Vuagniaux v. Korte

• Decision Date: 30 June 1995
• Docket Number: No. 5-92-0860,5-92-0860
• Citation: 210 Ill.Dec. 38,652 N.E.2d 840,273 Ill.App.3d 305
• Parties: , 210 Ill.Dec. 38 Earl L. VUAGNIAUX and Alice G. Vuagniaux, Plaintiffs-Appellants, v. Ralph KORTE and Garrett A. Balke, d/b/a The Edwardsville Partnership, an Illinois Limited Partnership; and the City of Edwardsville, a Municipal Corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 840

652 N.E.2d 840

273 Ill.App.3d 305, 210 Ill.Dec. 38

Earl L. VUAGNIAUX and Alice G. Vuagniaux, Plaintiffs-Appellants, v. Ralph KORTE and Garrett A. Balke, d/b/a The Edwardsville Partnership, an Illinois Limited Partnership; and the City of Edwardsville, a Municipal Corporation, Defendants-Appellees.

No. 5-92-0860.

Appellate Court of Illinois Fifth District.

June 30, 1995.

Harry J. Sterling, Harry J. Sterling, P.C., Fairview Heights, for appellants.

Gordon R. Broom, Daniel W. Farroll, Burroughs, Hepler, Broom, MacDonald & Hebrank, Edwardsville, Debra J. Meadows, Reed, Armstrong, Gorman, Coffey, Thomson, Gilbert & Mudge, P.C., Edwardsville, for appellees.

Justice McLAUGHLIN delivered the opinion of the court:

Plaintiffs, Earl L. Vuagniaux and Alice G. Vuagniaux, appeal from the dismissal of their fourth amended complaint against defendants, Ralph Korte and Garrett A. Balke, d/b/a the Edwardsville Partnership (Korte-Balke), and the City of Edwardsville (the City). We affirm.

Plaintiffs' fourth amended complaint was framed in two counts. Count one was against Korte-Balke. It alleged the breach of a written contract for the sale of real estate. Count one alleged that defendants were engaged in a joint venture to develop a tax-increment-financing district in downtown Edwardsville; that plaintiffs entered into a written contract with Korte-Balke, on behalf of the joint venture, for the sale of plaintiffs' downtown real estate; and that Korte-Balke failed to perform its contractual obligations, causing plaintiffs to suffer damages.

Count two was against the City. It alleged the City's breach of the same written contract by virtue of being engaged in a joint venture with Korte-Balke.

Defendants filed motions to dismiss the complaint pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 1992)), alleging, inter alia, that the City was not a party to the contract; that there was no joint venture between Korte-Balke and the City; that the contract included an express condition precedent which had not been fulfilled and therefore Korte-Balke was not required to perform; and that the statute of frauds (Ill.Rev.Stat.1987, ch. 59, par. 2 (now 740 ILCS 80/2 (West 1992))) barred enforcement of the contract against the City.

The trial court granted the defendants' motions to dismiss pursuant to section 2-619, without describing its reasons.

Section 2-619(a)(7) of the Code allows the dismissal of a complaint when "the claim asserted is unenforceable under the provisions of the Statute of Frauds." (735 ILCS 5/2-619(a)(7) (West 1992).) Section 2-619(a)(9) allows dismissal when "the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim." (735 ILCS 5/2-619(a)(9) (West 1992).) In ruling on a section 2-619 motion to dismiss, the trial court may consider pleadings, depositions, and affidavits. (See 735 ILCS 5/2-619(a), (c) (West 1992); 134 Ill.2d R. 191(a); Torcasso v. Standard Outdoor Sales, Inc. (1993), 157 Ill.2d 484, 486, 193 Ill.Dec. 192, 193, 626 N.E.2d 225, 226.) Our standard of review is "whether the existence of a genuine issue of material fact should have precluded the dismissal or, absent such an issue of fact, whether dismissal is proper as a matter of law." Kedzie & 103rd Currency Exchange, Inc. v. Hodge (1993), 156 Ill.2d 112, 116, 189 Ill.Dec. 31, 35, 619 N.E.2d 732, 736.

We hold that Korte-Balke's contractual duty to perform was discharged by the nonoccurrence of a condition precedent, and as a result Korte-Balke is not liable for breach of this contract. The circuit court therefore properly dismissed count one of plaintiffs' fourth amended complaint, against Korte-Balke, pursuant to section 2-619(a)(9). Even if there was a joint venture between Korte-Balke and the City, nevertheless, the statute of frauds prevents enforcement of this contract against the City. The circuit court therefore properly dismissed count two of plaintiffs' fourth amended complaint, against the City, pursuant to section 2-619(a)(7).

Here are the essential facts. The written contract, entitled "EARNEST MONEY RECEIPT AND SALES CONTRACT", is attached to plaintiffs' fourth amended complaint. Significantly, it describes plaintiffs as the "sellers" and Korte-Balke as the "buyers" of Lot 220 in the City of Edwardsville. The contract includes the following additional language relevant to this case:

"[T]he parties hereto agree as follows:

1. [T]his sale is on the following express conditions:

First, that fee simple title to Lot 55 * * * be conveyed by Warranty Deed to the Sellers or their nominees;

Second, that the City grant a variance to ordinances, if any, relative to parking and set back lines for a new building on Lot 55;

Third, that the City vacate Second Street, that fee simple title to the West half of vacated Second Street pass to the Sellers or their nominee, and that there will be permanent vehicular access to the West half of vacated Second Street where it adjoins Lot 55 as well as the alleyway South of Lot 55; and

Fourth: that the foregoing three conditions be fully met before closing * * *." (Emphasis in original.)

At all times relevant herein, the City owned Lot 55, the parcel referred to in the first express condition. Lot 55 was never conveyed to plaintiffs.

Plaintiffs' complaint alleges in count I that Korte-Balke breached the contract "in that Korte-Balke was unable to deliver fee simple title to Lot 55 and the west one-half of Second street as well as the City variances to its parking and setback ordinances * * *." The complaint alleges in count II that "the City by its joint venturer failed to do the things they had promised to do under the [contract] and failed to perform their functions as set forth in said contract."

It is well established that "[t]he intention of the parties to [a] contract must be determined from the instrument itself, and construction of the instrument where no ambiguity exists is a matter of law." Farm Credit Bank v. Whitlock (1991), 144 Ill.2d 440, 447, 163 Ill.Dec. 510, 513, 581 N.E.2d 664, 667.

It appears from the language of this contract, and from other portions of the record, that plaintiffs desired to sell Lot 220 to Korte-Balke only if they obtained title to Lot 55. The written contract provides that plaintiffs' obtaining fee simple title to Lot 55 was an express condition to the performance of Korte-Balke's contractual obligation, i.e., to pay the agreed-upon price for Lot 220. As quoted above, there were other express conditions. The last of these conditions provided that they had to be fulfilled by the closing of the real estate transaction and the conveyance of title. Plaintiffs argue that these conditions were conditions subsequent, while defendants argue that they were conditions precedent.

A condition precedent is to be performed before the contractual obligation becomes binding on the parties, while a condition subsequent is one which divests preexisting contractual liability on the failure to fulfill the condition. (Wysocki v. Bedrosian (1984), 124 Ill.App.3d 158, 163, 79 Ill.Dec. 564, 569, 463 N.E.2d 1339, 1344; see generally Blackhawk Hotel Associates v. Kaufman (1981), 85 Ill.2d 59, 51 Ill.Dec. 658, 421 N.E.2d 166; 3A Corbin on Contracts, § 739 et seq. (1960).) "A 'condition precedent' is defined as an event which must occur or an act which must be performed by one party to an existing contract before the other party is required to perform. [Citations.] The obligations of the parties end in the event that a condition precedent is not satisfied." (Maywood Proviso State Bank v. York State Bank & Trust Co. (1993), 252 Ill.App.3d 164, 168, 192 Ill.Dec. 123, 127, 625 N.E.2d 83, 87.) A condition subsequent, on the other hand, is an event which, if it occurs, discharges preexisting contractual liability. See, e.g., Ahlers v. Sears, Roebuck Co. (1978), 73 Ill.2d 259, 22 Ill.Dec. 731, 383 N.E.2d 207 (monthly payments under settlement contract; payments would be discontinued upon occurrence of condition subsequent); see also Evans v. Brown (1994), 267 Ill.App.3d 662, 205 Ill.Dec. 218, 642 N.E.2d 1335 (easement granted, subject to condition subsequent and reverter in case of nonuse or use inconsistent with highway).

Having described generally conditions precedent and subsequent, we turn our attention to the contract at issue in this case. Specifically, we will focus on the first condition, the conveyance of Lot 55 to plaintiffs; the second and third conditions are subsidiary to the first and need not be discussed separately.

The contract clearly and unambiguously provides for the sale of Lot 220 by plaintiffs to Korte-Balke. The plaintiffs were to convey Lot 220, and Korte-Balke was to pay the agreed sum. This was to occur at the closing. However, as noted, the conditions required that a transfer of Lot 55 from the City to plaintiffs occur prior to closing, and the contract conditioned performance on that occurrence.

We conclude that the contract herein unambiguously provides that the conveyance of Lot 55 to plaintiffs was a condition precedent, i.e., an event which had to occur before the parties were required to perform their contractual obligations. The occurrence of this condition precedent was in the control of the City, as the owner of Lot 55, and the plaintiffs, as the contemplated transferees. Given that the City and the plaintiffs did not complete the conveyance of Lot 55, the condition precedent did not occur and Korte-Balke's contractual obligation to purchase Lot 220 from plaintiffs was discharged. See Maywood Proviso State Bank, 252 Ill.App.3d at 166, 192 Ill.Dec. at 127, 625 N.E.2d at 87 (where condition precedent, obtaining FDIC approval, did not occur, summary judgment for defendants proper); Asher v. Farb Systems, Inc. (1993), 256 Ill.App.3d 792, 196 Ill.Dec. 508, 630 N.E.2d 443 (complaint alleging breach of contract properly dismissed...