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Comm v. Goodman

JULY 21, 1972.




APPEAL from the Circuit Court of Cook County; the Hon. JOHN DALY, Judge, presiding.


At the conclusion of a bench trial, the court entered judgment in favor of plaintiff on both counts of a two count complaint for architectural services; $2514.42 was awarded on Count I and $12,500 on Count II. Defendant has appealed from those judgments contending: (1) that the court erred in not sustaining his motion to strike and dismiss; (2) the Statute of Frauds is a complete defense to the action; (3) there was no agreement for future architectural services; (4) the court erred in admitting evidence to support plaintiff's theory that he could recover on an implied contract; (5) the court erred in assessing plaintiff's damages on Count II; and (6) the judgment of the court on Count II is contrary to the manifest weight of the evidence. On his cross-appeal, plaintiff contends: (1) that the court erred in not allowing him to introduce evidence relating to facts which arose subsequent to the date upon which this suit was filed; and (2) the court erred in denying him recovery for the full amount of the profit which he would have earned had he been allowed to fully perform his alleged contract with defendant.

Plaintiff, an architect and developer, had experience in both the architecture and development of various kinds of projects. Defendant was a real estate developer, with limited experience. Generally, the task of a developer is to complete the exploratory work on a project, determine its requirements and, if an apartment project is contemplated, the number, mix, size and appurtenances of the apartments must also be determined. This information is then given to the architect who develops the preliminary, working, mechanical and structural drawings. The architect also takes part in the supervision and general management of the project.

Through a mutual acquaintance, plaintiff met defendant sometime in 1964. They went to Joliet for the purpose of viewing a hotel property which defendant was thinking of developing. Although defendant testified that it was not until 1965 that he and plaintiff discussed the site of the old St. Joseph Hospital, which had been abandoned when the hospital moved to new quarters, plaintiff testified that they discussed the site several times during 1964, the first time being when they went to view the hotel property.

Early in 1965 plaintiff and defendant met and agreed upon the soundness of the St. Joseph Hospital project. Plaintiff testified that at that meeting defendant said, "as a result of [plaintiff's] aid in this development, that [plaintiff] could participate at any time in the equity position going further down the road when [plaintiff] wished to." Defendant also testified that any talk of a partnership relationship related to projects other than that at the hospital site. Further, defendant testified that he only consulted plaintiff to see if he had any idea about the possible development of the hospital property.

Plaintiff's version of his activities with respect to the development indicates that his role was more than that of a consultant. He testified that he did the developmental work on the project. He visited housing facilities in the area, determined the rental market, vacancy rate and rentals and in looking at comparable apartment units he determined the appurtenances which were offered with those units. In general he determined what the site should contain. He prepared a projection of operating expenses by determining the expected real estate tax, utility expense, janitorial expense, withholding tax and other factors. Plaintiff attended various meetings with a former official of Will County, an attorney who was experienced in F.H.A. matters and a mortgage broker. As a result of meetings with the mortgage broker an application was made to the F.H.A. That application was approved in the amount of $1,800,000, but it was later cancelled by the F.H.A. These developmental services were valued at $15,000 by plaintiff and $10,000 by a real estate appraiser and consultant called upon to testify by plaintiff.

During March, April and May of 1965 several more discussions of the project were held and on June 17, 1965, plaintiff sent defendant the following letter.

"As you requested, this letter will confirm the purposes of our impending meeting on next Monday.

In the many months of our relationship you have always assured me of at least the complete architecture that could result as a result of the time I have spent. In addition we also have talked of promotional or partnership relationships. Thus far no money has changed hands between ourselves mutually in accord, and the work involved to date for my office has been my time and knowledge.

Our discussion Monday will be toward cementing a relationship that can be put in writing. Probably the eventual relationship will be contingent upon the project proceeding. Therefore in order to limit your exposure in the event the project should fail our contingent fee will be on the basis of the direct personnel expense plus overhead."

At the meeting referred to in the above letter defendant told plaintiff, "It's time to take the next step. We have to take the next step, but I want to limit my liability in the event for some reason it doesn't proceed past the next step." (The next step was the submittal of preliminary plans to the F.H.A. and the securing of a credit letter.) Defendant further stated, "I want to minimize my exposure in the event we don't go ahead. Therefore, I want to know how much it's going to cost for this expenditure, and I think it should be at your cost." Plaintiff responded, "Fine, it will be at my cost because I don't want to create a hardship for you. It will be at my office cost, cost plus 25 percent, which doesn't include any profit, plus duplication. We will not be able to spell out any final percentage fee, since we don't know at this point." Plaintiff testified that it was agreed that all of the terms of the contract were to be as in the standard American Institute of Architects B 131 contract. The only term left open was the percentage of the fee which was to be five percent if conventional financing was obtained and six percent if financing was made through the F.H.A. Plaintiff further indicated that the architectural fee was to be his compensation for the developmental work. Defendant, however, testified that he never discussed the architectural fee with plaintiff.

Up until the time of the meeting plaintiff had not drawn the preliminary design but his staff was oriented to the project and immediately after the meeting the staff was instructed to prepare the preliminary submittals. A survey, which defendant instructed plaintiff to order, was made and delivered to defendant.

On June 24, 1965 plaintiff sent the following letter to defendant.

"In accordance with our conference Monday and the verbal agreement that followed, our office has begun study of the site which will lead to a completed design and preliminary plan submittal. This preliminary plan will be suitable for mortgage submittal to the FHA as well as a conventional lender and will describe 144 apartments and their relations both horizontal and vertical to the site. Our fee for this plan will be on the basis of direct personnel expense plus 25% for overhead and will not exceed $2,500.00. When the project proceeds this amount will apply within the basic fee we ultimately agree ...

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