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Benj. E. Sherman & Son, Inc. v. Lynn





APPEAL from the Circuit Court of Cook County; the Hon. NATHAN J. KAPLAN, Judge, presiding.


The plaintiff, Benj. E. Sherman & Son, Inc., appeals from a judgment of the Circuit Court of Cook County, in favor of the defendants, Gilbert Lynn and Melvin Cowen and others, as co-partners doing business as Alexander Grant & Co., and Alexander Grant & Co., a partnership. The court entered its judgment sitting without a jury on the basis of a stipulated presentation of evidence and oral arguments.

The issues presented for review are whether the judgment was against the manifest weight of the evidence, and whether the plaintiff may raise a claim for quantum meruit for the first time on appeal.

Alexander Grant & Co. (Grant), a partnership, leased office space in the Prudential Building in the City of Chicago. The lease ran to 1978 with two five-year options to extend it to 1983 and 1988. The terms of the lease provided Grant could not sublease the space, but this was understood to mean that subletting was possible only if Prudential specifically consented to the proposed sublease.

Grant determined it no longer needed its fifth-floor space, and initiated discussions with Prudential about a possible cancellation of the lease. When these discussions proved fruitless, Grant designated Gilbert Lynn as the partner to sublease that space.

On December 15, 1970, Lynn retained the real estate firm of Strobeck, Reiss & Co. (Strobeck) to sublease the unwanted premises. Strobeck was represented throughout the proceedings by its employee, William Buchbinder. The agreement between Grant and Strobeck provided Strobeck would be paid the customary commission if it subleased the space solely through its own efforts, and it would be paid one-half the customary commission if it procured a sublease through the efforts of a cooperating broker. In the latter case Grant agreed to pay a full commission to the cooperating broker.

The agreement further provided for the payment of a commission only upon the execution, delivery, and acceptance of a written sublease. Form language, which would have provided for a commission upon Prudential's cancellation, was struck out.

Merit Insurance Company was interested in acquiring office space and retained the firm of Benj. E. Sherman & Son, Inc. (Sherman) for that purpose. On Friday, May 21, 1971, Buchbinder received an inquiry about office space in the Prudential Building from Arthur Kaplan, a broker with Sherman. During this discussion, Kaplan asked Buchbinder whether an insurance company would be acceptable as a sublessee. Buchbinder spoke to the manager of the Prudential Building, Michael Sylvester, who informed him Prudential had no policy of automatically excluding insurance companies. He stated Prudential might look favorably on a sublease application for a casualty insurance company which would not be competitive in the life insurance business. Buchbinder relayed the message to Kaplan.

On Sunday, May 23, 1971, Strobeck published a classified advertisement in the Chicago Tribune, offering any cooperating broker a full commission in conjunction with the space in the Prudential Building. On the following day Buchbinder met with Kaplan and provided him with pertinent portions of the existing lease. Kaplan understood Prudential's consent was a necessary condition to any sublease.

The officers of Grant and Merit reached an oral agreement on the terms of a sublease acceptable to each of them on Friday, June 4, 1971, and Lynn sent a letter to Sylvester requesting Prudential's approval. The sublease agreement was to be effective September 1, 1971, and was to extend to 1978, as Grant hoped to use the space for its own expansion after that date. The proposed rent was for an amount less than called for in Grant's lease with Prudential.

Either on the same day or on the following Monday, Sylvester told Lynn, Prudential had decided to use the space for its own purposes, and would cancel Grant's lease effective August 1, 1971. Grant then accepted Prudential's proposal to terminate the lease. Although Grant had the legal ability to reject the proposal to cancel the lease, its full monthly liability on the lease would have continued.

Lynn stated he discussed with Prudential the possible termination of the lease in March of 1971 after the listing with Strobeck, but he did not remember the date of the last discussion prior to June 7.

On June 21, 1971, Strobeck submitted to Grant a bill for $10,000. The bill stated it was for negotiating a lease termination. Buchbinder stated Strobeck did not actually participate in the cancellation discussions, but it felt the Merit negotiation was a precipitant to Prudential making up its mind with regard to the cancellation, and it had spent many hundreds of hours on the disposition of the space and was entitled to some compensation. He stated Grant had a moral, but not a legal obligation to pay the bill. A memorandum from a partner of Grant to the Grant national office suggested Strobeck be paid approximately one month's rent ($5500) for its efforts in securing prospective sublessees.

Buchbinder testified Strobeck had no obligation to Sherman because it is the common practice between brokers that there is no commission unless there is ...

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