Citations
- 111 Ill. App. 2d 127
Full opinion text
MR. JUSTICE DAVIS
delivered the opinion of the court.
This is an action brought by the plaintiffs to recover damages for the alleged breach by the defendant of a contract for the sale of certain real estate. While there are several parties plaintiff and defendant, including corporate entities for purpose of the contracts in question, for the sake of simplicity we will refer to the plaintiffs as “seller” and the defendants as “buyer” without differentiating between the individual and corporate parties.
The matter was tried before the court without a jury. The court found that the buyer had breached the contract, and it awarded damages to the seller and dismissed the buyer’s counterclaim. The buyer then appealed to this court. The complex factual background, when reduced to the essentials necessary to an understanding of the issues and their determination, is as follows:
Some time in 1961, the buyer’s real estate firm received a listing from the seller for 337 acres of his land at a gross price of $2,500 per acre. The seller, who owned a total of 508 acres, had indicated to the buyer that he proposed to build a golf course adjacent to this land. Shortly thereafter, the buyer advised the seller that the asking price was too high and in a letter dated January 23, 1962, he outlined a rough draft of a proposal to the seller.
Under this proposition, the buyer would allow the seller to participate in the overall potential profit of the subdivision without losing his capital gain status or right to report the sale on an installment basis. He suggested that, with existing development costs, the break-even price on lots would be $5,000; that initially, lots not on the golf course would be offered at $5,000 and lots on the golf course at $6,000 to $7,000; and that after the subdivision was started, and the golf course available, the lots would sell at an average of $9,000.
The buyer explained in his letter that he arrived at the figure from the knowledge that a home builder is willing to pay from 20 to 25% of the total home value for the site; and that he estimated from the restrictions the parties had discussed, that home values would range from $40,-000 to $60,000. He stated that there was the additional unknown factor of what extra a homeowner would pay for a “golf course location.” From this, the buyer concluded that his estimate of average lot price was probably conservative.
The buyer pointed out that the draft of the proposed agreement had a base lot price of $2,000 to the seller, plus a 40 % bonus of that portion of the resale price over $5,000; and that based upon the anticipated average value of $9,000 per lot, the seller’s gross return would be approximately $1,070,000, or roughly, a quarter of a million more than his present asking price of $2,500 per acre. This letter was the genesis of the agreements to follow.
On April 30, 1962, the first of the agreements outlining the relationship of the parties was executed. This provided that the seller would sell 337 of his 508 acres to the buyer at a base purchase price of $640,000, assuming the land could be subdivided into 320 lots. The purchase price was to be paid as follows:
$15,000 on or before August 31, 1962 50,000 a « it December 31, 1962 285,000 « a it April 1, 1963 72,500 it a a April 1, 1964 72,500 it