the failure of the Esmonds to comply with the terms of the preannexation agreement with the village was the cause of the village's refusal to issue a building permit. The Esmonds then filed a third-party complaint for indemnity against several third-party defendants, including Chicago Title. The Esmonds amended their complaint by adding count VII, which alleged that the Weston letter had slandered the title of the lots still owned by the Esmonds. The underlying action between the Esmonds and the Kiests was ...


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