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Cole v. Brundage





APPEAL from the Circuit Court of Cook County; the Hon. REGINALD J. HOLZER, Judge, presiding.


The plaintiff, Robert M. Cole, commenced this action for a broker's commission arising out of the sale of the La Salle Hotel by the defendant Avery Brundage (hereinafter referred to as Brundage) to the defendant Samuel Schulman (hereinafter referred to as Schulman) on November 4, 1970. *fn1 After a lengthy trial the jury returned a verdict in the amount of $133,500 against each defendant. In response to special interrogatories submitted by Brundage, the jury found that an implied brokerage contract existed between plaintiff and each of the two defendants. The trial court entered judgments on these verdicts, thus giving rise to the instant appeal by both Brundage and Schulman.

The defendants were represented by separate firms of attorneys and each of them pursued separate although partially overlapping defenses. Consequently, while the issues raised on appeal are distinct, they retain common denominators. Brundage contends that the trial court erred in denying his motion for a judgment notwithstanding the verdict because of the insufficiency of the evidence as to (1) the creation of any implied brokerage contract between the plaintiff and himself or (2) the creation of an implied dual brokerage arrangement whereby plaintiff could have represented both him and Schulman. Schulman contends that (1) a buyer of real estate customarily is not responsible for a broker's commission in the absence of a special agreement and the record is devoid of any evidence indicating that he had a special agreement with plaintiff; (2) plaintiff is not entitled to collect a commission from both Brundage (seller) and himself (buyer) due to the plaintiff's failure to disclose his purported dual agency; and (3) plaintiff failed to prove a necessary element of an implied contract, namely, that he (Schulman) was cognizant that the plaintiff expected to be compensated by him for his efforts.

Besides the above contentions pertaining to plaintiff's brokerage commission, both defendants maintain that the trial court erroneously instructed the jury as to the law governing the case. In addition Brundage contends that the trial court erred in (1) admitting certain testimony concerning custom and usage in the payment of brokerage commissions, (2) refusing to admit a letter written by another broker to plaintiff, and (3) failing to order plaintiff to produce certain memoranda for Brundage's inspection.

Before delving into the pertinent facts surrounding the instant controversy, it is important to present a biographical sketch with regard to the parties in interest. Plaintiff has been a licensed real estate broker in Chicago since 1934. During this time frame, he has dealt almost exclusively in commercial and industrial property and has had extensive experience with complicated and expensive properties. Brundage, who died on May 8, 1975, during the pendency of this appeal, had been in the construction business for 30 years. He had been a real estate broker but acted solely in management of buildings. At the time of the trial, his occupation was confined to the management of his own personal affairs, which included the ownership and operation of the La Salle Hotel. He also served as president of the International Olympic Committee from 1952 to 1972. Schulman also has had extensive real estate experience which encompassed the ownership, construction and operation of a number of buildings in Chicago.

• 1 A review of the record reveals that it is replete with conflicting testimony. However, in considering whether either or both defendants were entitled to a directed verdict or a judgment n.o.v., we must keep in mind that the party resisting said motions is entitled to the benefit of all the evidence favorable to him. The oft cited rule is that a defendant is entitled to a directed verdict or a judgment n.o.v. when all of the evidence, viewed in its aspect most favorable to the plaintiff, so overwhelmingly favors the defendant that no contrary verdict based on such evidence could ever stand. (E.g., Risse v. Woodard (7th Cir. 1974), 491 F.2d 1170, 1171; Schmidt v. Archer Iron Works, Inc., 44 Ill.2d 401, 405, 256 N.E.2d 6, 8, cert. denied, 398 U.S. 959; Pedrick v. Peoria & Eastern R.R. Co., 37 Ill.2d 494, 510, 229 N.E.2d 504, 513-14.) The following facts are presented in conformance with this rule.

Plaintiff's initial encounter with Brundage occurred in 1947 when he personally submitted an offer of $8.5 million for the purchase of the La Salle Hotel on behalf of a real estate investor. In response to this proposal, Brundage informed the plaintiff that he had not owned the hotel for a sufficient period of time nor had he properly developed it to justify a sale at that point in time. However, Brundage did indicate, as he did on subsequent occasions, that he would sell the hotel to the right party, at the right time, and at the right price. Although the plaintiff made periodic inquiries with Brundage concerning the possible sale of the hotel, his next personal contact with him arose in the late 1950's. At that time, the First National Bank of Chicago was experiencing difficulty in procuring an entire block for its new building. Speculating that the bank would be interested in the block where the hotel was situated, the plaintiff obtained a verbal sales figure of $8 million from Brundage, but no sale was ever consummated. Subsequent to this meeting, the plaintiff did not converse in any manner with Brundage until September, 1964, when, as a result of the following facts, negotiations for the hotel between Schulman and Brundage commenced.

Plaintiff had known Schulman for approximately 20 years and had acted in his behalf in various business transactions. These transactions included the purchase and sale of buildings located in Chicago, Illinois. In 1964, Schulman, general partner and operating manager of the Water Tower Inn Hotel, was interested in leasing that hotel. Plaintiff procured a prospective lessee for the hotel, but, after several months of negotiations, a lease of the hotel did not reach fruition. However, during the course of a meeting between the plaintiff, Schulman, and Frank Little (another real estate broker) concerning the possible lease, Schulman stated that if he were successful in disposing of his responsibilities in the Water Tower Inn, he would be interested in a major property. He indicated a preference for La Salle Street properties. Plaintiff responded to this statement by opining that the only major property that could be acquired was the La Salle Hotel. Subsequent to Schulman's expression of interest in such property, the plaintiff stated that he would proceed to negotiate.

Approximately 2 weeks later, plaintiff engaged Schulman in a telephone conversation. During their talk Schulman related that he wanted to make an offer for the hotel. Pursuant to this request, plaintiff contacted Brundage and informed him that he might have an offer for the hotel. Thereafter, plaintiff met with Schulman at the Water Tower Inn. Schulman told him that due to plaintiff's ability to handle such matters, he wanted him to take an offer of $8.4 million ($6 million in cash and the remainder to cover an existing mortgage) to Brundage. Schulman stated further that if Brundage expressed the slightest bit of interest, the offer would be formalized in writing with the earnest money on the following Monday. Upon termination of this meeting, plaintiff proceeded to Brundage's office where Schulman's offer was rejected by Brundage. Plaintiff thereafter telephoned Schulman and advised him of the rejection.

In October, 1964, plaintiff arranged a meeting at Brundage's office between Brundage, Schulman and himself. At that meeting, plaintiff formally introduced Schulman to Brundage. Plaintiff discussed Schulman's qualifications as a hotel operator and further requested certain financial data relating to the operation of the hotel. In response to this request, Brundage telephoned Frederick Ruegsegger, his executive assistant and also the comptroller and general manager of the hotel, and told him to supply the plaintiff with such financial information. Moreover, when the meeting concluded, Brundage arranged a tour of the hotel for the plaintiff and Schulman. Subsequent to this meeting, the plaintiff personally met with Ruegsegger who supplied him with financial information relating to the operation of the hotel. Plaintiff thereafter sent a copy of said data to Schulman.

The next meeting concerning the possible sale of the La Salle Hotel occurred at Brundage's office on April 20, 1965. Present were plaintiff, Brundage, Schulman and Ruegsegger. Although the duration of the meeting was approximately an hour, numerous topics were discussed, including the price and conditions of the sale, the assets of the hotel, and the tax aspects of the transaction. Besides this meeting, the only contacts the parties had during the remainder of 1965 were numerous telephone calls and luncheon meetings between plaintiff and Ruegsegger, in which the latter provided plaintiff with further data concerning the hotel.

In June, 1966, Brundage telephoned plaintiff and asked him to come to the hotel immediately. When he arrived, Brundage informed him that another group had offered approximately $10 to $12 million for the hotel. After disclosing the terms of the offer, Brundage expounded that since "the [plaintiff] worked with [him] for some time, [he] would give [the plaintiff] the opportunity to better this offer or possibly to even meet this offer." Despite the occurrence of these events, the sale of the hotel was not consummated between the years 1966 and 1969, largely due to pending litigation involving the hotel and the Internal Revenue Service. However, plaintiff still kept communications open during this time span by meeting and speaking with Ruegsegger and Schulman. Ruegsegger further supplied plaintiff with updated information of a highly confidential nature. Moreover, in the fall of 1969, in response to Ruegsegger's request, the plaintiff attempted to arrange a meeting between Brundage, Schulman and himself. He was unsuccessful, however, because of Schulman's inability to attend at that particular time as well as Brundage's subsequent departure from the country in connection with the Winter Olympics.

Negotiations for the hotel resumed in March, 1970, when, subsequent to the plaintiff furnishing Schulman with a valuation of the hotel, the latter asked plaintiff to arrange a meeting with Ruegsegger. After calling Ruegsegger, the three individuals met and engaged in discussions about the hotel for about an hour. Thereafter, in May, 1970, the same persons met again in plaintiff's office where the basic terms of the eventual sale were structured. During these discussions plaintiff suggested that in light of the insight he obtained from mortgage lenders, builders and managing agents, the value of the property, absent the hotel, was $9 million. He further suggested that Schulman offer that amount for the hotel as well as alleviate an existing mortgage of $1.7 million by paying part of it in cash and the other part by way of a purchase money mortgage. When the meeting concluded, Schulman asked plaintiff to allow him to make his offer directly to Brundage so as to build his personal rapport with him. Moreover, he told plaintiff not to "have [any] worries about your commission" since he "would never sign any document unless [plaintiff's] commission was provided for."

A few days after the meeting at the plaintiff's office, plaintiff asked Schulman if he made the offer of $9 million. Schulman responded in the affirmative, but he added that in light of some inventories and a discrepancy in the exact land area, he might want to back down $100,000. Following this meeting, plaintiff immediately called Ruegsegger and requested that he [the plaintiff] be present at any further meetings because "Brundage might not remember [him] as a broker in the transaction." Ruegsegger assured plaintiff that he would be included in any future meetings. Approximately 2 days subsequent to plaintiff's and Schulman's meeting, Schulman came to the plaintiff's office and, with plaintiff's permission, took his file containing the information on the hotel.

The next relevant contact plaintiff had with Schulman took place on October 15, 1970, when plaintiff telephoned Schulman regarding the status of the hotel negotiations. Schulman's response to such inquiry was that nothing had occurred. However, on November 4, 1970, plaintiff learned of the sale of the hotel by Brundage to Schulman from an announcement on a television news program. Pursuant to the contract entered into by the parties, whose terms were essentially the same as those proposed by plaintiff in May, 1970, the hotel was sold for $8.9 million, payable partly in cash and partly by mortgage. Moreover, although Schulman and Brundage engaged in a 30-minute discussion during their final negotiations concerning the payment of a brokerage commission, the contract only provided that each party would be responsible for any commission that he incurred, and that neither of them would have any obligation for any commission incurred by the other. In light of this contractual provision coupled with plaintiff's futile efforts in attaining his brokerage commission from either Schulman or Brundage, he commenced an action against both of them on December 16, 1970. After two amendments to plaintiff's complaint as well as pretrial motions and orders pertaining to certain discovery matters, the trial began. On June 10, 1974, the jury returned a verdict and a judgment was entered for plaintiff in which he was awarded damages against each defendant in the amount of $133,500.

• 2 We first consider Brundage's contentions on appeal concerning the denial of his motion for a judgment notwithstanding the verdict. With regard to his assertion that there was insufficient evidence of an implied brokerage contract between the plaintiff and himself, Brundage maintained at trial that he presumed plaintiff was acting in behalf of Schulman. Moreover, he posits on appeal that where the impetus for the broker's contract with a seller is attributed to the buyer, courts are inclined to conclude that the broker was working for and would be compensated by the buyer. (See Bennett v. H.K. Porter Co., Inc., 13 Ill. App.3d 528, 531, 301 N.E.2d 155, 157; Lynch v. Nachusa Hotel Corp., 93 Ill. App.2d 250, 254, 235 N.E.2d 260, 262.) While plaintiff does not controvert the fact that he never discussed his retention as a broker with Brundage nor did he inform the latter that he expected to receive a commission from him, he does maintain that he is entitled to a commission from Brundage on the basis that an implied contract was created by their course of dealings. We are in accord.

It is well settled in Illinois that no particular form of words is necessary to engage the services of a real estate broker; rather, the essential prerequisite is action by the broker with the consent of the principal and such consent can manifest itself either in writing, orally or by implication from the conduct of the parties. (E.g., Van C. Argiris Co. v. Caine Steel Co., 20 Ill. App.3d 315, 323, 314 N.E.2d 361, 367; Dickerson Realtors, Inc. v. Frewert, 16 Ill. App.3d 1060, 1063, 307 N.E.2d 445, 447.) Moreover, whether a broker has attained his principal's consents is determined from the facts and circumstances of each case. (Bennett v. H.K. Porter Co., Inc., 13 Ill. App.3d 528, 532, 301 N.E.2d 155, 158.) Assuming this consent has been given, it has been held that a broker is entitled to a commission when it is proven that either (1) he procured a prospective purchaser who was ready, willing and able to buy on terms acceptable to the seller (Ellis Realty v. Chapelski, 28 Ill. App.3d 1008, 1011, 329 N.E.2d 370, 373; Western Pride Builders, Inc. v. Zicha, 23 Ill. App.3d 770, 773, 320 N.E.2d 181, 183), or (2) that the sale was procured or effected through his efforts or through information derived from him, regardless of whether the owner made the sale himself or through another broker. Van C. Argiris Co. v. Caine Steel Co., 20 Ill. App.3d 315, 322, 314 N.E.2d 361, 366.

Upon review of the record, we believe that the jury was justified in finding from the evidence that an implied brokerage contract existed between plaintiff and Brundage. Besides presenting an offer for the La Salle Hotel to Brundage on behalf of another real estate broker in 1947 as well as obtaining Brundage's authorization to offer the hotel to the First National Bank of Chicago in the late 1950's, the first relevant factor in the instant case, which evinces Brundage's consent to the plaintiff's conduct, pertains to the manner in which plaintiff was treated by Brundage and Ruegsegger in contradistinction to other brokers. As reflected in Ruegsegger's testimony at trial, his treatment of other real estate brokers who inquired about a possible sale of the La Salle Hotel ranged from not taking their telephone calls to having the police physically remove them from his office. However, when plaintiff initially called Ruegsegger, the latter checked out plaintiff and cleared him with Brundage. He either personally met or spoke with the plaintiff about 25 to 50 times between 1964 and 1970 concerning the sale of the hotel. During such time, Ruegsegger also provided the plaintiff with updated financial information of a highly confidential nature concerning the management and operations of the hotel, regardless of whether plaintiff requested such information or not. Although Brundage indicated on cross-examination that (1) Ruegsegger never cleared plaintiff with him and (2) that he (Brundage) never disclosed any financial data to anyone, he did respectively state on re-cross-examination and cross-examination by counsel for plaintiff that (1) subsequent to perusing a letter dated November 16, 1965, he remembered Ruegsegger advising him that plaintiff had made an inquiry about the hotel and (2) he was aware of five personal meetings between Ruegsegger and plaintiff during the period 1965-1970 and that Ruegsegger reported to him as to what transpired at such meetings. Moreover, Brundage testified on cross-examination by Schulman's counsel that he did not know whether Ruegsegger gave plaintiff financial data, but if so, he had his authorization. He also testified on re-cross-examination by plaintiff's counsel that he assumed that plaintiff was a real estate broker.

The second integral factor exemplifying Brundage's consent to the plaintiff's action was the transformation of Brundage's assumption that plaintiff was a broker into a realization and recognition in June, 1966. At that point in time Brundage telephoned plaintiff and requested him to come to the La Salle Hotel immediately. Plaintiff did so and was informed by Brundage that another group offered to purchase the hotel. As mentioned earlier, Brundage outlined the terms of the offer. He then remarked that since plaintiff worked with him for some time, he was giving him the opportunity to better or possibly match such offer. Moreover, at some point during their negotiations, Ruegsegger telephoned plaintiff and advised him that a wealthy individual living in Dallas, Texas would be a potential prospect for the purchase of the La Salle Hotel. Besides Brundage's recognition of plaintiff's status as a broker, Ruegsegger also acknowledged in 1970 plaintiff's role in the negotiations between Brundage and Schulman. As plaintiff testified at trial, subsequent to learning that Schulman made an offer for the hotel, he immediately telephoned Ruegsegger and ...

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