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05/14/97 VILLAGE OAK PARK v. FREDERICK H.

May 14, 1997

THE VILLAGE OF OAK PARK, PLAINTIFF-APPELLEE,
v.
FREDERICK H. SCHWERDTNER, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. No. 95 CH 10653. Honorable Michael B. Getty, Judge Presiding.

Released for Publication June 25, 1997.

The Honorable Justice Cahill delivered the opinion of the court. Cousins, P.j., and Gordon, J., concur.

The opinion of the court was delivered by: Cahill

The Honorable Justice CAHILL delivered the opinion of the court:

The Village of Oak Park (the Village) sued Frederick Schwerdtner, seeking a declaratory judgment and specific performance of a contract between the parties. The trial court granted the Village's motion for judgment on the pleadings. Defendant appeals. We affirm.

Defendant is employed as a police officer for the Village. On February 11, 1994, he entered into a contract with the Village to terminate his employment. The Village agreed to credit defendant with paid sick leave, to which he was not otherwise entitled, from April 27, 1993, to May 14, 1994. In return, defendant agreed to accept the paid sick leave as a settlement of a worker's compensation claim, to withdraw his application for a disability pension, and to resign effective June 19, 1994. The Village agreed that the sick leave payment would be treated by it as a component of service creditable toward his pension with the police department. The Village further agreed to defend, indemnify and hold harmless defendant in the event of a challenge to his right to a pension based on 20 years of service. If anyone successfully challenged his right to a pension based on 20 years of service, the Village agreed to pay him the difference between the pension awarded and a pension based on 20 years of service.

After the contract was signed, the Village prepared a check for defendant's paid sick leave, withholding federal income tax. The Village and defendant disagreed about whether or not the Village should have withheld tax from that check. As a result, defendant refused to resign or otherwise perform his obligations under the agreement.

The Village then brought this action for a declaratory judgment that the contract was specifically enforceable. The parties filed cross-motions for judgment on the pleadings under section 2-615(e) of the Code of Civil Procedure (735 ILCS 5/2-615 (e) (West 1994)).

Defendant argued that the contract is based on a mutual mistake and contrary to public policy. The trial court disagreed, holding that the contract was valid and subject to specific performance.

We first address defendant's argument that the contract was based on a mutual mistake. To invalidate a contract because of mutual mistake, a party must show by clear and convincing evidence that a mistake has been made by both parties relating to a material feature of the contract. Keller v. State Farm Insurance Co., 180 Ill. App. 3d 539, 548, 536 N.E.2d 194, 129 Ill. Dec. 510 (1989). A mutual mistake is one where both parties understand that the real agreement is what one party alleges it to be; then, unintentionally, a contract is drafted and signed that does not express the true agreement. See In re Marriage of Johnson, 237 Ill. App. 3d 381, 391, 604 N.E.2d 378, 178 Ill. Dec. 122 (1992); Black's Law Dictionary 1001 (6th ed. 1990) ("Mutual mistake is where the parties have a common intention, but it is induced by a common or mutual mistake").

Defendant argues there were two mutual mistakes. First, he claims that both parties were mistaken as to the tax consequences of the contract. We disagree. There is no evidence in the record or admission in the pleadings that the Village signed the contract with the mistaken belief that the payments were nontaxable. The contract is silent on tax consequences. At most, defendant has shown that he harbored a mistaken belief about the tax consequences of the contract before he signed it and that, after the contract was signed, the parties disagreed about the tax consequences of the agreement. The disagreement does not support a mutual mistake theory: that both parties understood before the contract was signed that the real agreement contemplated tax-free payments.

It is settled law in Illinois that one party's mistaken opinion about the legal effect of a contract is not sufficient to void the contract. Holbrook v. Tomlinson, 304 Ill. 579, 585, 136 N.E. 745 (1922); Bruner v. Illinois Central R.R. Co., 219 Ill. App. 3d 177, 180, 578 N.E.2d 1385, 161 Ill. Dec. 739 (1991); Joseph v. Lake Michigan Mortgage Co., 106 Ill. App. 3d 988, 992, 436 N.E.2d 663, 62 Ill. Dec. 637 (1982).

Defendant also argues that the parties mutually and mistakenly believed before the contract was signed that the sick leave payment could be counted toward creditable service such that defendant would be entitled to a 20-year service pension. Defendant contends that under the Illinois Pension Code (40 ILCS 5/3-110 (West 1994)) and Illinois insurance regulations (50 Ill. Adm. Code ยง 6302.40 (1996)), such payments are not considered creditable service.

Nothing in the record supports the theory that the Village, before signing the contract, believed the payments could be counted toward creditable service as a matter of law. The contract suggests the opposite. The contract anticipates the possibility of a future pension board ruling adverse to defendant with a provision to make defendant whole if the pension board so ruled. The promise of indemnification supports the ...


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