Crandall v. Sorg

• Citation: 198 Ill. 48,64 N.E. 769
• Parties: CRANDALL et al. v. SORG.
• Decision Date: 19 June 1902
• Court: Supreme Court of Illinois

198 Ill. 48

64 N.E. 769

CRANDALL et al.

v.SORG.¹

Supreme Court of Illinois.

June 19, 1902.

Appeal from appellate court, First district.

Bill by Paul J. Sorg against Roland A. Crandall and others. A decree in favor of complainant was reversed by the appellate court, and the cause remanded, with directions to dismiss both the original and cross bills and petitions filed by defendants (99 Ill. App. 22), and the latter appeal. Judgment of the appellate court and decree of the circuit court each reversed.

Albert N. & Edw. P. Eastman and John T. Richards, for appellants.

H. H. C. Miller and W. S. Oppenheim, for appellee.

BOGGS, J.

Paul J. Sorg, the appellee, filed a bill in chancery in the circuit court of Cook county for a decree declaring certain conveyances and claims for mechanics' liens to be clouds on his title to the south two acres of block 16, in Canal Trustees' subdivision of section 33, township 39 N., range 14 E., at the corner of Thirty-Fourth street and State street, in the city of Chicago, on which is situate a large hotel building known as the Mecca Hotel. The bill asked the cancellation of the claims for mechanics' liens on the ground the complainant in the bill was the owner of the fee of the premises and had leased same for the term of 99 years; that the claims for liens were for services rendered and materials furnished to the lessee, and were, if valid at all, only liens on the leasehold estate; that the lessee failed and made default in the payment of the rents reserved to be paid by the terms of the lease, and failed to pay the taxes on the premises as required by the terms of the lease, and that after notice to each of said parties claiming liens, and default upon their part to pay such rents and taxes, the lease had been declared forfeited, in accordance with the terms and conditions of the instrument; that the leasehold estate had become forfeited, and that the petitions for liens and claims appearing of record for liens were clouds, and clouds only, on the title in fee in the complainant to the premises. The lease was attached to the bill as an exhibit. The appellants and other claimants for such liens, and other parties otherwise interested, were made parties defendant and filed answers to the bill. Cross bills were also filed for affirmative relief in the way of decree establishing liens. The cause was referred to the master, the master's report filed and approved, and a decree entered in accordance with the prayer of the bill. The appellants in this court and other of the defendants to the bill in the circuit court perfected an appeal to the appellate court for the First district, where a judgment was entered reversing the decree of the circuit court and remanding the cause, with directions to dismiss the original bill and the cross bills, and also to dismiss ‘all the petitions for mechanics' liens, without prejudice to proceedings other than for mechanics' liens under the statute.’ This appeal is prosecuted to reverse the judgment of the appellate court.

The defendants to the bill pleaded, and on the hearing produced in evidence, a contract entered into by the appellee and the lessee prior to the execution of the lease, which they insisted should be considered and taken as a part of the lease, and contended that the two instruments, considered together, showed the appellee was interested in the construction and ownership of the building on the premises, and that the liens ought legally to attach to both the leasehold and the fee title to the property. The contract referred to was entered into on the 22d day of May, 1891. One Henry C. Hullinger then held the title to the premises in question. Hullinger was a clerk in the office of one George W. Henry. Henry and one James H. Campbell were the real owners of the property, and Hullinger simply held title for them. It was an unimproved city lot or block. Hullinger, acting for said Henry and Campbell and the appellee, on that day entered into the following contract:

‘This agreement, made and entered into this 22d day of May, in the year eighteen hundred and ninety-one (1891), by and between Paul J. Sorg, of Middletown, Ohio, party of the first part, and Henry C. Hullinger, of Chicago, Illinois, party of the second part, witnesseth, that for and in consideration of the sum of two hundred thousand dollars ($200,000), to be paid by the said party of the first part in the manner hereinafter specified to said party of the second part, the said party of the second part hereby agrees to sell to said party of the first part the following described property, situated in the city of Chicago, in the county of Cook, and State of Illinois, to wit: The south two (2) acres of the northeast quarter of block sixteen (16), in the Canal Trustees' subdivision of section thirty-three (33), township thirty-nine (39), north, range fourteen (14) east of the third principal meridian, subject to all taxes and assessments levied after the year eighteen hundred and ninety (1890), and to any unpaid special taxes or assessments levied for improvements not yet made. Said party of the first part agrees to pay at the time of the execution of this contract the sum of five thousand dollars ($5,000) as earnest money, to be applied on said purchase when consummated, and agrees to pay, within twenty days after the title has been examined and found good, the further sum of ninety-five thousand dollars ($95,000) at the office of Dennis, Netling & Co., Chicago, Illinois, provided a good and sufficient warranty deed conveying to said party of the first part a good title to said premises (subject only as aforesaid) shall then be ready for delivery. The said payment of five thousand dollars ($5,000) is to be held in escrow with this contract by the Merchants' Loan & Trust Company of Chicago, Illinois, for the mutual benefit of the parties hereto, and in case the title, upon examination, is found materially defective within thirty days after said abstract is furnished, then, unless the material defects be cured within sixty days after written notice thereof, the said earnest money shall be refunded and this contract is to become inoperative. The said party of the second part agrees to furnish a complete abstract of title or merchantable copy within a reasonable time after the execution of this contract, showing the title down to the date hereof; and it is mutually agreed between the parties of the first and second parts that, should said purchaser fail to perform this contract on his part at the time and in the manner herein specified, the earnest money paid as above shall, at the option of the party of the second part, by forfeited as liquidated damages and this contract shall become null and void; and it is agreed by and between all of the parties to this contract that time is of the essence of such contract and of all the conditions and covenants thereof. It is also agreed by and between the said party of the first part and the said party of the second part as follows: The said party of the first part will lease said premises to the said party of the second part for the term of ninety-nine (99) years, to commence at the date when said sum of ninety-five thousand dollars ($95,000) shall be paid as hereinbefore provided, at an annual rental of twelve thousand dollars ($12,000) per annum, to be paid quarterly in advance, the first payment to be made on the day when the deed for said premises is delivered to said party of the first part and said sum of ninety-five thousand dollars ($95,000) is paid according to the terms of this contract, and the following payments to be made at intervals of three months thereafter during the entire term of said lease, said payments to be made quarterly in advance. Said lease is to contain all of the provisions and conditions in the form of a lease hereto attached, which is made, so far as said provisions and conditions are concerned, a part of this contract and binding upon said parties of the first and second parts. It is further agreed by and between said parties of the first and second parts, that said party of the second part will construct upon said premises a building which will cost not less than three hundred thousand dollars ($300,000), and that the construction of said building shall commence on or before September 1st, eighteen hundred and ninety-one (1891), and be ready for occupancy on or before February 1st, eighteen hundred and ninety-three (1893). If said building is not ready for occupancy within the time named, allowance being made for labor strikes and the acts of God, the rights of said party of the second part hereunder and under said lease shall cease and determine, and so much of said building as shall then have been constructed shall be forfeited to said party of the first part by said party of the second part as agreed, assessed, and liquidated damages, and all interests of said party of the second part therein shall cease. It is further agreed between said parties of the first and second parts that said building shall be planned and supervised in the construction thereof by architects Treat & Foltz, or some other competent architect approved by said parties of the first and second parts, and that the construction thereof shall proceed uninterruptedly, allowancebeing made only for labor strikes and the acts of God. It is further agreed by and between the parties of the first and second parts that if, at any time after the commencement of the erection of said building, work therein shall cease for the space of sixty days, or valid liens thereon for an amount within twenty per cent. of the amount then remaining unpaid to said party of the first part under the terms of this contract shall be filed or exist against or on account of said building, said party of the first part may declare said lease determined, and the rights of the said party of the second part under this contract and said lease, and in and...