2019 IL 123046

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

(Docket No. 123046) 

1550 MP ROAD LLC, Appellee, v. TEAMSTERS LOCAL UNION NO. 700, Appellant. 

Opinion filed March 21, 2019.

JUSTICE BURKE delivered the judgment of the court, with opinion. 

Chief Justice Karmeier and Justices Thomas, Kilbride, Garman, Theis, and 

Neville concurred in the judgment and opinion. 

OPINION

¶ 1 The Property of Unincorporated Associations Act (Act) (765 ILCS 115/2 (West 

2010)) requires a labor union to notify its members and obtain their approval prior 

to entering into an agreement to lease or purchase real estate. At issue in this case is 

whether a union’s failure to follow these requirements rendered a real estate 

agreement executed by its representative unenforceable. Applying the analysis set 

forth in K. Miller Construction Co. v. McGinnis, 238 Ill. 2d 284 (2010), the circuit 
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court of Cook County concluded that the agreement is enforceable on the grounds 

that the Act is silent as to the consequences of noncompliance. The appellate court 

affirmed. 2017 IL App (1st) 153300. This court allowed defendant’s petition for 

leave to appeal. Ill. S. Ct. R. 315(a) (eff. Nov. 1, 2017). For the reasons that follow, 

we reverse that part of the lower courts’ judgments pertaining to the enforceability 

of the agreement and remand the cause to the circuit court with directions.

¶ 2 BACKGROUND

¶ 3 At the time of these events, Teamsters Local Union No. 726 (Local 726) was a 

voluntary unincorporated association chartered by, and a local affiliate of, the 

International Brotherhood of Teamsters. In 2009, Local 726 represented 

approximately 4500 members in the state of Illinois. On May 2, 2008, Thomas 

Clair, the secretary-treasurer of Local 726, signed and executed a lease and 

purchase agreement (LPA) on behalf of the union with plaintiff, 1550 MP Road 

LLC. The LPA was prepared by plaintiff’s attorney and signed by two 

individuals—Clair and Matthew Friedman, one of plaintiff’s managers. 

¶ 4 The LPA obligated Local 726 to occupy and pay rent on commercial property at 

1550 South Mount Prospect Road in Des Plaines, Illinois, for 15 years. The 

monthly base rent was $12,549 per month in the first year of the lease, gradually 

increasing to $16,559 per month in year 15 of the lease. In addition to the base rent, 

Local 726 was obligated to pay plaintiff an amount equal to the operating expenses 

incurred by plaintiff and the real estate taxes for each calendar year. The LPA 

functioned as a “lease” agreement only for the first five years. At the end of the fifth 

year, Local 726 was obligated to purchase the property for the amount of 

$2,145,371. If Local 726 failed to purchase the property within five years, it was 

required to pay plaintiff an amount equal to 200% of the base rent for the remainder 

of the lease term (double-rent penalty). This provision would require Local 726 to 

pay plaintiff approximately $3,583,000 over 10 years without obtaining title to the 

property. 

¶ 5 The LPA also contained a liquidated-damages provision in the event of tenant 

default. Under this provision, if Local 726 defaulted by failing to pay rent, it would 

be liable to plaintiff in the amount of the total rent owed for the remainder of the 

lease term. The liquidated-damages provision did not require an offset for the 
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fair-market rental value of the property. In other words, if the fair-market rental 

value exceeded the amount owed under the liquidated-damages provision, plaintiff 

was not required to apply the excess value toward the amount owed by Local 726. 

¶ 6 Pursuant to the LPA, Local 726 took possession of the property in January 2009 

and paid rent until August 2009. At that time, Local 726 went into emergency 

trusteeship as a result of an investigation into its finances by the International 

Brotherhood of Teamsters (International). From September to November 2009, 

Local 726’s trustees attempted to reach a new lease agreement with plaintiff but 

were unsuccessful. Local 726’s last rental payment was made to plaintiff in 

December 2009 for the month of January 2010. In December, International voted to 

revoke the charters of Local 726 and Teamsters Local Union No. 714 (Local 714) 

and to charter a new union, Teamsters Local Union No. 700 (Local 700). 

Accordingly, on December 31, 2009, Locals 726 and 714 were dissolved, and 

Local 700 was chartered. 

¶ 7 As of December 31, 2009, the membership rolls, assets, and liabilities of Locals 

726 and 714 were transferred to Local 700. From January 1, 2010, to April 30, 

2010, Local 700 occupied the property formerly occupied by Local 726. In 

February 2010, Local 700 proposed a “rent/standstill” agreement to plaintiff. Under 

the proposed agreement, Local 700 would occupy the property on a 

month-to-month basis and pay rent equal to the amounts set forth in the LPA, while 

plaintiff would not waive any of its rights regarding the enforcement of the LPA. 

Plaintiff never responded to that proposal. 

¶ 8 On or about March 10, 2010, plaintiff began advertising the property to 

potential renters and/or buyers by placing a sign on the front lawn. On April 30, 

Local 700 vacated the premises and moved its operations to another property. On 

May 12, plaintiff served Local 700 with a notice of default demanding rent 

payments, real estate taxes, insurance payments, and late charges for the months of 

February through May 2010. When Local 700 failed to respond, plaintiff formally 

terminated the lease. 

¶ 9 Plaintiff subsequently filed a 22-count verified amended complaint seeking 

damages related to Local 700’s alleged failure to perform according to the terms of 

the LPA. Count I, the sole count at issue in this appeal, alleged breach of contract 
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against defendant, Local 700.1 The claim alleged that defendant was liable for 

Local 726’s breach of the parties’ agreement under a theory of corporate successor 

liability. Plaintiff requested damages under both the liquidated-damages provision 

and the double-rent penalty. The case proceeded to a bench trial in September 2014. 

¶ 10 Clair testified that he worked for the City of Chicago for 28 years, retiring in 

2003. His education consisted of two years at community colleges. In 1971, while 

working as a truck driver for the City, he became a member of Local 726. In 1995, 

he attained the position of business agent for Local 726, and in 1996, he became the 

recording secretary. In 2003, he was appointed as Local 726’s secretary-treasurer, a 

position he maintained until his retirement from the union in 2009. Clair testified 

that he had no background in real estate. He testified that, as the secretary-treasurer 

and principal officer of Local 726, he had the authority to negotiate and sign leases 

on behalf of the union. 

¶ 11 Clair stated that he signed a lease renewal agreement for Local 726’s former 

premises on December 30, 2003. That lease and the LPA were the only lease 

agreements he had signed for the union. Clair testified that, in late 2007 or early 

2008, the union was in the market for new office space. He testified that he 

unilaterally negotiated the LPA with Friedman and Mick Bess, plaintiff’s 

comanager. Clair admitted that he did not seek advice from an attorney or real 

estate agent during the negotiations of the LPA. He also admitted that Local 726’s 

membership did not receive notification of the LPA before he signed it, nor was a 

vote taken of the members to authorize the agreement. Clair testified that he 

thought the members would be notified when it came time for Local 726 to 

purchase the property pursuant to the terms of the LPA. 

¶ 12 Friedman testified that he had been involved in the construction and the 

commercial real estate and development industries since 1984. He had worked for 

two or three companies before starting his own company doing commercial 

development and construction. He testified that, over the course of his career, he 

had been involved in over 250 commercial real estate transactions. Friedman stated 

that he thought Clair had the authority to sign leases on behalf of Local 726. He 

 1

Counts II and III alleged violations of the Uniform Fraudulent Transfer Act (740 ILCS 

160/5(a), 6(a) (West 2012)) against Local 700. The remaining counts alleged tortious interference 

with contract against various defendants not involved in this appeal.
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testified that, following negotiations with Clair, he asked his attorney, Jeffrey 

Rochman, to draft a lease agreement memorializing the terms agreed to by the 

parties. 

¶ 13 According to witness testimony, on May 8, 2008, six days after Clair signed the 

LPA, he met informally with some of the members of the executive board. No 

minutes were taken. At this meeting, five of the seven board members, including 

the president, signed a document titled “Unanimous Consent of the Executive 

Board in Lieu of Meeting of the Executive Board of Teamsters Local Union 

Number 726.” The document was drafted by Rochman. It purported to authorize 

the union’s secretary-treasurer, president, and/or secretary, acting together or 

alone, to lease the property at 1150 South Mount Prospect Road in Des Plaines, 

Illinois, from plaintiff. The document did not reference any specific terms of the 

LPA, nor did it mention Local 726’s obligation to purchase the property. Michael 

Marcatante, a trustee of Local 726 who was present at the meeting, testified that he 

had not seen a copy of the LPA and was unaware of its terms before signing the 

document. He also was unaware that Clair had already signed the lease prior to their 

meeting. 

¶ 14 Local 726’s bylaws were entered into evidence. The bylaws stated, in relevant 

part: “[t]he principal officer, *** together with the President shall sign all official 

documents, deeds, mortgages, bonds, contracts, or other instruments, *** and 

perform such other duties as the International Constitution, these Bylaws or law 

may require of him.” The bylaws also stated: 

“The Local Union Executive Board, in addition to such other general power 

conferred by these Bylaws, is hereby empowered to: *** (8) Lease, purchase or 

otherwise acquire in any lawful manner for and on behalf of the organization, 

any and all real estate or other property, rights and privileges, whatsoever 

deemed necessary for the prosecution of its affairs, and which the organization 

is authorized to acquire, at such price or consideration and generally on such 

terms and conditions as it thinks fit, and at its discretion pay therefor either 

wholly or partly in money or otherwise; specific authorization at a membership 

meeting shall be required for such expenditures, excepting for routine 

expenditures not of a substantial nature ***.” (Emphasis added.) 
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¶ 15 During his testimony, Clair admitted signing an affidavit stating that plaintiff 

was provided with a copy of the bylaws and acknowledged receipt of them. Clair 

testified, however, that he had no specific recollection of providing the bylaws or to 

whom they were given. Friedman testified that he did not recall seeing Local 726’s 

bylaws before signing the LPA. 

¶ 16 The evidence was undisputed that the members of Local 726 did not receive 

notice of the LPA or vote to authorize the agreement prior to its execution. Becky 

Strzechowski, the appointed trustee of Local 726 after it went into emergency 

trusteeship, testified that she had doubts about Clair’s authority to sign the LPA 

because the union’s bylaws required two signatures. She stated that she informed 

Friedman and his attorney of her belief that the LPA was not properly authorized. 

Strzechowski testified that she reviewed the minutes from Local 726’s executive 

board meetings and membership meetings from the end of 2007 through August 

2009. She testified that there was no discussion or authorization of the LPA or 

related expenditures in any of the minutes she reviewed. According to 

Strzechowski, the only references to the property were a possible announcement 

about moving to a new facility and a comment by a member who was unhappy with 

the new location. 

¶ 17 The parties stipulated that none of the minutes from the meetings of the general 

membership or the executive board for the period of January 2007 through July 

2009 reflected a request for authorization from the members to lease or purchase 

the property or to expend funds for the purpose. The parties also stipulated that 

none of these minutes showed any Local 726 officer or executive board member 

disclosing the terms of the LPA to the membership. 

¶ 18 At the conclusion of trial, the trial court found that the LPA was valid and 

enforceable and that defendant was liable to plaintiff for Local 726’s breach of the 

agreement under a theory of successor liability. In a written order, the court held 

that Clair had apparent authority to execute the LPA on behalf of Local 726 without 

a vote from the membership or authorization from the executive board. The court 

also held that the executive board ratified the LPA by signing a “unanimous 

consent resolution” approving the agreement. “More importantly,” the court found, 

“Local 726 moved into the property and paid rent for seven months without any 
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objection by the Executive Board or the membership, thereby retaining the benefit 

of the parties’ agreement.” 

¶ 19 Pursuant to the liquidated-damages provision, the court entered judgment for 

plaintiff on count I in the amount of approximately $2.3 million. The damage award 

included approximately $300,000 in attorney fees and costs, pursuant to a provision 

in the LPA that obligated Local 726 to pay all attorney fees and costs incurred by 

plaintiff in enforcing the terms of the agreement. However, the circuit court 

rejected plaintiff’s argument that it was also entitled to damages pursuant to the 

double-rent penalty. The court held that this provision “not only requires Local 726 

to pay significantly more than the fifth-year purchase price of the property and 

more than double the plaintiff’s loan amount, but also allows the plaintiff to retain 

ownership of the property.” The court reasoned that “[t]his recovery far exceeds 

any potential actual damages Plaintiff could foreseeably incur, and enforcement of 

the clause results in an unenforceable windfall for the plaintiff.” Citing evidence 

that plaintiff intended the double-rent provision as a penalty in the event of default, 

the court concluded that contract provisions that are penal in nature or intended to 

secure performance of an option through a threat are unenforceable as a matter of 

public policy. 

¶ 20 Defendant filed a posttrial motion to reconsider the trial court’s order and 

vacate the judgment. In the motion, defendant argued for the first time that the LPA 

was void ab initio and unenforceable because it failed to comply with the Act (765 

ILCS 115/0.01 et seq. (West 2010)). According to defendant, the LPA failed to 

satisfy the Act’s requirements because it was not signed by at least two board 

members and was never authorized by a vote of the members at a regular meeting 

after at least 10 days’ notice. Id. § 2. Defendant also argued that the LPA violated 

Local 726’s own bylaws, which mirrored the requirements in the Act. 

¶ 21 The trial court denied defendant’s motion. Applying the analysis set forth in 

K. Miller, 238 Ill. 2d 284, the court found that the Act does not explicitly state 

whether noncompliance with the statutory requirements renders a real estate 

contract unenforceable. In light of the Act’s silence on this issue, the court held that 

the public policy favoring the enforcement of contracts should prevail. On appeal, 

the appellate court affirmed in part and reversed in part the trial court’s judgment. 
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2017 IL App (1st) 153300.2 As to count I, the appellate court agreed with the trial 

court that the lease was valid and enforceable and that defendant was liable to 

plaintiff as the successor to Local 726. The appellate court also affirmed the award 

of damages pursuant to the liquidated-damages provision in the LPA. Id. ¶ 90. 

¶ 22 This court allowed defendant’s petition for leave to appeal under Illinois 

Supreme Court Rule 315(a) (eff. Nov. 1, 2017). 

¶ 23 ANALYSIS

¶ 24 On appeal to this court, defendant first argues that the LPA is void ab initio and 

unenforceable because it was not executed in compliance with the Act or Local 

726’s bylaws. The determination of whether a contract is void ab initio is a 

question of law subject to de novo review. Dowling v. Chicago Options Associates, 

Inc., 226 Ill. 2d 277, 285 (2007); Alliance Property Management, Ltd. v. Forest 

Villa of Countryside Condominium Ass’n, 2015 IL App (1st) 150169, ¶ 26. 

¶ 25 Under the common law, voluntary unincorporated associations, such as labor 

organizations, were not legal entities distinct from their individual members. See 

American Federation of Technical Engineers, Local 144 v. La Jeunesse, 63 Ill. 2d 

263, 265-66 (1976); Butler Manufacturing Co. v. Department of Finance, 383 Ill. 

220, 228 (1943). Accordingly, absent express statutory authorization, 

unincorporated associations have no right to sue or be sued, acquire or hold title to 

real property, or enter into contracts in their own names. Chicago Grain Trimmers 

Ass’n v. Murphy, 389 Ill. 102, 107 (1945); 3 Ill. L. and Prac. Associations § 5 (Feb. 

2019 Update); 6 Am. Jur. 2d Associations and Clubs § 11 (Jan. 2019 Update). 

¶ 26 In 1949, the Act went into effect, establishing an exception to the common-law 

rule for unincorporated associations in Illinois. The Act expressly empowers 

unincorporated associations to lease and own real estate in their names and to sue 

and be sued on such real estate. 765 ILCS 115/1, 3 (West 2010). In order to execute 

a valid real estate conveyance, lease, or mortgage, an unincorporated association 

must follow certain procedures: 

 2

The appellate court reversed the circuit court’s judgment in favor of plaintiff on counts II, III, 

and VIII. These counts are not at issue in the appeal before us.
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“The presiding officer of such lodge or subordinate body, together with the 

secretary or officer keeping the records thereof, may execute mortgages and 

execute or receive conveyances or leases of any real estate by or to such lodge 

or subordinate body when authorized by a vote of the members present at a 

regular meeting held by said lodge or subordinate body, after at least ten days’ 

notice has been given to all members of said lodge or subordinate body by 

mailing a written notice of said proposed action to the last known address of all 

such members.

All conveyances, leases or mortgages executed hereunder shall be in the 

name of the lodge, attested by the presiding officer and secretary or other 

officer in charge of the records, and shall have affixed the seal, if any, of such 

lodge or subordinate body.” (Emphasis added.) Id. § 2. 

¶ 27 Defendant contends that a lease agreement entered into by an unincorporated 

association that fails to comply with the statutory requirements is void as a matter 

of law. There is no dispute that Local 726 did not satisfy at least two of the statutory 

prerequisites for executing a lease and purchase agreement involving real property. 

First, prior to the execution of the LPA, the members of Local 726 did not receive 

written notice of the proposed agreement. Second, the members never voted to 

authorize the LPA at one of their regular meetings. The question is whether Local 

726’s failure to comply with these statutory requirements renders the LPA void 

ab initio and unenforceable by a court of law. We hold that it does. 

¶ 28 Where a party lacks the legal authority to form a contract, the resulting contract 

is void ab initio. McGovern v. City of Chicago, 281 Ill. 264, 283 (1917); Illinois 

State Bar Ass’n Mutual Insurance Co. v. Coregis Insurance Co., 355 Ill. App. 3d 

156, 164 (2004). For example, where a municipality exceeds its statutory authority 

in entering into a contract, the municipality’s act is ultra vires, and the resulting 

contract is void ab initio. See, e.g., Grassini v. Du Page Township, 279 Ill. App. 3d 

614, 620 (1996); Nielsen-Massey Vanillas, Inc. v. City of Waukegan, 276 Ill. App. 

3d 146, 152-53 (1995). “[A] contract that is void ab initio is treated as though it 

never existed; neither party can choose to ratify the contract by simply waiving its 

right to assert the defect.” Illinois State Bar Ass’n Mutual Insurance Co., 355 Ill. 

App. 3d at 164. Accordingly, a party without authority to enter into a contract may 

avoid enforcement of the contract as void even if the other contracting party has 
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performed satisfactorily. Elk Grove Township Rural Fire Protection District v. 

Village of Mount Prospect, 228 Ill. App. 3d 228, 234 (1992); Village of Lisle v. 

Village of Woodridge, 192 Ill. App. 3d 568, 576 (1989). 

¶ 29 The Act governs an unincorporated association’s authority to enter into a lease 

or purchase agreement for real estate. In the absence of compliance with the 

statutory prerequisites, an unincorporated association has no power to execute a 

valid real estate contract. See American Federation of Technical Engineers, Local 

144, 63 Ill. 2d at 265-66; Chicago Grain Trimmers Ass’n, 389 Ill. at 107. Although 

the Act does not expressly state that the failure to comply with its provisions 

renders a contract unenforceable, the statute is in derogation of the common law. 

American Federation of Technical Engineers, Local 144, 63 Ill. 2d at 265-66. As 

such, it must be strictly construed “in order to effect the least—rather than the 

most—alteration in the common law.” Rush University Medical Center v. Sessions, 

2012 IL 112906, ¶ 16; see also Williams v. Manchester, 228 Ill. 2d 404, 419 (2008). 

¶ 30 In this case, Local 726 indisputably failed to comply with section 2 of the Act 

(765 ILCS 115/2 (West 2010)) at the time it executed the LPA. Clair signed the 

agreement purportedly on behalf of Local 726 despite the fact that the members had 

not been notified and had not voted to authorize the agreement at a regular meeting. 

There is no question that Local 726 did not fulfill the clear statutory conditions for 

executing a lease and purchase agreement of real property. In construing a statute, it 

is this court’s obligation to ascertain and give effect to the intent of the legislature. 

Home Star Bank & Financial Services v. Emergency Care & Health Organization, 

Ltd., 2014 IL 115526, ¶ 24. In doing so, we may not depart from the plain statutory 

language by reading into it exceptions, limitations, or conditions that conflict with 

the clearly expressed legislative intent. Id. 

¶ 31 The legislature’s intent is evident in the plain language of the Act. Pursuant to 

the Act, an unincorporated association’s members must receive notice of proposed 

real estate contracts and must have the opportunity to vote in favor of or against 

entering into such contracts. This language clearly expresses a public policy to 

protect the individual members of an association from liability arising out of 

contracts entered into by its leadership.3 An interpretation of the statute that allows 

 3

It is important to note that the Act protects not only members of labor unions but members of 

“[a]ny unincorporated lodge or subordinate body of any society or order which is duly chartered by 
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an organization to ignore these requirements would render the express statutory 

language meaningless. This we may not do. See Sylvester v. Industrial Comm’n, 

197 Ill. 2d 225, 232 (2001) (the court “must construe the statute so that each word, 

clause, and sentence, if possible, is given a reasonable meaning and not rendered 

superfluous [citation], avoiding an interpretation which would render any portion 

of the statute meaningless or void [citation]”). To hold for plaintiff in this case 

would suggest that the legislature intended to allow a union to bind its members to a 

real estate contract for more than $2 million without the members’ knowledge or 

consent. This interpretation is at odds with the clear statutory language. We hold, 

therefore, that the LPA is void ab initio and unenforceable on the grounds that 

Local 726 lacked the statutory authority to enter into the agreement.4

 

¶ 32 Despite the clear defects in the formation of the LPA, the appellate court below 

held that the agreement was valid and enforceable based on the analysis set forth in 

K. Miller, 238 Ill. 2d 284. Relying on K. Miller, the appellate court examined the 

statutory language and found no evidence that the legislature intended that 

noncompliance with the Act renders a contract unenforceable. 2017 IL App (1st) 

153300, ¶ 18. The court then weighed the competing policy considerations and 

concluded that the public policy embodied in the Act did not outweigh the public 

policy of “enforcing otherwise legal private contracts entered into for legitimate 

purposes.” Id. ¶ 21. We reject this reasoning because the analysis set forth in 

K. Miller is inapposite. 

¶ 33 The issue in K. Miller was whether a party’s failure to comply with a statute 

rendered the contract entered into by the parties unenforceable “as a matter of 

public policy.” See K. Miller, 238 Ill. 2d at 291. In that case, a contractor entered 

into an oral agreement for home remodeling work over $1000, in violation of a 

provision of the Home Repair and Remodeling Act (815 ILCS 513/15 (West 2006)) 

that required such contracts to be in writing. K. Miller, 238 Ill. 2d at 286-87. To 

determine whether the statutory violation rendered the oral contract unenforceable, 

this court looked to section 178 of the Restatement (Second) of Contracts (1981), 

which stated, in part: 

 

its grand lodge or body” (765 ILCS 115/1, 2 (West 2010)), including, e.g., social or fraternal 

organizations, lodges, societies, or clubs.

4

In light of the clear violations of the statute’s membership-related requirements, we need not 

reach the issue of whether two signatures were necessary to render the agreement enforceable.
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 “ ‘§ 178 When a Term Is Unenforceable on Grounds of Public Policy 

(1) A promise or other term of an agreement is unenforceable on grounds of 

public policy if legislation provides that it is unenforceable or the interest in its 

enforcement is clearly outweighed in the circumstances by a public policy 

against the enforcement of such terms.’ ” K. Miller, 238 Ill. 2d at 293 (quoting 

Restatement (Second) of Contracts § 178 (1981)). 

After applying the Restatement’s analysis, we concluded that there was “no public 

policy requiring that oral contracts for home remodeling over $1,000 be held 

unenforceable.” Id. at 301. 

¶ 34 In contrast to K. Miller, the contract in this case is void and unenforceable

because one of the contracting parties lacked the legal authority or capacity to enter 

into the contract. As we have explained, at common law, an unincorporated 

association was legally incapable of owning or leasing property. The Act changed 

the common-law rule by setting forth specific conditions that, if satisfied, permit an 

unincorporated association to own or lease real property in Illinois. Thus, the Act 

was the sole source of Local 726’s power to enter into the agreement with plaintiff. 

Because Local 726 failed to fulfill the statutory prerequisites for executing a lease 

and purchase agreement, the LPA was void ab initio. See McGovern, 281 Ill. at 283 

(a contract entered into without authority is ultra vires and void); Grassini, 279 Ill. 

App. 3d at 620 (where a contracting party exceeds its statutory authority in entering 

into a contract, the contract is void ab initio). 

¶ 35 Plaintiff concedes that Local 726 failed to satisfy the Act but argues 

nonetheless that equitable considerations compel enforcement of the parties’ 

agreement. Specifically, plaintiff argues that (1) defendant judicially admitted the 

validity of the LPA, (2) Local 726 and defendant ratified the LPA through their 

course of conduct and, thus, are estopped from arguing the LPA is unenforceable, 

(3) the rule in Schnackenberg v. Towle, 4 Ill. 2d 561 (1954), compels this court to 

uphold the enforceability of the LPA, and (4) Clair had apparent authority to 

execute the LPA. We reject each of these arguments as untenable based on our 

holding that the contract was void at its inception as a matter of law. 

¶ 36 Plaintiff first contends that defendant judicially admitted the validity of the 

LPA in its verified answer and affirmative defenses. Specifically, one of the 
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affirmative defenses alleged that, on or about September 30, 2009, defendant 

advised plaintiff that it could not afford to comply with the LPA’s provisions. It 

further alleged that the parties entered into negotiations to modify the LPA and that 

the negotiations “resulted in a meeting of the minds relating to a modification of the 

Lease.” According to plaintiff, these allegations constitute a judicial admission by 

defendant that the LPA was valid at the outset, since only a valid lease is capable of 

being modified. Plaintiff’s argument is unavailing.

¶ 37 Judicial admissions are defined as “deliberate, clear, unequivocal statements by 

a party about a concrete fact within that party’s knowledge.” In re Estate of 

Rennick, 181 Ill. 2d 395, 406 (1998) (citing Hansen v. Ruby Construction Co., 155 

Ill. App. 3d 475, 480 (1987)). Judicial admissions are conclusively binding on a 

party and, thus, may not be contradicted in a motion for summary judgment or at 

trial. Id. at 406-07. It is well established that legal issues cannot be judicially 

admitted and, instead, are questions for the court to decide. Id. at 406; see also 

Knauerhaze v. Nelson, 361 Ill. App. 3d 538, 557-58 (2005) (“judicial admissions 

‘are formal concessions in the pleadings in the case or stipulations by a party or its 

counsel that have the effect of withdrawing a fact from issue and dispensing wholly 

with the need for proof of the fact’ ” (citing 2 John W. Strong, McCormick on 

Evidence § 254, at 142 (4th ed. 1992))). 

¶ 38 The question of a contract’s validity is a matter of law for the court to decide. 

See Alliance Property Management, Ltd., 2015 IL App (1st) 150169 ¶ 26 (the 

interpretation of a contract to determine whether it is void ab initio is a question of 

law). Even if the allegations in defendant’s affirmative defenses could be construed 

as an admission that the LPA was a valid contract, this would not constitute a 

judicial admission because it is a legal conclusion. See In re Marriage of Osborn, 

206 Ill. App. 3d 588, 594 (1990). Consequently, plaintiff’s argument that defendant 

judicially admitted the validity of the LPA is without merit. 

¶ 39 Plaintiff next argues that both Local 726 and defendant effectively ratified the 

LPA and waived the protections of the Act through their course of conduct. In other 

words, plaintiff contends that defendant is estopped from asserting that the LPA is 

unenforceable. In support of this contention, plaintiff directs our attention to the 

following facts. Prior to the execution of the LPA, Clair had unilaterally signed 

leases on the union’s behalf without complying with the Act. None of Local 726’s 
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members objected to the LPA either before or after the union took possession of the 

premises. Moreover, members of Local 726’s executive board signed a consent 

resolution approving the LPA after its execution. Local 726 subsequently paid rent 

on the property for seven months pursuant to the LPA. After Local 726 was placed 

into trusteeship, both it and Local 700 proceeded as though the LPA was a valid 

agreement, even while objecting to its terms. Finally, neither Local 726 nor Local 

700 asserted that the LPA was invalid pursuant to the Act until after the trial had 

concluded and a judgment was entered in favor of plaintiff. 

¶ 40 Plaintiff’s argument fails to recognize that equitable doctrines such as 

ratification and equitable estoppel do not apply to a contract that is void ab initio. 

See Alliance Property Management, Ltd., 2015 IL App (1st) 150169, ¶ 29 

(“ ‘[r]atification is impossible if there is no power to contract’ ” (quoting Granzow 

v. Village of Lyons, 89 F.2d 83, 85 (7th Cir. 1937))); State Bar Ass’n Mutual 

Insurance Co., 355 Ill. App. 3d at 164 (“a contract that is void ab initio is treated as 

though it never existed; neither party can choose to ratify the contract by simply 

waiving its right to assert the defect”); Nielsen-Massey Vanillas, Inc., 276 Ill. App. 

3d at 152-53 (holding that a contract entered into by a party in the absence of 

authority is void ab initio and cannot be enforced by estoppel). Accordingly, this 

argument also fails.

¶ 41 Plaintiff next argues that the rule in Schnackenberg, 4 Ill. 2d 561, is controlling. 

This rule states, “where a contract is illegal or against public policy a court of 

equity will not, at the instance of one of the parties who participates in the illegal or 

immoral intent, either compel the execution of the agreement or set it aside after it 

has been executed, because to give relief in such a case would injure and counteract 

public morals.” Id. at 565. The rule applies to “those situations where to allow 

recovery would permit a party to benefit from conduct in contravention of public 

policy.” Laleman v. Crombez, 6 Ill. 2d 194, 198-99 (1955). Only illegal contracts or 

those against public policy are subject to the rule. See Vine Street Clinic v. 

HealthLink, Inc., 222 Ill. 2d 276, 299 (2006); Aydt v. De Anza Santa Cruz Mobile 

Estates, 763 F. Supp. 970, 974 (N.D. Ill. 1991) (holding that the Schnackenberg 

rule applies to contracts whose subject matter is illegal, e.g., transactions in 

violation of usury statutes, blue sky laws, rent control ordinances, and 

anti-gambling statutes). Plaintiff cites no case, and we have found none, to support 
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its claim that Schnackenberg applies to a contract entered into by a party who lacks 

the legal authority to form the contract. 

¶ 42 Plaintiff’s final argument for the enforceability of the LPA is that Clair had 

apparent authority to execute the agreement, thus binding Local 726 to the 

agreement. The doctrine of apparent authority stems from an agency relationship. 

Gilbert v. Sycamore Municipal Hospital, 156 Ill. 2d 511, 523-24 (1993). Under this 

doctrine, “where a principal has created the appearance of authority in an agent, and 

another party has reasonably and detrimentally relied upon the agent’s authority, 

the principal cannot deny it.” Patrick Engineering, Inc. v. City of Naperville, 2012 

IL 113148, ¶ 35 (citing Petrovich v. Share Health Plan of Illinois, Inc., 188 Ill. 2d 

17, 31 (1999)). Like the doctrine of equitable estoppel, apparent authority is rooted 

in equitable principles. Id. ¶¶ 34-35. 

¶ 43 The apparent authority doctrine is not relevant here. A contract that is void 

ab initio is treated as though it never existed and, thus, cannot be enforced by either 

party. Illinois State Bar Ass’n Mutual Insurance Co., 355 Ill. App. 3d at 164 

(“stating where ‘a contract is void ab initio, or where it becomes void by the terms 

and conditions therein expressed and agreed to by the parties, no action can be 

maintained thereon by either party’ ” (quoting Smith v. Hunter, 171 Ill. App. 30, 36 

(1912))). The contract is unenforceable because the statutory requirements for an 

unincorporated association to enter into the contract were not fulfilled. If the 

principal has no authority to enter into a contract, it stands to reason that an agent of 

the principal has no authority to bind the principal to the contract. Thus, even if 

Local 726 held out Clair as having apparent authority to sign real estate contracts 

on its behalf, this would not render the contract legally enforceable. 

¶ 44 CONCLUSION

¶ 45 Because we hold that the LPA is void ab initio and unenforceable, it is not 

necessary to address defendant’s alternative arguments that the trial court 

erroneously imposed successor liability and enforced the liquidated-damages 

provision. We therefore reverse the part of the judgments of the circuit and 

appellate courts pertaining to count I of the amended complaint. The cause is 

remanded to the circuit court with directions to vacate the judgment for plaintiff 
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and enter judgment for defendant on count I.

¶ 46 Judgments reversed.

¶ 47 Cause remanded with directions.