APPEAL from the Circuit Court of Cook County; the Hon. WALTER
P. DAHL, Judge, presiding.
MR. PRESIDING JUSTICE EGAN DELIVERED THE OPINION OF THE COURT:
The plaintiffs, Richard H. Farrell, Jr., and Kristi L. Farrell, filed a class action complaint against Lincoln National Bank (hereafter the Bank), Bankers Consultants Corporation, Bankers Consultants Corporation-North and Mortgage Service Corporation (hereafter the Brokers), and Richard Dryer and Craig L. Opper. A summons was never served on Dryer.
On August 18, 1971, the court dismissed the complaint against the Bank as a class suit. The plaintiffs then filed an amended complaint, and on January 17, 1972, the court dismissed the entire complaint as to Craig L. Opper and part of the complaint as to the Brokers. Both sides filed motions for summary judgment and on June 14, 1972, the court allowed the motion of the defendants and denied the plaintiffs' motion. The plaintiffs appeal from the order dismissing their class action complaint, the order dismissing Opper, the order granting the defendants' motion for summary judgment and the order denying the plaintiffs' motion for summary judgment.
The record consists of the pleadings, affidavits, depositions, exhibits and answers to interrogatories. It discloses the following:
On January 12, 1966, the plaintiffs had borrowed $17,900 from Home Federal Savings & Loan Association of Chicago and had given a mortgage on their residence as security. In April, 1970, the plaintiffs borrowed $3500 from Harris Mortgage Loan Corporation secured by a junior mortgage on their residence. The Harris mortgage loan was for a period of 30 months payable in monthly installments of $148.14 including interest at an annual rate of 19.5%.
On January 18, 1971, Richard Dryer, representing Bankers Consultants Corporation, called the plaintiffs. He told them that he knew that they had a loan with Harris Loan Company, that he could secure a loan for them through a bank and that they would be paying the bank interest rates which were much lower than the rates they were paying to Harris, thus saving a few hundred dollars on the interest. The plaintiffs testified in their depositions that Dryer made it clear that the bank would pay their fee and that the plaintiffs would not be required to pay them anything.
They went to the officers of Bankers Consultants Corporation at 10400 Higgins Road in Rosemont and met the defendant Craig L. Opper, who explained the advantages of consolidating their debts and paying them off with a single bank loan. The plaintiffs signed a "Retention Authorization" by the terms of which the plaintiffs authorized Bankers Consultants to negotiate a bank loan in the amount of $4300 "or such other amount as might be mutually satisfactory"; the loan was to be negotiated at a State or national bank only; the net proceeds of the loan after payment of costs and "the fee of Bankers Consultants Corporation" would be $3775. The loan payments, including credit life insurance and all costs, were not to exceed $118.61 per month and the term of the loan was not to exceed 4 years. The collateral was to consist of a trust deed on the plaintiffs' residence. The agreement also provided:
"In the event that the said loan is successfully negotiated for and is accepted by the undersigned, the undersigned agrees to pay to Bankers Consultants Corporation an amount equal to $525 to cover its fee and all costs which it will incur. * * * Bankers Consultants Corporation is authorized to cause the bank to disburse said amount to the order of Bankers Consultants Corporation from the principal amount of the loan at the same time as the net proceeds of the loan are paid to the undersigned.
Unless a loan commitment, in accordance with the above terms, is obtained by Bankers Consultants Corporation and is accepted, there shall be no obligation on the part of the undersigned. The undersigned acknowledges that he has signed this authorization after carefully considering the terms hereof and that he has received a copy thereof."
Mrs. Farrell testified that when Opper mentioned a $500 service charge she was "kind of taken aback for a few minutes because the man on the phone said there would be no charge at all." Opper explained that the $500 would be part of the loan and that the Bank would be lending them the money to pay for the service charge. Mr. Farrell testified:
"I couldn't believe that somebody would go to all this trouble for nothing, so then it came up with his fee would be $525.
First he said, $500 then he corrected himself and said $525.
Now, I went in there thinking there was no charge. He convinced me this was a way out of debt. I could get my head above water and if I could stay clean for five years, I would be out of debt, so then he gave us this retention authorization form, I asked him, `If we sign this, does this mean we owe you the $525 whether or not we can get the loan or not,' and he stated, `If you don't get the loan you don't owe us a thing, but if on the other hand, I go ahead and do your credit check and everything like that and you change your mind I can't do this for nothing.'
He didn't say, `You would have to pay me.' He says, `I can't do it for nothing, so if you don't want the loan or you are not interested in it, don't sign it,' so my wife and I put our heads together for a minute and we decided that we were at the end of the rope so we better give it a try, so we signed it."
On February 12, 1971, Bankers Consultants negotiated a loan on behalf of the plaintiffs with Lincoln National Bank. The loan was evidenced by an installment note in the total sum of $5693.28 payable in 48 monthly installments of $118.61 including certain "add-on" finance charges at a purported annual percentage rate of 19.75%. The loan was secured by a trust deed on the plaintiffs' residence.
Lincoln National delivered to the plaintiffs a document purporting to be a full disclosure of information concerning the particulars of the loan as required by the Federal Truth-In-Lending Act (15 U.S.C. § 1601 et seq. (1970)) and Regulation Z thereunder as well as the Illinois ...