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SIXTH DIVISION

September 22, 2000

JUSTICE GALLAGHER delivered the opinion of the court:

Plaintiffs, Daniel J. Neppl and S. Leigh Jeter, appeal from an order of the circuit court ofCook County dismissing their complaint against defendants, Glenn S. Murphy and Deborah A.Murphy. Plaintiffs had brought an action against defendants for breach of a real estate contract,seeking damages for breach of an express warranty in the contract which provided that theheating system would be in "operating condition at possession." Defendants brought a combinedmotion to dismiss plaintiffs' complaint pursuant to sections 2-615, 2-619, and 2-619.1 of theCode of Civil Procedure (the Code) (735 ILCS 5/2-615, 2-619, 2-619.1 (West 1998)). OnJanuary 27, 2000, the trial court granted defendants' motion. Plaintiffs now contend on appealthat the circuit court erroneously granted the defendants' motion to dismiss plaintiffs' breach ofcontract claim on the grounds that it was barred under the doctrine of merger. The relevant factsfollow.

On May 3, 1999, plaintiffs entered into a written contract to purchase a single-familyhome known as 3835 North Alta Vista Terrace in Chicago, Cook County, Illinois (residence),from the defendants. Section 3 of the contract provided, in relevant part: "Seller warrants toBuyer that all fixtures, systems and personal property included in this Contract shall be inoperating condition at possession ***. A system or item shall be deemed to be in operatingcondition if it performs the function for which it is intended, regardless of age, and does notconstitute a threat to health or safety"(the express warranty).

Pursuant to the contract, plaintiffs had the right to a professional inspection, which theyobtained. The inspection took place on May 7, 1999. The inspector identified a crack in the heatexchanger, which defendants replaced. The inspector's report also contained a recommendationthat a safety inspection be performed by the local gas utility company, the final authority for allgas appliances. The parties closed the real estate transaction on July 16, 1999 and plaintiffs tookpossession. On the same day, the local gas utility company, Peoples Gas Light & Coke Co.(Peoples Gas) transferred the gas service to plaintiffs. As a result of doing so, a representative ofPeoples Gas determined that the furnace was not in compliance with the requirements of PeoplesGas or the City of Chicago and "red-tagged" the furnace. He immediately disconnected thesupply of natural gas to the furnace, advising plaintiffs that such action was being taken becausethe system presented an unacceptable threat to the health and safety of the residents. Asupervisor from Peoples Gas subsequently confirmed that the gas furnace was not in compliancewith Peoples Gas or the City of Chicago's building code, specifically the venting requirements,because the gas furnace could only be accessed through a bathroom in the basement, was locatedin an improper place, and lacked adequate access to a source of air. He further informedplaintiffs that unless and until the gas furnace was brought into compliance, Peoples Gas couldnot and would not supply gas for the furnace due to the threat of carbon monoxide poisoning,which constitutes a serious threat to health and safety.

On July 28, 1999, plaintiffs sent a letter to defendants and notified them of a potentialwarranty claim against them. The letter informed defendants of the actions taken by Peoples Gasand expressed plaintiffs' position that the condition constituted a breach of the warrantycontained in the contract. In response, on July 29, 1999, defendants sent a letter to plaintiffssuggesting that the Peoples Gas representative who refused to connect the gas service must havebeen in a "bad mood." Defendants further stated that they disagreed that the conditionconstituted a breach of the warranty contained in the contract. On August 25, 1999, plaintiffssent another letter to defendants requesting they honor the express warranty given by them in thecontract. Plaintiffs enclosed a letter from a Peoples Gas supervisor confirming their previousfinding and stating that the only acceptable solution was replacement of the furnace with a highefficiency model. Plaintiffs enclosed copies of two estimates they had obtained to remedy thecondition and requested that defendants fulfill the warranty obligation by forwarding $3,100. OnSeptember 2, 1999, defendants sent a letter to plaintiffs in which they informed plaintiffs thatthere had been no change in their position as stated in their July 29, 1999, letter.

On September 10, 1999, plaintiffs installed a closed combustion chamber design furnace,and incurred half the cost of obtaining a building permit from the City of Chicago for purposes ofthe installation. Plaintiffs filed suit against defendants on October 20, 1999. On October 21,1999, an inspection by Peoples Gas resulted in a finding that the furnace now complies with theventing requirements.

Our standard of review of motions to dismiss, under either section 2-615 or 2-619, is denovo. R-Five, Inc. v. Shadeco, Inc., 305 Ill. App. 3d 635, 639, 712 N.E.2d 913, 915 (1999). Amotion to dismiss based on section 2-615 admits all well-pleaded facts and attacks the legalsufficiency of the complaint; but a motion to dismiss under section 2-619 motion admits the legalsufficiency of the complaint and raises defects, defenses or other affirmative matter which appearon the face of the complaint or are established by external submissions which act to defeat theplaintiff's claim. Joseph v. Chicago Transit Authority, 306 Ill. App. 3d 927, 930, 715 N.E.2d733, 736 (1999). Thus, we apply a separate analysis to each basis of defendants' motion.

We first consider defendants' motion to dismiss under section 2-615. A motion todismiss brought under section 2-615 challenges only the legal sufficiency of a complaint andalleges only defects on the face of the complaint. Board of Directors of Bloomfield ClubRecreation Ass'n v. Hoffman Group, Inc., 186 Ill. 2d 419, 423, 712 N.E.2d 330, 333 (1999). Inruling on a section 2-615 motion, a court must accept as true all well-pled facts in the complaintand all reasonable inferences that can be drawn therefrom. Lewis E. v. Spagnolo, 186 Ill. 2d 198,236, 710 N.E.2d 798, 817 (1999).

Plaintiffs' complaint, into which was incorporated the sales contract, refers to the expresswarranty and alleges as follows:

"The Sellers breached the Contract because the furnace and the heating systemwere not in 'operating condition at possession' at the time the Contract was enteredinto and accepted, or at any time. On the day the Buyers took possession andbefore they had even moved into the residence, the furnace did not perform thefunction for which it was intended as it was disconnected by the utility companybecause it posed a threat to health and safety due to a risk of excessive carbonmonoxide accumulation within the residence."

For purposes of defendants' section 2-615 motion, we accept these allegations as true.

In support of their section 2-615 motion, defendants contend: " 'In the absence of anexpress clause in a contract, the contract for the sale of real estate is "merged" into the deed whenit is delivered to the buyer at closing, and the deed supersedes all of the contract provisions.' " While true, this statement, standing alone, is an oversimplification of the law regarding thedoctrine of merger. Under Illinois law, the doctrine of merger is not absolute. See, e.g., Trapp v.Gordon, 366 Ill. 102, 110, 7 N.E.2d 869, 873 (1937) ("While it is the general rule that all priorverbal understandings or agreements with reference to the subject matter become merged in adeed upon its acceptance and the deed constitutes the only contract between the parties whichbinds them [citations] yet this rule, like many other rules in the field of law, is subject toexceptions and qualifications"). A notable exception, germane to the instant case, is that whenthe contract for the sale of real estate contains provisions that are not fulfilled by delivery of thedeed, the contract is not merged as to such provisions, but remains open for performance of suchterms. Daniels v. Anderson, 162 Ill. 2d 47, 63, 642 N.E.2d 128 (1994); Petersen v. HubschmunConstruction Co., Inc., 76 Ill. 2d 31, 39, 389 N.E.2d 1154, 1157 (1979); Chicago Title & TrustCo. v. Wabash-Randolph Corp., 384 Ill. 78, 87, 51 N.E.2d 132, 137 (1943); Trapp v. Gordon,366 Ill. 102, 7 N.E.2d 869 (1937). Thus, the merger doctrine is not the absolute bar to plaintiffs'claim for breach of the express warranty in the contract that defendants assert it to be. Instead,the applicability of the merger doctrine here first requires a determination of whether the expresswarranty constituted a collateral undertaking excepted from the merger doctrine.

Since any consideration of whether the merger doctrine applies here necessarily requiresthat we go beyond the four corners of the complaint, the merger doctrine may not be consideredin ruling on a section 2-615 motion. Indeed, none of the cases cited by defendants involving thedoctrine of merger involved a section 2-615 motion to dismiss for failure to state a cause ofaction. Accepting plaintiffs' allegations as true, for purposes of section 2-615, we conclude thatthose allegations sufficiently state a cause of action for breach of express warranty.

Although a section 2-615 motion concerns itself solely with defects on the face of thecomplaint, a section 2-619 proceeding enables the court to dismiss the complaint afterconsidering issues of law or easily proved issues of fact. Yu v. Kobayashi, 281 Ill. App. 3d 489,492, 667 N.E.2d 106, 108 (1996). Section 2-619(a)(9), in particular, allows dismissal when "theclaim asserted * * * is barred by other affirmative matter avoiding the legal effect of or defeatingthe claim." 735 ILCS 5/619(a)(9)(West 1998). Our supreme court has acknowledged that thereis "some degree of overlap" between the two motions. Illinois Graphics Co. v. Nickum, 159 Ill.2d 469, 485, 639 N.E.2d 1282, 1290 (1994); see also AG Farms, Inc. v. American PremierUnderwriters, Inc., 296 Ill. App. 3d 684, 688, 695 N.E.2d 882, 886 (1998).

The term "affirmative matter" as used in section 2-619(a)(9) has been defined as a type ofdefense that either negates an alleged cause of action completely or refutes crucial conclusions oflaw or conclusions of material fact unsupported by allegations of specific fact contained in orinferred from the complaint. Bloomingdale State Bank v. Woodland Sales Co., 186 Ill. App. 3d227, 233, 542 N.E.2d 435, 439 (1989). We believe that the defendants' evocation of the mergerdoctrine, as a basis for its motion to dismiss, constitutes an affirmative matter that is outside theface of the complaint. Accordingly, this part of defendants' motion to dismiss should have beenbrought pursuant to section 2-619(a)(9), in that it requires that we consider this issue of law. Because, however, all of the relevant arguments were addressed by plaintiffs in their response todefendants' motion, plaintiffs were not prejudiced by the defendants' mislabeling of this part oftheir motion. Thus, we shall further consider defendants' contentions that the merger doctrinebars plaintiffs' complaint.

Under the doctrine of merger, all agreements between a buyer and seller are said to havemerged in the deed, and if reservations are not contained in that instrument, the doctrine ofmerger will prevent relief to the aggrieved vendee after receipt of the deed. Petersen, 76 Ill. 2d at38-39, 389 N.E.2d at 1157. The Petersen court described the merger doctrine as an acceptedprinciple of real estate law, similar to the doctrine of caveat emptor, which is based on reasonsfounded in antiquity. Under these accepted principles, the vendee took property at his risk.Petersen, 76 Ill. 2d at 38, 389 N.E.2d at 1157. The inconsistent application of the mergerdoctrine has been noted (see L. Berger, Merger by Deed-What Provisions of a Contract For TheSale of Land Survive The Closing?, 21 Real Est. L.J. 22, 23 (1992) ("courts use many differingtests or formulae to determine which provisions merge and which do not, and the results formany of the most common contract terms are all over the lot")) and the doctrine has been thesubject of criticism. See P. Teich, A Second Call for Abolition of the Rule of Merger by Deed, 71U. Det. Mercy L. Rev. 543, 568 (1994) ("It is understandable that there should be so muchdifference of opinion. The merger by deed rule actually implements a wide spectrum of theoriesof discharge. It is time the courts acknowledge this fact and end their effort to support amonolithic doctrine. The chaos surrounding the rule affects every real estate transaction takingplace daily in the United States. The merger rule should be abolished".) This court has recentlyacknowledged that modern courts do not favor the doctrine of merger. Krajcir v. Egidi, 305 Ill.App. 3d 613, 623, 712 N.E.2d 917, 924 (1999). Nonetheless, Illinois has not rejected thedoctrine. As noted earlier, however, the merger doctrine is subject to exceptions andqualifications.

As the Petersen court explained:

"In Illinois, however, certain exceptions to the merger doctrine have been created. Reasoning that the merger doctrine evolved solely to protect the security of landtitles, the Illinois courts have held that when the deed embraced and contained allof the subjects of the executory contract, the contract merged with the deed. However, an executory agreement for the performance of separate and distinctprovisions did not merge with the deed. The prior contract is superseded only asto such of its provisions as are covered by the conveyance made pursuant to itsterms."Petersen, 76 Ill. 2d at 39, 389 N.E.2d at 1157.

See also Daniels v. Anderson, 162 Ill. 2d 47, 63, 642 N.E.2d 128, 135 (1994); Harris Trust &Savings Bank v. Chicago Title & Trust Co., 84 Ill. App. 3d 280, 284, 405 N.E.2d 411, 415 (1980)(an executory agreement for performance of distinct and separate acts is not merged in asubsequent instrument executed in only part performance of its provisions, but remains in fullforce and effect as to provisions not performed); Krajcir v. Egidi, 305 Ill. App. 3d 613, 623, 712N.E.2d 917, 924 (1999) (since delivery of the deed does not fulfill these other obligations in thecontract, the contract is not merged into the deed and remains open for performance of suchterms). These separate and distinct provisions in an executory contract that do not merge withthe deed have been described as "collateral to and independent of the provisions in thesubsequent deed." Harris Trust and Savings Bank v. Chicago Title & Trust Co., 84 Ill. App. 3d at284, 405 N.E.2d at 415; Lanterman v. Edwards, 294 Ill. App. 3d 350, 353, 689 N.E.2d 1221,1223 (1998); Timothy Christian Schools v. Village of Western Springs, 285 Ill. App. 3d 949, 953,675 N.E.2d 168, 171 (1996); Fitton v. Barrington Realty Co., Inc., 273 Ill. App. 3d 1017, 1022,653 N.E.2d 1276, 1280 (1995). When a contract for the conveyance of land provides forperformance of these "other acts besides conveyance," it remains in effect until such provisionshave been fully performed. Trapp v. Gordon, 366 Ill. at 110, 7 N.E.2d at 873; Kellner v.Bartman, 250 Ill. App. 3d 1030, 1037, 620 N.E.2d 607, 611 (1993). Delivery of the deed has noeffect on and is irrelevant to these separate and distinct agreements contained in the salescontract. Therefore, we believe that the threshold issue in any case involving the merger doctrineas a defense is whether the contractual provision at issue is collateral to and independent of theprovisions in the subsequent deed; if so, there is no merger.

Our analysis begins with a look at the nature of the warranty contained in the contract. Generally, warranties as to quality, in comparison with requirements of conveyancing, touchupon aspects other than the conveyance itself and are incidental to the main purpose of the deed,which is to transfer good title. Lanterman, 294 Ill. App. 3d at 353, 689 N.E.2d at 1224; Rouse v.Brooks, 66 Ill. App. 3d 107, 110, 383 N.E.2d 666, 668 (1978).

Rouse v. Brooks, 66 Ill. App. 3d 107, 383 N.E.2d 666 (1978), was a case of firstimpression as to whether the merger doctrine applied to an express quality warranty made by aseller of a previously owned home as part of the sales contract. Previously, in Brownell v. QuinnHome Builders, 47 Ill. App. 2d 206, 208-09, 197 N.E.2d 721 (1964), the court had held that acovenant of a builder/vendor to convey a lot and construct a house thereon "in a neat andworkmanlike" manner did not merge into the deed since delivery of deed did not constituteperformance of this covenant because it was an undertaking collateral to and not part of theprimary purpose of the contract, which was to convey title to real estate. In Rouse, as here, thepurchase agreement not only provided for the conveyance of the property, but also containedexpress warranties as to the quality of the property and its improvements. The express warrantyat issue in Rouse provided that, among other things, all of the equipment in the house was in"good, proper, satisfactory and functional working order." Rouse, 66 Ill. App. 3d at 108, 383N.E.2d at 667. The court noted that most of the provisions in a land sales contract deal with themechanics and requirements of conveyancing which the deed conclusively settles, but thatquality warranties are independent of and collateral to the conveyance of title. Rouse, 66 Ill. App.3d at 110, 383 N.E.2d at 668. Such warranty provisions contained in the purchase agreementwere not satisfied by the acceptance of the deed and, therefore, did not merge in the deed. Rouse,66 Ill. App. 3d at 110, 383 N.E.2d at 668. As the court explained: "Warranties as to quality ***touch upon aspects other than the conveyance itself and are incidental to the main purpose of thedeed, which is to transfer good title." Rouse, 66 Ill. App. 3d at 110, 383 N.E.2d at 668; see alsoPetersen, 76 Ill. 2d at 41, 389 N.E.2d at1158 (noting that, if agreement had contained expresscovenants concerning the quality of construction, they would not have merged in the deed, butwould have continued as a collateral undertaking).

In Mallin v. Good, 93 Ill. App. 3d 843, 417 N.E.2d 858 (1981), the court recognized theavailability of a post-closing contract action. The court concluded that the representation in thecontract that "all heating, plumbing, electrical and air conditioning" would be in reasonableworking order at the time of closing was the equivalent of the express warranty of qualityinvolved in Rouse and, therefore, a collateral undertaking that was not performed by the deliveryof the deed and thus not merged into it. Mallin v. Good, 93 Ill. App. 3d at 847, 417 N.E.2d at861.

More recently, in Lanterman v. Edwards, 294 Ill. App. 3d 350, 689 N.E.2d 1221 (1998),the court held a warranty provision in a real estate sales agreement as to the quality of premises,namely, that the heating and air conditioning system would be in normal working condition attime of closing, did not merge with the deed upon delivery of the deed as such representation wasa collateral undertaking that was not performed by delivery of the deed.

The present case is similar to those cited above and, we believe, indistinguishable fromLanterman. Here the contract expressly warranted that the heating system was to be in operatingcondition at possession. Delivery of the deed would not constitute performance of this portion ofthe contract as it was incidental to the main purpose of the contract, which was the conveyance ofreal estate. Thus, the doctrine of merger does not apply to the warranty as to the condition, i.e.,quality, of the heating system.

Defendants' attempts here to distinguish Lanterman fail. Defendants note that Lantermaninvolved a latent defect, but this factor is totally irrelevant to the issues here. In fact, with respectto the issue of latent defects, the defendant in Mallin had contended that the doctrine of mergershould be relaxed only in the case of latent defects and not where plaintiffs discovered, or shouldhave discovered, any defects when they inspected the home before the closing. The Mallin courtexplained, however, that although our supreme court in Petersen had limited the application ofan implied warranty of habitability to latent defects, Petersen did not hold that the scope of theimplied warranty of habitability was coextensive with the concept of collateral agreements whichdo not merge in the deed. Mallin, 93 Ill. App. 3d at 847, 417 N.E.2d at 861. In any event, in theinstant case, whether the alleged defect here was latent or obvious, known or unknown, disclosedor undisclosed is irrelevant and of no import to the issue involved in this case, which is whetherthe alleged defects existed at the time of possession.

Courts have stated that whether and to what extent merger occurs is also a matter of theparties' intent as evidenced by the language of the instruments and surrounding circumstances.See, e.g., Daniels v. Anderson, 162 Ill. 2d 47, 642 N.E.2d 128 (1994). The parties disagree as tohow that concept applies here. In Daniels, the court explained that "[w]hether and to what extentthe contract merges into the deed is a matter of the parties' intent that the deed constitutes a fullperformance of the contract." (Emphasis added.) Daniels, 162 Ill. 2d at 64, 642 N.E.2d at 136. Thus, whether and to what extent a sales contract merges into a deed is, in fact, the samedetermination as whether and to what extent the contractual provisions at issue are separate anddistinct, and not covered by the conveyance.

The Daniels court concluded the circumstances there evidenced no merger, since the deeddid not mention the disputed provision contained in the contract, namely, the grant of aneasement. As the court in Daniels explained, "The creation of an easement in a contract is such aseparate and independent provision which, if not referred to in the deed, is not fulfilled bydelivery of the deed and remains in force until performed. [Citations.]" Daniels, 162 Ill. 2d at 63-64, 642 N.E.2d at 136. In other words, the contractual provision survived delivery of the deed. This analysis applies in the instant case.

The main purpose of the sales contract here was the conveyance of real estate. Theunambiguous language of the sales contract, however, additionally provides that the heatingsystem will be in operating condition at possession. This express warranty regarding the qualityof the heating system, if not referred to in the deed, is "collateral to and independent of theprovisions in the subsequent deed."⁽¹⁾ Such a separate and independent provision is not fulfilledby delivery of the deed and remains in full force until performed.

Defendants also cite Lanterman, notably the dissenting opinion, to further support theirtheory that the doctrine of merger bars plaintiffs' claim based upon the fact that plaintiffsinspected the property. In fact, the court in Lanterman explained that "[w]hether or not theplaintiffs exercised their contractual right to inspect the premises is of no consequence to thedefendants' contractual obligation to provide a heating and air-conditioning system in normalworking condition on the date of possession." Lanterman, 294 Ill. App. 3d at 353, 689 N.E.2d at1224. The points raised in the dissent regarding the contractual provisions in that case, includingthe "as is" provision, have no relevance here.

Defendants' have further contended, pursuant to section 2-619 of the Code, presumablysection 2-619(a)(9)(735 ILCS 5/2-619(a)(9)(West 1998)), that plaintiffs have "failed to state aclaim for breach of warranty *** because the furnace was in operating condition 'at possession,' i.e., the closing." The affirmative matter upon which defendants rely consists of an affidavit andthe report of an inspection obtained by plaintiffs. The sum and substance of defendants'argument is that the heating system was "in operating condition at possession." This ultimateissue - whether defendants performed their contractual obligations or breached the contract, i.e.,whether the operating system was or was not in operating condition at the time of possession - isfor the trier of fact, not the court, to determine.

Defendants also argue that plaintiffs made "admissions" that the heating system was inoperating condition. In support of this argument, defendants make two incorrect assertions: (1)that the inspector's opinions as to the heating system constituted admissions, and (2) that theinspector was plaintiffs' agent and his "admissions" are binding upon the plaintiffs. We find bothassertions meritless. The fact that the inspector did not identify the particular defect plaintiffsnow allege was a breach of the express warranty does not mean that the defect did not exist atpossession. That the inspector suggested a safety inspection be performed by the local gas utilitycompany is irrelevant to the issues here regarding breach of contract. Defendants' insinuationthat this recommendation to have a safety inspection created a duty on the part of the plaintiffsthat would excuse the defendants from any defect, in existence at the time of possession, isbaseless.

Equally baseless is defendants' assertion that the inspector's statements that "the furnacewas tested using normal operating controls and functioned properly at the time of inspection"(emphasis added) and that "the carbon monoxide levels evident on the date of inspection werewithin normal acceptable levels" (emphasis added) constitute admissions that the heating systemwas in operating condition at possession which are binding upon the plaintiffs. First, these areopinions, not undisputed facts and certainly not admissions. The inspector himself stated that thelocal gas utility company was the final authority. More importantly, however, how the furnacefunctioned and what the carbon monoxide levels were at a certain point in time are differentissues from the allegations here: that the furnace "posed a threat to health and safety due to a riskof excessive carbon monoxide accumulation within the residence." (Emphasis added.)

In their failed attempt to distinguish Lanterman by arguing the alleged defect here wasnot latent, as was previously discussed, defendants pointed to the fact that the inspectorspecifically noted the furnace was "[l]ocated at the basement bathroom utility closet." Ifanything, this evidence is actually favorable to plaintiffs' claim that the alleged defect was presentat the time plaintiffs took possession since the inspection took place on May 7, 1999, and nothingchanged with respect to the location of the furnace between that time and the closing date ofJuly16, 1999. Whether this alleged defect constitutes a breach of the express warranty, however,is a factual question for the trier of fact.

In conclusion, defendants' express warranty in the contract as to the quality of, amongother things, the heating system is a collateral undertaking not fulfilled by the delivery of thedeed. The trial court erroneously applied the doctrine of merger when it granted defendants' motion to dismiss. Plaintiffs' complaint is not barred by the merger doctrine and should not havebeen dismissed.

Reversed and remanded.

CAMPBELL, P.J., and O'BRIEN, J., concur.

1. ¹The record contains no copy of the deed. Nevertheless, a deed is an instrument in writingwhich conveys an interest in land and its main function is to pass a title to land. It is wellestablished that the main purpose of a deed is conveyance, i.e., to transfer good title. See, e.g.,Lanterman v. Edwards, 294 Ill. App. 3d 350, 353, 689 N.E.2d 1221, 1224 (1998). Defendantshave not contended that this was not the main purpose of the deed here nor have they shown thatthe deed referred, in any way, to the contractual provisions at issue.