SECOND DIVISION FILED: March 4, 2008
No. 1-07-0970
WHEELER-DEALER, LTD., an Illinois ) APPEAL FROM THE Corporation, ) CIRCUIT COURT OF ) COOK COUNTY Plaintiff-Appellant, ) ) v. ) ) ROGER CHRIST, individually and d/b/a/ ) R&R BUILDING INVESTMENTS, ) HONORABLE ) MARTIN S. AGRAN, Defendant-Appellee. ) JUDGE PRESIDING.
PRESIDING JUSTICE HOFFMAN delivered the opinion of the court:
The plaintiff, Wheeler-Dealer, Ltd., filed a two-count amended
complaint in the instant action seeking, in count I, reformation of
a deed conveying all of lot 4 of Massey’s Addition to Fairmont, a
subdivision in Blue Island, Illinois (Lot 4). Count II, pled in
the alternative to count I, sought rescission of the same deed.
Following a bench trial, the circuit court entered judgment in
favor of the defendant, Richard Christ, on both counts of the
amended complaint. The plaintiff filed a timely notice of appeal.
In its brief filed with this court, the plaintiff states that
it is not pursuing an appeal from the circuit court’s judgment on
count II, the rescission count, and the plaintiff has not presented
any arguments in relation thereto. Consequently, any claim of
error in the circuit court’s entry of a judgment in favor of the NO. 1-07-0970
defendant on count II has been waived. 210 Ill. 2d R. 341(h)(7).
We restrict our analysis to the plaintiff’s claims of error in the
circuit court’s judgment on count I, the reformation action.
Count I of the plaintiff’s amended complaint alleges that, on
October 9, 2004, the plaintiff as seller and the defendant as
purchaser executed a contract for the sale and purchase of a
certain parcel of real property described, in part, as the east 165
feet of Lot 4. However, when the sale was closed on December 28,
2004, the plaintiff delivered a special warranty deed conveying all
of Lot 4 to R&R Building Investments, the defendant’s nominee.
According to the complaint, the conveyance of all of Lot 4 was a
"scrivener’s error," and the product of a mutual mistake of fact.
In count I of its amended complaint, the plaintiff asked the court
to reform the deed by deleting from the legal description that
portion of Lot 4 which had been excluded from the parties’
contract.
In his answer to count I of the amended complaint, the
defendant admitted the execution of the contract as alleged by the
plaintiff, but denied that he only intended to purchase the east
165 feet of Lot 4. He denied that the conveyance of all of Lot 4
was the result of a mutual mistake of fact.
At trial, the defendant testified that he attended a real
estate auction on October 9, 2004, and received a bid brochure at
that time. He stated that he was interested in purchasing the land
and building at 12531 S. Vincennes in Blue Island, Illinois, which
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was listed by that address as parcel No. 54 in the bid brochure.
As described in the brochure, the property had a metal garage
building located on it which was being used as an auto shop. The
defendant testified that he intended to use the metal building as
a warehouse for the storage of cabinets. According to the
defendant, the auctioneer made no disclosure prior to the bidding
that the seller intended to retain any part of the property listed
as 12531 S. Vincennes. He admitted that, prior to the auction, he
had no idea that there was an advertising sign on the property, nor
did the auctioneer make any reference to the sign. None of the
auction materials described the property as containing an
advertising sign. The defendant testified that the first time he
found out that there was a sign on the property was approximately
two months later.
The defendant admitted that he did not read the bid brochure
"word for word" prior to the auction. After being shown the
document, he acknowledged that the brochure states that it and all
other auction related materials are subject to and superceded by
the real estate contract which had been made available to all
potential bidders prior to the auction.
The defendant maintained that he intended to purchase all of
the property comprising 12531 S. Vincennes. Initially, he
testified that he knew the boundaries of the property prior to the
auction. However, later in his testimony, the defendant stated
that, at the time he purchased the subject property, he had no idea
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how large the parcel was.
After identifying the real estate sale contract which he
signed on October 9, 2004, the defendant acknowledged that the
address of 12531 S. Vincennes does not appear anywhere in the
document. Rather, the contract contains a legal description of the
property as the east 165 feet of Lot 4 and gives approximate
dimensions of 50 feet by 165 feet. The defendant then identified
a special warranty deed dated December 27, 2004, which conveyed all
of Lot 4 to R&R Building Investments and a survey of Lot 4 showing
the dimensions of Lot 4. According to the survey, Lot 4 is 206.27
feet on its northern border, 50 feet on its eastern border which
abuts a private road, 224.77 feet on its southern border, and 53.30
feet on its western border which abuts Vincennes road. The metal
building bearing the address of 12531 is located on the eastern
portion of Lot 4, approximately 19 feet from the eastern border of
the property.
David R. Gray, Jr. (Gray Jr.), the attorney who represented
the plaintiff in the subject transaction, testified that he made a
mistake when he included all of Lot 4 in the special warranty deed
which he prepared. According to Gray Jr., instead of inserting the
proper legal description of the east 165 feet of Lot 4 in the deed,
he used a "cut and paste" method and mistakenly took the legal
description, Lot 4, from the documents the plaintiff received when
it obtained title to the property. Gray Jr. testified that he
never discovered the error until several months after the closing.
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He admitted that the receipt given to the defendant when he posted
his earnest money on the day of the auction lists 12531 S.
Vincennes as the address of the property purchased, as does the
closing statement. Gray Jr. also admitted that, about one month
prior to the closing, he received a title commitment showing Lot 4
as the property involved in the transaction, but he stated that he
would not have reviewed the legal description. He would only have
reviewed title exceptions listed on schedule B of the commitment.
Gray Jr. testified that, in addition to the special warranty deed,
Lot 4 was mistakenly listed as the legal description of the
property in other closing documents such as the affidavit of title
and the state and county tax declarations.
Kevin Skalnick, who was employed by Gray Jr. as a law clerk at
the time of the instant transaction, testified that, prior to the
closing, he received a call from the law firm representing the
defendant. According to Skalnick, he spoke to a woman named Donna
regarding her concern that the legal description of the property as
set forth on the sale contract did not match the legal description
on the title commitment or the survey. He testified that he
consulted with Gray Jr. about the discrepancy and told Donna that
the legal description on the contract was correct. Donna Stasi, an
employee of the law firm that represented the defendant in the
instant transaction, testified that, although she assisted in the
transaction, she did not remember having a discussion with anyone
regarding a discrepancy between the legal description in the sales
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contract and the description in the title commitment.
Timothy Gray, the president of the plaintiff corporation,
testified that, when he decided to sell the portion of Lot 4 with
the metal garage located on it, he never intended to sell that
portion of the property upon which the advertising sign was
located. Gray stated that he was present at the auction on October
9, 2004, and did not make any statements to the defendant about
selling less than the entire parcel of property listed as 12531 S.
Vincennes, nor did he instruct the auctioneer to announce to the
bidders that it was only the east 165 feet of the property listed
as 12531 S. Vincennes that was being sold. He admitted that the
address of 12531 S. Vincennes was painted on the door of the metal
building located on the property. Gray testified that he
authorized his father, David R. Gray, Sr., to prepare the contract
of sale and Gray Jr. to prepare the deed and all other documents
necessary for a closing. According to Gray, he never authorized
the preparation of any deed or closing documents that contained a
legal description other than the one appearing on the sales
contract. He acknowledged that 12531 S. Vincennes appears on the
earnest money receipt given to the defendant on the day of the
auction as the address of the property purchased and the same
address appears on the closing statement.
Following the close of evidence, the circuit court entered
judgment in favor of the defendant on both counts of the
plaintiff’s amended complaint. As to count I, the reformation
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action, the circuit court found that the defendant never
contemplated that he was going to receive less than the entire lot
at 12531 S. Vincennes or that any portion of the land was going to
be excluded from the transaction. This appeal followed.
The plaintiff argues that the judgment of the circuit court on
its reformation claim is against the manifest weight of the
evidence. According to the plaintiff, the conveyance of all of Lot
4 to the defendant was the result of a mutual mistake of fact. The
plaintiff contends that the parties' contract unambiguously
identifies the east 165 feet of Lot 4 as the parcel that it agreed
to sell and the defendant agreed to purchase, and the variance
between the legal description in the contract, the east 165 feet of
Lot 4, and the legal description in the deed, Lot 4, was solely the
result of Gray Jr.'s mistake in preparing the deed. The plaintiff
concludes that the circuit court erred in failing to reform the
legal description in the deed to conform to the legal description
in the contract.
The purpose of an action for reformation is to change a
written instrument by inserting some omitted provision or deleting
some existing provision so that the document conforms to the
original agreement of the parties. Schaffner v. 514 West Grant
Place Condominium Ass'n, Inc., 324 Ill. App. 3d 1033, 1044, 756
N.E.2d 854 (2001). Before a deed will be reformed, satisfactory
evidence of mistake must be presented. The mistake must be one of
fact, not of law, and it must be mutual and common to both parties.
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Schmitt v. Heinz, 5 Ill. 2d 372, 379, 125 N.E.2d 457 (1955). The
plaintiff has the burden of proving by clear and convincing
evidence that the parties reached a meeting of the minds resulting
in an actual agreement between them, but that, at the time that the
deed was reduced to writing and executed, some agreed-upon
provision was omitted or one not agreed upon was inserted either
through mutual mistake or through mistake by one party and fraud by
the other. See Sheldon v. Colonial Carbon Co., 116 Ill. App. 3d
797, 800, 452 N.E.2d 542 (1983). Whether the plaintiff in such an
action has met its burden of proof is a question of fact to be
resolved by the circuit court, and its decision in the matter will
not be disturbed on review unless it is against the manifest weight
of the evidence. Fisher v. State Bank of Annawan, 163 Ill. 2d 177,
182, 643 N.E.2d 811 (1994); Sheldon, 116 Ill. App. 3d at 800.
There is a presumption that a written instrument conforms to
the intention of the parties. Sheldon, 116 Ill. App. 3d at 800.
However, where a mutual mistake is alleged, parol or extrinsic
evidence is admissible to show the true intent of the parties.
Schmitt, 5 Ill. 2d at 379; Schaffner, 324 Ill. App. 3d at 1045. A
mutual mistake is one that is common to the parties such that each
labors under the same misconception. In such a case, the parties
are in actual agreement, but the instrument to be reformed, in its
present form, does not express the parties' real intent. See Bank
of Naperville v. Holz, 86 Ill. App. 3d 533, 538, 407 N.E.2d 1102
(1980).
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In this case, the plaintiff contends that the parties’
contract unequivocally and unambiguously establishes their intent;
namely, the sale and purchase of the east 165 feet of Lot 4, "[n]o
more, no less." According to the plaintiff, its attorney made a
mistake when he prepared a deed conveying all of Lot 4, and the
defendant "made a mistake in accepting the Deed." The plaintiff
concludes that the mistake was mutual.
The defendant appears to argue that the mistake in this case
involved the very identity of the subject matter of the parties’
contract. The defendant asserts that he always intended to
purchase the entire premises identified in the bid brochure as
12531 S. Vincennes, which is legally described as Lot 4, not merely
some portion thereof. He reasons that, if as it asserts, the
plaintiff only intended to sell a portion of the property commonly
known as 12531 S. Vincennes, there was no meeting of the minds and,
as a consequence, no agreement upon which a claim for reformation
could be based. The defendant’s argument in this regard rests on
the circuit court’s finding that the plaintiff failed to prove a
meeting of the minds by clear and convincing evidence.
The plaintiff asserts that the circuit court erred in
considering any parol evidence as to the defendant’s intent at the
time that he signed the contract to purchase the east 165 feet of
Lot 4. According to the plaintiff, the contract is clear,
unambiguous and contains an integration clause stating that the
document incorporates the entire understanding between the parties.
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The plaintiff argues that the circuit court erred in looking beyond
the "four corners" of the contract in determining the intent of the
parties. However, assuming for the sake of analysis that the
evidence offered by the defendant did violate the parol evidence
rule, the plaintiff waived any challenge to the circuit court’s
consideration of that evidence by failing to make a contemporaneous
objection at trial.
Evidence violating the parol evidence rule may be considered
by a trial court in the absence of a timely objection. Tolbird v.
Howard, 43 Ill. 2d 357, 362, 253 N.E.2d 444 (1969). Timeliness
requires that an objection be made when the evidence is offered at
trial. Spurgeon v. Mruz, 358 Ill. App. 3d 358, 360, 832 N.E.2d 321
(2005). Although a party may have objected to the evidence at some
pre-trial stage in the proceedings or unsuccessfully moved to bar
the evidence prior to trial, it must still renew its objection at
the time that the evidence is offered. Spurgeon, 358 Ill. App. 3d
at 360-61. Failure to renew the objection when the evidence is
offered at trial results in a waiver of any challenge to the
circuit court’s consideration of that evidence. Spurgeon, 358 Ill.
App. 3d at 361; see also Dremco, Inc. v. Hartz Construction Co.,
261 Ill. App. 3d 531, 534, 633 N.E.2d 884 (1994).
The plaintiff asserts that, during the "discovery stage" of
the proceedings, it objected to the admission of any oral
statements going to the intent of the parties at the time that they
entered into the real estate contract and that it again objected to
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such evidence in its brief filed with the circuit court prior to
the commencement of trial. Nevertheless, the record is devoid of
any objection by the plaintiff to the introduction of parol
evidence at the time that it was offered during the trial of the
cause. Consequently, any objection to the circuit court having
considered the extrinsic evidence offered by the defendant to
establish his intent at the time that he entered into the real
estate contract with the plaintiff has been waived.
The existence of a factual mistake is a prerequisite for
relief in a reformation action. Friedman v. Development Management
Group, Inc., 82 Ill. App. 3d 949, 953, 403 N.E.2d 610 (1980).
Mistakes are divided into two groups. The first group consists of
"those fundamental in character, relating to an essential element
of the contract which prevent a meeting of the minds of the parties
and so no agreement is made." Harley v. Magnolia Petroleum Co.,
378 Ill. 19, 28, 37 N.E.2d 760 (1941). Mistakes relating to the
identity of the subject matter of the contract are included within
this first group. Harley, 378 Ill. at 28. The second group of
mistakes involve circumstances in which an actual understanding has
been reached by the parties but, through some error, their written
contract does not express their actual understanding. "The former
of these classes constitutes ground for rescission but not
reformation, while the latter may be reformed." Harley, 378 Ill.
at 28.
The defendant contended throughout this litigation that he
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intended to purchase the entire property commonly known as 12531 S.
Vincennes. His testimony in this regard is supported by the bid
brochure for the auction on October 9, 2004, which described the
property as 12531 S. Vincennes, and the receipt which the defendant
received when he posted his earnest money deposit which also
described the property as 12531 S. Vincennes. In contrast, the
plaintiff's president testified that he never intended to sell all
of Lot 4; rather, he only intended to sell the east 165 feet
thereof. The contract entered into by the parties states that the
property to be conveyed is the east 165 feet of Lot 4, and makes no
reference to a common address of 12531 S. Vincennes. The survey
admitted into evidence reveals that the parcel described in the
contract, the east 165 feet of Lot 4, does not border Vincennes
road. The only road frontage that the parcel has is 50 feet on the
private road abutting its eastern border.
The circuit court found that the defendant never contemplated
that he was purchasing anything less than the entire parcel
commonly known as 12531 S. Vincennes. The inference being that the
plaintiff prepared a contract for the sale of one parcel of land,
and the defendant signed the contract thinking that he was
purchasing a different parcel. The circuit court concluded that
there was no meeting of the minds when the parties signed the real
estate contract on October 9, 2004, and we are unable to find based
upon the record before us that its determination in this regard is
against the manifest weight of the evidence.
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When, as in this case, there has been no meeting of the minds,
there can be no reformation. In cases where reformation is
appropriate, the mistake involved is in the expression of an
agreement between parties whose minds have met. See Harley, 378
Ill. at 28.
The plaintiff also argues that reformation of the deed to
include only the east 165 feet of Lot 4 is appropriate in order to
prevent the defendant from being unjustly enriched at its expense.
However, the plaintiff has failed to cite any cases in support of
the proposition that, in the absence of any underlying meeting of
the minds, reformation of a written instrument is an appropriate
remedy in order to prevent unjust enrichment. Failure to cite
legal authority in support of an argument results in a waiver of
the issue for purposes of appeal. 210 Ill. 2d R. 341(h)(7);
Libertyville Toyota v. U.S. Bank, 371 Ill. App. 3d 1009, 1017-18,
864 N.E.2d 850 (2007). Waiver aside, we reject the argument on its
merits.
Recovery under a theory of unjust enrichment is based on a
contract implied in law. Because recovery under this theory is
based upon an implied contract, where the parties' relationship is
governed by a contract, the doctrine of unjust enrichment has no
application. People ex rel. Hartigan v. E & E Hauling, Inc., 153
Ill. 2d 473, 497, 607 N.E.2d 165 (1992). Reformation of a written
instrument is based upon proof of an underlying agreement between
the parties which has been thwarted by a mutual mistake in
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transcription. Harley, 378 Ill. at 27-28; Sheldon, 116 Ill. App.
3d at 800; Friedman, 82 Ill. App. 3d at 953. The two concepts are
fundamentally inconsistent. Unjust enrichment may only form the
basis of recovery in the absence of an agreement between the
parties; whereas, reformation may only be awarded in order to
conform a writing to an actual agreement between the parties. We
conclude, therefore, that the doctrine of unjust enrichment may not
form the basis of a claim for reformation.
Based upon the foregoing analysis, we affirm the judgment of
the circuit court in favor of the defendant on count I of the
plaintiff’s amended complaint, the reformation claim. Further, as
noted earlier, the plaintiff has declined to pursue its appeal from
the judgment entered in favor of the defendant on count II, its
action for rescission. We, therefore, affirm the circuit court’s
judgment in its entirety.
Affirmed.
SOUTH and KARNEZIS, JJ., concur.