Hepperly v. Bosch

• Decision Date: 26 July 1988
• Docket Number: No. 4-87-0857,4-87-0857
• Citation: 527 N.E.2d 533,123 Ill.Dec. 70,172 Ill.App.3d 1017
• Parties: , 123 Ill.Dec. 70 Paul R. HEPPERLY and Julia Mignucci-Hepperly, Plaintiffs-Counterdefendants-Appellants and Cross-Appellees, v. Henry M. BOSCH and Margareta Bosch, Defendants-Counterplaintiffs-Appellees and Cross-Appellants.
• Court: United States Appellate Court of Illinois

Page 533

527 N.E.2d 533

172 Ill.App.3d 1017, 123 Ill.Dec. 70

Paul R. HEPPERLY and Julia Mignucci-Hepperly Plaintiffs-Counterdefendants-Appellants and Cross-Appellees, v. Henry M. BOSCH and Margareta Bosch Defendants-Counterplaintiffs-Appellees and Cross-Appellants.

No. 4-87-0857.

Appellate Court of Illinois Fourth District.

July 26, 1988.

Robert M. Finch, Finch Law Office, Urbana, for plaintiffs-counterdefendants-appellants and cross-appellees.

Law Offices of Ora J. Baer, II, Champaign, for defendants-counterplaintiffs-appellees and cross-appellants.

Presiding Justice GREEN delivered the opinion of the court:

On June 1, 1984, plaintiffs Paul Hepperly and Julia Mignucci-Hepperly (sellers) filed a three-count complaint in the circuit court of Champaign County against defendants Henry and Margareta Bosch (buyers). Count I sought to regain possession of real estate sold by sellers to buyers under a contract for periodic payments. Counts II and III sought to recover (a) contract damages for installments owed and (b) for physical damage to the property. On June 18, 1984, the court entered an order determining sellers were entitled to possession of the property.

On September 19, 1985, sellers filed an amended three-count complaint with each count seeking the same relief as before. On March 14, 1986, buyers filed an answer and counterclaim. The latter alleged: (1) sellers accepted monthly payments from buyers beyond the date buyers were required to make a large final "balloon" payment on the contract and allowed buyers to pursue a loan commitment after declaring a forfeiture, thus waiving any default by buyers and estopping sellers from forfeiting the contract; (2) tender of payment to sellers after forfeiture was declared and possession was surrendered constituted satisfaction of sellers' claim; (3) buyers' tender and transfer of possession gave rise to a new contract and satisfaction of sellers' claim; and (4) sellers were guilty of constructive fraud in retaining possession of the property, which had a value of $22,000, rather than accepting plaintiffs' timely tender of $17,310.73, the balance due on the contract, thus obtaining unjust enrichment.

Following a bench trial, the court entered an order on February 26, 1987, again ruling sellers were entitled to possession of the property but denying all other relief and ruling against buyers on their counterclaim. The court explained buyers were in default when sellers properly exercised their right to declare a forfeiture, and, thus, sellers were entitled to possession of the property and to retain payments paid as liquidated damages; however, sellers had made an election of remedies, barring recovery for the contract price under count II or for breach of the contract by damaging the property as alleged in count III. The court stated sellers would have had rights arising dehors the contract which would have allowed sellers to recover for damages inflicted on the property by buyers, but sellers had failed either to allege such damages or to prove them. The court also determined any tender by buyers of the amount due was untimely, and no reformation of the contract had occurred. The court ruled in favor of sellers on the counterclaim.

On appeal, sellers make two contentions. First, they maintain their action, demanding possession of the property and retaining payments, was done only for the purpose of securing the obligations of the buyers to make the payments and performances required by the contract, and the court erred in ruling they had elected the remedy of forfeiting the contract. Secondly, sellers note amended count III was alleged in the alternative, and the circuit court had denied buyers' motion to dismiss count II, thus indicating count II was not barred by an election of remedies. The court then made sellers elect whether to proceed on count II or count III. Accordingly, sellers contend they refrained from introducing evidence under count III as to damages arising outside the terms of the contract because, pursuant to court order, they had elected not to sue on that count. Buyers maintain they proved the elements of their counterclaim and should have been permitted recovery.

The record reveals sellers and buyers entered into a contract for sale of real estate located in Champaign County on April 20, 1980. The contract provided for payment of a $20,000 purchase price partially in monthly installments up until May 1, 1983, when buyers were to pay the remaining balance in full in one balloon payment. The contract further contained a covenant and agreement by buyers to "maintain, repair and renovate the [premises] so as to keep it in a reasonabl[y] good state of repair during the pendency of this contract * * *." Finally, in case of default by buyers, the contract allowed the sellers to (1) collect the total amount agreed to be paid under the contract, or (2) terminate the contract, reenter and take possession of the premises, and retain payments made by buyers as liquidated damages sustained by sellers. In addition, if either party failed to perform any agreement or covenant required by them under the contract, the contract stated the defaulting party would be liable to the other for damages.

The record indicates buyers failed to make the balloon payment due May 1, 1983, as required by the contract. Sellers wrote buyers on May 9, 1983, notifying them of their default and demanding that they make payment immediately. Buyers informed sellers by letter dated May 18, 1983, they had applied for a loan, and buyers apparently continued making monthly payments to sellers in May, June, July, and August.

However, on August 11, 1983, sellers served upon buyers a document entitled "Demand for Possession, Notice of Default, and Notice of Intention to File Suit." In the document, the sellers quoted the forfeiture and reentry remedy as set forth in the default section of the real estate contract. It further stated:

"[T]he said Contract is hereby declared terminated due to your default in payment of $16,591.14 on May 1, 1983 and your failure to cure said default within 60 days as required by Section 10 of the contract. You are further notified that the [sic ] Paul A. Hepperly and Julia Mignucci-Hepperly will keep as liquidated damages all payments made on said Contract for Sale of Real Estate made by you to them to date and that they shall hold you liable for their attorneys' fees expended in this matter.

You are further notified that, if you fail to peacefully surrender possession of the above described premises, Paul A. Hepperly and Julia Mignucci-Hepperly will file a proceeding against you under the provisions of Illinois Revised Statutes, Chapter 110, section 9-101 et. seq. for possession, costs, and attorneys' fees." (Emphasis added.)

Buyers subsequently received a loan commitment on September 7, 1983, and tendered it to sellers on two occasions; sellers rejected both of these tenders. Sellers' evidence showed that, after sellers obtained possession under the June 18, 1984, order, they inspected the premises and found substantial damage had occurred during buyers' possession.

The court properly found against sellers as to count II where they sought to collect unpaid amounts due under the contract. Decisions in Illinois clearly hold that a vendor under an installment contract for the sale of real estate cannot both forfeit the contract, regaining the real estate, and sue under the contract for actual damages. Instead, he must make an election of the remedy he wishes to pursue. (Herrington v. McCoy (1982), 105 Ill.App.3d 527, 61 Ill.Dec. 130, 434 N.E.2d 67.) Sellers' contention that they sought possession only for security purposes is not supported by any evidence. An August 11, 1983, notice they served on buyers clearly showed sellers' intent to exercise an option to terminate the contract, retain payments made as liquidated damages and, if possession was not surrendered, to bring an action in forcible entry and detainer (Ill.Rev.Stat.1981, ch. 110, par. 9-101 et seq.). Sellers maintain they were seeking possession to protect the property from damages incurred by buyers, but the record does not show they knew of the damage until after they took possession.

Sellers' other contention is more complex. It concerns the action of the circuit court (1) in denying buyers' motion to dismiss count II, but (2) requiring...