Schilling v. Stahl ( 2009 )

No. 2--08--0961 Filed: 11-5-09
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
______________________________________________________________________________
JEFFREY SCHILLING and NANCY ) Appeal from the Circuit Court
SCHILLING, ) of Boone County.
)
Plaintiffs-Appellants, )
)
v. ) No. 08--L--07
)
PATRICIA STAHL, MATTHEW STAHL, )
GERALD HOWELL, and U-SELL WE BUY )
ENTERPRISE, INC., ) Honorable
) Paul A. Logli,
Defendants-Appellees. ) Judge, Presiding.
______________________________________________________________________________
JUSTICE McLAREN delivered the opinion of the court:
Plaintiffs, Jeffrey and Nancy Schilling, appeal from the trial court's order denying their motion
for summary judgment and granting the motion for summary judgment of defendants, Patricia and
Matthew Stahl, Gerald Howell, and U-Sell We Buy Enterprise, Inc. (U-Sell). We reverse and
remand.
On February 4, 2008, the Schillings filed a three-count complaint in the circuit court of Boone
County. The Schillings alleged that, on August 3, 2007, the Stahls entered into articles of agreement
for warranty deed with defendant U-Sell regarding property at 205-207 W. Main St. in Poplar Grove,
Illinois. The Schillings were to buy the property for $313,500. In December 2007, Patricia Stahl met
with the Schillings and discussed selling them the Poplar Grove property. Patricia notified Jeffrey
Schilling on January 10, 2008, that she and her husband were ready to sell the property and wanted
No. 2--08--0961
to close within the next few days. On January 17, the Stahls and the Schillings entered into a contract
for sale of the property for $675,000. Patricia executed the contract individually and by power of
attorney on Matthew's behalf. Closing was to take place on or before January 30. An addendum to
the contract provided that the Stahls would fulfill all the terms and conditions of the agreement for
warranty deed with U-Sell, including full payment of the mortgage balance, by January 30.
On January 28, defendant Gerald Howell of U-Sell informed Nancy Schilling that the contract
between the Stahls and the Schillings "was cancelled." Patricia Stahl also told Nancy that she and
Howell "had decided not to sell" the property. On January 30, the Schillings went to the title
company offices for the scheduled closing, as did a representative of U-Sell, but the Stahls did not
appear.
Count I of the Schillings' complaint sought a declaratory judgment against the Stahls requiring
specific performance of the contract. Count II alleged breach of contract by the Stahls, while count
III alleged tortious interference with a contract against Howell and U-Sell. The Schillings and the
Stahls filed cross-motions for summary judgment. On September 18, 2008, the trial court granted
summary judgment in favor of the Stahls and denied summary judgment for the Schillings. This
appeal followed.
The Schillings now contend that the trial court erred in granting summary judgment in favor
of the Stahls and denying summary judgment in their favor. Summary judgment is appropriate where
the pleadings, depositions, admissions, and affidavits demonstrate that there is no genuine issue as
to any material fact and that the movant is entitled to judgment as a matter of law. Allegis Realty
Investors v. Novak, 379 Ill. App. 3d 636, 637 (2008). The pleadings, depositions, admissions, and
affidavits are to be construed against the movant and in favor of the nonmoving party. Allegis Realty
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Investors, 379 Ill. App. 3d at 637. A court should grant summary judgment only when the movant's
right to judgment is clear and free from doubt; where reasonable persons could draw divergent
inferences from undisputed facts, summary judgment should be denied. Allegis Realty Investors, 379
Ill. App. 3d at 637. We review de novo a trial court's decision regarding summary judgment. Allegis
Realty Investors, 379 Ill. App. 3d at 637.
In their motion for summary judgment, the Schillings sought specific performance of the
January 17, 2008, contract; they included no argument regarding counts II and III of their complaint.
In their motion, the Stahls argued that the agreement was too indefinite to be enforceable and listed
12 terms "which were not agreed to and are material to the sale of the property."
To state a cause of action for specific performance, a plaintiff must allege: (1) the existence
of a valid, binding, and enforceable contract; (2) compliance by the plaintiff with the terms of the
contract, or proof that the plaintiff is ready, willing, and able to perform the contract; and (3) the
failure or refusal of the defendant to perform his part of the contract. Hoxha v. LaSalle National
Bank, 365 Ill. App. 3d 80, 85 (2006). In order for a party to be entitled to specific performance, the
contract must be so certain and unambiguous in its terms and in all its parts that a court can require
the specific thing contracted for to be done. Cefalu v. Breznik, 15 Ill. 2d 168, 170 (1958). It is not
sufficient to show the existence of some kind of agreement between the parties; where there is
ambiguity, doubt, or uncertainty with respect to its terms, equitable enforcement by specific
performance will be denied. Cefalu, 15 Ill. 2d at 170. The method or manner of payment is an
essential part of an agreement to purchase real estate, and the contract must specify not only the price
but the terms and conditions of the sale as well. Cefalu, 15 Ill. 2d at 170.
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Attached to the complaint as exhibit "C" was the contract for purchase and sale dated January
17, 2008. The names and addresses of the parties, as well as the description of the property, were
listed. The sale price was $675,000, with $1,000 paid as earnest money. The contract was signed
by the Schillings as buyers and the Stahls (with Patricia signing for Matthew by power of attorney)
as sellers. Above the signatures, in bold capital letters, was printed:
"NOTICE TO PARTIES
BY THE SIGNING OF THIS CONTRACT, YOU ARE ENTERING INTO A
BINDING LEGAL AGREEMENT. ANY REPRESENTATION UPON WHICH YOU
RELY SHOULD BE INCLUDED IN THIS AGREEMENT. NO ORAL
REPRESENTATION WILL BE BINDING UPON OR AN OBLIGATION OF THE
SELLER, BUYER, REAL ESTATE BROKER, OR AGENT.
TIME IS OF THE ESSENCE OF THIS CONTRACT AND OF ALL THE TERMS
AND CONDITIONS HEREOF."
The addendum, identified in the contract and similarly signed by the parties, was also included
as part of the exhibit. Pursuant to the addendum, the Stahls were party to the agreement for warranty
deed for the property at 205-207 W. Main in Poplar Grove. The Stahls warranted that they would
comply with and fulfill all terms of the agreement, including full payment of the mortgage balance,
taxes, insurance, and fees on or before January 30, 2008. They then would sell the property to the
Schillings for $675,000. The Schillings would provide to the Stahls $435,000 cash at closing and a
promissory note and mortgage in the amount of $240,000. The promissory note was to bear interest
at 4% simple interest per annum for five years, with interest to begin accruing from the closing date.
The first payment was due one month from closing with payments in consecutive months thereafter;
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payments were to be mailed to the Stahls at 817 Blakely Street in Woodstock, Illinois. The payments
were to be "interest only or more" at the Schillings' option. All outstanding principal was to be paid
to the Stahls on or before five years from closing. The addendum also provided for the Schillings'
right of first refusal to purchase the note if the Stahls decided to sell it and for the substitution of
collateral securing the mortgage as long as (1) the equity in the substituted property was equal to or
greater than the outstanding principal balance on the note at the time of substitution and (2) the cash
flow from the substituted property was equal to or greater than the minimum committed payment on
the note at the time of substitution.
The Stahls, in their words, "have admitted that the Contract and Addendum have sufficient
terms as to the promissory note." However, they argue that the parties did not discuss, let alone
come to an agreement on, any terms of the mortgage. The Stahls, as did the trial court, rely
extensively on Lencioni v. Brill, 50 Ill. App. 3d 802 (1977). The parties in Lencioni entered into a
contract for the purchase of real estate, providing that the defendants would furnish a " 'standard form
mortgage' " for the plaintiffs to execute and return at closing. Lencioni, 50 Ill. App. 3d at 804. The
plaintiffs rejected the forms filled in and sent by the defendants as not proper and ultimately sent to
the defendants a statutory mortgage form, obtained from a stationer, and a separate group of printed
mortgage provision inserts. Lencioni, 50 Ill. App. 3d at 804. At trial, the plaintiffs introduced an
exhibit that included similar printed clauses, including a mortgage prepayment clause and a clause
granting a grace period after a missed payment before default. Lencioni, 50 Ill. App. 3d at 804. The
defendants rejected those provisions and did not honor the contract, leading to the plaintiffs' suit for
specific performance. Lencioni, 50 Ill. App. 3d at 804. After the trial, the trial court found that many
of the mortgage provisions supplied by the plaintiffs varied significantly from the original terms of the
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contract and that, while the parties "had agreed to what they called a standard form mortgage, they
have different understandings of the terms of such a mortgage" such that the court could not properly
resolve the differences by supplying the disputed terms. Lencioni, 50 Ill. App. 3d at 805.
This court concluded that the phrase " 'standard form mortgage' " was "not definitive and
contemplates different terms to different persons." Lencioni, 50 Ill. App. 3d at 806. Before the trial
court could order the defendants to carry out the sale, it would have to "fix those mortgage
provisions not agreed upon by the parties," such as prepayment penalties, foreclosure procedures, the
imposition of attorney fees and other costs in a foreclosure proceeding, and the existence and
potential length of a grace period before default. Lencioni, 50 Ill. App. 3d at 806. Under the
evidence presented in the case, the trial court "could not properly resolve these substantial disputed
terms of the contract," and this court could not say that its decision was against the manifest weight
of the evidence. (Emphasis added.) Lencioni, 50 Ill. App. 3d at 806.
Here, defendants attempt to frame this case within the contours of Lencioni and list 13
mortgage terms that were not provided for in the contract and addendum, including those specifically
listed in Lencioni. However, Lencioni is distinguishable. The mortgage terms at issue in Lencioni
were "disputed." See Lencioni, 50 Ill. App. 3d at 804, 806. By definition, there is no agreement
where provisions are disputed by the parties. However, in the case before us, there are no disputed
terms. While defendants argue that mortgage terms are missing and, thus, not agreed upon, the
absence of an express agreement regarding a provision, or even 13 provisions, is not evidence that
terms are disputed, are not agreed upon, or even were not considered. As the Stahls failed to show
up at the closing and present a mortgage, it would be difficult for anyone to dispute the "missing
terms" of a document that the Stahls failed to present.
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More on point with this case is J.L. Watts Co. v. Messing, 111 Ill. App. 3d 937 (1982). In
J.L. Watts Co., the parties agreed to the sale/purchase of property for $100,000, with $14,000 paid
up front as earnest money. The contract specified that the $86,000 balance would be " 'carried on
contract for deed payable $977.48, or more, per month for 180 months, said payment to include
interest at the rate of 11% per annum, computed monthly, on the unpaid balance.' " J.L. Watts Co.,
111 Ill. App. 3d at 938. The defendant seller resisted scheduling a closing, and the plaintiff buyer
brought suit for specific performance.
After a trial, the trial court found for the defendant. The appellate court reversed and
remanded, concluding that the anticipated preparation of another contract for deed, standing alone,
did not render the contract unenforceable. J.L. Watts Co., 111 Ill. App. 3d at 939. The sales
contract itself bore in "large bold type 'This is a binding contract' "; it also "clearly and unambiguously
set forth" the names and addresses of the buyer and the seller, the purchase price, the location of the
property, the amount of the down payment, and terms of paying the balance, including interest. J.L.
Watts Co., 111 Ill. App. 3d at 939. Other terms, including payment of taxes, proration of certain
expenses, and the broker's commission, were also included. J.L. Watts Co., 111 Ill. App. 3d at 939.
The court distinguished Lencioni, as we have here, because of the "actual difference in their
understanding" of the terms in Lencioni and described as "mere speculation" the various areas of
potential disagreement between the parties in the case before it. J.L. Watts Co., 111 Ill. App. 3d at
939-40.
In the case before us, the contract clearly identified the parties, the property, the price, and
the earnest money provided. It also clearly notified the parties that they were entering into a binding
legal contract. The addendum to the contract clearly included the amount to be provided at closing,
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the amount of the promissory note and mortgage, the interest rate, the method of interest calculation,
the date from which interest was to accrue, the term of the note, the payment schedule, and the
address to which payments were to be sent. Prepayment would be allowed without penalty, as the
Schillings were given the option of paying "interest only or more." It also provided for the Schillings'
right of first refusal to purchase the note if the Stahls decided to sell it and for the substitution of
collateral securing the mortgage. The parties, price, and terms of payment are clear and
unambiguous.
A mortgage is an interest in land, created by a written instrument providing security in real
estate to secure the payment of a debt. Aames Capital Corp. v. Interstate Bank of Oak Forest, 315
Ill. App. 3d 700, 703 (2000). The "missing" terms listed by the Stahls, like those in J.L. Watts Co.,
are a list of "what ifs" that could arise at some future date, not terms that are essential to the creation
of such an interest. For example, the Stahls list as unaddressed: prepayment (which actually was
addressed, as the Schillings could pay "interest only or more"); procedures and imposition of costs
and fees in the event of foreclosure; grace period before default; maintenance of insurance; remedy
for failure to pay taxes; rights under a condemnation proceeding; assignment of rents; rights to
insurance proceeds if the property is damaged; obligations regarding any future environmental
contamination; subordination agreements; and rights if a mechanic's lien is recorded against the
property. Most or all of these terms would be included in a standard mortgage, and a strongly
positioned bank could require them to protect its rights. However, it does not follow that the lack
of such terms renders the agreement in this case ambiguous and unenforceable. To the extent that
any such rights are not included, those rights do not exist; the noninclusion of those rights does not
signal a dispute as to what rights exist.
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Even the argument that there is no explanation of whether such a mortgage would be a first
or a second mortgage is a red herring. There is a presumption that the first mortgage recorded has
priority. See Aames Capital Corp., 315 Ill. App. 3d at 704. The mortgage's priority is based on when
it is recorded. Furthermore, the addendum provided for the substitution of collateral securing the
note so long as the equity in the substituted collateral was the same as or greater than the balance due
on the note and the cash flow from the new collateral was the same as or greater than the minimum
payment due on the note. Such a detailed substitution term shows not only that the terms of the
mortgage were discussed but that a specific agreement was reached. Position was not as important
as equity and cash flow. The existence of such a term demonstrates that position was not an open,
ambiguous term, let alone a disputed term.
We conclude that the contract and addendum were so certain and unambiguous in their terms
and in all their parts that the Schillings were entitled to specific performance of the contract. Thus,
the trial court erred in granting summary judgment to the Stahls and in denying summary judgment
to the Schillings.
For these reasons, the judgment of the circuit court of Boone County is reversed, and the
cause is remanded for further disposition consistent with the decision granting specific performance.
Reversed and remanded.
O'MALLEY and JORGENSEN, JJ., concur.
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