Prime Group, Inc. v. Northern Trust Co.

Decision Date21 June 1991
Docket NumberNo. TH,No. 1-90-0431,TH,1-90-0431
Citation576 N.E.2d 841,215 Ill.App.3d 1065
Parties, 159 Ill.Dec. 918 The PRIME GROUP, INC., General Partner, Michael Reschke, Limited Partner, and Edward J. John, Limited Partner, d/b/a Prime Development, Ltd., an Illinois Limited Partnership, Plaintiffs-Appellees, v. The NORTHERN TRUST COMPANY, as Trustee under Trust00164, and Howard Pomper and Barbara Pomper, Defendants-Appellants.
CourtUnited States Appellate Court of Illinois

Joseph and Myers, Chicago (Michael P. Myers, and Jack Joseph, of counsel), for defendants-appellants.

Winston & Strawn, Chicago (Terry M. Grimm, Paul P. Biebel, Jr. and Catherine W. Joyce, of counsel), for plaintiffs-appellees. ON REHEARING

Justice McNAMARA delivered the opinion of the court:

Defendants appeal from a judgment entered by the circuit court of Cook County granting to plaintiffs specific performance of a real estate agreement. On appeal, defendants contend that the trial court erroneously found plaintiffs' September 1988 payment timely and erroneously granted specific performance in favor of plaintiffs.

On December 12, 1986, the parties entered into a real estate purchase agreement ("Agreement") for plaintiffs' purchase from defendants of 63.8 acres of land in unincorporated Lake County. The Agreement gave plaintiffs sixty days from the date of execution ("feasibility period") to review the title and the feasibility of developing the property, during which time plaintiffs could terminate the Agreement at their discretion. Pursuant to the parties' subsequent agreement and plaintiffs' $7,500 payment, the feasibility period was extended from 60 to 150 days.

The issue on appeal concerns the interpretation of paragraph nine of the Agreement, which outlined conditions precedent to closing and granted plaintiffs the right to extend the period for fulfillment of the conditions. These conditions precedent included: rezoning of property to permit plaintiffs' purported development; approval of plans by appropriate government agencies and authorities; and confirmation of adequate utilities. The provisions at issue, set forth in paragraph nine, provided in pertinent part:

"Purchaser shall notify Seller no later than three hundred (300) days following the expiration of the feasibility period whether the aforementioned conditions have been satisfied or that the same have been waived by Purchaser. If Purchaser shall notify Seller that the aforementioned conditions have not been satisfied and have not been waived by Purchaser prior to such date, this Agreement and all rights, obligations and liabilities hereunder shall terminate; provided, however, that, if all of the aforementioned conditions have not been satisfied or waived by Purchaser on or before such date, Purchaser, at Purchaser's sole and absolute discretion, may extend such date for periods of thirty (30) days each for no more than ten (10) periods by written notice from Purchaser to Seller and by payment to Beneficiary of the sum of Five Thousand and no/100 Dollars ($5000.00) (the "Extension Payment") for each thirty-day extension."

In October 1987, when the Lake County Zoning Board of Appeals recommended denial of plaintiffs' application for rezoning, plaintiffs began to explore alternatives to their original development plan for the property. In November 1987, plaintiffs refused defendants' request for written waiver of the rezoning contingency.

Pursuant to the Agreement, and as plaintiffs' December 30, 1987 letter acknowledged, the time within which the conditions could be waived or satisfied would expire on March 10, 1988. On March 9, 1988, plaintiffs delivered to defendants written notice of their intent to extend the date by 30 days and the required payment. On April 8, 1988, plaintiffs delivered a second notice and tendered payment to extend the date. In May, June, July and August, plaintiffs delivered notices and payments to defendants before the prior 30-day period elapsed. A letter enclosed with the August payment acknowledged that the Agreement was extended until September 6, 1988. On September 8, 1988, plaintiffs tendered another extension payment. Defendants returned the notice and payment to plaintiffs on the following day and informed plaintiffs that the Agreement had terminated. Although plaintiffs informed defendants on September 12, 1988, that they were willing to close the transaction on October 31, 1988, defendants refused to close, maintaining that the Agreement had been terminated.

Plaintiffs sought a declaration of the parties' rights under the Agreement and a judgment of specific performance. Defendants subsequently moved for summary judgment. The parties filed a stipulation of uncontested facts and agreed to an order allowing the trial court to render a decision based solely upon the record before it.

On January 4, 1990, the trial court held that the Agreement did not specify a date for the delivery of extension payments or for the notice of extension. Because no date was specified, the court held that plaintiffs' September 8, 1988 extension payment was tendered within a commercially reasonable time. The court accordingly granted specific performance in favor of plaintiffs.

On appeal, defendants argue that the terms of the Agreement required plaintiffs to tender the payment prior to the expiration of the prior period. Alternatively, defendants assert that the Agreement was an option contract and, as such, required strict compliance with time limitations. Further, defendants maintain that because plaintiffs failed to make a timely payment in September 1988, the Agreement terminated and plaintiffs are not entitled to enforce it.

We note initially that the granting of a decree of specific performance lies in the trial court's sound judicial discretion and will not be disturbed on appeal absent an abuse of discretion. (Chariot Holdings, Ltd. v. Eastmet Corp. (1987), 153 Ill.App.3d 50, 106 Ill.Dec. 285, 505 N.E.2d 1076.) Further, we will uphold the trial court's judgment if it is justified in the law for any reason that appears in the record. Kostur v. Indiana Insurance Co. (1989), 192 Ill.App.3d 859, 140 Ill.Dec. 34, 549 N.E.2d 685.

We first consider defendants' argument that the Agreement unambiguously required plaintiffs to tender an extension payment before the prior period expired. In construing a contract's terms, the primary objective is to give effect to the parties' intentions. (Continental Assurance Co. v. Commonwealth Edison Co. (1990), 194 Ill.App.3d 1085, 141 Ill.Dec. 711, 551 N.E.2d 1054.) A court must seek a reasonable interpretation and a strong presumption exists against provisions which could easily have been included in the agreement. Ebrahim v. Checker Taxi Co. (1984), 128 Ill.App.3d 906, 84 Ill.Dec. 103, 471 N.E.2d 632.

In our view, paragraph nine did not require plaintiffs to tender their notice and payment before the prior period ended. The provision unequivocally gave plaintiffs 300 days after the feasibility period to inform defendants whether the conditions have been satisfied or waived. The provision then entitled plaintiffs to "no more than" ten 30-day extensions if plaintiffs notified defendants and paid $5,000 to the beneficiary. Despite the Agreement's precision as to the number and length of extensions and the amount of the payments, the Agreement failed to specify when such payment was due. The provision simply did not indicate when payment must be received, let alone state that it must be received prior to the end of the extension period. Such interpretation was not "plain and obvious" from the language. (J.M. Beals Enterprises, Inc. v. Industrial Hard Chrome, Ltd. (1990), 194 Ill.App.3d 744, 748, 141 Ill.Dec. 347, 349, 551 N.E.2d 340, 342.) Because the parties declined to set forth time limitations, we, therefore, cannot conclude that the Agreement required payment before the prior period expired. In the absence of a date, the trial court properly implied a reasonable time. Murphy v. Roppolo-Prendergast Builders, Inc. (1983), 117 Ill.App.3d 415, 73 Ill.Dec. 21, 453 N.E.2d 846.

Nor do we believe that plaintiffs' conduct evidences the parties' intention that payment be tendered before the prior period expired. Defendants argue that by making payments in March through August before the prior extension period passed, plaintiffs demonstrated that they believed such payment was due before the extension ended. However, such payments are equally consistent with an intention to make payment within a commercially reasonable time, and in the absence of express language requiring notice and payments by a particular time, we do not conclude that the parties so intended.

As additional support for their argument that the Agreement required plaintiffs to tender payment earlier, defendants rely upon the "time is of the essence" clause and their characterization of the Agreement as an option contract. Neither argument is persuasive.

Defendants maintain that the Agreement was in substance an option contract and plaintiffs' failure to tender a timely extension payment terminated both the option and the Agreement and precluded specific performance for plaintiffs. We disagree.

An option contract is an agreement in which one binds himself to perform a certain act, at the sole power and discretion of optionee to accept upon terms specified at which time it is converted from a bilateral to a unilateral contract. (Stull v. Hicks (1978), 59 Ill.App.3d 665, 16 Ill.Dec. 874, 375 N.E.2d 981.) Moreover, an option contract has two elements: 1) an offer to do something or to forebear, which does not become a contract until accepted; and 2) an agreement to leave offer open for a specified or reasonable time. Hamilton Bancshares, Inc. v. Leroy (1985), 131 Ill.App.3d 907, 87 Ill.Dec. 86, 476 N.E.2d 788.

The Agreement here obligated both parties to perform and became a valid, bilateral contract upon execution on December 12,...

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