{ "id": 307250, "name": "XL DISPOSAL CORPORATION (W. Robert Blair, Appellant) v. JOHN SEXTON CONTRACTORS COMPANY et al. (John Sexton Contractors Company, Appellee)", "name_abbreviation": "XL Disposal Corp. v. John Sexton Contractors Co.", "decision_date": "1995-12-21", "docket_number": "No. 78505", "first_page": "355", "last_page": "367", "citations": [ { "type": "official", "cite": "168 Ill. 2d 355" } ], "court": { "name_abbreviation": "Ill.", "id": 8772, "name": "Illinois Supreme Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "290 Ill. App. 8", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3155618 ], "year": 1952, "pin_cites": [ { "page": "13" } ], "opinion_index": 0, "case_paths": [ "/ill-app/290/0008-01" ] }, { "cite": "124 Ill. App. 3d 158", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3428775 ], "pin_cites": [ { "page": "163" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/124/0158-01" ] }, { "cite": "215 F.2d 872", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 3761304, 533653 ], "weight": 4, "pin_cites": [ { "page": "874" }, { "page": "874" }, { "page": "874" } ], "opinion_index": 0, "case_paths": [ "/f2d/215/0872-01" ] }, { "cite": "109 Ill. 2d 225", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3126588 ], "year": 1987, "pin_cites": [ { "page": "232", "parenthetical": "noting that the \"intent to benefit test\" avoids the distinction between \"donee\" and \"creditor\" beneficiaries" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/109/0225-01" ] }, { "cite": "346 Ill. 252", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5265823 ], "pin_cites": [ { "page": "258" } ], "opinion_index": 0, "case_paths": [ "/ill/346/0252-01" ] }, { "cite": "104 Ill. 2d 150", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3146175 ], "pin_cites": [ { "page": "161" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/104/0150-01" ] }, { "cite": "156 Ill. 2d 112", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 777542 ], "pin_cites": [ { "page": "116-17" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/156/0112-01" ] } ], "analysis": { "cardinality": 800, "char_count": 21152, "ocr_confidence": 0.777, "pagerank": { "raw": 1.9844231760411855e-07, "percentile": 0.7409877950413325 }, "sha256": "89d5651a13eedf8dcba2a86d3c884434114594afd45907d64a58b4a00e09c6c7", "simhash": "1:10fce5d66d8b56da", "word_count": 3421 }, "last_updated": "2023-07-14T21:01:26.676595+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "XL DISPOSAL CORPORATION (W. Robert Blair, Appellant) v. JOHN SEXTON CONTRACTORS COMPANY et al. (John Sexton Contractors Company, Appellee)." ], "opinions": [ { "text": "JUSTICE FREEMAN\ndelivered the opinion of the court:\nAs part consideration for assets of a business, the buyer, Sexton Contractors Company, agreed to pay an attorney who had done legal work for the seller, XL Disposal Corporation. Sexton later challenged the legality of the payments. We hold Sexton cannot challenge the payments for the reasons it asserted.\nBACKGROUND\nRobert Blair, an attorney, secured for XL Disposal Corporation (XL Disposal) land upon which it operated two waste transfer facilities. In August 1984, XL Disposal agreed to compensate Blair for his past services. A typewritten letter from Blair, signed by XL Disposal, confirmed the agreement. XL Disposal was to pay Blair, or his estate upon his death, $5,000 every month, the amount increased annually by 6%, from the letter\u2019s date until XL Disposal ceased operating the two facilities.\nOne of the facilities was located on South Laflin Street in Chicago. The Laflin Street facility was operated on land leased for a five-year term, from 1983 to 1988. The lease was renewable for four additional terms, but would end in 2008.\nIn June 1985, XL Disposal sold, subject to that lease, the assets of the Laflin Street facility to the John Sexton Contractors Company (Sexton). For the assets, Sexton agreed to pay XL Disposal $443,200 and to continue monthly payments, as modified, to Blair. Sexton promised to pay Blair $2,650 every month, with the same 6% yearly increase, from July 1985 until the time Sexton ceased to operate the Laflin Street facility. Sexton\u2019s promise was set out in an addendum to the letter stating XL Disposal\u2019s previous agreement to pay Blair. The addendum was incorporated by, and referred to, the typewritten contract stating the terms of the asset sale. Blair, himself, was not a party to the addendum.\nIn April 1989, Sexton, though it continued to operate the Laflin Street facility, stopped paying Blair. In turn, XL Disposal sued Sexton. XL Disposal sought a declaration that the asset sale contract obligated Sexton to continue to pay Blair.\nSexton raised numerous affirmative defenses in answer to the complaint: XL Disposal\u2019s agreement to pay Blair was fraudulent as based on past consideration; the agreement was an excessive legal fee arrangement; the agreement was contrary to public policy as a contingent-fee arrangement for Blair to lobby the City of Chicago for public contracts; Sexton\u2019s promise to Blair was similarly one for Blair to lobby for city contracts as Sexton\u2019s attorney and, therefore, the addendum was also an excessive fee agreement; and, finally, the promises of both XL Disposal and Sexton to pay Blair were perpetual contracts.\nSexton also filed a verified counterclaim, as amended, against Blair. The counterclaim stated five counts, each based on one or more of the affirmative defenses Sexton asserted against XL Disposal. Sexton sought declaratory relief and recovery of money it had paid to Blair.\nBlair moved pursuant to section 2\u2014619(a)(9) to dismiss Sexton\u2019s counterclaim. (Ill. Rev. Stat. 1989, ch. 110, par. 2\u2014619(a)(9).) Blair argued that Sexton had no standing to challenge XL Disposal\u2019s original promise to pay him. Further, Sexton\u2019s allegations that its payments were for something other than the assets of the Laflin Street facility were barred by the paroi evidence rule. Blair also argued that neither XL Disposal\u2019s nor Sexton\u2019s promise to pay him was a perpetual contract, for a termination date could be ascertained in the lease under which the Laflin Street facility was operated.\nXL Disposal moved for summary judgment (Ill. Rev. Stat. 1989, ch. 110, par. 2\u20141005) on its complaint against Sexton. XL Disposal\u2019s arguments for summary judgment were the same ones Blair raised in his then still pending motion to dismiss Sexton\u2019s counterclaim.\nBlair\u2019s motion to dismiss was granted and, four days later, XL Disposal was awarded summary judgment.\nSexton filed a notice of appeal which sought review of both the counterclaim\u2019s dismissal and the grant of summary judgment. The appellate court, ruling in Sexton\u2019s favor, reversed and remanded. (No. 1\u201491\u20141809 (unpublished order under Supreme Court Rule 23).) The court stated that Sexton had standing to challenge XL Disposal\u2019s agreement to pay Blair and that the trial judge was wrong not to find the agreement invalid. The court directed on remand that the trial judge was free to \"review the reasonableness of the fees\u201d and award Sexton any \"excessive fees\u201d it had paid to Blair.\nBlair sought, and was granted, leave to appeal (145 Ill. 2d R. 315).\nDISCUSSION\nThe Appellate Court Order\nIn the appellate court, Sexton had challenged both the grant of Blair\u2019s motion to dismiss the counterclaim and the grant of XL Disposal\u2019s motion for summary judgment on its complaint. The appellate court did not separately consider the two rulings. Presumably, that was because the motions involved like bases, and an appeal of a section 2 \u2014 619(a)(9) dismissal involves the same concerns as an appeal of a grant of summary judgment (see Kedzie & 103rd Currency Exchange, Inc. v. Hodge (1993), 156 Ill. 2d 112, 116-17 (stating the standard of review)). But the motions were of different parties, were directed at or involved different pleadings, and sought different relief.\nIn directing that Sexton could be awarded fees found to be excessive, the appellate court effectively granted summary judgment for Sexton. Notwithstanding that Supreme Court Rule 366 would allow for entry of \"any judgment *** that ought to have been *** made\u201d or the grant of \"any relief,\u201d the appellate court\u2019s ruling exceeded the scope of the appeal. (134 Ill. 2d R. 366.) Sexton did not move for summary judgment against either Blair on its counterclaim or XL Disposal in a cross-motion for summary judgment. Certainly, Sexton\u2019s argument that it was not obligated to continue to pay Blair presented a legal question the court could decide. But no evidence whatsoever had been presented as to Blair\u2019s services by which any determination could be made about the reasonableness or unreasonableness of the compensation.\nBlair alone has contested the appellate court\u2019s order and only the viability of Sexton\u2019s counterclaim against Blair is at issue. The disposition here is limited accordingly.\nThe Relationship Between the Parties as Affecting Sexton\u2019s Defenses\nSexton argues that its obligation cannot be separated from XL Disposal\u2019s agreement to pay Blair for legal services. In effect, Sexton says it stepped into XL Disposal\u2019s shoes and \"assumed a direct contractual obligation to Blair.\u201d Therefore, Sexton says it can challenge the legality of XL Disposal\u2019s agreement to pay Blair as, for example, one for excessive legal fees, though it was not a party to it.\nThat particular argument is premised on the role this court plays in policing attorney discipline in Illinois. The court is duty-bound to guard against the collection of excessive legal fees, both contingent and fixed. (See In re Teichner (1984), 104 Ill. 2d 150, 161; see generally 107 Ill. 2d R. 2\u2014106 (prohibiting the collection of an \"illegal or excessive fee\u201d).) Sexton is implicitly relying on the notion that that duty should not be any less because the fee issue happens not to arise in a more familiar context like a disciplinary proceeding. It bears noting that Sexton did, in fact, file a complaint with the \u25a0Attorney Registration and Disciplinary Commission against Blair on the fee issue, but no action was taken against Blair and the investigation was closed.\nBlair argues that Sexton\u2019s obligation is distinct from his previous agreement with XL Disposal. That is, Sexton\u2019s promise to pay Blair was but a component of its contract payment to XL Disposal for the Laflin Street facility assets. It makes no difference, Blair says, that the consideration was in the form of monthly payments directed to him.\nTo support the respective contentions, the parties point to the different language of the asset sale contract and the addendum. The asset sale contract obligated Sexton to \"assume the liability\u201d of XL Disposal \"as to\u201d XL Disposal\u2019s agreement with Blair. But the addendum states only that Sexton had \"agreed to pay\u201d Blair and \"to be bound by all the terms and conditions\u201d of XL Disposal\u2019s agreement with him, though the.amount was modified. In short, the parties see the case as turning on whether the phrase \"assume the liability\u201d in the asset sale contract means more than the phrase \"agree[] to pay\u201d in the addendum.\nThe point certainly figures in the disposition of this case. However, what must first be settled is Blair\u2019s status with respect to the asset sale contract between XL Disposai and Sexton. As already noted, the addendum stating Sexton\u2019s promise to Blair, whatever its nature, was made a contract term. The term conferred upon Blair, who was not a party to XL Disposal\u2019s and Sexton\u2019s contract, a direct benefit: monthly payments from Sexton. That made Blair a third-party beneficiary of the asset sale agreement.\nThird-party beneficiary status is determined against \"the contract and the circumstances surrounding the parties at the time of its execution.\u201d (Carson Pirie Scott & Co. v. Parrett (1931), 346 Ill. 252, 258.) Illinois follows the \"intent to benefit\u201d rule; that is, third-party beneficiary status is a matter of divining whether the contracting parties intended to confer a benefit upon a nonparty to their agreement. (See, e.g., Bates & Rogers Construction Corp. v. Greeley & Hansen (1985), 109 Ill. 2d 225, 232; see generally J. Calamari & J. Perillo, Contracts \u00a7\u00a7 17\u20143, 17\u20144, at 693-702 (3d ed. 1987) (noting that the \"intent to benefit test\u201d avoids the distinction between \"donee\u201d and \"creditor\u201d beneficiaries); see also Restatement (Second) of Contracts \u00a7 302 (1981).) The asset sale contract and the addendum it incorporates as a term plainly show Blair to be an intended \u2014 as opposed to an incidental \u2014 third-party beneficiary of the asset sale contract between XL Disposal and Sexton. That makes Sexton the promisor with respect to Blair and XL Disposal the promisee.\nBy way of its counterclaim, Sexton sought to end the payments to Blair and to recover payments made. The question in this appeal\u2014whether Sexton\u2019s counterclaim can survive Blair\u2019s section 2\u2014619 motion to dismiss\u2014takes the form of what defenses Sexton, as promisor, may assert against Blair, the intended third-party beneficiary. The counterclaim\u2019s alleged bases were, again, in substance, the affirmative defenses Sexton had raised in answer to XL Disposal\u2019s complaint.\nThe first of the grounds depended upon XL Disposal\u2019s relationship with Blair: that XL Disposal\u2019s agreement to pay Blair was fraudulent; that it involved excessive legal fees; and that the payments were part of an illegal lobbying contract or constituted a perpetual one. But Sexton also looked to its own relationship with Blair: Sexton alleged that Blair was really being paid for lobbying efforts as Sexton\u2019s attorney and that the arrangement involved excessive fees and was otherwise a perpetual contract.\nPromisee-Based Defenses\nWhether Sexton may allege in its counterclaim against Blair a basis for recovery arising from XL Disposal\u2019s agreement with Blair turns on whether Sexton did, in fact, step into XL Disposal\u2019s shoes in promising to make the monthly payments. To state the question rhetorically: May Sexton, as promisor, assert against Blair, the intended third-party beneficiary, defenses which XL Disposal, the promisee, might have against Blair? (See J. Calamari & J. Perillo, Contracts \u00a7 17\u201412, at 716-17 (3d ed. 1987).) The issue of whether a promisor can assert such defenses has not before arisen in Illinois. This case is even more novel because the defenses were not asserted in response to a claim by the third-party beneficiary as might normally be expected.\nNevertheless, the seminal decision is Rouse v. United States (D.C. Cir. 1954), 215 F.2d 872. In that case, Bessie Winston had had installed in her home an oil burner which she financed with a promissory note. The United States, through the Federal Housing Administration, guaranteed the note\u2019s payment. Winston sold the home to John Rouse. The contract of sale contained a provision obligating Rouse \"to assume payment of $850\u201d for the oil burner. When Winston defaulted on her promissory note, the United States paid and sued Rouse. One of the defenses Rouse, the promisor, raised against the United States, the third-party beneficiary, was that the oil burner had not been installed satisfactorily, a defense Winston, the promisee, might have asserted.\nThe court held that Rouse could not assert the defense. The court said that whether a promisor could assert a defense against a third-party beneficiary that the promisee might have asserted against the beneficiary depended upon the nature of the obligation undertaken. If a promisor agrees to \" 'discharge whatever liability the promisee is under\u2019 \u201d to the third party, then the promisor must be allowed to step into the promisee\u2019s shoes to show that the promisee was \" 'under no enforceable liability.\u2019 \u201d (Rouse, 215 F.2d at 874, quoting 3 S. Williston, Williston on Contracts \u00a7 811A (1936).) But if the promisor only agrees to pay a certain sum of money to the third party, it is immaterial whether the sum' is actually owed by the promisee. (Rouse, 215 F.2d at 874, quoting 3 S. Williston, Williston on Contracts \u00a7 811A (1936).) In that situation, the promisor has no basis to assert a defense that the promisee might have enjoyed. The court concluded that a promise to assume amounts is a promise to pay irrespective of the promisee\u2019s liability. (Rouse, 215 F.2d at 874; see also J. Calamari & J. Perillo, Contracts \u00a7 17\u201412, at 716 (3d ed. 1987).) Rouse could not assert Winston\u2019s defense that the oil burner had not been properly installed because Rouse had but agreed to assume the payment of an $850 sum.\nWas Sexton\u2019s obligation, like Rouse\u2019s, one to pay Blair regardless of whether XL Disposal actually owed anything to him or was Sexton\u2019s obligation one to discharge a liability running between XL Disposal and Blair?\nXL Disposal had agreed to pay Blair until such time as it \"cease[d] to operate both of [its] waste transfer facilities.\u201d But the promise was not conditioned merely on XL Disposal\u2019s operation of the facilities. The promise to pay Blair continued as long any \"successor[ ]\u201d or \"assignee]\u201d of XL Disposal\u2019s interest in the facilities continued to operate them. Sexton was such a successor or assignee of XL Disposal\u2019s interest in the Laflin Street facility. And Sexton\u2019s promise to Blair was similarly conditioned\u2014Sexton promised to pay until it \"ceasefd] to operate\u201d the Laflin Street facility\u2014reflecting XL Disposal\u2019s obligation to Blair. Ignoring, for the moment, that the monthly amounts Sexton and XL Disposal agreed to pay Blair differed, the like conditions make it seem that Sexton did assume XL Disposal\u2019s liability at least with respect to the Laflin Street facility.\nBut the condition stated in XL Disposal\u2019s obligation to Blair would also seem to undermine the notion that there was any liability for Sexton to assume. The condition\u2014a condition subsequent to the promised payment (J. Calamari & J. Perillo, Contracts \u00a7 11\u20147, at 441-44 (3d ed. 1987); see also Wysocki v. Bedrosian (1984), 124 Ill. App. 3d 158, 163)\u2014seems to contemplate a single entity\u2019s operation of XL Disposal\u2019s two waste transfer facilities. XL Disposal promised to pay Blair until:\n\"XL [Disposal], its successors and assigns, in whole or part, including successors, assigns, and lessees of all or part of its interest in its said waste transfer facilities, ceases to operate both of said *** facilities ***.\u201d\nThe language can be reasonably read to say that XL Disposal\u2019s obligation depended upon the operation of both waste transfer facilities by either XL Disposal or a successor or assign of some or all of its business interests, including waste transfer. The sale of the Laflin Street facility\u2019s assets to Sexton would have meant that neither XL Disposal nor such a successor, assign, or lessee operated both facilities. XL Disposal\u2019s liability would be discharged with the sale leaving nothing for Sexton to assume.\nA closer look at the nature of XL Disposal\u2019s promise to Blair further shows that XL Disposal\u2019s promise to Blair did not represent liability Sexton could assume. XL Disposal said that it was indebted to Blair for past legal services. That reason explained XL Disposal\u2019s promise to pay him. But XL Disposal\u2019s promise could hardly be said to be based upon a liquidated debt for the actual value of legal services rendered. What amounts Blair was \"owed\u201d were determined only in connection with operation of both waste transfer facilities. If XL Disposal had closed one of its facilities the day after the August 1984 agreement with Blair took effect, XL Disposal\u2019s \"liability\u201d for the legal services of Blair would have been completely discharged. That is so regardless of the fact that Blair might have gone undercompensated.\nIf XL Disposal\u2019s promise to pay Blair did not represent an independently ascertainable liability of XL Disposal, what liability of XL Disposal could exist for Sexton to assume? Sexton\u2019s promise to pay Blair until it ceased operating the Laflin Street facility was its own, separate promise to Blair. That that promise was separate from any \"liability\u201d of XL Disposal is evident in the fact that Sexton, too, controlled the extent of its own obligation. If Sexton had stopped operating the Laflin Street facility one day after the asset sale contract took effect, it would owe Blair no further payments.\nFinally, there is the matter of the amount of Sexton\u2019s promised payments to Blair. Sexton promised to pay roughly half of the amount that XL Disposal had promised to pay Blair. Presumably, that was because Sexton\u2019s payment \u2014 connected to only one of the two waste transfer facilities \u2014 would be roughly half of XL Disposal\u2019s obligation to Blair in operating both. Sexton\u2019s argument would be that it is sufficient to have stepped into only one of XL Disposal\u2019s shoes to enable it to assert defenses XL Disposal would be entitled to. Sexton has not directed us to, nor have we found, authority stating that the assumption of only part of a promisee\u2019s liability to a third party entitles a promisor to avail himself of the promisee\u2019s defenses.\nWe conclude that Sexton promised no more than to pay Blair the monthly sums independent of whether XL Disposal truly owed Blair anything. Sexton therefore cannot assert defenses which XL Disposal, as promisee, might have asserted based on its relationship with Blair. The trial judge was correct to dismiss the counts of Sexton\u2019s counterclaim alleging that XL Disposal\u2019s agreement to pay Blair was fraudulent, involved excessive legal fees, was against public policy, or was a perpetual contract.\nSexton\u2019s Own Defenses as Promisor\nThat leaves for consideration the defenses Sexton, as promisor, raised against Blair, the third-party beneficiary. Those defenses related to Blair\u2019s alleged service as Sexton\u2019s own attorney in lobbying for city contracts and the duration of Sexton\u2019s promised payments.\nA third-party beneficiary\u2019s rights depend on the validity of the contract creating them. (Gallopin v. Continental Casualty Co. (1937), 290 Ill. App. 8, 13; see A. Corbin, Corbin on Contracts ch. 44, \u00a7 818 (1952).) And, therefore, a promisor may assert as a defense to the third-party beneficiary\u2019s claims under the contract the \"absence of mutual assent or consideration, lack of capacity, fraud, mistake and the like.\u201d Restatement (Second) of Contracts \u00a7 309, Comment, at 458 (1981); see also A. Corbin, Corbin on Contracts ch. 44, \u00a7 818 (1952).\nBut the defenses Sexton alleged as promisor in its counterclaim do not go to the validity of the asset sale contract. What Sexton has attempted to do is to assert defenses to its obligation to pay Blair based upon some other direct contractual relationship with Blair. It bears repeating that the addendum stating Sexton\u2019s specific promise to Blair was simply a term of the asset sale contract. The addendum \u2014 to which Blair was not a party \u2014 could create no separate contractual relationship between Sexton and Blair. Therefore, the allegations of Sexton\u2019s counterclaim that its payments to Blair were excessive legal fees or constituted a perpetual contract were also properly dismissed.\nConclusion\nWe reverse the appellate court and affirm the judgment of the circuit court dismissing Sexton\u2019s amended counterclaim against Blair.\nAppellate court reversed; circuit court affirmed.\nCHIEF JUSTICE BILANDIC and JUSTICE HARRISON took no part in the consideration or decision of this case.", "type": "majority", "author": "JUSTICE FREEMAN" } ], "attorneys": [ "Gerald L. Angst, Steven J. Ellison and Susan A. Weber, of Sidley & Austin, of Chicago, for appellant.", "Frank L. Winter and Michael T. Reynolds, of the Law Offices of Victor J. Cacciatore, of Chicago, for appellee John Sexton Contractors Co." ], "corrections": "", "head_matter": "(No. 78505.\nXL DISPOSAL CORPORATION (W. Robert Blair, Appellant) v. JOHN SEXTON CONTRACTORS COMPANY et al. (John Sexton Contractors Company, Appellee).\nOpinion filed December 21, 1995.\nBILANDIC, C.J., and HARRISON, J., took no part.\nGerald L. Angst, Steven J. Ellison and Susan A. Weber, of Sidley & Austin, of Chicago, for appellant.\nFrank L. Winter and Michael T. Reynolds, of the Law Offices of Victor J. Cacciatore, of Chicago, for appellee John Sexton Contractors Co." }, "file_name": "0355-01", "first_page_order": 367, "last_page_order": 379 }