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Nelson v. Bolton





APPEAL from the Circuit Court of Kane County; the Hon. JOHN A. LEIFHEIT, Judge, presiding.


Rehearing denied July 13, 1979.

Plaintiff, Bradley Nelson, a real estate broker, brought suit against defendant, William Bolton, for payment of real estate commissions allegedly due plaintiff from defendant. Following a bench trial, the trial court entered judgment in favor of plaintiff for $9000 but denied plaintiff recovery of a second commission in the amount of $3000. Defendant appeals from the entry of judgment in favor of plaintiff for $9000, and plaintiff cross-appeals from the denial of the $3000 commission.

On or about October 29, 1975, plaintiff and defendant entered into a one-year exclusive listing agreement for the sale by plaintiff of defendant's commercial real estate, located at 336 Webster Street, Batavia, Illinois. On June 3, 1976, defendant and Alex Jacobs signed two contracts to purchase real estate; these contracts were prepared by plaintiff, except for certain handwritten portions which were inserted by Jacobs.

The Jacobs (seller) to defendant (purchaser) contract (hereinafter referred to as sale No. 1) was for the sale of four parcels of vacant land, located on Seavy Road, Batavia. The parcels were shown on the plat of survey as Lots 1, 2, 6, 7 and 8; exact legal descriptions were to be clarified prior to closing. The contract provided that Jacobs would record a road easement "which extends to the easterly lot line of Lot No. 6, 7, 8." The purchase price specified in the contract was $100,000; immediately after the purchase price the words, "CONTINGENT UPON SALE NO. 2 WITH SELLER," were typed in. Further, the contract contained a provision that it was necessary for defendant to obtain within 21 days a commitment for a mortgage loan of $60,000; that if upon good faith effort the defendant could not obtain the mortgage, upon notice to Jacobs the contract became null and void. The contract specified that Jacobs would pay to plaintiff as the cooperating broker 50 percent of the real estate commission of six percent of the purchase price.

The defendant (seller) to Jacobs (purchaser) contract (hereinafter referred to as sale No. 2) was for the sale of the Webster Street property for $150,000. Immediately after the purchase price the words, "CONTINGENT UPON SALE NO. 1" were typed in. This contract contained a similarly worded financing clause as the one above, this one in the amount of $80,000 to be procured by Jacobs. Plaintiff, as specified in the contract, was to receive the full six-percent real estate commission from the defendant as there was no cooperating broker in sale No. 2. Both contracts had a July 1, 1976, closing date; however, the sales were never consummated, for reasons hereinafter set forth.

Defendant was called as a witness under section 60 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 60), and also as a witness on his own behalf. He testified that while he knew Jacobs as a customer, he had no meetings or conversations with him concerning the contracts prior to the time the contracts were signed; his dealings in that regard were solely with plaintiff. He had visited the Seavy Road property prior to the signing of the contracts but had not walked on the property due to the wet weather, and therefore was unable to determine its condition. He had no question as to the location of the parcels he was purchasing; however, the property had not been staked or plotted prior to June 3. Thereafter, defendant discovered a peat bog, located on Lots 6 and 7, affecting approximately three acres of the property he was purchasing from Jacobs.

In the meantime, defendant had attempted to obtain financing for sale No. 1 at the First National Bank of Elgin (Elgin), and discussed the matter with William O'Rourke there. O'Rourke advised him that Elgin would require paper work showing that the land was profitable or that it could be subdivided in the manner intended; however, defendant was unable to obtain the required paper work for Elgin. Defendant did not attempt to obtain financing from any other financial institution. Towards the end of June, defendant informed plaintiff about the unavailability of financing, at which time plaintiff indicated that he could perhaps acquire the necessary financing for him. Plaintiff then delivered to defendant a letter from Jacobs, dated June 18, in which Jacobs offered to finance sale No. 1; the offer was open for one week. Defendant took no action concerning the offer, as he still intended to get the financing through Elgin when the paper work was complete; this, however, never occurred. Defendant did not recall receiving a letter from Jacobs dated June 26 withdrawing the offer of financing.

On or about July 2, 1976, defendant along with plaintiff, Jacobs, and several others met in the offices of A.L. Allen & Sons, Jacobs' listing broker, and discussed the existence of the bog in the back half of the property defendant was purchasing; also they discussed a change of location for the road easement, additional land to replace the bog, and defendant's inability to obtain a mortgage from Elgin before the soil conditions were cleared up. However, Jacobs refused to make any changes in the contract. After the meeting in Allen's office, plaintiff turned over to defendant the results of the soil boring tests. Based on those tests, the property was listed by the Conservation Department as unsuitable for development.

Alex Jacobs testified that he understood that the contracts for sale No. 1 and sale No. 2 were contingent on one another, and that both contracts were contingent on financing. He was first aware that the transactions were not going to close at the July 2nd meeting in Allen's office; at that meeting defendant expressed concern over the soil conditions of part of the property. Jacobs refused to agree to any modification in the contracts.

Jacobs' listing agreement with Allen provided that Jacobs would consider financing a capable purchaser. When plaintiff notified him that defendant was having difficulty obtaining financing, he drew up the June 18 letter, offering to finance sale No. 1; the offer was to remain open for seven days. Jacobs understood the contract to contain a provision whereby the seller would agree to finance the transaction with a purchase money mortgage, if the purchaser could not obtain financing. He sent a letter, dated June 26, to plaintiff withdrawing the offer to finance after he had heard nothing from defendant or his agents.

Jacobs testified that he stood ready, willing and able to proceed with the contracts. On July 12, 1976, however, he sent a letter to plaintiff with copies to defendant's attorney and A.L. Allen's office, that he considered himself released from the contract.

On cross-examination, Jacobs testified that he had been aware of the peat bog on the property, at least as of January 5, 1976; that the proposed road easement went directly through the bog; and that a report from the Department of Agriculture's soil conservation service indicated that the land had severe limitations insofar as construction of a road is concerned. However, Jacobs had never told plaintiff of the existence of the bog or the limitations on road construction. Further, Jacobs testified that there were no legal descriptions pertaining to the specific lots to be included in the sale of land to defendant, although the property had been staked out by a surveyor; no deeds for the property were ever prepared and tendered; and no easement was ever recorded. An objection had been raised on the commitment for title insurance relating to a fence line and had been waived; however, neither defendant nor his attorney had been notified of the waiver.

In reference to the financing provisions of the contracts, Jacobs testified that he had obtained a loan commitment from First National Bank of Batavia (Batavia) for $95,000. All totaled, he would need $155,000 to satisfy the financing provisions in both contracts. He testified that he had "other equity" and that he intended to use defendant's contract obligation from sale No. 1 as collateral in obtaining another loan for the remaining balance of cash needed to close sale No. 2. However, he did not have the $155,000 himself, and he had not approached Batavia about such a loan. On redirect examination, ...

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