Court Opinion

ID: 3140733
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:52:10.561167+00
Date Added: 2024-06-11T15:06:01.418353
License: Public Domain

No. 2--00--1076

      IN THE

      APPELLATE COURT OF ILLINOIS

      SECOND DISTRICT

PREMIER TITLE COMPANY,            )     Appeal from the Circuit
                                                              )     Court
                                             of McHenry County.
      Plaintiff-Appellee,               )
                                                                    )
                                          v.
                                                   )     No. 00--SC--136
                                        )
DUANE DONAHUE,                          )    Honorable
                                        )    Michael T. Caldwell,
      Defendant-Appellant.        )     Judge, Presiding.

      JUSTICE GROMETER delivered the opinion of the court:

      Defendant, Duane Donahue, appeals from a series of orders  entered  by
the circuit court of McHenry County.  Defendant first assigns error  in  the
circuit court's grant of summary judgment in  favor  of  plaintiff,  Premier
Title Company.  Defendant next contends that the court erred in denying  his
motion for summary judgment.   Finally,  defendant  argues  that  the  trial
court improperly denied his motion for  sanctions.   For  the  reasons  that
follow, we affirm.
                                 BACKGROUND
      Plaintiff acted as the closing agent for a real estate transaction  in
which defendant was the seller.  The closing occurred  on  August  8,  1997.
At the time of the closing, real estate taxes were unpaid  on  the  property
for 1995.  The first installment due in 1996 was unpaid as well.   Plaintiff
noted on its title commitment that defendant's 1995 real  estate  taxes  had
been sold and the first installment of the 1996 taxes were past due.
This was unacceptable to the buyer.  Hence, plaintiff and defendant  entered
into an indemnity agreement whereby  defendant  would  place  $3,500  in  an
escrow with plaintiff and plaintiff would issue a  title  insurance  policy.
The unpaid taxes were listed as exceptions in the agreement.  The  agreement
required plaintiff to remove these exceptions by August 21, 1997.  Upon  the
removal of the exceptions, any funds  remaining  were  to  be  disbursed  to
defendant.
      Plaintiff redeemed the 1995 real estate taxes  and  reimbursed  itself
from the escrow.  Plaintiff then  returned  the  balance  of  the  funds  to
defendant.  The first installment of the 1996 taxes had not yet  been  paid.
Plaintiff  subsequently  paid  the  first  installment  of  the  1996  taxes
pursuant to the title insurance policy it had issued.   Plaintiff  requested
that defendant tender $1,189.72 to cover this  expense.   Defendant  refused
to comply.
      Plaintiff subsequently filed a small  claims  action  to  recoup  this
sum.  Both parties moved for summary  judgment.   The  trial  court  granted
plaintiff's  motion  and  denied  defendant's.   Defendant  also  moved  for
sanctions, pursuant to  Supreme  Court  Rule  137  (155 Ill. 2d  R.  137),
alleging that plaintiff failed to provide notice of its motion for leave  to
file its summary judgment motion and failed to  notify  defendant  that  the
date originally set for trial had been stricken.   Defendant  asserts  that,
as a result, he prepared for trial on the original date and traveled  nearly
500 miles to attend court that day.  The trial court denied this motion.
                                  ANALYSIS
      Determining whether  the  trial  court's  resolution  of  the  summary
judgment motions was proper  requires  us  to  construe  the  contract  that
created the escrow.  Because of the posture of this case,  the  granting  of
one of the parties' summary  judgment  motion  entails  the  denial  of  the
other's.  Accordingly, we will not address the motions separately.
      We review de novo a trial court's grant of summary  judgment.   Corona
v. Malm, 315 Ill. App. 3d 692, 694 (2000).  Summary judgment is  appropriate
only if no genuine issue of material fact exists and  the  moving  party  is
entitled to judgment as a matter of law.  Stewart v. Jones,  318  Ill.  App.
3d 552, 557-58 (2001).  The interpretation of a contract is  a  question  of
law and therefore may properly be decided on a motion for summary  judgment.
 Fitzwilliam v. 1220 Iroquois Venture, 233 Ill. App. 3d 221, 237 (1992).
      The primary goal in construing a contract is to  give  effect  to  the
intent of the parties.  Omnitrus  Merging  Corp.  v.  Illinois  Tool  Works,
Inc., 256 Ill. App. 3d 31, 34 (1993).  When the language of  a  contract  is
clear, a court must determine the intent of  the  parties  solely  from  the
plain language of the contract.  Owens v. McDermott, Will & Emery, 316  Ill.
App. 3d 340, 344 (2000).  The language of  a  contract  must  be  given  its
plain and  ordinary  meaning.   Owens,  316  Ill.  App.  3d  at  344.   When
interpreting a contract, a court must consider  the  document  as  a  whole,
rather than focusing upon isolated portions.   Spectramed,  Inc.  v.  Gould,
Inc., 304 Ill. App. 3d 762, 770 (1998).
      In the present case, each party relies on a different subpart  of  the
contract.  Defendant relies on the following provision:
      "If this Title Indemnity-Escrow Agreement  is  not  terminated  within
      thirty (30) calendar days of the date set forth in  paragraph  (3)  on
      the preceding page, the  Agent  Escrowee  shall  thereafter  charge  a
      reasonable annual service or handling  fee  to  be  paid  out  of  the
      deposit.  The fee shall  consist  of  $75.00  or  10%  of  the  amount
      deposited, per month, whichever sum is greater."
According to defendant, this provision demonstrates that the primary  intent
of the parties was to create a relationship that would terminate  within  30
days.  Defendant further asserts  that  the  provision  indicates  that  the
disbursal of the deposited funds would terminate the  agreement.   Defendant
concludes  that  the  agreement  terminated  when  plaintiff  disbursed  the
balance of the remaining funds to  him,  thus  terminating  his  obligations
under the contract.  Limiting our consideration to  the  plain  language  of
this  subpart,  defendant's  interpretation  is   not   unreasonable.    The
provision speaks in terms of the agreement itself terminating,  rather  than
additional fees becoming due if any of the  deposited  funds  were  retained
past a certain point.  Since this provision speaks  of  amounts  being  paid
out of funds  deposited,  it  is  not  unreasonable  to  conclude  that  the
termination of the agreement is related to the disbursal  of  the  deposited
funds.
      Plaintiff relies on a  different  provision.   This  provision  states
that defendant agrees:
      "To forever defend and save  the  Agent-Escrowee,  and  PREMIER  TITLE
      COMPANY, harmless from all  the  Exceptions,  from  any  loss,  costs,
      damages, attorneys' fees and expenses of every  kind  which  they  may
      suffer, expend or incur under, or by reason  of  the  title  insurance
      policy, on account of the Exceptions, or on account of  the  assertion
      or enforcement or attempted assertion of enforcement thereof or of any
      rights existing or later arising, or which may at any time be  claimed
      to exist under or growing out of any of the exceptions."
Pointing to the plain language  of  this  subpart,  specifically  "forever,"
plaintiff contends  that  the  agreement  creates  on  defendant's  part  an
ongoing obligation,  unrelated to the disbursal of any  escrowed  funds,  to
indemnify it against any  losses  growing  out  of  the  "Exceptions."   The
"Exceptions" listed in the agreement refer to the unpaid real estate  taxes.
 Plaintiff presents a reasonable reading  of  the  language  upon  which  it
relies.
      Thus, we are presented  with  two  conflicting  provisions.   Read  in
isolation, they create an apparent ambiguity as to the parties'  intentions.
 However, in interpreting this contract, we must consider the document as  a
whole (see Spectramed, Inc., 304 Ill. App. 3d  at  770)  and  determine  if
these two subparts are reconcilable.
      The resolution of this  appeal  turns  upon  the  resolution  of  this
conflict.  Plaintiff does not  address  this  conflict.   Defendant  briefly
asserts that any ambiguities in a contract should be  resolved  against  its
drafter, which is, apparently,  plaintiff  in  this  case.   See  Brewer  v.
Custom Builders Corp, 42 Ill. App. 3d 668, 672  (1976).   However,  we  will
resort to this doctrine, known as contra proferentem, only  if  we  fail  to
ascertain  the  intent  of  the  parties  using   ordinary   principles   of
contractual interpretation.  See Farwell Construction  Co.  v.  Ticktin,  84
Ill. App. 3d 791, 798-99 (1980).  The rule has been described as "at best  a
secondary rule of interpretation, a last resort which may be  invoked  after
all the ordinary interpretive guides have been exhausted."  Bunge  Corp.  v.
Northern Trust Co., 252 Ill. App. 3d 485, 493 (1993); see also National  Tea
Co. v. Commerce & Industry Insurance Co., 119 Ill. App. 3d 195, 209  (1983).
 In fact, as we understand it, the rule is not an interpretive one  at  all.
Instead of seeking to divine the intent of  the  parties,  the  rule  merely
assigns the risk of an unresolvable ambiguity to the party  responsible  for
creating it.  Thus, before we apply this rule, we will  attempt  to  resolve
the apparent conflict between the two sections of the agreement.
      Taking the contract as a  whole,  we  believe  that  it  unambiguously
expresses the intent of the parties that defendant was  under  a  continuing
obligation to indemnify  plaintiff  regarding  expenses  plaintiff  incurred
resulting  from  the  exceptions  listed  in  the   contract.    Defendant's
interpretation, that the agreement terminated  with  the  disbursal  of  the
escrowed funds, violates  at  least  three  well-established  principles  of
contractual construction.  Plaintiff's interpretation does not.
      First, it has been  recognized  that  "it  is  a  basic  principle  of
contract construction that where two clauses conflict, it  is  the  duty  of
the court to determine which of the two clauses most clearly  expresses  the
chief object and purpose of the contract."  Harris Trust & Savings  Bank  v.
Hirsch, 112 Ill.  App.  3d  895,  900  (1983).   Further,  "a  clause  which
requires something to be done to effect  the  purpose  of  the  contract  is
entitled to greater consideration than one which does not."  Harris Trust  &
Savings Bank, 112 Ill. App. 3d at 900.  Read as a whole, it  is  clear  that
the chief purpose of this contract is to  insure  that  defendant  would  be
responsible for the unpaid real estate taxes.  The section plaintiff  relies
on effectuates the  purpose  of  the  contract  by  requiring  defendant  to
"defend and save" plaintiff from all  losses  incurred  on  account  of  the
unpaid taxes.  The section defendant relies on deals with fees that  may  be
imposed should the agreement continue for more than 30 days beyond the  date
set for removing the exceptions.  The section on which plaintiff  relies  is
related to the central purpose of the contract, while  the  one  upon  which
defendant relies deals with a collateral  matter.   Therefore,  the  section
upon which plaintiff relies is entitled to more weight in  ascertaining  the
parties' intent as to when the agreement would terminate.
       Second,  defendant's  construction  of  the  contract  violates   the
principle that requires that a contract be construed such that none  of  its
terms are regarded as mere surplusage.  See J.B. Esker & Sons, Inc. v.  Cle-
Pa's  Partnership,  325  Ill.  App.  3d  276,   285   (2001).    Defendant's
interpretation makes the term  "forever,"  contained  in  the  section  upon
which plaintiff relies, meaningless.  "Forever" would last  no  longer  than
the  distribution  of  the  funds  held  in  escrow.   On  the  other  hand,
plaintiff's interpretation suffers from no such defect.  The term  "forever"
applies to defendant's obligation to indemnify plaintiff, while the  section
upon which defendant relies allows for the imposition of additional fees  in
certain circumstances.  Neither  provision,  nor  any  portion  thereof,  is
rendered  meaningless.   This  provides  further  support  for   plaintiff's
interpretation of the contract.
      Third, defendant's interpretation disregards the  rule  that,  in  the
event of a conflict, specific provisions are  entitled  to  more  weight  in
ascertaining the parties' intent than general provisions.   See  Water  Pipe
Extension Bureau of Engineering Laborers' Local 1092  v.  City  of  Chicago,
318 Ill. App. 3d 628, 638  (2000).   The  section  relied  on  by  plaintiff
specifically addresses defendant's obligation to indemnify  plaintiff.   The
section  defendant  relies  on  deals  with  matters   unrelated   to   this
obligation,  and  thus  only  addresses  termination  tangentially.   Again,
plaintiff's interpretation prevails.
      Accordingly, we accept plaintiff's interpretation of the contract  and
reject defendant's.  The contract imposed a continuing duty on defendant  to
indemnify plaintiff for losses arising out of the unpaid real estate  taxes.
 Defendant also briefly  argues  that  where  a  party  "has  performed  his
obligations under an agreement, he cannot be  liable  for  breech  [sic]  of
that  agreement."   As  we  have  concluded  that  the  contract  imposed  a
continuing obligation upon defendant to indemnify plaintiff,  defendant  has
not performed his obligations.  Thus, this argument is meritless.
      Defendant next contends that the agreement between him  and  plaintiff
merged into the real estate deed at the closing.  Although still a  part  of
Illinois  law,  the  merger  doctrine  is  disfavored  by   modern   courts.
Hagenbuch v. Chapin, 149 Ill. App. 3d 572, 576 (1986).   Exceptions  to  the
doctrine exist, two of which are  relevant  to  the  instant  case.   First,
executory  agreements  for  the  performance  of   separate   and   distinct
obligations beyond the conveyance  itself  do  not  merge  with  a  deed  at
closing.  Petersen v. Hubschman Construction Co., Inc., 76 Ill. 2d  31,  39
(1979).  In the  present  case,  defendant's  obligation  to  plaintiff  was
distinct from defendant's obligation  to  convey  the  real  estate  to  the
buyer.  Second, obligations  that  are  not  to  be  performed  until  after
delivery of a deed do not merge.  Mearida v. Murphy, 87 Ill. App. 3d 87,  89
(1980).  The contract between the parties required that  all  exceptions  be
removed by August 21, 1997.  The closing in this case occurred on August  8,
1997.   Both  exceptions  are  applicable;  hence,  the   contract   between
plaintiff and defendant did not merge into the deed at closing.
      Finally, we turn to the trial court's  denial  of  defendant's  motion
for sanctions made pursuant to Supreme Court Rule 137 (155 Ill. 2d R.  137).
 Defendant's motion is based on the alleged failure of plaintiff to  provide
notice of plaintiff's motion for leave to file  a  summary  judgment  motion
and the cancellation of the trial date that was  originally  set.   We  will
overturn a trial court's decision to grant or deny a  motion  for  sanctions
only if the trial court abused its discretion.  Baker v. Daniel  S.  Berger,
Ltd., 323 Ill. App. 3d 956, 963 (2001).  The record on  appeal  contains  no
transcript of the hearing where the motion  was  denied,  no  written  order
explaining the trial court's decision, and no bystander's  report  (see  166
Ill. 2d R. 323(c)) of the proceeding where this motion was decided.   We  do
not know upon what basis the trial court exercised its  discretion.   It  is
the appellant's burden to present a sufficient record to support any  claims
of error.  Foutch v. O'Bryant, 99 Ill. 2d 389, 391-92  (1984).   Any  doubts
arising as a result of the record being inadequate must be resolved  against
the appellant.  Foutch, 99 Ill. 2d at 392.  Consequently, we are  unable  to
determine if the trial court abused its discretion.  See In re  Marriage  of
Blinderman, 283 Ill. App. 3d 26, 34 (1996)  ("Absent  a  transcript  of  the
hearing on the distribution of the assets, there is no basis upon  which  to
determine whether  the  circuit  court  abused  its  discretion  in  denying
defendant's motion").
                                 CONCLUSION
      In light of the foregoing, the order of the circuit court  of  McHenry
County  granting  plaintiff's  motion  for  summary  judgment  and   denying
defendant's motion for summary judgment  is  affirmed.   The  order  of  the
circuit court denying defendant's motion for sanctions is also affirmed.
      Affirmed.
      HUTCHINSON, P.J., and McLAREN, J., concur.