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Lageschulte v. Steinbrecher





APPEAL from the Circuit Court of Cook County; the Hon. CHARLES R. BARRETT, Judge, presiding.


This is an appeal from a decree that ordered specific performance of a written contract to sell land. We are asked to review three issues. 1. Whether the plaintiff-purchaser was in default of the contract; and for this reason, was not entitled to specific performance. 2. Whether the plaintiff-purchaser failed to tender the earnest money required by the contract and thus was not entitled to specific performance. 3. Whether the plaintiff-purchaser's failure to disclose that he was in fact a cooperating broker, one who was sharing in the real estate commission that defendant was paying, met the equitable standards of conduct required of a plaintiff who applies to a court for equitable relief. These issues are before us on the following facts.


On February 18, 1971, Henry J. Lageschulte entered into a written contract by which he agreed to purchase approximately 38 acres of land from Francis J. Steinbrecher for $100,000. Ten of the acres were in McHenry County, the rest in Lake County, Illinois. The contract, although personally signed by the parties, was not negotiated by them. Contract negotiations were conducted by Thomas Haywood, a lawyer who represented Lageschulte, and John T. Williams, a broker with Barrington Realty Company of Barrington, Illinois who represented Steinbrecher. Among its terms was one which required Lageschulte, within 30 days of the contract's execution, to obtain and deliver to Steinbrecher a survey certified by a registered Illinois land surveyor showing the exact boundaries, legal description, and acreage of the land being sold. In the event the survey showed that the parcel contained less than 38 acres, the purchase price was to be reduced proportionately. The parties also agreed that no later than 15 days after receipt of evidence of good title, Lageschulte was to apply for a zoning reclassification by the Village of Barrington Hills which would permit development of the land by construction of at least 20 single-family homes. With regard to payment of the price, it was agreed that Lageschulte was to deposit $4,000 with Steinbrecher as earnest money.

Shortly after the contract was signed, Haywood, acting for Lageschulte, advised officials of the Village of Barrington Hills that his client had contracted to purchase the parcel in question; and that a land plan was in preparation, one he wanted to discuss with them informally. On March 19, 1971, Steinbrecher sent Lageschulte a title commitment report that covered the Lake County portion of the parcel. Lageschulte, on April 20, 1971, sent Steinbrecher a check for the expense incurred in obtaining the title report. Then, during the latter part of March 1971, the land plan for the parcel was completed by a private firm of land planners. It was reviewed and discussed with members of the Zoning Board of the Village of Barrington Hills. Thereafter, and until August of 1971, Lageschulte, either personally or through Haywood, continued discussions with officials of the municipality where the parcel was situated. The meetings were informal and resulted in a revision of the plan that had originally been submitted.

On September 28, 1971, Haywood sent Steinbrecher a letter in which was enclosed a petition to rezone the land with the request that he lend his name to it. Steinbrecher refused to do so. Instead, on the following day, he sent a notice saying to Lageschulte that his "failure and refusal to perform in accordance with the terms of our written agreement * * * has rendered said agreement of no force and effect." Despite this notice, Lageschulte on October 11, 1971, filed his formal rezoning application with the Village of Barrington Hills Zoning Board by a document that did not have Steinbrecher's signature. Then, on October 28, 1971, through Haywood, he sent Steinbrecher a plat of survey, the legal description of the subject real estate, and a copy of the rezoning petition. Six days later, Haywood called Steinbrecher to tell him that he could not "call off" the real estate deal. A short time later, on November 10, Haywood had another conversation with Steinbrecher from which he learned the name of the latter's attorney. On the same evening, Lageschulte and Haywood met informally with members of the Barrington Hills Zoning Board and Planning Commission. Thereafter, and through the month of December 1971, Haywood carried on conversations with Steinbrecher's attorney who said that his client had taken the position that the real estate contract with Lageschulte was no longer binding on him. Nevertheless, on January 17, 1972, Lageschulte, through Haywood, sent Steinbrecher a letter in which he waived certain provisions in the contract and stated that he had elected to proceed under its terms. In response to this communication, Steinbrecher, on February 3, 1972, sent Lageschulte a letter in which he declared the February 18, 1971, contract null and void. Alternatively, Steinbrecher gave notice that with regard to three contractual requirements, Lageschulte was in default: (1) he had failed to deposit with Steinbrecher the $4,000 earnest money that was due on the day the contract was executed; (2) he had failed to deliver a certified survey showing the exact boundaries of the parcel, its legal description, and its acreage; and (3) he had failed to apply to the Village of Barrington Hills for rezoning within 15 days after receipt of evidence of title.

Fifteen days after he received this letter, Lageschulte filed suit for specific performance. The trial court later heard the evidence and entered a decree in which it found that Lageschulte had not defaulted on any term of his contract with Steinbrecher. As to the $4,000 earnest money deposit, the court found that this requirement had been modified by the parties with Steinbrecher's concurrence. No reference was made by the court to Steinbrecher's claim that Lageschulte was not entitled to relief because he was a cooperating broker who was sharing in the broker's commission Steinbrecher was paying. Instead it ordered specific performance of the contract, and Steinbrecher seeks review of the decree.


The first two issues Steinbrecher presents do no more than articulate his claims that Lageschulte had defaulted on certain terms of the contract between them. After reviewing the record, however, we find that in its decree, the trial court made detailed findings of fact regarding all of Steinbrecher's claims. Based on evidence it heard, the court determined that Lageschulte "* * * acted with diligence and good faith in a reasonable effort to perform the contract" and that Steinbrecher's "* * * contentions that plaintiff was in default and therefore is not entitled to specific performance are without merit." In addition, the court specifically found that Lageschulte's "* * * failure to pay earnest money was the result of an agreement between the parties that the earnest money would be retained by the plaintiff; that any default in furnishing a survey was cured when plaintiff furnished a survey to defendant on October 28, 1971, [one that was] certified by a registered land surveyor and stated the boundaries, legal description, and acreage of the property; and the court finds that [these acts by the plaintiff] met the requirements of the contract; and that the plaintiff had several informal contacts with the officials of Barrington Hills concerning zoning; and any default in applying for rezoning was cured by the filing of a petition on October 10, 1971."

• 1 In an appeal in which the controversy is whether there was compliance with the terms of a contract, questions concerning performance are usually answered by facts shown in the record. In this case, the record contains the testimony of seven witnesses. Additionally, 28 exhibits were offered and received as part of the proof. From this evidence the trial court made its findings of fact. It is well established that a trial court's determinations of questions of fact will not be reversed unless those determinations are against the manifest weight of the evidence, or unless there is a clear and palpable error in some other respect. (Brown v. Commercial National Bank, 42 Ill.2d 365, 247 N.E.2d 894, cert. denied, 396 U.S. 961, 24 L.Ed.2d 425, 90 S.Ct. 436; Brown v. Zimmerman, 18 Ill.2d 94, 163 N.E.2d 518; Lang v. Parks, 19 Ill.2d 223, 166 N.E.2d 10.) We are of the view that the factual determinations in this case are supported by the evidence, and no clear or palpable error in any other respect appears. Accordingly, we will not substitute our judgment for that of the trial court. (Wickenhauser v. Selhime, 75 Ill. App.2d 413, 221 N.E.2d 6; see Chirikos v. Akathiotis, 9 Ill. App.3d 191, 292 N.E.2d 120.) Therefore, we conclude that Lageschulte was not in default of his contract with Steinbrecher, nor had he failed to tender the earnest money required of him.


• 2 We now turn to the question whether Lageschulte's failure to disclose that he was sharing in the real estate commission Steinbrecher was paying met the equitable standard of conduct required of a plaintiff who applies to a court for equitable relief. This issue arises from the fact that Lageschulte was the president and owner of Dunkirk Realty, a real estate firm which, as a cooperating broker, was going to share in the commission that Steinbrecher had agreed to pay Barrington Realty, the company that had represented him in the transaction. It clearly appears from the evidence that Steinbrecher's broker, John T. Williams of Barrington Realty, knew of Lageschulte's controlling interest in Dunkirk Realty; but he did not inform Steinbrecher of this fact. Consequently, Steinbrecher did not know of Lageschulte's connection with Dunkirk Realty.

It must be noticed, however, that there is no evidence which could prove existence of the relation of broker and principal between Lageschulte and Steinbrecher. (See Fish v. Teninga, 330 Ill. 160, 161 N.E. 515; compare Dickerson Realtors, Inc. v. Frewert, 16 Ill. App.3d 1060, 307 N.E.2d 445; Bennett v. H.K. Porter Co., 13 Ill. App.3d 528, 301 N.E.2d 155.) On course, if such a relation were proved, its essential and basic features would have been those of agency; and the rules applicable to the relation of principal and agent would have governed the rights and liabilities of the parties. City of Chicago v. Barnett, 404 Ill. 136, 88 N.E.2d 477.

But it is from the relation of principal and agent, a relation fiduciary in character, that the duty to disclose finds its genesis. (Moehling v. W.E. O'Neil Construction Co., 20 Ill.2d 255, 170 N.E.2d 100; Lerk v. McCabe, 349 Ill. 348, 182 N.E. 388; Chicago Title & Trust Co. v. Schwartz, 339 Ill. 184, 171 N.E. 169; Pawlowic v. Pearce, 59 Ill. App.2d 153, 207 N.E.2d 155.) Absent such a relation, with the burden of proving its existence on the party that asserts it, there is no duty to disclose when parties deal at arms length with each other. See Fish v. Teninga, 330 Ill. 160, 161 N.E. ...

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