APPEAL from the Circuit Court of Cook County; the Hon. SAMUEL
B. EPSTEIN, Judge, presiding.
MR. JUSTICE LINN DELIVERED THE OPINION OF THE COURT:
Plaintiff, Edward Ross, filed this action against defendant, Sheldon H. Steiner, M.D., and others seeking to protect his rights in certain property following defendant's decision to treat plaintiff's option to repurchase the property as terminated. The option to repurchase was created by a written agreement providing for the sale of the property by plaintiff to defendant.
After a bench trial, the trial court granted plaintiff a 25-day extension of time within which to exercise the option to repurchase. Defendant appeals, contending that (1) the decision of the trial court is against the manifest weight of the evidence; (2) plaintiff is not entitled to the relief granted because he failed to make a sufficient tender of the repurchase price to the defendant; and, (3) the trial court erred in refusing defendant's request for attorneys' fees and costs. Plaintiff cross-appeals from the trial court's additional holding that the agreement providing for the sale with option to repurchase was not an equitable mortgage.
We affirm the decision of the trial court.
EVENTS LEADING TO THE AGREEMENT OF MARCH 17, 1975:
Prior to the events involved in this action both plaintiff and defendant had engaged the law firm of Rosenthal and Carnow for various unrelated legal services. Defendant, on the advice of this law firm, had invested with plaintiff in a dinner-playhouse venture in Kansas City. Defendant had also advanced plaintiff $25,000 to develop a dinner-theater at the Town Theater Building located at 322-24 West Armitage in Chicago. As of March 1975, defendant had received no return on these investments.
At that time, legal title to the Town Theater Building was held in trust by the Exchange National Bank of Chicago. Plaintiff was the beneficial owner of the property and his entire interest was assigned as collateral for money loaned to him by the Parkway Bank and Trust Company. A first mortgage on the property, the Pritzker mortgage, had been reduced to approximately $11,400 by March 1975, and attempts were being made to refinance the building in order to proceed with the development of the dinner-theater.
In February of 1975, the Parkway Bank and Trust Company notified plaintiff that they intended to sell the collateral because he was in default, and the bank initiated proceedings to sell plaintiff's interest in the property. Plaintiff filed an action to prevent the sale and the sale was temporarily restrained by the court.
In seeking potential sources of money to remedy plaintiff's financial dilemma, attorney Carnow informed defendant that plaintiff's interest in the Town Theater Building was in jeopardy. After engaging in negotiations with plaintiff, defendant agreed to purchase plaintiff's beneficial interest in the property and he acquired separate counsel to represent him in that transaction. Pursuant to a written agreement which was signed March 17, 1975, defendant deposited $55,000 into an escrow account. Approximately $38,000 of this amount was used to pay the balance of the Parkway loan and an additional sum went to satisfy an existing mechanic's lien on the subject property. In addition, $10,000 was paid directly to plaintiff. Defendant took the interest subject to the Pritzker mortgage and real estate taxes for the years 1972, 1973 and 1974. The agreement also gave plaintiff an option to repurchase the property within 181 days after the escrow transaction closed. The repurchase price assured defendant a $20,000 profit.
Defendant arranged to obtain a $55,000 loan from the Bank of Ravenswood to finance his obligation under the agreement. Before the bank would give a commitment for the financing, it demanded a letter from plaintiff's attorney stating that the transaction described in the agreement was a sale rather than a mortgage. Plaintiff's attorney sent this letter to the bank and, thereafter, legal title to the property was transferred from the Exchange National Bank to the Bank of Ravenswood as trustee.
On September 16, 1975, plaintiff notified defendant that he had initiated procedures to exercise his option to repurchase the subject property. Two escrows were established, an escrow between plaintiff and defendant for the reconveyance of the property to plaintiff for $73,000 and a money-lender's escrow between plaintiff and his lender, Paul Rosenbaum, in which $81,000 was deposited to be released to the plaintiff-defendant escrow upon receipt of good title. The money-lender's escrow was amended to permit plaintiff to place a second mortgage on the property if it became necessary to acquire additional funds. By agreement of the parties the term of the option period was extended until November 3, 1975.
During this period there were delays in defendant's deposit of certain documents in the plaintiff-defendant escrow. The Bank of Ravenswood deposited a payoff letter but did not deposit a release of the mortgage which it held on the property and which secured not only the subject property but other monies owing from defendant to the bank.
Also during this period, foreclosure proceedings were instituted on the Pritzker mortgage and a sale of the real estate for the 1972-74 taxes required immediate redemption, thus, increasing plaintiff's financial requirements to complete the repurchase. In addition, plaintiff had entered into negotiations for the sale of the property to James McHugh Construction Co. and had given McHugh an option to purchase the ...