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Denis F. McKenna Co. v. Smith

December 07, 1998


The opinion of the court was delivered by: Justice Tully delivered the opinion of the court.

Appeal from the Circuit Court of Cook County. Honorable Aaron Jaffe, Judge Presiding.

Plaintiff, The Denis F. McKenna Co. (McKenna), filed a complaint against defendants, Mary Ann Kenny Smith, David Drew, and Drew Holdings, Inc. (Drew). Plaintiff sought a declaratory judgment to enforce an alleged real estate contract between plaintiff and Smith and a preliminary injunction to prevent Smith from selling the property to Drew pursuant to defendants' real estate contract. Defendants filed a motion for a directed finding. On March 19, 1998, the trial court granted defendants' motion for a directed finding and denied plaintiff's request for a preliminary injunction. Plaintiff filed this interlocutory appeal pursuant to Supreme Court Rule 307(a)(1) (155 Ill. 2d R. 307(a)(1)).

For the reasons which follow, we affirm.


The record sets forth the following relevant facts. Defendant Smith owned residential property located at 2600 Blackhawk in Wilmette, Illinois. Smith placed the property up for sale for $459,000. On November 18, 1997, at approximately 10:30 a.m., Denis McKenna, president of The Denis F. McKenna Co., made an offer to buy the property through Peg Spengler, his real estate agent. The offer was for $435,000 and it expired at noon that day.

When Smith saw the offer at about 11 or 11:30 a.m., she told Mary Jane Kraus, her real estate agent, that she wanted to consult with her attorney, Eugene Callahan, and her brother before entering into a contract. Just before noon, although Smith still wanted to speak with Callahan, she made a counter-offer which included a new price of $450,000 and was subject to Callahan's approval. McKenna responded by agreeing to each term of the counter-offer, except for the price. McKenna then offered $442,500 and imposed a deadline of 2 p.m. that afternoon. Smith responded that she wanted to speak with Callahan before either accepting or rejecting the offer and requested that McKenna extend the deadline until 3 p.m. When McKenna was informed of this, he raised his offer to $450,000. Kraus informed Spengler that Smith was likely to agree to McKenna's offer, but that Smith still wanted to speak with her attorney. Spengler then asked Kraus for permission to deliver the offer to Smith personally. Kraus agreed but reiterated that Smith wanted to speak with her attorney before signing any contract.

At approximately 1:30 p.m., Spengler brought the offer to Smith's home. The offer expired at 2 p.m. and included an attorney approval clause. While Spengler waited, Smith continued her attempts to reach Callahan, but was unsuccessful. Callahan's secretary told Smith that as long as the contract included an attorney approval clause she could sign it because Callahan could reject the offer upon his later review. Spengler told Smith that there was "no deal" and McKenna "would walk" if she did not sign the contract by 2 p.m. As a result, Smith signed the contract before reaching Callahan. Spengler then sent a copy of the contract by facsimile to Callahan's office.

The contract was a standardized real estate contract which is distributed by the North Shore Board of Realtors and widely used in the Chicago area. It includes a non-negotiation attorney approval clause which states:

"This contract is contingent upon the approval hereof as to form by the attorneys for Purchaser and Seller within 5 business days after Seller's acceptance of this contract. Notices shall be given pursuant to Paragraph 14 on the reverse side hereof."

The notice provision stated, in pertinent part:

"All notices or other communications which may be required or made under the terms of this Contract shall be in writing and shall be made to the parties hereto at the addresses which appear after their names, or such address or to such person as each may by written notice to the other designate, by personal delivery, certified or registered mail, or by facsimile transmission.

For the purposes of Paragraphs 8 and 9 of this contract, if written notice of disapproval is given within the time period specified, this contract shall be null and void and the earnest money shall be returned to Purchaser."

On November 18, 1997, Kraus received an offer to buy Smith's property from defendant Drew for $480,000. On November 19, 1997, Callahan sent written notice by facsimile and first class mail to Spengler that Smith was rejecting the McKenna contract pursuant to the attorney approval clause, and Coldwell Banker returned the $2000 earnest money check that McKenna had submitted. Spengler immediately faxed Callahan's rejection notice to Marguerite McKenna, McKenna's attorney and Denis' wife. That same day, Marguerite showed the rejection letter to Denis and recorded the contract at the recorder's office. She stated that she recorded the contract in order to provide "constructive notice" to subsequent purchasers and creditors.

Smith accepted the Drew offer on November 25, 1997. According to Callahan, the Drew contract was not relevant to his rejection of the McKenna contract. Callahan testified that he specifically objected to paragraph one of the contract, which ...

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