Appeal from the Municipal Court of Chicago, First Municipal
District of the Circuit Court of Cook County; the Hon. WARREN J.
McCAFFREY, Judge, presiding. Reversed and remanded with
MR. PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT.
Plaintiffs appeal from a judgment entered in favor of the defendants in an action to recover an earnest money deposit of $1,000 made by the plaintiffs with the defendants under a contract for the purchase of real estate. The case was tried before the court without a jury. The facts are these.
On September 12, 1964, plaintiffs and defendants entered into a written contract whereby the plaintiffs agreed to purchase from the defendants, property located at 1814 Main Street, Evanston, Illinois, for the price of $21,500. A deposit of $1,000 was given by plaintiffs to defendants, pursuant to the contract. The contract was partly handwritten and partly printed, and was labeled "Offer to Buy Real Estate." The Offer to Buy Real Estate provided in part as follows:
"Cash to be paid on closing of deal $20,500.00
"Balance to be paid as follows: $3,500.00 cash, and balance from proceeds of 1st mtge. to be obtained by purchaser."
In longhand the contract contained the following:
"This contract is subject to purchaser or seller to obtain a 1st mtge. loan in the amount of $17,000 at interest rate not to exceed 5 3/4% for a period not less than 20 years. If such loan cannot be obtained within 10 days from date hereof the earnest money is to be returned to the purchaser and this contract will be null and void."
In the printed portion of the Offer to Buy Real Estate there appeared the following sentence:
"But if the undersigned defaults in this contract, the deposit is at your option to be forfeited, as liquidated damages, first paying the real estate broker's commission and expenses incurred, and rendering the balance to you, and the contract shall become null and void."
No real estate broker was involved in this transaction. Clara Western held title and was the wife of Cedric Western. The plaintiff, Thornton Stearns, was advised by Cedric Western of an existing mortgage on the property held by the First Federal Savings and Loan Association of Wilmette, and that that association had appraised it for maximum mortgage purposes. Thornton Stearns, the plaintiff, contacted the First Federal Savings and Loan Association of Wilmette two days after the signing of the contract and sought a $17,000 mortgage at the rate of 5 3/4% for 20 years. This application was rejected by that savings and loan association. Mr. Stearns then made a written application to the Bell Savings and Loan Association for a $17,000 mortgage loan on the property, but that association, likewise, rejected the application. Cedric Western then advised Thornton Stearns to try First National Bank and Trust Company of Evanston. Application was made at that bank by Stearns and the loan was refused. Stearns then called the defendant, Cedric Western, on the Friday following the date of the contract and advised him that he (Stearns) had been turned down three times and was unable to get the mortgage funds. On September 22, 1964, being ten days after the execution of the agreement, Stearns wrote a letter to the defendants advising them that the plaintiffs were unable to obtain a $17,000 mortgage loan and that the contract was, by its terms, null and void. He also advised the defendants they were at liberty to deal with anyone else and requested the return of the earnest money deposited. At approximately 1:00 p.m. on September 22, 1964, after the plaintiff Stearns had mailed the above letter requesting the return of the deposit money, the defendant, Cedric Western, delivered to Mr. Stearns the following letter:
"5710 N. Western Ave., Chicago 45, Illinois.
Mr. Thornton B. Stearns, 7731 N. Marshfield, Chicago 26, Illinois. Dear Mr. Stearns:
Property: 1814 Main Street, Evanston, Illinois. _______________________________________________
I hereby offer you a mortgage loan on the following terms:
2. Interest rate: 5 3/4% (five and ...