154 N.E. 231 | Ill. | 1926
In November, 1923, Josephine L. Kellogg negotiated a sale of certain real estate in Lake county, represented to be approximately 225 acres, to P.H. Kartte and John J. Krueger at the price of $350 an acre, and on November 19 a written contract embodying the terms agreed upon was prepared by her attorney for execution by the parties, who had met at the attorney's office for the purpose. Before the writing was completed Krueger had to go back to his work, and it was agreed that the other two parties to the contract should sign it and it should be left in escrow with the Chicago Title and Trust Company and Krueger should sign it later. The contract was completed and signed by Miss Kellogg and Kartte and the same day was deposited with the trust company under an escrow agreement signed by Miss Kellogg, Kartte and Krueger's mother, together with a deposit of $1000 earnest money required by the contract, which was advanced by Krueger's mother. Before the contract was performed disagreements arose between the parties, which resulted in Kartte's filing in the recorder's office an affidavit setting forth that he had entered into a contract with Miss Kellogg for the purchase of the land, which, with the earnest money, was placed in escrow, and that he had always been ready and willing to perform his part of *445 the contract but that she had failed and refused to carry it out, and she thereupon filed a bill to remove the cloud upon her title caused by the record of the affidavit. Kartte, Krueger, Mandel Mendelson, to whom they had assigned the contract, and the Chicago Title and Trust Company, were made defendants to the bill and filed separate answers, the trust company disclaiming interest in the land or contract except as escrow agent. In addition to his answer Mendelson filed a cross-bill praying for specific performance of the contract. The cause was referred to a master, who made a report recommending the dismissal of the original bill and the granting of a decree of specific performance on the cross-bill. The court sustained exceptions to the report and entered a decree finding that the contract had been abandoned by all the parties and ordering the affidavit expunged from the record and the cross-bill dismissed for want of equity. Mendelson has appealed from this decree and contends that the decree is not justified by the evidence and is not based on the pleadings; that the sole defense to the cross-bill relied on by the appellee is that there was no contract, and in her pleading there is no claim that the contract was abandoned and in the evidence no warrant for such a finding that it was abandoned.
The facts appearing from the evidence are, that the contract was drawn in accordance with the agreement of the parties, was signed and deposited in escrow, as has been stated, and it was agreed that Krueger might sign it afterward upon being identified by Linden, Miss Kellogg's attorney. He called at Linden's office several times to get him to go with him to the trust company's office and identify him but did not find him in. When he did find him Linden was in a hurry to go to a train and declined to go with him then, but said that there was no hurry, — he could sign it any time. Later Linden refused to identify him, and the contract was not actually signed by Krueger until after Miss Kellogg filed the bill in this case. However, all the *446 parties treated the contract in the meantime as in force. It required Miss Kellogg to deliver within a reasonable time either a merchantable abstract of title or a title guaranty policy brought down to show the title as of the date of the contract. Within ten days after the receipt of such abstract of title or title guaranty policy the purchasers were required to deliver to the vendor a memorandum in writing signed by them or their attorneys, specifying in detail their objections to the title, if any, or if none, then stating that the title was satisfactory. In case material defects were found in the title and reported and such defects were not cured within sixty days after notice thereof, it was provided that the purchasers might elect to take the title as it then was, but the vendor's deed should not be construed as a warranty against such objections to the title, provided that at the end of said sixty days the vendor should notify the purchasers or their attorney that the objections could not be removed, whereupon the purchasers should, within ten days next following said sixty days, notify the vendor of their intention to either take the title as it was or abandon their claim on the premises under the contract. It was further stipulated their failure to so notify the vendor should be construed as an abandonment. Time was declared to be of the essence of the contract, and it was stipulated that upon failure of the purchasers to perform the contract promptly, the earnest money should, at the option of the vendor, be retained by the vendor as liquidated damages.
It is contended by the appellee that because of the failure of Krueger to sign the contract it never became effective; that it lacked mutuality, and that the appellee could not have enforced it against Krueger and therefore it can not be enforced against the appellee. To constitute a valid executory contract for the sale of land both parties must be bound; there must be concurrent mutual promises binding upon the parties, respectively, or neither will be bound. (Gage v. Cummings,
Kartte testified that between the date of the signing of the contract and the giving of notice of forfeiture the property had more than doubled in value. The decree is based *448 on the finding that Kartte and Krueger, after the expiration of the sixty days within which the appellee was required to cure the defects in the title of which she had received notice, having failed to notify the appellee of their election to take the title subject to the objections made by them, the contract ceased to have any effect and was abandoned by all the parties and Kartte and Krueger became entitled to have the earnest money returned to them. The bill makes no allegation of the abandonment of the contract, but bases the right to have the cloud removed from the title on the allegation that no contract was ever entered into. If there was no contract there could be no decree permitting the appellee to retain the $1000 earnest money as liquidated damages for the breach of the contract. We have held that there was a contract binding upon Kartte and Krueger by reason of their acceptance of the written agreement purporting to bind them. The appellee so regarded it, as appears from her action in serving notice of forfeiture for non-compliance with its terms and claiming to hold the earnest money as liquidated damages for its breach. The declaration of forfeiture by the appellee was not effective for that purpose. The defects in the abstract and guaranty policy delivered by the appellee on December 19, 1923, and January 3, 1924, were stated in the objections of Kartte and Krueger on January 14 and they remained uncorrected on March 14. If the appellee was unable to remove the objections it became her duty to notify the purchasers in writing, and thereupon they would become entitled to elect to take the title subject to the objections. No such notice was given and no obligation to elect arose in the absence of notice. The purchasers were therefore not in default when the appellee's notice of forfeiture was given, and she therefore acquired no right to retain the earnest money as liquidated damages.
On May 23, 1924, Kartte and Krueger assigned their contract of purchase to Mendelson. The contract was assignable *449
and carried with it the rights and remedies that existed in the assignors. (Moore v. Gariglietti,
Objection is made to the decree that it is based upon the finding of the court that the contract had been abandoned by all the parties, while the only defense set up in the appellee's answer to the cross-bill is that no contract between the parties was ever executed. The appellee's answer did not set up, in terms, the affirmative defense of the abandonment of the contract, but it did not admit the assignment of the contract to the appellant or that the appellant had assumed its obligation and had become bound to the appellee for its performance. Since these facts were not admitted it was necessary for the appellant to prove them, and failing to do so no decree could be rendered for the specific enforcement of the contract. In order to enforce the specific performance of the contract it was necessary for the appellant to show that he was bound to the appellee for the performance of all the terms of the contract, so that there should be the mutuality of obligation and remedy which would enable her to enforce the contract against him as well as him to enforce it against her, and the proof shows no such situation. On the contrary, he made no offer to bind himself to the full performance of the contract for many months after its assignment to him, and no effort to enforce its specific performance until after the appellee had filed her bill for the cancellation of the contract.
The appellee was not entitled to retain the earnest money but was herself in default, and the appellant was not entitled to a decree of specific performance, and for these reasons both the bill and the cross-bill should have been dismissed.
The decree is reversed and the cause is remanded, with directions to the court to enter a decree dismissing both the bill and the cross-bill for want of equity. Each party will pay his own costs in this court.
Reversed and remanded, with directions. *452