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12/07/89 Louis Dato Et Al., v. Arthur A. Mascarello

December 7, 1989





557 N.E.2d 181, 197 Ill. App. 3d 847, 145 Ill. Dec. 411 1989.IL.1899

Appeal from the Circuit Court of Cook County; the Hon. William A. Kelly, Judge, presiding.


JUSTICE McMORROW delivered the opinion of the court. JIGANTI, P.J., and LINN, J., concur.


Plaintiff-counterdefendant Louis Dato (plaintiff) *fn1 appeals from a judgment order in favor of defendant-counterplaintiff Arthur Mascarello (defendant) in an action arising from a commercial real estate transaction. Plaintiff contends that the trial court erred in its award and calculation of damages on defendant's counterclaim.

The facts of the case, which are largely undisputed, will be set forth only to the extent they are relevant to the issue presented. On July 3, 1979, the parties executed a written contract for the sale and purchase of a parcel of commercial property in Bellwood, Illinois. The contract provided, inter alia, that the purchase price was $215,000; that upon payment of $21,500 earnest money, plaintiffs would be permitted to take possession of the property; that closing would take place within seven days after issuance of a title insurance commitment; that at the closing, plaintiffs would pay to defendant the sum of $13,500 plus or minus prorations; and that defendant would hold a purchase money mortgage secured by a note from plaintiffs for the remaining amount of $180,000. The parties also entered into a separate agreement for the sale of various items of personal property for an agreed price of $7,000. There is a dispute as to when closing originally was to have taken place and why it did not occur as scheduled. However, it is agreed that plaintiffs took possession of the property on July 23, 1979, and that closing was rescheduled for September 14, 1979. On September 13, 1979, plaintiffs presented defendant with an itemized list of defects in need of repair (the punchlist) which plaintiffs had discovered after taking possession of the property. In addition to the dispute concerning the punchlist, a disagreement arose regarding whether certain items of personalty were to be conveyed with the property.

These disputes resulted in the cancellation of the September 14 closing and the filing of plaintiffs' original complaint seeking injunctive relief, specific performance of the contract, and damages for defendant's failure to make the necessary repairs of the items on the punchlist. Defendant thereafter filed his answer and a counterclaim alleging breach of contract by plaintiffs, seeking forfeiture of the earnest money and an order requiring plaintiffs to pay rent on a per diem basis from the date of their possession of the property.

The parties eventually executed an agreement to close the sale of the property on February 22, 1980, without prejudice to their respective rights under the real estate contract. Throughout the seven-month period between the date plaintiffs took possession of the property and the date of closing, defendant continued to collect the rents and to pay all taxes, insurance, utilities and maintenance costs (operating expenses) relating to the property.

On July 24, 1980, plaintiffs filed an amended complaint seeking reimbursement for the cost of the repairs not made by defendant and a declaration of the rights and liabilities of the parties with respect to the separate agreement regarding the items of personal property in dispute. Defendant filed an answer, affirmative defenses and an amended counterclaim seeking (1) payment of the full amount agreed upon for the personal property; and (2) damages equivalent to (a) the lost interest on the amount of the unpaid purchase price plus (b) the sums expended by him for the operating expenses during the seven months plaintiffs were in possession of the property prior to closing.

Following a bench trial, the trial court ruled that defendant owed plaintiff $2,000 as reimbursement for the reasonable cost of repairs of the defects itemized on the punchlist; that plaintiff was entitled to the rents of $2,450 collected by defendant during the seven months plaintiff was in possession of the property; that plaintiff, as a vendee in beneficial possession of the property for those seven months, was obligated to pay defendant $11,287.50 in interest on the unpaid purchase price of $180,000; and that plaintiff was further liable to defendant for all operating expenses paid by defendant during that period, which amounted to $10,015. The order resulted in a net judgment in favor of defendant and against plaintiff in the amount of $19,852.60. The trial court denied plaintiff's motion to vacate or modify the judgment, and this appeal followed.


Plaintiff contends that the order of the trial court constituted an unwarranted judicial reformation of the parties' written contract which was based on the court's erroneous reliance on inapplicable authorities. He asserts that the written contract is clear and unambiguous in expressing the intentions of the parties as to their rights and obligations, and that the court's award of damages on defendant's counterclaim is contrary to the intentions expressed in the contract.

The overriding objective in contract litigation is to give effect to the intentions of the parties. (Braeside Realty Trust v. Cimino (1985), 133 Ill. App. 3d 1009, 479 N.E.2d 1031.) Where an agreement is clear and unambiguous, a court should not resort to rules of construction or principles of equity (Harris Trust & Savings Bank v. Hirsch (1983), 112 Ill. App. 3d 895, 445 N.E.2d 1236). On the other hand, where an ambiguity arises from the written agreement, a court is not confined to a strict and literal construction of the language used, if such construction would frustrate the intentions of the parties as gathered from the agreement as a whole. (Shelton v. Andres (1985), 106 Ill. 2d 153, 478 N.E.2d 311.) In such circumstances, the court may look to extrinsic facts surrounding the formation of the contract to determine and give effect to the intentions of the parties at the time they entered into the agreement. (Harris, 112 Ill. App. 3d 895, 445 N.E.2d 1236; Wald v. Chicago Shippers Association (1988), 175 Ill. App. 3d 607, 529 N.E.2d 1138.) The court noted in Pieszchalski v. Oslager (1984), 128 Ill. App. 3d 437, 470 N.E.2d 1083, that the construction of a written contract should be controlled by its spirit and purpose, and a strict construction which renders a result different from that which the parties intended should not be adopted. Whether ambiguity exists in a contract is to be determined by the trial court as a question of law (Turner ...

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