Foxfield Realty, Inc. v. Kubala

No. 2--96--0836
_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
_________________________________________________________________

FOXFIELD REALTY, INC., ) Appeal from the Circuit Court
) of Kane County.
Plaintiff-Appellant, )
) No. 95--LM--3440
)
v. )
)
THEODORE KUBALA and BARBARA E. )
KUBALA, ) Honorable
) Donald J. Fabian,
Defendants-Appellees. ) Judge, Presiding.
_________________________________________________________________

PRESIDING JUSTICE GEIGER delivered the opinion of the court:
The plaintiff, Foxfield Realty, Inc., a real estate broker,
appeals from the circuit court's order of May 6, 1996, dismissing
with prejudice (see 735 ILCS 5/2--615 (West 1994)) the plaintiff's
unverified complaint seeking the award of a real estate sales
commission allegedly owed by the defendants, Theodore and Barbara E.
Kubala, pursuant to an exclusive right-to-sell agreement. Following
the denial of its motion to reconsider, the plaintiff timely appeals.
We affirm.
The plaintiff contends that the court's dismissal of the cause
of action and the denial of the motion to reconsider were erroneous
where the plaintiff's exclusive right-to-sell agreement with the
defendants (sellers) provided that the seller agreed to pay the
listing broker a commission of 6% of the full selling price,
including encumbrances, "if any sale or exchange is made by [the]
BROKER, by the SELLER or by anyone else" during the exclusive listing
period.
Initially, we note that there is no report of proceedings for
the hearing at which the order of dismissal was entered, but there is
one for the hearing on the motion to reconsider. The complaint
alleged that the defendants were the owners of real property located
in St. Charles, Illinois. On July 14, 1994, the plaintiff and the
defendants entered into a written listing agreement. The defendants
signed the agreement as "SELLER." The defendants appointed the
plaintiff as their agent with the exclusive right to sell the
property at the list price of $237,500 or such lesser amount as the
sellers agreed to accept. The agreement was made in consideration
for, among other things, the plaintiff's efforts to procure a
purchaser for the property.
Under the agreement, the sellers had the usual obligations to
provide a current survey and a title policy as evidence of
merchantable title and to refer all inquiries made to the seller to
the listing broker. The commission was due for covered transactions
during the exclusive period or if it were sold or exchanged within 60
days after the termination of the agreement (unless the property were
listed with another broker) to any "PURCHASER" to whom it was offered
or shown during the term of the agreement. The exclusive period was
from August 5, 1994, through February 5, 1995.
The complaint alleged that the plaintiff advertised the property
and showed it to prospective purchasers. It stated that the
plaintiff learned that Barbara conveyed her interest in the property
to Theodore by (quitclaim) deed, dated December 20, 1994, in exchange
for consideration in the form of property and an allocation of debt
as the result of a marital settlement agreement and pursuant to a
judgment of dissolution of the defendants' marriage. The plaintiff
therefore concluded that the defendants became obligated to pay a 6%
commission on the $237,500 list price.
Theodore moved to dismiss the complaint for the failure to state
a cause of action. The motion stated that Theodore and Barbara owned
the property as joint tenants at the time of the agreement and that
on December 6, 1994, the court entered an agreed order dividing the
property in accordance with a prior order presumably entered in the
dissolution proceeding. The December 6 order appears to be in
response to Theodore's motion to compel the enforcement of a prior
judgment and orders inter alia Theodore to pay Barbara $103,000 in
satisfaction of certain credit card debts, the purchase of three life
insurance policies, Barbara's interest in the marital property, and
an award of $33,265 due according to the prior judgment.
Appended to Theodore's motion was a copy of a quitclaim deed
dated December 20, 1994, and signed by Barbara; also appended were
copies of two checks dated December 19, 1994, totalling $103,000 and
a receipt signed by Barbara. Theodore asserted that the transaction
was a division of marital assets pursuant to a court order and not a
"sale." Citing a Colorado case, Cooley Investment Co. v. Jones, 780 P.2d 29 (Colo. App. 1989), because of the lack of Illinois precedent,
Theodore also argued that there was merely a change in the form of
ownership and not a transfer to another entity; thus, there was no
sale and no right of the plaintiff to a commission. Barbara filed a
separate motion to dismiss also arguing that there was no sale
entitling the plaintiff to a commission.
An appeal from the dismissal of a complaint for the failure to
state a cause of action preserves for review only the question of the
legal sufficiency of the complaint. Payne v. Mill Race Inn, 152 Ill.
App. 3d 269, 273 (1987). In considering a motion to dismiss, all
well-pleaded facts are taken as true along with all reasonable
inferences favorable to the nonmoving party. Payne, 152 Ill. App. 3d
at 273. However, a motion to dismiss does not admit conclusions of
law or of fact that are not supported by allegations of specific
facts which form the basis for such conclusions. Payne, 152 Ill.
App. 3d at 273. Exhibits attached to the pleadings are considered
part of the pleadings, and allegations in the pleadings which
conflict with facts disclosed in the exhibits are not admitted as
true; rather, the exhibits control. Evers v. Edward Hospital Ass'n,
247 Ill. App. 3d 717, 724 (1993). The granting of a motion to
dismiss a complaint is within the discretion of the trial court.
Evers, 247 Ill. App. 3d at 724.
A claim should not be dismissed on the pleadings unless it
clearly appears that no set of facts can be proved under the
pleadings which will entitle a party to recover. F.H. Prince & Co.
v. Towers Financial Corp., 275 Ill. App. 3d 792, 797 (1995). Whether
a complaint states a cause of action based on the interpretation of
a contract may be the subject of a motion to dismiss where the
question presented is a matter of law. See, e.g., Evers, 247 Ill.
App. 3d 717; Chicago Investment Corp. v. Dolins, 93 Ill. App. 3d
971, 974 (1981); see also Camp v. Hollis, 332 Ill. App. 60 (1947).
The trial judge, who was the same in both the dissolution
proceeding and the contract action, was in a position to take
judicial notice of the facts in the dissolution proceeding. We do
not have the benefit of a complete record from either proceeding. At
the hearing on the motion to reconsider, the trial judge noted that
both owners of the property signed the listing agreement. He
concluded that a cause of action was not properly pleaded as no
commission was triggered under the agreement where one signatory
merely transferred her interest to the other. We agree with this
result.
The question presented is whether the trial court properly
construed the exclusive sales agreement to mean that Barbara's
quitclaim of her interest in the property, pursuant to a judgment in
the marriage dissolution proceeding which ordered a division of the
defendants' assets, did not obligate the defendants to pay a
commission to the plaintiff. The facts are essentially undisputed.
Since the real dispute centers on the interpretation of the contract,
the legal effect and interpretation of the contract is a question of
law. See Kennedy, Ryan, Monigal & Associates, Inc. v. Watkins, 242
Ill. App. 3d 289, 295 (1993).
In an exclusive sales agreement (as opposed to an exclusive
agency agreement), the broker may become entitled to a commission if
the property is sold by anyone during the life of the agreement.
Kennedy, 242 Ill. App. 3d at 294. However, in determining whether
there was a sale that triggered a commission, the court must
ascertain the intent of the parties as evidenced in the contract as
a whole, and not merely by reference to particular words or isolated
phrases. Kennedy, 242 Ill. App. 3d at 295. In determining the
parties' intent, the court simply looks to the contract as ultimately
executed; when the contract terms are clear and unambiguous they must
be given their ordinary and natural meaning, and no parol evidence
may be considered to vary the meaning of the terms; whether an
ambiguity exists is itself a question of law for the court. Hammel
v. Ruby, 139 Ill. App. 3d 241, 247 (1985).
Although the term "sale" has no fixed or invariable meaning, it
is to be interpreted in accordance with the manifest intention of the
parties. Felbinger & Co. v. Traiforos, 76 Ill. App. 3d 725, 732
(1979). We find that the language of the contract is not ambiguous
and must be given its ordinary and natural meaning within the context
of the contract. See Hammel, 139 Ill. App. 3d at 247. The plaintiff
maintained in the trial court that the contract is unambiguous, but
nevertheless urges that its construction of the term "sale" controls.
It is not what one of the parties may have intended that controls,
but what is shown by the contract to have been the intention of both
parties. Blackhawk Hotel Associates v. Kaufman, 80 Ill. App. 3d 462,
465 (1979). The language of a contract is not ambiguous simply
because the parties disagree upon its meaning (Omnitrus Merging Corp.
v. Illinois Tool Works, 256 Ill. App. 3d 31, 37 (1993)), nor is it
ambiguous if the court can determine its meaning without any guide
other than a knowledge of the simple facts on which, from the nature
of language in general, its meaning depends (Shultz v. Delta-Rail
Corp., 156 Ill. App. 3d 1, 10 (1987)).
Finally, to the extent that a contract is susceptible of two
interpretations, one of which makes it fair, customary, and such as
prudent persons would naturally execute, while the other makes it
inequitable, unusual, or such as reasonable persons would not be
likely to enter into, the interpretation which makes a rational and
probable agreement must be preferred. Kokinis v. Kotrich, 74 Ill.
App. 3d 224, 229 (1979); Camp, 332 Ill. App. at 68. Courts will
construe a contract reasonably to avoid absurd results. Wachta v.
First Federal Savings & Loan Ass'n, 103 Ill. App. 3d 174, 181 (1981).
A sale is defined as a "contract between two parties, called
respectively, the 'seller' (or vendor) and the 'buyer' (or
purchaser), by which the former, in consideration of the payment or
promise of payment of a certain price in money, transfers to the
latter the title and the possession of [the] property." Black's Law
Dictionary 1337 (6th ed. 1990) (Black's). It is also defined as a
"contract whereby property is transferred from one person to another
for a consideration of value, implying the passing of the general and
absolute title, as distinguished from a special interest falling
short of complete ownership." Black's at 1337. A further definition
states in part that to constitute a sale, "there must be parties
standing to each other in the relation of buyer and seller." Black's
at 1337. Illinois courts have recognized various transactions as
constituting sales--including the transfer of property for any kind
of valuable consideration such as the extinguishment of a debt or a
transfer where the grantee is the holder of a note secured by a
mortgage even where effectuated by a court order or by a foreclosure
sale. See Blackhawk, 80 Ill. App. 3d 462.
The fact that many types of property transfers for consideration
may come within the meaning of the term "sale" does not resolve
whether the transaction here was one reasonably contemplated by the
parties. For that, we rely on the cardinal rule of contract
construction and examine the entirety of the contract language to
ascertain the intention of the parties. Notwithstanding any technical
definition of the term "sale" that the plaintiff urges us to accept,
it is clear to us that the plaintiff's construction of the contract
would produce an unusual, unintended, unreasonable, absurd, and
inequitable result. This we cannot abide.
First, it is clear that an important consideration stated in the
contract was the plaintiff's efforts to procure a qualified purchaser
for the entire property, and not just a part interest in it. The
limited record suggests that, in the dissolution proceeding, the
court ordered the couple to place their property up for sale in order
to divide their assets, and, in order to actually facilitate the
sale, the court appears to have ordered the change in ownership. The
trial court was in a better position to take notice of the facts in
the dissolution proceeding and matters presented at the original
hearing on the motion to dismiss. We are, however, limited to
considering the record before us.
There is no doubt that a broker's commission would have become
due if the entire property had been sold to a third-party buyer,
regardless of whose efforts brought about the sale. One of the
obvious purposes of an exclusive right-to-sell agreement is to
prevent the seller from showing or offering the property to others
without informing the broker so as to avoid paying a commission.
Theodore and Barbara, who were joint tenants, obviously signed the
listing agreement jointly as "SELLER" with the intent of disposing of
the whole property to a third-party "PURCHASER" and not with the
intent of transferring only a part interest in the property pursuant
to a judicially ordered division of assets. Their duties and
obligations, for example, in showing the property or providing
evidence of merchantable title, are clearly aimed at producing a sale
to other prospective purchasers.
It is inconceivable that the joint sellers here reasonably
contemplated that they would be liable for a large commission for any
partial transfer of one seller's interest, possession, and title to
the other seller or upon any change between themselves in the
ownership of the property. No reasonable person would enter into a
sales contract in which he subjected himself to an unnecessary and
unearned commission for the sale of property to himself or to his
spouse under the circumstances presented. There is nothing
whatsoever in the agreement to suggest even remotely that the broker
was hired to facilitate the division or partition of their joint
tenancy.
Though not precisely on point, Cooley Investment, 780 P.2d 29
(Colo. App. 1989), adds some support to our conclusion. In Cooley,
where the seller retained an ownership interest in the property and
transferred her property to a partnership in which she had an
interest, there was merely a change in the form of ownership and not
a complete "sale" to another entity warranting a commission under an
exclusive right-to-sell contract. Here, the plaintiff has cited
Illinois cases where a sale was found to be within one of the usual
meanings of the term where it occurred between the owner and a third-
party entity such as a mortgagee or guarantor. See Hammel, 139 Ill.
App. 3d 241; Blackhawk, 80 Ill. App. 3d 462; Felbinger, 76 Ill. App.
3d 725. The plaintiff has cited no authority having the facts
present here.
The trial court properly construed the contract so as not to
trigger a commission to the plaintiff. The plaintiff's
interpretation of the contract is so unusual that it would have
unintended, illogical, absurd, and inequitable results. If the
plaintiff intended for these unusual circumstances to obligate the
seller to pay a commission, it could easily have included such an
express provision in the agreement. See Ebrahim v. Checker Taxi Co.,
128 Ill. App. 3d 906, 908 (1984). We doubt that any rational seller
would have agreed to such a provision.
For the foregoing reasons, the judgment of the circuit court of
Kane County is affirmed.
Affirmed.
DOYLE and RATHJE, JJ., concur.