[Property] 18. John Giannini v. First National Bank of Des Plaines (1985)

[이유나]

18. John Giannini v. First National Bank of Des Plaines (IL, 1985)

Facts

In Mar 1980, John Giannini (P) entered into a contract to purchase a unit in a condominium complex to be constructed. Frank R. Stape Builders, Inc. (Stape) was the developer of the construction and agent of the beneficiary of a land trust. First National Bank of Des Plaines (Bank) was the trustee and record title holder. The beneficiary of the land trust was to direct the trustee to sell and convey the real estate to the purchaser when the construction of the complex would be completed. However, when the construction was completed, 3 out of the 5 buildings including the one in which P’s unit were not declared as condominiums. A declaration of 3 buildings as condominiums remained to be part of the development project. Later, Stape was involuntarily dissolved and Unity Savings Association (Unity), the mortgage holder, obtained title to the complex instead of foreclosure of its mortgage, agreeing that it would carry out the development. However, Unity did not declare the 3 buildings as condominiums.

In Oct 1981, P sued Bank and Stape for money damages and Unity for specific performance of the purchase agreement. The trial court dismissed P’s complaint.

Issue

Whether a buyer of real property is entitled to a specific performance of a valid contract for the sale of real property as a matter of right.

Rules

A buyer of real property is entitled to a specific performance of a valid contract for the sale of real property as a matter of right, absent circumstances of oppression and fraud (Hayes v. Disque)

Application

Unity argues that the specific performance is inappropriate on the following basis:

1. Unity first claims that it is impossible for it to execute the purchase agreement since the condominium unit does not exist because the building in which it was located had not been declared a condominium building.

·       Court: Generally, where it is impossible for the defendant to enforce its execution of the agreement, such fact necessarily constitutes a sufficient reason why the court should refuse to decree specific performance. (Saur v. Ferris) However, P’s unit does exist literally and physically. Any form of “non-existence” of the unit is nothing more than a direct result of Unity’s refusal to declare the building as a condominium.

2. Unity also contends that a condominium is not so unique as other real property as to require specific performance.

·       Court: the term condominiums has been defined in other jurisdictions as an estate in real property. Even if exactly the same condo units are available, there is no adequate basis for comparison of the sale of these units and the purchase agreement which P stands ready to perform because there is no evidence to establish the degree of similarity, price, terms, or conditions. Thus, we find no persuasive reason to treat condos differently from other real property.  Also, Unity cites no case law denying specific performance of a contract for a condo.

3.  Unity argued that specific performance was properly denied because it would be uneconomical to it.

·       Court: a court using its equitable powers may refuse to grant specific performance where the remedy would cause a peculiar hardship or an inequitable result. (Geist v. Lehmann) There is no hardship in compelling the seller to do what he agreed to do when he thought it was to his advantage. The fact that the contract cannot be performed without great or unanticipated expense is not such an impossibility that will usually excuse performance. (Smith v. Farmers' State Bank) Here, the evidence shows that Unity represented in its foreclosure action that it would honor and follow the plans of the land developer of the condominium project. Accordingly, it cannot now seek to avoid the agreement because of financial hardship. Any additional expense of converting the building into a condominium is not great enough to excuse specific performance.

·       P might not have a legal remedy against any of the defendants because Stape was involuntarily dissolved and the land trust was emptied of any interest in the complex.

A buyer of real property is entitled to a specific performance of a valid contract for the sale of real property as a matter of right, absent circumstances of oppression and fraud (Hayes v. Disque) Therefore, P is entitled to specific performance of the purchase agreement for the condominium unit as a matter of right.

Conclusion

Reversed.

Feedback

1. Subject matter – specific performance can be awarded in one real property area – condominium.

2. 한미 용어 구분

·       콘도Vacation/membership resorts with divided ownership

·       아파트 Condominium with co-ownership

3. 왜 specific performance를 청구했는가

·       Purchase agreement with the developer who later was dissolved & The new owner (Unity) did not perform its duty under the agreement.

o   Compensatory damages: monetary VS Specific performance: act

4. Hardship – discussed in Chevy case

·       There is no hardship in compelling the seller to do what he agreed to do when he thought it was to his advantage. The fact that the contract cannot be performed without great or unanticipated expense is not such an impossibility that will usually excuse performance. (Smith v. Farmers' State Bank)

·       이 케이스에 적용: Unity did not have hardship which amounted to an oppressive or inequitable result which totally defeated or negated Giannini's claim.