Midwest Concrete Products Co. v. La Salle Nat. Bank

• Decision Date: 19 March 1981
• Docket Number: H,C,No. 80-558,N,No. 2046,No. 47038,47038,2046,80-558
• Parties: , 49 Ill.Dec. 968 MIDWEST CONCRETE PRODUCTS COMPANY, Plaintiff-Counter-Defendant, Appellee, v. LA SALLE NATIONAL BANK, a National Banking Association, as Trustee under Trustome Builders of America, Inc., Beneficiaries under Trustew England Mutual Life Insurance Company, Jordan H. Kaiser, Doris Kaiser and Walter Kaiser, Public Electric Construction Co., Michigan Avenue National Bank of Chicago, as Trustee under Trustontract Electric Supply, Inc., Nathan Yorke, Lake Shore Racquet Club, Inc., and Unknown Owners, Defendants- Counter-Plaintiffs, Appellants.
• Court: United States Appellate Court of Illinois

Page 988

418 N.E.2d 988

94 Ill.App.3d 394, 49 Ill.Dec. 968

MIDWEST CONCRETE PRODUCTS COMPANY, Plaintiff-Counter-Defendant, Appellee, v. LA SALLE NATIONAL BANK, a National Banking Association, as

Trustee under Trust No. 47038, Home Builders of America,

Inc., Beneficiaries under Trust No. 47038, New England

Mutual Life Insurance Company, Jordan H. Kaiser, Doris

Kaiser and Walter Kaiser, Public Electric Construction Co.,

Michigan Avenue National Bank of Chicago, as Trustee under

Trust No. 2046, Contract Electric Supply, Inc., Nathan

Yorke, Lake Shore Racquet Club, Inc., and Unknown Owners,

Defendants- Counter-Plaintiffs, Appellants.

No. 80-558.

Appellate Court of Illinois, First District, Fourth Division.

March 19, 1981.

Gaines & Boyer, Alan I. Boyer and William S. Piper, Chicago, of counsel, for defendants-counter-plaintiffs, appellants.

Crandell & Hoag, Rosaland M. Crandell, Evanston, of counsel, for plaintiff-counter-defendant, appellee.

JIGANTI, Justice:

The plaintiff subcontractor, Midwest Concrete Products Company (Midwest), entered into an agreement with the defendant general contractor, Home Builders of America, Inc. (Home Builders), to supply and install precast concrete products for racquet ball courts being constructed by Home Builders. Midwest brought this suit to foreclose its subcontractor's lien against Home Builders. Also joined as defendants were Jordan and Walter Kaiser (Kaisers), the owners of the property involved, and Lake Shore Racquet Club, Inc., (Lake Shore), which operated a sports center located on the property. The trial court found in favor of Midwest on its claim for lien and entered judgment against the defendants in the amount of $35,260.20 plus costs. There is no appeal from that judgment. Midwest does, however, appeal from the court's refusal to award attorneys' fees as provided in the contract.

Lake Shore filed a counterclaim against Midwest claiming damages for lost profits due to Midwest's failure to complete its work on time. Pursuant to a motion to dismiss the counterclaim, an amended counterclaim was filed alleging an identity of interest between the Kaisers, Home Builders and Lake Shore and asserting that Lake Shore had a right to sue on the contract between Home Builders and Midwest because it was a third party beneficiary of that contract. Although the Kaisers and Home Builders were joined as counter-plaintiffs, only Lake Shore sought relief. The court denied the claim for lost profits on the grounds that Lake Shore was involved in a new business and that proof of lost profits from a new business is necessarily speculative. However, the court did award Lake Shore $1,902 for damage to carpeting. Lake Shore appeals the denial of that portion of their claim concerning lost profits. Midwest contends that the court erred in awarding Lake Shore damages for carpeting in that Lake Shore was neither a party to the contract nor a third party beneficiary.

Midwest contends that Lake Shore, which was not a party to the subcontract between Midwest and Home Builders, had no right to sue for its breach. Lake Shore argues that it had a right to sue as a third party beneficiary under the subcontract. If a contract is entered into for the direct benefit of a third person, that person may sue for breach of the contract even though he is not a party. (Carson Pirie Scott & Co. v. W. J. Parrett (1931), 346 Ill. 252, 178 N.E. 498.) Whether a party is a third party beneficiary depends upon the intent of the parties and must be determined on a case-by-case basis. (Vinylast Corp. v. Gordon (1973), 10 Ill.App.3d 1043, 295 N.E.2d 523.) In making this determination, it must appear from the language of the contract when properly construed that the contract was made for the direct benefit of the third person and that the benefit was not merely incidental. (Young v. General Insurance Company of America (1975), 33 Ill.App.3d 119, 337 N.E.2d 739.) It has been observed that:

"(I)t is not sufficient that the performance of the (contract) may benefit a third person, * * * it must have been entered into for his benefit, or at least such benefit must be the direct result of performance and so within the contemplation of the parties. * * * (I)nasmuch as people usually stipulate for themselves, and not for third persons, a strong presumption obtains in any given case that such was their intention, and that the implication to overcome that presumption must be so strong as to amount practically to an express declaration." (17 Am.Jur.2d Contracts § 304, at 729-30 (1964).)

The terms of the contract are controlling with respect to the rights of a third party beneficiary. Liability cannot be extended beyond the terms of the contract merely on the ground that the situation and circumstances of the parties justify further liability. Carson Pirie Scott & Co. v. W. J. Parrett.

Lake Shore does not dispute the legal requirements necessary to establish a third party beneficiary. Rather, it argues that by awarding actual damages to Lake Shore, the trial court implicitly found that it met those requirements. Lake Shore contends that this finding is supported by the manifest weight of...