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O'brien v. Kawazoye

APRIL 11, 1975.




APPEAL from the Circuit Court of Cook County; the Hon. SHELDON BROWN, Judge, presiding.


This cause of action arises out of a suit for specific performance of a real estate contract entered into between plaintiff-purchaser (O'Brien) and defendant-sellers. Plaintiff amended his claim for specific performance to one for damages and then moved for summary judgment. Kaplan and Associates (Kaplan) intervened, seeking a sales commission pursuant to an exclusive listing agreement and moved also for summary judgment. Both motions were granted, and this appeal challenges the propriety of these rulings. The facts are essentially as follows.

On May 9, 1972, defendants entered into an exclusive listing sales agreement with Kaplan for a period of 60 days. During this interval, O'Brien contacted Kaplan and made an offer to purchase the property in question for $50,000. This was not acceptable to defendant because he had to clear certain building code violations at a cost of some $3,000. Accordingly, O'Brien's offer was increased to $53,000 and a contract to that effect was drafted on July 29, 1972. This was a standard form contract for the sale of residential property containing, inter alia, the following provisions:

"4. This contract is subject to the condition that Purchaser be able to procure within 30 days a firm commitment for a loan to be secured by a mortgage or trust deed on the real estate in the amount of $43,000, or such lesser sum as Purchaser accepts, with interest not to exceed 8 1/2% a year to be amortized over 20 years, the commission and service charges for such loan not to exceed 1%. If, after making every reasonable effort, Purchaser is unable to procure such commitment within the time specified herein and so notified Seller thereof within that time, this contract shall become null and void and all earnest money shall be returned to Purchaser; provided that if Seller, at his option, within a like period of time following Purchaser's notice, procures for Purchaser such a commitment or notifies Purchaser that Seller will accept a purchase money mortgage upon the same terms, this contract shall remain in full force and effect.

5. The time of closing shall be on September 1, 1972, or 20 days after notice that financing has been procured if above paragraph 4 is operative, or on the date, if any, to which such time is extended by reason of paragraph 2 of the Conditions and Stipulations [relating to objections to marketability of title] hereafter becoming operative (whichever date is later), unless subsequently mutually agreed otherwise, at the office of lending agency or of the mortgage lender, if any, provided title is shown to be good and is accepted by Purchaser."

There were certain additional conditions and stipulations, including the following:

"7. Time is of the essence of this contract.

8. All notices herein required shall be in writing and shall be served on the parties at the addresses following their signatures. The mailing of a notice by registered or certified mail, return receipt requested, shall be sufficient service."

The contract was signed only by O'Brien, whose address followed his signature. Thereafter, on August 21, 1972, a rider was executed containing only a warranty that, to the best of sellers' knowledge, there were then no existing building code violations. The rider was signed by all parties to the contract.

O'Brien did not notify defendants of his inability to obtain a mortgage commitment or to terminate the contract, as provided in paragraph 4. In fact, no notice of any kind was given defendants until O'Brien made a demand on October 14, 1972 that defendants convey the property to him. Furthermore, although the July 29 portion of the contract provided that earnest money of $5,300 had been paid, it appears from O'Brien's Exhibit 2 that the $5,300 was not deposited with Kaplan until October 14, 1972, the date on which O'Brien made demand for conveyance of the property.

While defendants acknowledged receipt on October 14, 1972, of the written demand to convey, they countered that during the first week of September, 1972, O'Brien was notified to appear at Chicago Title and Trust Company on September 18, 1972, to set up an escrow to close the transaction, and he was informed that his failure to appear would cause defendants to treat the contract as terminated. During his deposition and in answers to interrogatories, defendant Robert Kawazoye stated he delivered this notice to Kaplan. O'Brien stated he never received any such notification. Condition and Stipulation 8 of the contract, however, provided for service of notice on O'Brien at the address following his signature in the contract. His address, which appears on the July 29 portion of the contract, differs from that of Kaplan.

O'Brien's demand of October 14 for conveyance called for closing the transaction on November 14, 1972. Defendants did not appear and deliver the warranty deed, as called for in the contract, and O'Brien then filed a complaint for specific performance of the August 21, 1972 contract. The court heard evidence ex parte and determined that a valid contract existed between the parties and ordered defendants to perform in accordance with its terms.

Within 30 days after this judgment order was entered, O'Brien learned that defendants had conveyed the subject property to third parties on December 16, 1972. O'Brien immediately filed a post-trial motion to vacate the judgment, which was granted, and he was given leave to amend his complaint. Thereafter, he filed his verified amended complaint, seeking a trust on all sums received by defendants in excess of the contract purchase price of $53,000. Defendant Robert Kawazoye filed a verified answer, which admitted that on August 21, 1972, O'Brien and defendants entered into a written agreement for the purchase and sale of the property in question for $53,000, but denied that O'Brien had performed all conditions precedent to the contract in that he had failed to obtain financing within 30 days and had breached the contract by not appearing as requested to close the transaction on September 18, 1972.

In his deposition, Robert Kawazoye admitted that during the first week in September another purchaser was sought, and on September 20, 1972, he executed another written agreement to sell the same property for $55,000 ...

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