PAGE v. FOSCO

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Docket Number

No. 79-421

Attorney(S)

Richard Weinberger, of Chicago, for appellants. Anthony F. Spina, of Elmwood Park, for appellees.

Judges

Mr. JUSTICE CAMPBELL delivered the opinion of the court:

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Smart Summary

Factual and Procedural Background

Plaintiffs Marie Page, Leon Page, and Norma Steljes entered into a contract to purchase improved real estate located at 6431-33 West Wabansia in Chicago from defendants Anthony P. Fosco and James Fosco for $194,000. Plaintiffs paid $19,000 earnest money and obtained a mortgage commitment. When defendants failed to appear at the closing, plaintiffs filed a two-count complaint seeking specific performance or, alternatively, money damages for breach of contract. The trial court granted defendants' motion for summary judgment, dismissing the complaint on the ground that the contract was invalid and incapable of transferring title. Plaintiffs appealed only the dismissal of their claim for damages, asserting that defendants breached the contract by failing to convey the property.

The complaint alleged that the legal title to the property was held by Exchange National Bank of Chicago as trustee under a land trust, with defendants as two of four beneficiaries who lacked sole power to convey. The contract required defendants to deliver a trustee's deed at closing. Plaintiffs claimed damages of $47,325, representing fair market value plus special value.

Defendants admitted that the trustee held legal title and that they were not agents authorized by the trustee to execute the contract. They argued the contract was unenforceable under the Statute of Frauds because the trustee and other beneficiaries did not sign the contract. Defendants also noted that the property listing disclosed the trust arrangement.

Legal Issues Presented

Whether the plaintiffs' complaint states a cause of action for money damages against defendants as individual beneficiaries of a land trust for failure to perform a real estate sales contract.
Whether the contract between plaintiffs and defendants is enforceable despite the property being held in a land trust and defendants lacking sole power to convey legal title.
The applicability of the Statute of Frauds to the sales contract under these circumstances.

Arguments of the Parties

Appellants' Arguments

The failure of defendants to convey the realty constituted a breach of contract entitling plaintiffs to money damages.
The contract was valid and binding despite the property being held in a land trust because defendants contracted individually without limiting conditions.
The special value of the property to plaintiffs and the fair market value support the claimed damages.

Appellees' Arguments

The contract was unenforceable due to the Statute of Frauds because the trustee and other beneficiaries did not sign the contract.
Defendants lacked authority to convey title as they were only beneficiaries without sole power to direct conveyance.
The listing disclosed the land trust status, and plaintiffs were aware of it, negating enforceability.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Seaberg v. American National Bank Trust Co., 35 Ill. App.3d 1065, 342 N.E.2d 751 (1976)	Beneficiary of a land trust may contract to convey title if trust agreement vests power to direct conveyance without trustee's consent.	Supported the principle that beneficiaries can bind themselves individually in contracts to convey trust property under appropriate circumstances.
Madigan v. Buehr, 125 Ill. App.2d 8, 260 N.E.2d 431 (1970)	Same principle regarding beneficiary's power to contract for conveyance in a land trust context.	Reinforced the court's understanding of beneficiary authority in land trust conveyances.
Lampinen v. Hicks, 73 Ill. App.3d 376, 391 N.E.2d 1105 (1979)	Consideration of beneficiary's authority and contract enforceability in land trust sales.	Referenced for comparative analysis of beneficiary contractual capacity.
Gibb v. Merrill, 234 Ill. App. 267 (1924)	Contractual liability of sellers as individuals despite trust ownership of property.	Applied to hold defendants individually liable for breach of contract damages.
Schiro v. W.E. Gould Co., 18 Ill.2d 538, 165 N.E.2d 286 (1960)	General principles related to vendor and purchaser rights and remedies.	Supported the court's conclusion regarding enforceability and damages.

Court's Reasoning and Analysis

The court analyzed the enforceability of the contract between plaintiffs and defendants, focusing on the defendants' capacity as individuals rather than as beneficiaries acting on behalf of the trust. Although the property was held in a land trust with legal title vested in the trustee, the contract expressly obligated defendants to "perform and convey or cause to be conveyed good title," indicating an individual contractual commitment. The court noted that the contract required delivery of a trustee's deed, signaling awareness of the trust arrangement, but this did not negate defendants’ personal liability.

The court rejected the defendants' Statute of Frauds defense because it was not preserved for review, as defendants did not pursue this argument on appeal. The court further explained that under Illinois law, a beneficiary may validly contract to convey trust property if the trust agreement allows the beneficiary to direct conveyance without trustee consent. Here, defendants signed the contract as individuals without any representative capacity or conditions limiting their liability.

Consequently, the court held that the contract was valid and enforceable against defendants individually, entitling plaintiffs to pursue damages for breach. The summary judgment dismissing plaintiffs' claim for damages was improper because it deprived plaintiffs of a remedy for defendants' failure to perform under the contract.

Holding and Implications

The court reversed the circuit court’s summary judgment dismissing plaintiffs’ damages claim and remanded the case for further proceedings consistent with this opinion.

This decision establishes that individual beneficiaries of a land trust may be held personally liable for breach of contract when they contract individually to convey trust property, even if legal title is held by a trustee and the contract contemplates a trustee's deed. The ruling does not create new precedent beyond the application of existing principles but clarifies that summary judgment was inappropriate given the facts and contractual language. The direct effect is to allow plaintiffs to proceed with their damages claim against defendants as individuals.

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MARIE PAGE et al., Plaintiffs-Appellants, v. ANTHONY P. FOSCO et al., Defendants-Appellees.

Mr. JUSTICE CAMPBELL delivered the opinion of the court:

Plaintiffs, Marie Page, Leon Page and Norma Steljes, bring this appeal from an order entered in the circuit court of Cook County granting defendants' motion for summary judgment. We reverse this order and remand for further proceedings.

On February 19, 1980, an order was entered by this court pursuant to Supreme Court Rule 23 (Ill. Rev. Stat. 1979, ch. 110A, par. 23) reversing the order of the circuit court granting the motion for summary judgment. A petition for rehearing was granted and as a result thereof the Rule 23 order is withdrawn and this opinion is substituted.

Plaintiff purchasers entered into a contract to purchase certain improved property, which was located at 6431-33 West Wabansia in Chicago and which was allegedly owned by defendants, Anthony P. Fosco and James Fosco (hereinafter sellers), for the sum of $194,000. Thereafter, purchasers paid $19,000 earnest money to the real estate broker handling this transaction, and obtained from a lending institution a commitment for a mortgage loan within the time allowed in the aforesaid sales contract. When the sellers failed to appear on the appointed closing date, purchasers filed a complaint in two counts. This complaint requested that the trial court order specific performance or in the alternative grant purchasers money damages for such breach of contract. Sellers made a motion for summary judgment, in lieu of an answer, which was allowed. The trial court then dismissed the complaint specifically finding that the contract entered into between the parties was not valid, and therefore, was not capable of transferring title to the real estate in question. Purchasers appeal only from that portion of the judgment which dismissed their claim for damages, contending that a failure on the part of the sellers to convey the realty, contracted for, constituted a breach of contract for which the sellers are liable in money damages.

The complaint in question was filed on June 15, 1978, and it alleged that title to the real estate, in question, was held by Exchange National Bank of Chicago as trustee, under a trust agreement dated May 6, 1963, and identified as Trust No. 15810; that a condition of the aforementioned sales contract required sellers to deliver a trustee's deed conveying all of the pertinent real estate to purchasers at the closing; that this particular real estate had a fair market value of not less than $225,000 on the closing date; that this property had a special value to the purchasers of $15,000 in addition to the fair market value by reason of the fact that all three of the purchasers would be able to live in one building having no third floor; and that, as a result of the sellers' failure to perform their obligations to sell the real estate, the purchasers were damaged in the amount of $47,325. The sellers are two of four beneficiaries of the land trust holding the property in question. All four beneficiaries have equal power to convey but none have the individual sole power to convey.

In their motion for summary judgment, the sellers admitted that the Exchange National Bank of Chicago, acting as trustee under trust No. 15810, was, at all times pertinent, the owner of legal title for the real estate, in question, having become such legal owner by a deed on May 6, 1963; that Minnie Fosco and Arlene Fosco were beneficiaries of this trust, along with the sellers; that the sellers were not the legal title owners of the real estate at the time the real estate sales contract was entered into; that the trustee did not appoint, at any time, either of the sellers as its agent to execute such a real estate sales contract; that the trustee did not sign the aforementioned sales contract; that Minnie and Arlene Fosco also did not sign that contract; that the purchasers were aware at all times that the real estate in question was held in trust since this condition was fully described in the public listing placed with the listing service by the real estate broker; and that, in light of these circumstances, the aforesaid real estate sales contract was unenforceable as a matter of law because of the Statute of Frauds (Ill. Rev. Stat. 1977, ch. 59 et seq.).

• 1 Defendant-appellees have not cited any authority or pursued the Statute of Frauds contention and the same has not been preserved for review. It is evident that the issue presented in this appeal is whether plaintiff-purchaser's complaint sets forth a cause of action for damages against defendant-sellers as individuals, and not as beneficiaries of a land trust for failure to perform as agreed in the offer to purchase. The beneficiary of a conventional land trust, as used in Illinois, may under appropriate circumstances enter into a valid contract to convey title to the trust property. He may do so not as agent of the trustee but in his capacity as beneficiary. This right is limited to situations in which the trust agreement vests in him the right to direct title to be conveyed without the trustee's consent. Such a contract will be mutually enforceable by the beneficiary as seller and the buyer where it expressly, or by reasonable construction, provides for exercise by the beneficiary of the power to direct conveyance. Seaberg v. American National Bank Trust Co. (1976), 35 Ill. App.3d 1065, 1069-70, 342 N.E.2d 751; Madigan v. Buehr (1970), 125 Ill. App.2d 8, 16-17, 260 N.E.2d 431; cf. Lampinen v. Hicks (1979), 73 Ill. App.3d 376, 377-79, 391 N.E.2d 1105.

The contract in question provides that the sellers accepted the offer of the purchasers and agreed "to perform and convey or cause to be conveyed good title according to the terms of this contract." (Emphasis supplied.) Furthermore, paragraph 3 provides:

"Closing shall be on June 15, 1978 or on such other date mutually agreed to by the parties hereto, provided the title has been shown good or accepted by purchaser, the conveyance to be by stamped and recordable trustees deed to purchaser or his nominee, * * *" (Emphasis added.)

• 2 We are of the opinion that the real estate sales contract in the present matter was enforceable against the two defendants as to money damages. We arrive at this conclusion despite the fact that this sales contract provided that the sellers were to provide the purchasers with a trustee's deed, thereby putting the purchasers on notice that the real estate in question was held in a land trust. The sellers' motion for summary judgment also alleged that the multiple listing for the property described the real estate as being held in trust. However, in the instant case, the sellers contracted specifically as individuals without any conditions whatsoever to "cause to be conveyed good title according to the terms of this contract." In view of these facts, we hold that the aforesaid contract to purchase real estate signed by the purchasers as individuals and accepted by Anthony Fosco and James Fosco is a valid and binding contract between the sellers as individuals and purchasers. Said sellers did not sign said agreement in any representative capacity, and no such allegation was made in defendant's motion for summary judgment. No answer to the complaint was filed by defendants and said motion for summary judgment did not operate to defeat or deprive plaintiff buyers of their claim for damages against defendants as individuals for breach of contract. Gibb v. Merrill (1924), 234 Ill. App. 267; see also Schiro v. W.E. Gould Co. (1960), 18 Ill.2d 538, 165 N.E.2d 286; 77 Am.Jur.2d 644 Vendors Purchasers § 517.

For the above and foregoing reasons, the judgment of the circuit court of Cook County dismissing that portion of the plaintiffs' complaint seeking money damages is hereby reversed and the cause is remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.

McGLOON and O'CONNOR, JJ., concur.