APPELLATE COURT OF ILLINOIS, SECOND DISTRICT
539 N.E.2d 856, 183 Ill. App. 3d 1081, 132 Ill. Dec. 293 1989.IL.831
Appeal from the Circuit Court of Kane County; the Hon. Barry Puklin, Judge, presiding.
JUSTICE NASH delivered the opinion of the court. UNVERZAGT, P.J., and LINDBERG, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE NASH
Plaintiff, Kenneth Vincent, appeals from a summary judgment entered in this declaratory judgment action in favor of intervenor-appellees, Joseph J. Freed and La Salle National Bank of Chicago, as trustee. Defendants Eugene Doebert, Dolores J. Doebert, Tommy Cole, and Marilyn Jean Cole have also filed a brief as appellees, in which they are described as stakeholders and urge affirmance of the judgment below.
The controversy in this case evolves around the question of whether plaintiff, Vincent, or intervenor, Freed, has the right to purchase a commercial corner at the intersection of Route 31 and New Indian Trail Road in the City of Aurora. Defendants, the Doeberts and Coles, are owner-lessors of the property which is held by plaintiff, Vincent, under a long-term lease, and who conducts a used car business on the premises. Intervenor Joseph Freed owns or is purchasing the area surrounding the subject property for development of a shopping center and wishes to acquire it for that purpose. The lease under which Vincent holds possession has a term to 1998, and contains three five-year options to extend it. The lease also contains a right of first refusal given therein by the lessors to the lessee to meet any bona fide offer from a third party to purchase the property during the term of the lease. Intervenor Freed, through his land trustee bank, entered into an agreement with the owner-lessors to purchase the property, after being unable to acquire Vincent's interest in it. The issue to be resolved on this appeal is whether Vincent did or did not correctly exercise his right of first refusal so as to be entitled to purchase the property on the material terms and conditions of Freed's third-party offer to its owners.
The lease was originally entered into in December 1978, between the Doeberts and Coles, as lessors, and Judico, Inc., as lessee. Plaintiff, with the consent of lessors, acquired the Judico interest in the lease in 1983 and occupies the premises. The provision of the lease relevant to this appeal states as follows:
"26. Right of First Refusal. Lessors do hereby grant to Lessee a right of first refusal with reference to the possible future sale of the premises, including that portion covered by the separate option provided for in Paragraph 27. In the event that Lessors receive a bona fide offer from a third party to purchase the premises during the original term of the lease or during any option term thereof, the Lessee shall have the right to purchase the premises on the same terms and conditions as being offered by the third party. Upon receipt of the third party offer, Lessors shall notify the Lessee in writing of the material terms of the offer. The Lessee shall have thirty (30) days form [ sic ] the date of the notice to advise the Lessors in writing of Lessee's intention to purchase the property on the same terms and conditions as offered by the third party." (Emphasis added.)
On May 15, 1986, the owners caused a notice to be sent to Vincent, signed by their attorney, advising Vincent, pursuant to the right of first refusal provision of the lease, that they had received an offer to purchase the premises from a third party. The terms of the offer were stated in the notice to include a purchase price of $330,000, with a down payment of $75,000 and the $255,000 balance to be paid in monthly installments of $2,695.37 over a 119-month period and the balance to be due on the 120th month. Interest was to be paid at the rate of 9% per annum and there could be no prepayment without the consent of the lessors. Closing of the transaction was scheduled for on or about July 1, 1986. The notice further stated:
"To secure the payment of the purchase price, the Purchaser shall grant to the Lessors a first mortgage on the premises along with a personal guarantee of an individual whose financial net worth is to be not less than $10,000,000. The Purchaser shall have the right to obtain a release of the first mortgage if the Purchaser supplies the Lessors with substitute security in the form of a letter of credit or other acceptable security in an amount not less than the amount of the purchase price then due the Lessors." (Emphasis added.)
The notice stated that, as provided in the lease, the lessee shall have 30 days from its date to advise lessors in writing of his intent to purchase the premises on the same terms and conditions set forth in the notice, as offered by the third party.
The record of this case also discloses that on May 22, 1986, the owner-lessors, as sellers, and the La Salle National Bank, as trustee, and as purchaser, entered into a real estate sales contract which acknowledged Vincent's interest in the property as a lessee with a right of first refusal of a third-party offer to purchase it. The terms of the sales contract between the owners and the Freed trustee are substantially as stated in the earlier notice sent to Vincent, except that it makes no reference to a requirement or offer by Freed that the payment of the purchase price shall be further secured by the "personal guarantee of an individual whose financial net worth is to be not less than $10,000,000," as is represented in the notice of the offer given to Vincent by the lessors' attorney. The sales contract did provide, however, that the promissory note for the $255,000 balance would be secured by a first mortgage on the premises, "and the personal guarantee of Joseph J. Freed."
A letter dated June 10, 1986, by Vincent's attorney directed to the lessors' attorney, stated in response to the notice that Vincent intended to exercise his right to purchase the property under the right of first refusal terms of the lease. The letter stated that the terms of the offer set forth in the notice would be met, except for the paragraph requiring the personal guarantee of an individual whose net worth was not less than $10 million. Vincent considered that requirement to be arbitrary and to not conform with normally accepted standards in this type of transaction, noting that the $330,000 price would be secured by the property and the $75,000 down payment. Vincent offered to pay the $330,000 purchase price ...