Alsip Homebuilders, Inc. v. Shusta

• Decision Date: 25 May 1972
• Docket Number: No. 55433,55433
• Citation: 6 Ill.App.3d 65,284 N.E.2d 509
• Parties: ALSIP HOMEBUILDERS, INC., an Illinois Corporation, Plaintiff Counter-Defendant Appellant, v. Thomas J. SHUSTA and Mary E. Shusta, Defendants Counter-Plainiffs Appellees.
• Court: United States Appellate Court of Illinois

Page 509

284 N.E.2d 509

6 Ill.App.3d 65

ALSIP HOMEBUILDERS, INC., an Illinois Corporation, Plaintiff Counter-Defendant Appellant, v. Thomas J. SHUSTA and Mary E. Shusta, Defendants

Counter-Plainiffs Appellees.

No. 55433.

Appellate Court of Illinois, First District, Third Division.

May 25, 1972.

Howard Harris and Lawrence M. Freedman, Ash, Anos & Harris, Chicago, for appellant.

William F. Rickelman, Equi, Farwell, Rickelman & Proteau, Oak Park, for appellees.

McGLOON, Presiding Justice.

Plaintiff-counter defendant (hereinafter called Alsip) appeals from a judgment awarded to the defendant-counter plaintiff (hereinafter called Shusta) in the amount of $8100. Alsip does not appeal from the judgment entered against it on the original complaint that began this action. The Shusta counterclaim alleges that Alsip, a corporation engaged in the business of construction and sale of residential property, breached the Building and Real Estate Sales Contract entered into by the parties. The counterclaim was in two counts: Count I alleged the contract was breached in various aspects and demanded compensatory damages; Count II realleged the significant paragraphs of Count I and further alleged fraudulent activities of Alsip and precipitated the breach and demanded punitive damages. The jury verdict indicates that Shusta was awarded $3100 in compensatory damages and $5000 in punitive damages. In this appeal Alsip argues three grounds for reversal. First, that it did construct the Shusta's home in compliance with the contract, and the award of compensatory damages was against the manifest weight of the evidence. Second, it was denied its right to poll the jury. Third, it attacks the award of punitive damages on three grounds, the most important of which is its argument that punitive damages cannot be awarded in breach of contract actions.

We affirm in part and reverse in part.

On June 11, 1967, Alsip and Shusta entered into a contract in which Alsip agreed to build and Shusta agreed to buy a house to be completed at some future date. The contract was a standard form building and real estate sales contract with three added clauses typed on the reverse side. For purposes of this appeal the two significant covenants of this contract recite that the seller shall construct the residence in a good, substantial and workmanlike manner and that the structure was to be built in accordance with plans and specifications approved by the Federal Housing Administration.

Sometime before completion of the residence, Alsip recorded the deed conveying the real estate to Shusta. Upon completion of the structure, a dispute arose between the parties as to certain alleged construction defects. Although Shusta moved into the house, he refused to accept the residence as presented and demanded that Alsip make repairs to bring the house into compliance with the plans and specifications as recited in the contract. Shusta's dissatisfaction with the house caused him to refuse to sign the acceptance document that was needed by the mortgage lender before mortgage monies would be released to Alsip.

Alsip did perform some repairs and corrections on the house and simultaneously demanded that Shusta signed the acceptance document. Shusta continued to refuse to sign until all the alleged defects were corrected.

Subsequently Alsip forwarded to the mortgage lender an acceptance document that contained the purported signatures of the Shusta's. Upon receipt of this document and the final F.H.A. inspection report the mortgagee released the mortgage monies to Alsip. Shusta alleges that he never signed the acceptance document and, at the trial, produced an expert witness who testified that the purported signatures of Shusta and his wife were in fact forgeries.

Upon disbursement of these mortgage monies there remained a small amount allegedly owed Alsip. In January, 1969, Alsip filed suit to recover this balance. Shusta answered and counterclaimed alleging a breach of the building and sales contract. Count I alleged the specific, material defects in the strucure that violated the provisions of the contract and demanded actual damages. Count II, demanding punitive damages, alleged that Alsip wilfully and maliciously caused to be delivered to the mortgagee the acceptance document bearing the forged signature of Shusta which caused the mortgagee to release all mortgage monies to Alsip who then refused further repairs on the house, thereby breaching the contract. Both the original complaint and the counterclaim were tried by a jury with the aforementioned results.

In support of its contention that it did construct the house in compliance with the contract and that the verdict was against the manifest weight of the evidence, Alsip places great reliance upon that part of the contract which obligates it to complete the dwelling substantially in accordance with F.H.A. approved plans and specifications. The record shows that this dwelling was periodically inspected during its construction. All of these inspection reports indicate that all building material and construction techniques used, and any variation from the original building plans, were consistently approved by the F.H.A. inspector. Alsip concludes that because...