Court Opinion

ID: 9742238
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:08:59.813876+00
Date Added: 2024-06-11T07:24:30.031600
License: Public Domain

Mr. JUSTICE HEIPLE, dissenting: The majority holds that Germania Federal Savings and Loan Association breached the agreement of the parties by not accepting the amount of the first market value appraisal made on the property in question. With this result I must dissent. Germania Federal Savings and Loan Association and Foster Enterprises, Inc., entered into an agreement on May 26, 1977, providing for Foster to complete construction of certain apartments on property owned by Germania. The parties further agreed that when the building project was completed and 90% occupancy obtained, Foster would have the option to purchase the property subject to future negotiation on the purchase price. Foster would have 60 days from the time that such purchase price was agreed upon by the parties to exercise its option. Specifically, the agreement terms provided that: “5. When 90% occupancy is obtained, the sale price from Germania Federal to Foster shall be determined based upon a market value appraisal acceptable to both parties. The sale price will not exceed 80% of said market value appraisal. The agreed upon value of the excess land separated from that required for the initial 52 units is $63,000.00, said amount to be included as a component of the sale price.” “8. In the event Foster should decline to purchase the project or in the event Germania Federal and Foster are unable to agree on a sale price within a period of one (1) year from the date of completion of the 52 apartment units, or 60 days following attaining 90% occupancy, whichever is sooner, Foster shall be entitled only to the 5% add-on charge as provided above and all duties and liabilities of the parties to each other pursuant to this agreement shall cease.” Thus it is evident that Foster had an option to purchase the property subject to several events happening: (1) the building project be completed; (2) 90% occupancy of the apartments; (3) Germania and Foster agree upon a market value appraisal which is acceptable to both of them. When all those events occurred only then did Foster have an option to purchase the property at 80% of the mutually agreed upon market value appraisal. Did these events occur? The record reveals that the building project was substantially completed in January of 1978. On January 24, 1978, the 90% occupancy was obtained, and Germania engaged Roy R. Fisher, Inc., to appraise the property. A market value figure of $925,000 was submitted by Fisher for the 2 acres of improved apartment property and the 4.2 acres of excess adjacent land. Germania reviewed that appraisal and found it unacceptable. Germania sent to Foster a copy of the complete Fisher appraisal report stating that the figure was not acceptable to them and they had not yet arrived at a sale price. Germania indicated that the Fisher report was forwarded merely for study and suggestion. On March 6, 1978, Foster notified Germania that it was exercising its option to purchase based on the $925,000 Fisher appraisal figure. As the agreement provided that the sale price would be 80% of the agreed upon market value appraisal, Foster considered the sale price to be 80% of $925,000 or $740,000. One week later Germania responded with an offer of $825,000 for the 2 acres of improved apartment property. Rejecting this offer, Foster adamantly adhered to the notion that it was exercising the option at 80% of the Fisher appraisal for the entire property. Foster maintained that it was merely complying “strictly to the contract signed by the parties which spelled out the sales price of the entire property at 80% of the appraisal of [Germania’s] appraiser.” The signed contract did not state that. The agreement did not state that the sales price would be 80% of the appraisal figure submitted by Germania’s appraiser. Nowhere in the agreement was a procedure outlined for appraisal of the property. The agreement did not provide that a party forwarding an appraisal for “study and suggestion” to the other party thereby became bound by that appraisal figure. Nor is it reasonable to imply that interpretation from such action. Moreover, Germania unequivocably stated that the Fisher appraisal was unacceptable to them. In a commercial transaction of this magnitude, it is not unreasonable to assume that several appraisals would be solicited by both parties. I see no reason to conclude that a party is acting in bad faith merely because it does not adopt the first appraisal on real estate worth close to a million dollars. I think it is clear from the facts that the parties did not agree upon a market value appraisal acceptable to both of them. Thus, no option contract was formed for Foster to exercise. The parties considered the possibility that they would be unable to agree upon a sales price and provided accordingly in the contract. The parties agreed that if they were unable to agree upon a sales price, “that Foster shall be entitled to the 5% add-on charge.” For these reasons, I believe that the judgment of the La Salle County Circuit Court should be reversed. Judgment properly should be entered for Foster in the amount of $33,752.56, the 5% add-on charge.