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Kenilworth Realty Co. v. Sandquist





APPEAL from the Circuit Court of Cook County; the Hon. JOSEPH R. SCHWABA, Judge, presiding.


This action was brought by plaintiff Kenilworth Realty Company and/or George Dadian d/b/a Kenilworth Realty Co. (hereinafter "Kenilworth") to recover damages occasioned by the alleged breach of an exclusive real estate broker's contract by the defendant, Oliver Sandquist. A jury rendered a verdict for $48,000 in favor of the plaintiff. Judgment was entered on the verdict. The defendant appeals from the entry of that judgment, alleging error in the refusal of the Municipal Department to transfer the case to the County Department, Law Division, when the complaint was amended to increase the ad damnum from $15,000 to $48,000 thereby exceeding the dollar limit placed on cases to be heard in the Municipal Department; questioning whether the plaintiff stated a cause of action for breach of the broker's agreement and is entitled to its commission where the principal terminated the contract and revoked the broker's agency before the property was sold. The defendant also claims that the plaintiff is barred from recovering either in contract or quantum meruit in the absence of evidence of the value of its services, and alleges reversible error where the court did not allow the defendant's instructions regarding the consequences of revocation of a broker's authority with and without cause to be submitted to the jury.

On December 3, 1973, the defendant, Sandquist, signed an exclusive listing agreement with the plaintiff, Kenilworth, to sell his 34-unit apartment building in Skokie, Illinois.

The essential terms of the agreement provided:

"Price: $950,000 or such lesser amount as seller may agree to accept.

Realtor shall have sole authority to advertise, display signs, and sell the property for a period of 6 months, and thereafter until said authority is cancelled by 30 days advance written notice of either party to the other.

Seller agrees to cooperate fully with realtor and refer all inquiries; to conduct all negotiations through him; to pay a real estate brokerage commission of 5% plus $500.00 if a contract to purchase and sell the property is executed by seller and purchaser through the services and efforts of realtor, sellor or by or through any other persons during the period of this agreement or if such contract to purchase and sell is executed within six months after termination of this agreement with a purchaser to whom it was offered during the period hereof."

In late January, 1974, through Homefinders of Chicago, a corresponding broker, Kenilworth, contacted a potential purchaser, Triangle Builders. Roy Gromke and Don Metroff, individually and in their partnership as Triangle Builders, had successfully engaged in converting apartment buildings to condominiums, and over a period of more than 10 years, had developed sources of financing with Northwest Federal Savings and Loan, and Fidelity Savings and Loan. Neither institution had ever denied financing to Gromke, Metroff or Triangle Builders. Before making any offer to Sandquist, Gromke took the proposed transaction to loan offices at both Northwest and Fidelity. Both orally committed their respective lending institutions for financing of the deal, although the commitment of Fidelity was subject to an inspection of the interior of the premises. According to the testimony of Robert Holzer of Northwest, the great bulk of their business was done on an oral basis.

On January 29, 1974, Triangle submitted an offer of $920,000 payable in cash at closing with a 20-day mortgage contingency clause to Sandquist through Kenilworth. This offer was rejected on January 31 as being too low. Later that same day, the offer was raised to $935,000, but again was rejected as being too low.

On February 1, 1974, a third offer was made by Triangle Builders. The offer was in the amount of $950,000, $5,000 of which was to be paid immediately, to be increased $20,000 within 20 days which would represent earnest money, with the balance to be paid in cash at closing. The offer was conditioned upon the purchaser's ability to obtain a loan in an amount equivalent to 75% of the purchase price within 20 days.

Orally on February 4 and in writing on February 5, Sandquist rejected the offer. In the course of the February 4 telephone conversation, the defendant indicated he was rejecting the offer because of the mortgage contingency clause, which he felt did not make it a viable offer. His letter of February 5 stated: "Contract rejected as not being in accord with terms and conditions set forth in the listing agreement." Following receipt of the letter, Gromke contacted Sandquist about the rejection and was told that Sandquist "was concerned about the tax position it might put him in if he sold the building at this point." Later in February, at the request of Triangle, Sandquist met with Gromke, Metroff and their C.P.A. at his office. Gromke advised Sandquist that Triangle was in a position to close the deal if Sandquist could bring title down. There was no discussion of the financial position of Gromke, Metroff and/or Triangle Builders. Extensive discussions dealt with tax problems and various tax approaches which might be beneficial to Sandquist, including a possible conversion of the property into condominiums with Sandquist being permitted to buy into the conversion undertaking. The $950,000 offer was not retracted. However, no agreement was reached at the meeting.

At the end of February, 1974, Gromke and Metroff contacted Joan Manker of Kenilworth, requesting a master appraisal so they could submit a full cash offer with no mortgage contigency clause. Sandquist testified that he received a call from Manker on a Friday near the end of February and she requested to see the building that day. He responded that he was not available until the following Monday. About one-half hour later, Metroff called and tried to persuade Sandquist to show the building that same day. Sandquist refused, reiterating that he would show it on Monday, to which Metroff then agreed. That same Friday evening, Sandquist went to the building and became furious when he learned that the janitor had shown the building to Manker without his permission. She had also given the janitor $5. However, Manker testified that Sandquist had set up an appointment for 12:30 p.m. on Friday, March 1, for her and the master appraiser to see the building and that she had given the janitor "a tip of five dollars."

On March 7, 1974, Sandquist wrote George Dadian of Kenilworth Realty terminating the agreement claiming that Kenilworth had breached specific agreements by showing the property to prospective purchasers without informing him prior thereto, by attempting to bribe his janitor, and by refusing to furnish all bona fide offers. The reference to not forwarding all bona fide offers apparently referred to an offer from Philip C. Goldstick to purchase the property for $950,000. According to Dadian's testimony, Goldstick's real estate agent came to Kenilworth and withdrew the offer. Goldstick's offer was for an exchange of a building to be traded for Sandquist's building. In addition, there would be cash paid over a period of five years as Goldstick converted Sandquist's building into condominiums. Kenilworth's position was that this was not an offer within the terms of the listing agreement.

The following day, March 8, Sandquist again met with Gromke and Metroff, and according to Gromke, discussed various tax considerations which would make the sale more advantageous to Sandquist from a tax standpoint. On March 19, 1974, Dadian wrote to Sandquist, denying the alleged breaches and stated that Kenilworth considered the contract "fully valid and in force."

On April 8, 1974, Triangle Builders through Kenilworth delivered a $950,000 cash offer without a mortgage contingency clause to Sandquist. On April 15, 1974, Sandquist's attorney returned the contract unaccepted, noting that the listing agreement had been terminated previously.

• 1 The defendant points out that the complaint was initially filed in the Municipal Department with an ad damnum of $15,000. Later it was amended to include a quantum meruit count and a contractual count, each with an ad damnum of $48,000. The defendant immediately moved to transfer the action to the County Department, Law Division, since the amount at issue now exceeded the limit set for actions filed in the Municipal Department. (See Rules of the Circuit Court of Cook County, General Order No. 1.) However, two judges subsequently denied the motion to transfer, based on the generally adhered to policy that once properly filed and lawfully within a district, that district retains the case, even though subsequent amendments exceed original filing limits. No question can be raised regarding the original jurisdiction of the court over the parties or the subject matter. In view of the Circuit Court of Cook County Rule 1-3(b) which states "No action shall be dismissed and no judgment order or decree vacated, set aside or invalidated because the action was filed, tried or adjudicated in the wrong department, division or district" we find no reversible error in the failure of the court to transfer the case to the County Department.

• 2, 3 The defendant next argues that the plaintiff failed to state a cause of action for breach of contract because the agreement had been terminated and the broker's agency revoked before the property was sold. The parties agree that Sandquist had the power to revoke Kenilworth's listing at any time. (See Nicholson v. Alderson (1952), 347 Ill. App. 496, 107 N.E.2d 39.) However, the more important issue here is whether the principal rightfully revoked the agency and at such time as to avoid liability for the full amount of commission. The court in Nicholson ...

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