Opinion ID: 2014591
Heading Depth: 1
Heading Rank: 4

Heading: Installment Agreement

Text: As she did in the appellate court, Wiley argues that the circuit court erred in granting the Department summary judgment on count I of the Department's complaint because the Department settled any and all claims that it had against Wiley under the scholarship contracts when it entered into the installment agreement with Wiley in September of 1993. Wiley contends that, under the doctrine of compromise and settlement, the Department is precluded as a matter of law from pursuing claims under the scholarship contracts that it previously settled. See, e.g., Towne v. Town of Libertyville, 190 Ill.App.3d 563, 569-70, 137 Ill.Dec. 865, 546 N.E.2d 810 (1989). A compromise is an agreement to terminate, by means of mutual concessions, a claim that is disputed in good faith or unliquidated. 15A Am.Jur.2d Compromise & Settlement § 1 (1976). `It involves an agreement that a substituted performance is acceptable instead of what was previously claimed to be due; thus, each party yields something and agrees to eliminate both the hope of gaining as much as he previously claimed and the risk of losing as much as the other party preciously claimed.' 15A Am.Jur.2d Compromise & Settlement § 1 (1976). Collection Professionals, Inc. v. Logan, 296 Ill.App.3d 959, 964-65, 231 Ill.Dec. 225, 695 N.E.2d 1344 (1998). In other words, a compromise is an agreement that a substitute performance will be accepted in place of what was previously claimed to be due each party. An agreement is not one for compromise and settlement, however, if the parties do not dispute the original claim, merely reaffirm their existing obligations, and make no mutual concessions. Collection Professionals, 296 Ill.App.3d at 965, 231 Ill.Dec. 225, 695 N.E.2d 1344. We agree with the appellate court's conclusion that the installment agreement was a payment plan expressly contemplated by the scholarship contracts and not a settlement of claims under those contracts. See 348 Ill.App.3d at 818-19, 284 Ill.Dec. 824, 810 N.E.2d 614. As the Department points out, Wiley agreed in the scholarship contracts that if she did not fulfill her service obligation, she would pay the Department three times the scholarship funds received, or $157,395. Wiley also agreed that, if this occurred, she would enter into another contract with the Department to set forth the terms of payment. Each scholarship contract expressly stated that the terms of the repayment agreement would be in equal monthly installments for three years or as otherwise approved by the Department. Consistent with this language, Wiley entered into an installment agreement that required her to pay $100 per month for the first 24 months and then $4,305 per month for the following 36 months. At the time Wiley discussed the installment agreement with the Attorney General's office, she did not dispute that she had not yet fulfilled the service obligation or that she was obligated to fulfill the payment obligation. Further, as the appellate court noted (348 Ill.App.3d at 818-19, 284 Ill.Dec. 824, 810 N.E.2d 614), the installment agreement stated that Wiley would be entitled to a full release from any further obligation on this matter only [u]pon payment in full. Wiley and the Department agreed, therefore, that she owed the entire amount due under the scholarship contracts and that she would be released from her obligations under those contracts only when she fully paid that amount. All that the installment agreement did, then, was to reaffirm Wiley's existing obligation under the scholarship contracts and provide her with a monthly installment plan to fulfill that obligation. The installment agreement was clearly a means for the Department to enforce its rights under the scholarship contracts, not a means to surrender any of its rights against Wiley in exchange for rights surrendered by her. Wiley also contends, however, that the Department is precluded from arguing that the installment agreement was not a settlement, based on a statement made by the Department in its verified complaint that Wiley and the Department entered into an `Installment Agreement'    for the purpose of settling claims in accordance with the Illinois Family Practice Residency Act. According to Wiley, this statement shows the Department's intent to enter into a settlement with Wiley and is a binding judicial admission that the installment agreement was in the nature of a settlement contract. Whether the installment agreement was, in fact, a settlement agreement presents a question concerning the proper interpretation of a contract. The construction of a contract is a question of law. See, e.g., Farm Credit Bank of St. Louis v. Whitlock, 144 Ill.2d 440, 447, 163 Ill.Dec. 510, 581 N.E.2d 664 (1991) (The intention of the parties to contract must be determined from the instrument itself, and construction of the instrument where no ambiguity exists is a matter of law); Klein v. Caremark International, Inc., 329 Ill. App.3d 892, 902, 264 Ill.Dec. 597, 771 N.E.2d 1 (2002). As the appellate court below observed, a party is not bound by admissions regarding conclusions of law since it is for the courts to determine the legal effect of the facts adduced. 348 Ill. App.3d at 819, 284 Ill.Dec. 824, 810 N.E.2d 614, citing Charter Bank & Trust of Illinois v. Edward Hines Lumber Co., 233 Ill.App.3d 574, 579, 174 Ill.Dec. 674, 599 N.E.2d 458 (1992). Thus, as the appellate court correctly concluded, the Department's statement in its verified complaint was not a judicial admission that the installment agreement was a settlement agreement between the parties. 348 Ill. App.3d at 819, 284 Ill.Dec. 824, 810 N.E.2d 614. Accordingly, because there was no settlement, the Department was free to pursue the present action against Wiley for breach of the scholarship contracts. See, e.g., Kruse v. Kuntz, 288 Ill.App.3d 431, 435, 225 Ill.Dec. 522, 683 N.E.2d 1185 (1996).