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Krajcir v. Egidi

June 04, 1999

ROBERT J. KRAJCIR, PLAINTIFF-APPELLANT,
v.
MARIO R. EGIDI, DENNIS R. EGIDI, LLOYD S. LEVINE, AND SPAULDING ASSOCIATES, AN ILLINOIS PARTNERSHIP, DEFENDANTS-APPELLEES.



The opinion of the court was delivered by: Justice Hartman

Appeal from the Circuit Court of Cook County. Honorable James Fitzgerald Smith, Judge Presiding.

Plaintiff Robert J. Krajcir appeals from the circuit court's orders dismissing count I of his third amended complaint with prejudice and dismissing his fourth amended complaint, with prejudice. Plaintiff had filed suit against defendants Mario R. Egidi (Mario), Dennis R. Egidi (Dennis), Lloyd S. Levine (Lloyd) and Spaulding Associates (Spaulding), an Illinois partnership, seeking to recover the balance due on a contract for the sale of an apartment building to Spaulding Associates and on a promissory note issued in connection with the sale. Krajcir presents as issues on appeal whether the circuit court erred when it dismissed: (1) count I of his verified third amended complaint with prejudice; (2) his verified fourth amended complaint with prejudice; and (3) his action for an equitable seller's lien. The relevant facts follow.

On March 18, 1982, Krajcir and his brother, Richard W. Krajcir (sellers), entered into a written contract to sell the property commonly known as 1944-50 N. Spaulding Avenue, Chicago, Illinois (Spaulding Property) to Spaulding, Lloyd and Mario (purchasers). The contract was signed by plaintiff, as seller, and Lloyd, as a partner on behalf of Spaulding, the purchaser. This original contract between the parties was amended by a letter dated July 9, 1982, from plaintiff and his brother to Lloyd, which altered the payment provisions of the original contract. The copy of the amendatory letter contained in the record is not signed, but its contents are undisputed. It is also undisputed that Dennis is a partner of Spaulding, despite the fact that his name does not appear on the original contract or the amendatory letter.

The original contract provided for the payment of a purchase price in the amount of $350,000 to plaintiff and his brother, in exchange for the Spaulding Property. It specifically provided that "the funds to be paid hereunder are to come out of Project No. 071-35488 when funded by HUD. If said funding is not received by the Purchaser then this contract is null and void."

The July 9, 1982 amendment to the contract stated, among other things, that:

"[t]he amount of $10,000.00 [is] to be paid sellers at the time of the initial closing (delivery of the deed); plus, delivery at the same time of a Promissory Note in the principal amount of $110,000.00 payable to sellers and executed by Mario Egidi and [Lloyd S. Levine], individually, as co-makers; the Note shall be due on the date of final endorsement of the subject H.U.D. Loan and will be satisfied in full upon final payout of the proceeds thereof ***."

The July 9, 1982 amendment by letter further specified that Mario and Lloyd would be responsible for and assume certain liens, bills, fees, taxes, and other costs and expenses which relate to the Spaulding Property. The letter also stated that "[i]t is the intention of the parties that the contract between them dated March 18, 1982, shall remain in full force and effect except as herein specifically amended."

On September 15, 1982, at the closing of the sale of the subject property, a check in the amount of $10,000 was paid to plaintiff and his brother by the purchasers. They also received a written agreement signed by Mario and Lloyd, indemnifying sellers from any and all claims, demands or causes of action that may arise in connection with the property subsequent to September 15. On that same date, a promissory note in the amount of $110,000 was executed by Mario and Lloyd, as individuals, and delivered to plaintiff and his brother. The sellers transferred their rights, title and interest in the Spaulding Property. The deed shows that the property was conveyed to Lloyd S. Levine CLU-CFP, Inc., a corporation, which in turn conveyed the subject property to a bank as trustee under an Illinois land trust. Spaulding was the owner of the beneficial interest in the land trust.

On April 29, 1983, the final endorsement by the United States Department of Housing and Urban Development (H.U.D.) for defendants' Federal Housing Authority Project No. 071-35488 was completed. It was on this date that the $110,000 promissory note paid to the sellers by Mario and Lloyd became due pursuant to the terms of the note.

A payment was subsequently made to plaintiff by check dated March 15, 1984, in the amount of $10,000, drawn on an account of Spaulding, and signed by Lloyd, as partner, and Dennis. A written notation appears on the face of this check reading, "Partial Pymnt Principal of Note MEM[sic] FWD[sic]." A second payment was made to plaintiff by check dated April 3, 1984, in the amount of $55,000. This check was also drawn on a Spaulding account and signed by Lloyd, as partner, and Dennis. A typed notation appears on the face of this check reading, "For payment against land and buildings." On April 22, 1984, Richard W. Krajcir died intestate, leaving plaintiff as his only survivor and heir at law.

On March 3, 1994, plaintiff filed a verified complaint at law against Mario, Dennis, Lloyd and Spaulding, seeking recovery of the unpaid balance of $55,000 on the promissory note, plus interest.On October 27, 1994, Mario filed a motion to dismiss plaintiff's complaint, based on the fact that Mario had filed for bankruptcy (Chapter 7) in the United States Bankruptcy Court for the Northern District of Illinois -Eastern Division on June 22, 1993. On that same date, Dennis and Spaulding filed a combined motion to dismiss plaintiff's complaint pursuant to sections 2-615, 2-619, and 2-619.1 of the Code of Civil Procedure (Code)(735 ILCS 5/2-615, 2-619, 2-619.1 (West 1994)).

On February 1, 1995, plaintiff filed a verified amended complaint at law, alleging, among other things, that the principal sum of $45,000, plus interest, remained due and owing on the September 15, 1982 promissory note. On June 27, 1995, Dennis and Spaulding filed a combined section 2-619 supplemental motion to dismiss plaintiff's verified amended complaint, alleging that the promissory note was subject to the six-year statute of limitations set forth in section 3-118 of the Uniform Commercial Code (UCC) (810 ILCS 5/3-118 (West 1994) (UCC section 3-118)). They argued that plaintiff's original complaint had been untimely filed, where the statute of limitations had expired on April 29, 1989, six years after the final endorsement by H.U.D., and plaintiff's complaint in this matter was not filed until March 3, 1994.

On August 31, 1995, following a hearing on the preceding day, the circuit court entered an order granting the motion to dismiss pursuant to section 2-619.1 of the Code, based on the expiration of the applicable statute of limitations. It further held that because "this motion is dispositive of this matter as to [Dennis and Spaulding], there is no need to consider the remaining motions to dismiss."

On September 29, 1995, plaintiff filed a motion to vacate the order of dismissal and for leave to file an amended complaint. On the same date, plaintiff filed a verified second amended complaint, adding a second count and another theory of recovery, based on his claim that he had an equitable vendor's lien on the real estate in the amount of $45,000, the balance of the purchase price due, plus interest.

On February 23, 1996, the circuit court denied the motion to vacate. Noting that "[n]either side was able to supply [the] court with a case that squarely addressed the issue of [the] competing statutes of limitation," the court concluded that the UCC section 3-118 six-year limitation applied to the subject promissory note in this case, not the 10-year limitation under section 13-206 of the Code, as claimed by plaintiff. The court, however, granted plaintiff leave to file a second amended complaint.

On March 22, 1996, Dennis and Spaulding filed a combined sections 2-615, 2-619, and 2-619.1 motion to dismiss plaintiff's verified second amended complaint, asserting that the circuit court previously had determined plaintiff's cause of action on the promissory note was barred by the six-year statute of limitations and stating, among other things, that the complaint failed to state a cause of action against Dennis and Spaulding, where count I appeared to co-mingle separate causes of action based on the promissory note and the real estate contract. Dennis and Spaulding further argued that no facts were alleged which would constitute a cause of action on the note against them, not being parties to the note. They stated that no facts had been alleged to support the Conclusion that Mario and Lloyd were acting on behalf of Dennis and Spaulding; rather, the facts showed an obligation only on the part of Mario and Lloyd. They also claimed that no cause of action for breach of contract had been brought against them nor had any breach of contract occurred.

With respect to count II, Dennis and Spaulding argued that it failed to allege whether a written vendor's lien had been obtained by plaintiff, since payment of the full purchase price had been received by the sellers at closing, upon delivery of the personal promissory note of Mario and Lloyd. Given the fact that they had no personal obligation to pay the note of Lloyd and Mario, they were entitled to protection under the Frauds Act (740 ILCS 80/0.01 et seq. (West 1994)). Finally, they contended that a cause of action for an implied vendor's lien against the real estate and in favor of plaintiff was barred by the applicable statute of limitations, because the promissory note itself was barred.

On August 5, 1996, the circuit court granted the combined motion to dismiss plaintiff's second amended complaint, "striking" count I of the complaint with prejudice, and striking count II of the complaint without prejudice, giving ...


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