Illinois Life Insurance v. Beifeld

184 Ill. App. 582, 1914 Ill. App. LEXIS 1230

• Court: Appellate Court of Illinois
• Decided: January 22, 1914
• Docket: Gen. No. 18,765
• Status: Published

Opinion

Mr. Presiding Justice Fitch

delivered the opinion of the court.

The only question raised upon this appeal is whether the declaration states a good cause of action. On behalf of appellee, it is contended (1) that the instrument set forth in the declaration is not a contract, but is a mere memorandum, intended to serve as a skele7 ton or outline for the preparation of contracts to be thereafter agreed upon and executed; (2) that if the instrument can be considered as a contract, it is void for uncertainty; (3) that, as so considered, it is void for want of mutuality; (4) that, in any view, it is ultra vires, and void for that reason.

First. As to the first of these contentions, the argument is, as we understand it, that because the memorandum, though signed by the parties, shows upon its face that a formal “contract of leasing” and formal assignments or subleases were to be subsequently prepared, and because it appears from the memorandum that but few of the usual covenants and conditions of ordinary leases are mentioned as having’ been agreed on, therefore it must be held that the memorandum was intended to be only an agreement to enter into another agreement, the precise terms and conditions of which were still undetermined at the time the memorandum was signed. We are unable to take this view of the matter. The memorandum shows that all the essential provisions of a valid lease and valid assignments had been in fact agreed on, and appellee therein “agrees to take” a lease containing those provisions ‘ ‘ as soon as the same can be conveniently prepared.” A lease for a term of years is a chattel real, and conveys an interest in the land demised. People v. Shedd, 241 Ill. 155, 165. So far as we are advised, it has never been held that a contract which provides for the conveyance of real estate by a warranty deed, or other specified instrument of conveyance, is an incomplete contract merely because it provides that such deed or instrument is to be subsequently prepared. Of course, if it is apparent from the language of the contract that some of the terms and conditions which are to be inserted in the instrument of conveyance are still unsettled and open for further negotiation, then the agreement to convey is incomplete because in such ease there is no agreement in fact. But we do not think there is any language in the document under consideration that can be so construed. It speaks of appellant as the “lessor” and of appellee as the “lessee.” It describes the property which is to be leased, the duration of the term, the rental, and the time and manner in which the rent shall be payable. It provides that the lessee shall pay “all taxes, assessments, charges, etc., levied or assessed'for the year 1907 and thereafter during the term of said lease.” The only “charges, etc.,” which can be “levied or assessed” against real estate are taxes and special assessments. It provides that the lessee shall build and complete within a fixed time, a building of a specified type, height and cost, and provides that architect’s fees and certain other expenses of building shall be included in the cost. It provides further that “concurrently with the execution and delivery of the lease,” appellee shall 'make certain deposits with a specified bank, “or such other trustee as may be mutually agreed upon,” as security for the performance of the covenants of the lessee. In this clause a way was left for a subsequent agreement as to some other trustee than the one specifically mentioned, but that fact does not make the contract incomplete, for the clear intention is that in the absence of any such subsequent agreement the trustee specified should act. Throughout the memorandum, the word “agrees” is used, indicating a present and not a future agreement. It is inconceivable that the parties would go to the trouble of preparing a document like this, and cause it to be formally signed, on the part of the appellant corporation, by its president and secretary, and attested with the corporate seal, and also to be signed in person by appellee, if they intended it to be a mere memorandum for future reference only, not binding upon either party except in the event of a subsequent further agreement. We think the memorandum thus prepared and signed must be construed as a complete agreement to convey a specified interest in the property described upon the terms therein set forth, as soon as a formal instrument to that effect could be conveniently prepared for the signature of the parties.

Second. As to the second contention above stated, what we have already said applies with equal force to the argument made upon this point. Appellee’s counsel have picked out sentences here and there, which they claim are hot sufficiently explicit to enable a lawyer to so prepare a lease as to definitely provide for all contingencies that might be suggested. It may be conceded that the memorandum does not provide in express terms for all possible contingencies, but that fact does not render the contract void for uncertainty. The document expresses the agreement of the parties in such form as to leave little room for doubt as to what was intended and what matters were in fact agreed upon; and that is enough to overcome the objection of uncertainty. The objection that it is uncertain whether assignments of existing leases, or subleases, should be prepared is immaterial, for as the whole term of existing leases was to be conveyed, subleases, if executed, would amount to the same thing in legal effect as assignments. Lyon v. Moore, 259 Ill. 23. It would unduly extend the limits of this opinion to take up and discuss each of the sentences objected to on this ground, and it will suffice to say that after due consideration of the arguments advanced we think the objections are not well taken.

Third. It is argued at great length, and with much force, that an agreement by one party to “take” a lease does not, as a matter of law, impose any obligation on the other party to “give” such a lease. It is conceded that the courts may construe an obligation from the words used by the parties in a contract, but it is insisted that the language used in the memorandum in question is too plain for construction, and that to construe an obligation upon appellant to give a lease from words which only require appellee to take one, would be to create an obligation by implication. Some words are often used in a double sense, and others have more than one meaning. In order to arrive at the meaning of words used in a contract, the whole contract must be considered; and if, when so considered, the words employed have a signification other and different from the meaning conveyed by the same words when standing alone, it is the duty of the court to interpret the words used so as to give effect to the intention of the parties, if such intention clearly appears from all the language of the contract. In the memorandum in question, appellee “agrees to take lease of Oriental property and assignments or subleases of other property (as soon 'as the same can be conveniently prepared), beginning" October 1, 1906, subject to existing leases, and running for 97 years and 7 months,” at a stipulated rental, and he also agrees to deposit a large amount of securities “concurrently with the execution and delivery” of the lease. One meaning of the word “take” is “to accept as something offered; to receive; not to refuse or reject.” (Webster’s Dict.) Giving the word “take” this meaning, and reading the phrase in which it is used in connection with the other clauses above quoted, the contract clearly imports a present agreement by Beifeld to accept an offer made by appellant to execute and deliver to him a lease of the Oriental property and assignments or subleases of the other property, as soon as the same can be conveniently prepared. This interpretation of the words used does not create an obligation by implication, but construes the contract so as to give effect to the intention of the parties, as shown by the language employed. It is impossible to read the memorandum in question without being impressed with the view that the parties thereby intended to state, not only in substance but in detail, the terms and conditions of a lease which they agreed should be at once prepared and executed by appellant, and accepted by appellee. In principle, the memorandum in this case is like the contracts construed in Minnesota Lumber Co. v. Whitebreast Coal Co., 160 Ill. 85; Torrence v. Shedd, 156 Ill. 194, and Sanitary Dist. of Chicago v. McMahon & Montgomery Co., 110 Ill. App. 510. We are of the opinion that the contract imposed mutual obligations, in consideration of the mutual promises therein contained.

Fourth. A more difficult question, in our opinion, is presented by the contention that the contract was ultra vires. No claim is made in this court that the term of the lease contracted for extends beyond the corporate life of appellant. Whether such is or is not the fact does not appear; and whether that fact, if true, would affect the question here presented is not discussed by counsel. The contention as made here is that the making of a lease, for ninety-seven years, of property which a life insurance corporation has lawfully acquired but which becomes unnecessary for the transaction of its business, is beyond the power of such a corporation to make, because of the language of the statute permitting such corporation to own only “so much real and personal estate as shall be necessary for the transaction of its business, and to sell and dispose of the same when deemed necessary.” (Hurd’s St. 1911, ch. 73, ¶ 182, J. & A. ¶ 6460.)

It is alleged in the declaration that all the property mentioned in the memorandum contract had been acquired by appellant “for the purpose of carrying on the business for which it was incorporated.” This allegation is admitted by the demurrer. Having lawfully acquired such property, if it may be held, as we think it may, that the execution of the memorandum contract is prima facie evidence of the fact that the property in question was deemed to be no longer necessary for the transaction of its business, then the only question as to the power of the corporation to make such a contract is whether the power given by the statute to “sell and dispose of” such real estate precludes appellant- from making a lease of the same for ninety-seven years and seven months.

It is contended by appellee’s counsel that the words “dispose of,” as used in the statute, must be construed to apply only to transactions that are in their nature equivalent to "sales; to which contention appellant’s counsel reply that to give those words the same meaning as the word “sell” would be to read the statute “to sell and to sell,” thereby giving to the words “dispose of” the effect of mere repetition. Appellant’s counsel contend that the making of such a lease as the contract provides for does, in effect, “dispose of” the property. We think that neither of these.contentions is entirely sound. The phrase “to dispose of” has two meanings; one is “to exercise the power of control over;” the other is “to exercise finally one’s power of control over; to alienate.” (Webster’s Dict.) Clearly, the latter of these meaning’s is the one in which the phrase is used in the statute. As thus construed, the statute gave to appellant the right to sell and alienate the property in question; or, in other words, to sell and convey the same by proper instruments of conveyance. But the statute does not require a corporation having property which is no longer required for the transaction of its business to immediately sell and convey the same. It' may, undoubtedly, hold such property a reasonable time, in order that the same may be sold to advantage. Under some statutes relating to corporations, a time limit of five years is fixed. As to life insurance companies, by an act passed after this contract was entered into, it was provided that such property shall be “sold and disposed of” within five years after the same shall have ceased to be necessary for the accommodation of the business of the corporation, unless a certificate is obtained from the insurance superintendent extending the time. Hurd’s Stat. 1909, p. 1312. (J. & A. ¶ 6507.) It is unnecessary to decide whether these statutes must be considered in determining the rights and powers of appellant. Assuming that to be true, it would be absurd to say that during the five years’ limitation, if an insurance company should be unable to find a buyer for such property, it must suffer its property to remain vacant and unoccupied, bringing no return and entailing constant expense in carrying the same. The fact that property is leased does not prevent a sale of it. On the contrary, it is a matter of common knowledge that property which is advantageously leased is frequently more salable because of that fact. So the mere making of a lease for ninety-seven years does not prevent a sale of the property. Such a lease might, and probably would, in many cases, give a value to the fee which it would not otherwise possess. If such a lease were to be made as a part of a plan adopted by a corporation for the purpose of effecting a more advantageous sale of its unnecessary real estate, there would seem to be no question of its right and power under the statute to do so. This being true, it follows that whether appellant had, or had not, such a plan and purpose in view, when it made the contract for such a lease, is not a question of power but a question of its intention, or good faith, in exercising a power which it had the right under some circumstances, to exercise. Where an alleged ultra vires contract is one which the corporation was not, under any circumstances, authorized to perform, it is void and may be attacked anywhere, by any one. National Home Building & Loan Ass’n v. Home Sav. Bank, 181 Ill. 35. But where the validity of the contract depends upon the question whether the corporation has abused, or unjustifiably used, a power which it had the right to exercise, if exercised in good faith, then only the 'State can attack it. Rector v. Hartford Deposit Co., 190 Ill. 380. In any view, however, the facts stated in the declaration do not raise the presumption that appellant intended to continue to hold its real estate in violation of the statute. We therefore conclude that the objection of ultra vires cannot prevail in this case.

For the reasons indicated, we think the demurrer to the declaration should have been overruled. The judgment of the Superior Court will, therefore, be reversed and remanded with directions to that court to overrule the demurrer.

Reversed and remanded with directions.