Goodwine State Bank v. Mullins

• Decision Date: 22 December 1993
• Docket Number: No. 4-92-0585,4-92-0585
• Citation: 625 N.E.2d 1056,253 Ill.App.3d 980,192 Ill.Dec. 901
• Parties: , 192 Ill.Dec. 901 GOODWINE STATE BANK, Richard P. Fourez and Shirley A. Fourez, Plaintiffs-Appellees and Cross-Appellants, v. Jeffrey MULLINS, Defendant-Appellant and Cross-Appellee.
• Court: United States Appellate Court of Illinois

Page 1056

625 N.E.2d 1056

253 Ill.App.3d 980, 192 Ill.Dec. 901

GOODWINE STATE BANK, Richard P. Fourez and Shirley A Fourez, Plaintiffs-Appellees and Cross-Appellants, v. Jeffrey MULLINS, Defendant-Appellant and Cross-Appellee.

No. 4-92-0585.

Appellate Court of Illinois Fourth District.

Argued March 23, 1993.

Decided Dec. 22, 1993.

Charles C. Hall, argued, Welsch & Hall, Danville, for defendant-appellant and cross-appellee.

Kevin M. Colombo, argued, Jeanette E. Bahnke, Saikley, Garrison & Colombo, Ltd., Danville, for plaintiffs-appellees and cross-appellants.

Justice KNECHT delivered the opinion of the court:

Defendant, Jeffrey Mullins, appeals from an order of the circuit court of Vermilion County ordering reformation of a deed. Plaintiff, Goodwine State Bank (the Bank), has filed a cross-appeal alleging the trial court erred in granting Jeffrey's motion for summary judgment with respect to several counts of the Bank's complaint. We reverse the order of reformation but affirm the trial court in all other respects.

I. FACTS

In 1966, James Mullins, the owner of a 120-acre farm, died. Through his will, James granted a life estate to his son, Harold Mullins, and provided that, upon Harold's death, the farm is granted outright to Harold's then-living descendents. Harold is still alive; thus, Jeffrey Mullins, Harold's only descendent, has a contingent remainder in the farm. In 1966, Harold, his wife Marjorie, and Jeffrey (then three years old) began living on the farm.

When Jeffrey was 14 or 15 years old, Harold and Marjorie told him about the terms of James' will. They did not tell Jeffrey he had an "interest" in the farm; rather, they told him when Harold died, Jeffrey would inherit the farm. At best, Jeffrey thought he had an "interest" in James' will and would someday inherit an interest in the farm.

Harold and Marjorie took out a series of loans from the Bank to finance their farming operation. In 1981 the Bank began to require Jeffrey to sign the notes and mortgages for his parents' loans. At this time Jeffrey was 18 years old and a senior in high school. After graduating from high school, Jeffrey was not involved in the farming operation, but became a welder.

In 1981 and 1982 Jeffrey signed the notes and mortgages for his parents' loans. The notes and mortgages were not explained to Jeffrey. His parents merely requested him to sign, and told him his signature was required because of the way James' will was written. In 1983 and 1984, Jeffrey was requested by his parents to sign only the mortgages, but not the notes. Again, he signed the mortgages, although they were not explained to him.

In April 1987, Harold was not actively involved in farming the land, and was no longer living at the farm. Harold and Marjorie were in the process of obtaining a dissolution. At this time Harold and Marjorie defaulted on the loan. Jeffrey went to the Bank to determine whether he could obtain a loan to pay off his parents' debt; however, since Jeffrey was not involved in the farming operation, he was ineligible for a loan.

In June 1987 the Bank prepared an agreement to settle debt (Agreement) and quitclaim deed. Under the terms of the Agreement, Harold, Marjorie, and Jeffrey would sign a quitclaim deed regarding the farm in exchange for the Bank's forgiveness of Harold and Marjorie's debt. The Agreement additionally provided if the farm was sold for an amount in excess of the debt, interest, and costs, the Bank would give the excess to Harold, Marjorie, and Jeffrey. One copy of the Agreement and deed was sent to either Marjorie or Gene Wright, the attorney handling her divorce. The Mullinses did not discuss the terms or implication of the Agreement; however, both Harold and Marjorie told Jeffrey it would be in the family's best interests to sign the Agreement.

Jeffrey accompanied his mother to Wright's office because she told him she needed him to sign some papers to help her get her divorce finalized. Wright advised Marjorie to sign the Agreement and deed, informing her she had no interest in the property as it was Harold's nonmarital property. Jeffrey was in the room when Wright advised Marjorie. Wright did not advise Jeffrey regarding whether he should sign the Agreement and the deed. Jeffrey signed the Agreement and deed. Separate copies of the Agreement and deed were signed by Harold. The quitclaim deed was in statutory form, and could not, as a matter of law, convey a contingent remainder.

In August 1987, the Bank sold the farm and Marjorie and Jeffrey were instructed to vacate the premises. The sales price was in excess of the debt, interests, and costs and in October 1987, checks totalling $10,384.03, made payable to Harold, Marjorie and Jeffrey jointly were sent to Harold's attorney. Due to a dispute with Harold regarding the distribution of the money, Jeffrey consulted with attorney Charles Hall in December 1987. In March 1988, Jeffrey filed a notice of contingent remainder.

The Bank filed this lawsuit. The Bank originally requested a declaratory judgment that the quitclaim deed had conveyed Jeffrey's contingent remainder in the property to the Bank. The complaint was later amended to include four additional counts requesting specific performance of the Agreement, rescission of the Agreement, reformation of the Agreement, and asserting Jeffrey should be estopped from claiming his contingent remainder in the farm. Jeffrey's motion for summary judgment was granted with respect to the counts requesting a declaratory judgment, specific performance, rescission and estoppel. A trial was held based upon the Bank's claim for reformation of the Agreement. The testimony at trial was contradictory with respect to whether Jeffrey thought he had an "interest" in the farm and intended to convey that interest to the Bank by signing the deed.

In closing argument, the Bank for the first time claimed it was not requesting reformation of the Agreement, even though reformation of the Agreement was the relief specifically prayed for in its complaint. Rather, the Bank alleged the Agreement did not need to be reformed, since, by its terms, it required Jeffrey to convey his contingent remainder to the Bank. The Bank alleged the quitclaim deed, to the extent it did not convey the contingent remainder, should be reformed to be in conformity with the Agreement. The trial court found reformation of the deed was within the scope of the pleadings, and the parties intended for Jeffrey to convey his contingent remainder to the Bank. Accordingly, the court ordered the deed to be reformed to convey Jeffrey's contingent remainder to the Bank.

II. SCOPE OF PLEADINGS

Defendant alleges the trial court erred in finding reformation of the deed was within the scope of the relief sought in the pleadings. We agree. Reformation of the deed is not within the scope of the Bank's specific prayer for relief, which requested reformation of the Agreement. Reformation of the deed should not have been granted by the court in the exercise of its general equitable powers under the Bank's general prayer for relief, since defendant was surprised by the Bank's request for reformation of the deed--based upon a new theory--when both the request for reformation of the deed and the new theory were not asserted until closing argument.

In its amended complaint, the Bank alleged that in executing the Agreement and the quitclaim deed, the parties intended for Jeffrey to convey any right, title and interest he may have had in the farmland. The Bank then requested the court to reform the Agreement to require Jeffrey to convey any right, title, or interest in the farmland to the Bank. The Bank additionally requested it be awarded "such further * * * relief as the Court deems just under the circumstances." At trial, defendant presented a defense against reformation of the Agreement.

In changing its theory in closing argument, the Bank, for the first time, stated it did not wish the court to order reformation of the Agreement. Rather, the Bank elected to take the position the Agreement provided for the conveyance of Jeffrey's contingent remainder to the Bank, and requested the deed be reformed to conform to the parties agreement that the contingent remainder would be conveyed to the Bank. Specifically the Bank stated:

"[a]nd I would note to the Court that in our amended complaint, although the relief there requested seems to ask that the [A]greement be reformed, it's actually not the [A]greement that needs to be reformed. The [A]greement was that each of these people convey their interest by quitclaim deed. The only problem that happened was as to Jeffrey Mullins alone the quitclaim deed as written, because it was in the statutory form, has been ruled upon by this Court that it did not convey his remainder interest because it was contingent. Had it been a vested remainder we wouldn't be here today because it would have been conveyed by the quitclaim deed, and it can't be argued but that his parents when they signed the quitclaim deed they've conveyed their interest. They were done. There's no question that they could convey theirs by a quitclaim deed.

So really the only problem was with regard to the quitclaim deed as to Jeff, and it certainly isn't a problem to convey his contingent remainder interest by a quitclaim deed. He could have done it. It just needed additional language in the quitclaim deed. That's where the mistake occurred as far as Jeff was concerned. It should have contained additional language to convey his remainder interest in the quitclaim deed." (Emphasis added.)

A. Scope of Prayer for Specific Relief

Reformation of the deed was not within the scope of the specific prayer for relief. The Bank's specific prayer for relief requested reformation of the Agreement. Reformation of the deed is a different remedy than reformation of the Agreement because it requires different proof. In an action for reformation of the Agreement, the...