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Thorp v. Gosselin Hotel Co.

NOVEMBER 22, 1965.

DONALD THORP, PLAINTIFF,

v.

GOSSELIN HOTEL COMPANY, AN ILLINOIS CORPORATION, AURORA ISLAND HOTEL COMPANY, AN ILLINOIS CORPORATION, AND ROBERT W. ROBINSON, ET AL., DEFENDANTS. ROBERT W. ROBINSON, COUNTER-PLAINTIFF, APPELLANT,

v.

DONALD THORP, COUNTER-DEFENDANT, APPELLEE.



Appeal from the Circuit Court, 16th Judicial Circuit, Kane County; the Hon. NEIL E. MAHONEY, Judge, presiding. Reversed and remanded. MR. JUSTICE MORAN DELIVERED THE OPINION OF THE COURT.

Counterplaintiff, Robert W. Robinson, appeals from the trial court's judgment order disallowing his counterclaim for real estate broker's commission of $10,000 against Donald Thorp, counterdefendant. Thorp had sued two hotel companies, an attorney and Robinson for fraud and deceit in inducing Thorp to enter contracts to purchase a hotel building from one corporate defendant, forty rooms of furniture from the other corporate defendant and to pay Robinson a brokerage commission of $10,000. Thorp asked the court to declare the contracts null and void and order the return of his earnest money deposit held by the attorney.

The attorney was dismissed before trial, and after a trial on the merits the trial court held in favor of the corporate defendants in the original case and in favor of plaintiff and counterdefendant Thorp on the counterclaim. Plaintiff did not appeal; however, Robinson appeals from the denial of his counterclaim.

On March 11, 1963, Thorp, who described himself as a real estate investor, entered into a contract to purchase the Aurora Hotel in downtown Aurora for $175,000, together with furniture for forty hotel rooms from the Leland Hotel for $60,000. He paid $5,000 down and paid another $5,000 on April 1, 1963. The contract provided for the final $165,000 for the hotel to be paid by May 1, 1963.

Thorp had been approached about purchasing the hotel in January of 1962 by Robinson, and in January of 1963, Robinson mentioned it to him again. The asking price was reported to be $175,000 net to the sellers. In February, 1963, Thorp made a formal written offer to purchase the property for $175,000, which was to include the broker's commission. After this offer was refused he made a second offer of $175,000 net, which was not to include the broker's commission. This was accepted and the contract of March 11, 1963, was prepared and signed and the earnest money was paid.

Subsequently, on March 19, 1963, Thorp entered into a written agreement to pay a broker's commission of $10,000 to Robinson for his services in the transaction.

The March 11, 1963, contract was not made contingent upon Thorp obtaining financing and there was testimony that he stated at that time he already had financing committed.

During March, April and May of 1963, Thorp made certain attempts to obtain financing but without success. He finally defaulted on the purchase contract.

During the trial, Thorp testified that Robinson had acted as his broker in previous transactions; that Robinson had several listings on properties owned by Thorp about which they conferred together regularly; that in January of 1962, when they talked about the hotel property, Robinson told him a member of the Gosselin family had said the net profits of the hotel were around $23,000. Thorp further testified that, prior to entering into the purchase contract, Ward Gosselin told him the profits for two or three years were $23,000 per year. The property had been appraised at about $250,000 or $300,000.

Prior to March 11, 1963, Thorp had never inspected the hotel except to go through the lobby. He had been advised that the plumbing was bad, that the plaster on some of the walls was crumbling and falling, and that there had been a falling out between the various members of the Gosselin family. He stated that Robinson told him that he did not care what the net earnings of the hotel had been because if the hotel could support the three Gosselin families, it could certainly support one family, and that under new management the hotel could earn substantially more than it had in the past.

On cross-examination, Thorp admitted that he had used the figure of $22,000, rather than $23,000 at the discovery deposition; that he had stated at the deposition that he did not recall asking for a statement of earnings of the hotel prior to March 11, 1963, and that he did not recall hearing the Gosselins say anything about net earnings before March 11, 1963.

Frank Muneio, an officer of one of the lending institutions to which Thorp applied for a loan, testified that Thorp told him the purchase price was $250,000, and the net earnings were approximately $5,000.

William Ward Gosselin testified that no net earnings figures were mentioned in the negotiations and Thorp never asked for any such figures. He thought Thorp was acting for another undisclosed purchaser because of his lack of interest in the earnings of the hotel. An offer was made to Thorp that he could look at the hotel books and records, but he did not avail himself of the offer.

It further appears that on May 4, 1963, Thorp received a letter from John Gosselin stating the income to be about $5,000, and later on or about May 15, 1963, at Thorp's request, Robinson wrote a letter. In this letter he stated that in the first part of 1963, John Gosselin gave him various figures including the figure of $21,311.00 as "new" income per year from 1960 to date.

Thorp admitted several times during his testimony that he had understood Robinson to have been only relaying net income ...


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