Herrington v. McCoy

• Decision Date: 08 April 1982
• Docket Number: No. 17478,17478
• Citation: 61 Ill.Dec. 130,434 N.E.2d 67,105 Ill.App.3d 527
• Parties: , 61 Ill.Dec. 130 Charles L. HERRINGTON and Martha J. Herrington, Plaintiffs-Appellants, v. Joseph W. McCOY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 67

434 N.E.2d 67

105 Ill.App.3d 527, 61 Ill.Dec. 130

Charles L. HERRINGTON and Martha J. Herrington, Plaintiffs-Appellants, v. Joseph W. McCOY, Defendant-Appellee.

No. 17478.

Appellate Court of Illinois, Fourth District.

April 8, 1982.

Sharon A. Buckler, Arcola, for plaintiffs-appellants.

Perry S. Albin, Tuscola, for defendant-appellee.

GREEN, Presiding Justice:

On April 3, 1981, plaintiffs, Charles L. Herrington and Martha J. Herrington, brought suit in the circuit court of Douglas County against defendant, Joseph W. McCoy, seeking damages for defendant's breach of a contract whereby plaintiffs sold real estate to defendant. The trial court allowed defendant's motion under section 45 of the Civil Practice Act (Ill.Rev.Stat.1979, ch. 110, par. 45) and dismissed plaintiffs' complaint in bar of action. Plaintiffs appeal. We affirm.

Attached to the amended complaint and referred to therein was a copy of the contract dated December 27, 1979. It provided for a purchase price of $26,500, acknowledged receipt of a down payment of $3,500 and provided for full payment to be made on or before January 31, 1982. The agreement also provided for interest of 13% per annum on the balance outstanding to be paid on each anniversary date of the contract, for a deed to be placed in escrow, and for defendant to go into possession. The amended complaint alleged defendant had failed to make the first two interest payments required, in the sums of $2,990 and $3,378.70, respectively. It also alleged plaintiffs had exercised their option, pursuant to paragraph 11 of the contract, "to terminate the contract." Incorporated by reference was a notice served on defendant by plaintiffs' agent stating plaintiffs had "terminated" the contract for defendant's breach and demanding immediate possession. The first count of the amended complaint sought damages in the sum of $4,748.30 for back interest and tax payments advanced by plaintiffs. The second count sought $656.42 for damages arising from defendant's failure to maintain the property.

Defendant's successful motion to dismiss was based on the theory that by terminating the contract and demanding repossession, plaintiffs had elected a remedy inconsistent with their claim for damages arising under the terms of the contract. The trial court agreed.

Paragraph 11 of the contract between the parties is at the heart of the dispute. It states:

"11. DEFAULT-FORFEITURE-REPOSSESSION. In case of failure of Buyer to pay the sum of $23,000 as hereinbefore provided, or if Buyer shall permit such sum to remain due for a period of 30 days or more, or if Buyer shall fail to perform any other covenant of this agreement by Buyer to be performed, then Seller shall have the immediate right to treat this agreement as at an end and to re-enter and regain possession of said premises as if this agreement had never been made; and, in such event, Seller shall have the right to treat all payments theretofore made by Buyer as rent and as agreed and liquidated damages, and a written notice served upon Buyer or his heirs, devisees, legatees or personal representatives of such termination, forfeiture and election to re-enter and regain possession of the premises, or filed in the office of the Recorder of the county in which the premises lie, shall be sufficient evidence of such termination, forfeiture and election to re-enter and regain possession. Upon receipt of proof of such default or breach of this agreement, and upon receipt of proof of such notice given by Seller to Buyer, the escrow agent shall be and is hereby, authorized to surrender all instruments, including the deed * * *. Declaration of forfeiture and the other remedies hereinabove provided shall not be the exclusive remedy upon default. Seller may, upon default, elect to continue this contract in full force and effect and hold Buyer for all damages arising from a breach of the provisions hereof."

Plaintiffs argue that the words "termination" and "forfeiture" as used in the contract are ambiguous. They maintain that if the complaint were allowed to stand and the case to be heard on its merits, they could show the parties intended for them to have a right to rescind "the contract as of the date of possession, preserving their contract rights up to that point." They contend with that meaning given to the contract, the statement that "a declaration of forfeiture and the other remedies hereinabove provided" are not the exclusive remedies under the contract, permits them to both sue for damages occurring before termination and upon termination to demand and regain possession of the premises. Finally, they maintain their theory is not negated by the provision for their right to re-enter and gain possession "as if (the) agreement had never been made." They deem this to refer merely to the "quality" of their right of possession which they would obtain on re-entry and not to indicate a rescission of the contract.

We hold the meaning of the contract to be subject to determination without the presentation of evidence. Plaintiffs make no explanations to why they claim the word forfeiture was used ambiguously. The word "terminated" as used in a contract for sale of real estate was construed in Tucker v. Beam (1951), 343 Ill.App. 290, 98 N.E.2d 871. The contract there contained a provision that upon default in payment, the vendor had the option to terminate the contract and payments previously made would be forfeited and retained as liquidated damages. The purchaser in the case had defaulted. The court distinguished "termination" from "rescission," stating that termination merely implied an ending of dealings under a contract with the law leaving the parties as it then finds them. It stated a rescission implied the complete abrogation of a contract requiring both parties to then be restored to the status quo ante.

We hold that the use of the words "termination" and "forfeiture" as used in paragraph 11 cannot give rise to a meaning that plaintiffs might both sue for damages occurring prior to the termination and also regain possession of the premises. The precedent of the decisions of the courts of this state and of this court in particular is to the contrary. In Morey v. Huston (1967), 85 Ill.App.2d 195, 228 N.E.2d 544, this court passed upon the remedial provision of a very similar real estate sales contract. There, a vendor under a contract for sale of a motel brought suit against the purchasers to recover unpaid installments and taxes due under the terms of the contract. The vendor then took possession of the property. The trial court, hearing the case at bench, held that the vendor could not receive the damages sought. We affirmed. The contract provided that upon failure of the purchaser to make the required payments, the vendor could re-enter and take possession " 'as if this agreement had never been made' " and " 'in such event sellers shall have the right to treat all payments made by purchaser to date as rent and as agreed and liquidated damages.' " (85 Ill.App.2d 195, 198, 228 N.E.2d 544, 546-47.) We noted that there, as here, the contract did not say that the vendor was limited to...