Horwath v. Parker

• Decision Date: 24 April 1979
• Docket Number: No. 77-1387,77-1387
• Citation: 72 Ill.App.3d 128,28 Ill.Dec. 90,390 N.E.2d 72
• Parties: , 28 Ill.Dec. 90 Germaine M. HORWATH, Plaintiff-Appellant, v. Hortense E. PARKER et al., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 72

390 N.E.2d 72

72 Ill.App.3d 128, 28 Ill.Dec. 90

Germaine M. HORWATH, Plaintiff-Appellant, v. Hortense E. PARKER et al., Defendants-Appellees.

No. 77-1387.

Appellate Court of Illinois, First District, Second Division.

April 24, 1979.

Yale Stein, Skokie, for plaintiff-appellant.

Mayer, Brown & Platt, Chicago (Sherwood K. Platt, James E. Honkisz, Chicago, of counsel), for defendant-appellee Hortense Parker.

Lerner & Shimberg, Chicago (Jonathan E. Shimberg, Chicago, of counsel), for defendants-appellees Clephases and LaSalle Nat. Bank of Chicago.

DOWNING, Justice:

This appeal involves the question of whether the circuit court of Cook County properly dismissed plaintiff's complaint for failure to exhaust her remedies pursuant to an arbitration agreement.

This case concerns a dispute among the owners of beneficial interests in a land trust. The property is a 4-unit apartment building located at 8312 Kilpatrick Avenue, Skokie, Illinois. LaSalle National Bank presently holds title to the property as trustee under a trust agreement dated October 18, 1949 and known as Trust No. 8025. The original owners executed an "Agreement Among Co-Owners" ("Agreement") dated October 18, 1949, which set forth their rights and obligations with respect to the property. Included was a section which read:

"All of the provisions of this instrument shall be deemed covenants running with the land, and shall be binding upon and inure to the benefit of the undersigned * * * and all who shall claim through or under the undersigned, including * * * heirs * * * successors and assigns of each of the partners hereto."

None of the original owners were owners at the time of this action. The present beneficial owners of the property are plaintiff Germaine M. Horwath, defendants Louis and Tina Clephas, defendant Hortense E. Parker, and defendants Mr. and Mrs. Samuel J. Wise who take no part in this appeal.

Defendant Parker moved and wished to sell her unit in the building. The "Agreement" required Parker as seller to serve the other co-owners either personally or by registered mail with written notice of her intention to sell, informing them of the price and terms of the proposed sale. Within ten days after the written notice, any co-owner could exercise a first right to purchase Parker's beneficial interest at the same price and terms as she was offering it to other purchasers. The interested co-owner was required to deliver to Parker either personally or by registered mail written notice of an intent to buy.

By letter dated September 7, 1976, and addressed to the other co-owners, defendant Parker stated that she was offering for sale her 1/4 beneficial interest in the property for $23,000, and pursuant to the "Agreement" was giving them first option to purchase at that price. If she did not receive written notice to purchase from any of the co-owners within ten days, the letter stated that defendant Parker would go ahead and consummate the sale.

By letter dated September 15, 1976, plaintiff, through her attorney, objected to defendant Parker's letter as not complying with the "Agreement" in that, among other things, it was not delivered personally or by registered mail, and the terms of the proposed sale were not disclosed.

In response, by letter dated September 17, 1976, defendant Parker informed plaintiff of the details of the sale. The letter also informed plaintiff that defendants Clephases for the past ten years had been "on contract" buyers of unit 1B, had recently paid off their loan and become co-owners, and were the first co-owners to exercise the option to purchase.

Defendant Parker also wrote to the trustee, LaSalle National Bank of Chicago, requesting it forward a written verification to plaintiff's attorney that the Clephases were co-owners and entitled to an "on contract" purchase of another beneficial interest in the property.

On September 30, 1976, plaintiff filed a complaint against LaSalle National Bank of Chicago as trustee, Hortense Parker, Louis and Tina Clephas, Joseph and Esther Friedman (prior owners of the unit occupied by the Clephases), Mr. and Mrs. Wise, and Unknown Owners. After making numerous allegations, plaintiff requested an injunction pendente lite restraining the sale of defendant Parker's interest in the property; a permanent injunction preventing any sale of the property to Louis and/or Tina Clephas a permanent injunction preventing defendants Clephases from using the building for anything other than residential purposes, and from annoying, striking, harassing, threatening, and interfering with plaintiff and her right to privacy, peace and quiet; an accounting of the common building fund; a termination of the trust; a partition of the subject real estate; a declaratory judgment as to plaintiff's rights under the "Agreement"; and damages due plaintiff by reason of the defendants' wrongful conduct.

LaSalle National Bank of Chicago filed a motion to dismiss on the grounds that it held title to the property in trust only, and by attached affidavit stated that it did not manage, control, operate, or possess the property.

Defendant Parker filed a motion to strike and dismiss on the grounds that the complaint did not state a cause of action as to her in that it did not allege a duty to sell her apartment to plaintiff, was indefinite, uncertain, contained conclusionary and immaterial matter, included misjoined parties, did not include all necessary parties, and the attached exhibits were inconsistent with the allegations.

Defendants Clephases filed an answer to the complaint in which they denied all allegations made as to them, alleged they were co-owners of the building and entitled to notice of all sales in the building and the right of purchase, and requested the complaint be dismissed.

Plaintiff filed a cross-motion requesting leave to amend the complaint to add Charles E. Schaaf as an additional party defendant and insert a paragraph to the effect that Schaaf purports to own part of defendant Parker's beneficial interest, that the nature of that interest should be determined, and that defendant Parker's notices of intention to sell were null and void without disclosure and joinder of Schaaf's interest.

On May 18, 1977, the trial court dismissed the complaint on its own motion for plaintiff's failure to exhaust her remedies in arbitration pursuant to an arbitration clause in the "Agreement." Defendant appeals the order.

I.

Faced with the issue of whether the trial court properly dismissed the complaint, we must first decide whether the arbitration agreement was valid and enforceable.

The law in existence at the time and place a contract is made is deemed part of that contract to the same extent as though expressly referred to or incorporated in the contract. (Goble v. Central Security Mutual Insurance Co. (2nd Dist. 1970), 125 Ill.App.2d 298, 302, 260 N.E.2d 860.) Thus the Illinois statute on arbitration in existence at the time the instant contract was made must be considered a part of the "Agreement." Kaiser-Ducett Corp. v. Housewrights, Inc. (1st Dist. 1977), 48 Ill.App.3d 589, 592, 6 Ill.Dec. 568, 363 N.E.2d 97.

In 1949, the year the "Agreement" was executed, "An Act to revise the law in relation to arbitrations and awards," (Ill.Rev.Stat.1949, ch. 10, par. 1 Et seq.) enacted in 1917 was in existence. Section 1 of the Act provided: " That all persons having requisite legal capacity may, by an instrument in writing to be signed by them, submit to one or more arbitrators * * * any controversy Existing between them, * * *." (Emphasis added.)

The constitutionality of the Act was challenged in the case of White Eagle Laundry Co. v. Slawek (1921), 296 Ill. 240, 129 N.E. 753. There a controversy arose from an automobile collision occurring on October 18, 1920. Thereafter, on October 29, 1920, the parties entered into a written agreement for the submission of the cause to arbitration. The arbitrator found plaintiff contributorily negligent. Plaintiff objected to the finding, but the trial court entered judgment on the arbitrator's award. On appeal, the plaintiff argued the Act was unconstitutional in that it was an attempt to oust courts of their jurisdiction. In upholding the constitutionality of the Act, the supreme court stated "There is no constitutional provision against the settlement of controversies out of court or the submission of them to the judgment of arbitrators who may be agreed upon by the parties, * * *." (296 Ill. 245, 129 N.E. 755.)

That decision established the legal validity of agreements to arbitrate existing disputes.

However, the same was not applied to arbitration agreements to settle future disputes. In Cocalis v. Nazlides (1923), 308 Ill. 152, 139 N.E. 95, suit was brought to recover liquidated damages for breach of an executory contract which called for arbitration of future disputes. The court denied recovery holding that "(A)n agreement that any dispute that may arise under it shall be submitted to arbitration, by which the individual citizen renounces his right to resort to the courts provided by the Constitution for the redress of grievances and the settlement of disputes, is void." (308 Ill. 158, 139 N.E. 98.)

In 1961, Illinois adopted the Uniform Arbitration Act (Ill.Rev.Stat.1961, ch. 10, par. 101 Et seq.) which repealed the prior Act. Section 1 of the Uniform Arbitration Act presently provides:

"A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable * * *." (Ill.Rev.Stat.1977, ch. 10, par. 101.)

This section grants legal validity and enforcement to arbitration agreements to settle future as well as existing disputes. Flood v. Country Mutual Insurance Co. (1968), 41 Ill.2d 91, 93, 242 N.E.2d 149.

The clause in the "Agreement" upon which the trial court's dismissal is...