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Klibanow & Co. v. Shafer

NOVEMBER 4, 1971.




APPEAL from the Circuit Court of Cook County; the Hon. RICHARD HARWOOD, Judge, presiding.


The defendants, controlling beneficiaries under a land trust, appeal from a judgment for $7,500 entered in favor of the plaintiff, a real estate broker.

The defendants' main contentions are that the plaintiff did not produce a purchaser who was ready, willing and able to buy their property on their terms, and that the trial court erred in refusing to admit parol evidence to explain ambiguous statements in two documents introduced into evidence by the plaintiff.

With the exception of William Levin, the plaintiff's salesman, all the principals to the transaction were lawyers. The three defendants, Erwin Shafer, Arthur Bogeaus and Walter Sampson were members of the Illinois bar and the prospective purchaser, Gerald Kaufman, was a member of the bar of the State of New York. At times, Kaufman was represented by Martin Gordon, a Chicago attorney.

Levin and the defendants began discussing the sale of the property in 1961 or 1962. From time to time he showed it to potential buyers. In the summer of 1965 he submitted the property to Kaufman who was engaged in the hotel business in Chicago; Kaufman was interested and Levin arranged for him to meet the defendants. At this meeting further details were supplied, a price of $770,000 to $775,000 was quoted and Kaufman said he wanted to buy the property. He was unfamiliar with Illinois land trusts and a second meeting was arranged to give him an opportunity to check into the legal aspects of such trusts. The principals met again on August 19, 1965, in the land trust department of the Chicago Title and Trust Company, Chicago. On August 20th they returned to the Title Company where an escrow agreement was drawn and executed. The agreement was signed by Shafer in behalf of the beneficiaries and by Gordon in behalf of Kaufman. No question is raised as to Gordon's authority.

The agreement, entitled "Escrow Instructions," was on a standard printed form customarily furnished by the Title Company. Inserted into the form were typewritten provisions which stated that Shafer would deposit with the Title Company a trustee's deed conveying the property to Kaufman; that Kaufman would deposit $10,000 and would, on or before October 1, 1965, deposit an additional $140,000 and a second part purchase money mortgage and note payable on or before March 1, 1966, in the amount of $118,837.62. Further typed provisions were for the issuance of a $772,000 title insurance policy; the purchase of $295.90 in revenue stamps to be affixed to the trustee's deed, and the payment by the escrowee of $7,500 to the plaintiff as brokerage commission.

The agreement was entered into on a Friday afternoon and Kaufman promised to make his initial $10,000 deposit the following Monday morning, August 23rd. The defendants acquiesced and the agreement was signed. When the group left the offices of the Title Company, Shafer said to Levin, "Well, Bill, we finally made it, the deal, congratulations. You have earned a commission at last."

The commission was never paid. On August 23rd Kaufman telephoned Levin and informed him of a telephone call he received that morning from Shafer. Levin testified that he then called Shafer and repeated what Kaufman had said: that Shafer told Kaufman not to deposit the $10,000. When Levin asked why he did this Shafer replied the deal was not satisfactory to him and would be cancelled unless changes were made in conformity with his wishes. Arrangements were made for another meeting.

At this meeting the defendants, according to Levin's testimony, insisted that the escrow agreement be altered. They refused to prorate as of October 1, 1965, and because of tax considerations wanted to change the payment dates set out in the agreement. Kaufman would not consent to the proposed changes and the deal fell through.

Kaufman, who was called as a witness by both the plaintiff and the defendants, testified that he did not deposit the $10,000 because of a conversation he had with one of the defendants on August 23rd; in this conversation it was mutually agreed "to abandon the deal for one reason or another." He testified that it was his intention to close the deal on August 20th. Conversely, he testified that he was not ready, willing and able to close the deal on that date. He also stated that he was willing to close but his ability to do so rested on either raising the money or getting a new first mortgage of $656,000 or $657,000. Contrariwise, he stated that the total purchase price consisted of the existing first mortgage [$525,000] plus the sums called for in the escrow agreement: $10,000, $140,000 and $118,837.62.

Shafer testified as the plaintiff's witness under section 60 of the Civil Practice Act (Ill. Rev. Stat. 1967, ch. 110) and he also testified in his own behalf. He said the escrow agreement was intended to be a memorandum of the offer made by the owners of the property and that Levin knew it was only an offer. He conceded that Kaufman was ready and willing to purchase the property and was sufficiently solvent to do so. He affirmed saying in his discovery deposition that Kaufman had "tremendous resources" and could, if he wanted to, pay for the property in cash out of his own pocket.

The defendants' attorney asked Kaufman and Shafer questions concerning the financial details of the purchase, the size of the contemplated first mortgage, their understanding of the escrow agreement, and their conversations with Levin about these subjects. Objections to the questions were sustained. The court ruled that the agreement of August 20th was a contract and that a written contract could not be modified or explained by parol evidence. An offer of proof was made that Kaufman, if permitted to answer the questions, would testify that: at a meeting held in his office subsequent to August 23rd he told the defendants, in the presence of Levin, of his and Levin's attempt to obtain a $650,000 mortgage and their failure to do so because the sale price was $772,000 and that the defendants were requested to obtain a $650,000 mortgage (based on their cost price of $900,000) and to execute it individually but they refused. Another offer of proof was made that Shafer would testify Levin informed him of the problem he was having in getting a $650,000 mortgage for Kaufman and told him a condition to the completion of the transaction was for the three beneficial interest holders to personally execute a first mortgage; Shafer advised Levin that under no circumstances would this be done.

• 1, 2 A real estate broker ordinarily earns his commission by producing a buyer who is ready, willing and able to purchase the property on the seller's terms. (Nardi, Pain & Podolsky v. Vignola Furniture Co. (1967), 80 Ill. App.2d 220, 224 N.E.2d 649.) This is true even though the seller refuses to contract with the buyer. 12 Am.Jur.2d, Brokers, sec. 183. When the seller approves the buyer or enters into a contract with him, his readiness, willingness and ability are no longer open to question and the broker's right to compensation accrues whether or not the sale is completed. Greenwald v. Marcus (1954), 3 Ill. App.2d 495, 123 N.E.2d 139.

The defendants argue that they had no binding contract with Kaufman; that the escrow agreement was conditional and was directive to the escrowee; that the failure of Kaufman to deposit the $10,000 indicated that he did not accept the terms and conditions they attached to ...

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