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Sunny Ridge Realty & Ins. v. Williamson

OPINION FILED JULY 13, 1979.

SUNNY RIDGE REALTY AND INSURANCE, INC., PLAINTIFF-COUNTERDEFENDANT-APPELLANT,

v.

VERDELL WILLIAMSON, DEFENDANT-COUNTERPLAINTIFF-THIRD-PARTY PLAINTIFF-APPELLEE. — (NATIONAL FARM BROKERS ASSOCIATION INC. ET AL., THIRD-PARTY DEFENDANTS-APPELLEES.)



APPEAL from the Circuit Court of Kendall County; the Hon. WILSON D. BURNELL, Judge, presiding.

MR. JUSTICE LINDBERG DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 12, 1979.

This appeal presents the single question of whether an incorporated association which supplies its members, all licensed real estate brokers, with videotapes of commercial and farm property to assist the member broker in effecting a sale, is engaged in the activity of a "broker" of real estate within the meaning of section 4.02 of the Real Estate Brokers and Salesmen License Act (Ill. Rev. Stat. 1975, ch. 114 1/2, par. 104.02). *fn1 We hold that it does not, and we affirm the decision of the trial court.

Despite the apparent simplicity of the issue, the facts of this case are somewhat complex. The instant litigation commenced when Sunny Ridge Realty and Insurance Agency, Inc. (Sunny Ridge) filed a complaint in the Circuit Court of Kendall County against Verdell Williamson, claiming the sum of $17,500 due as a 5% broker's commission upon the sale of Williamson's farm. Williamson initially answered, admitting the factual allegations of the complaint but denying liability to Sunny Ridge for the full amount of the commission. He subsequently filed a complaint for interpleader against Sunny Ridge, John Almburg (a real estate broker), and National Farm Brokers Association (National). In this pleading, Williamson admitted liability for the full amount of the broker's commission, but also alleged that Almburg, Sunny Ridge and National had all claimed a part of the commission due and that he was unable to determine which of the claimants were legally entitled to it.

National then filed a cross-complaint against Sunny Ridge, claiming that the sum of $4,140 became payable upon the sale of the Williamson farm pursuant to a "membership agreement" entered into by Sunny Ridge and National. (The details of the membership agreement are more fully set forth below.) In this pleading, National alleged that it was a corporation organized to act as a real estate broker; that Sunny Ridge and National entered into a written agreement which required an association member (i.e., Sunny Ridge) to submit listings of all nonresidential real estate to National within 30 days; that on January 27, 1976, at a time when the membership was in full force and effect, Sunny Ridge entered into a listing agreement with Verdell Williamson for his real estate; that in cooperation with John Almburg, Sunny Ridge produced a purchaser for the property which was subsequently sold for $345,000; that the listing agreement was within the scope of the membership agreement, and upon the sale National became entitled to a commission of $4,140 from Sunny Ridge.

Sunny Ridge filed an answer to National's cross-complaint, denying the allegation that National was authorized to do business as a broker, and denying that National was entitled to any portion of the commission. Both National and Sunny Ridge agreed that John Almburg was entitled to 50% of the commission (i.e., $8,625) as the producing broker. Apparently, he was paid immediately, and did not participate further in the suit.

The membership agreement referred to above was attached as an exhibit to National's cross-complaint and was admitted into evidence at trial. The agreement provided in material part, as follows:

1. Each party warranted that it was a duly licensed real estate broker in the State of Illinois;

2. Each party agreed that National developed "certain valuable methods of marketing real property" and that the member desired to avail itself of those methods (however, neither these "methods" nor National's duties under the agreement were specified);

3. The member broker of the association (i.e., Sunny Ridge) was required to submit all nonresidential listing in excess of $50,000 to the association;

4. In return for a membership fee, the broker would receive one color television receiver, one color tape player, and ten 30-minute video tapes with a minimum of 50 video listings;

5. Upon the sale of any listed property, the member agreed to pay National a commission based upon the selling price of the property (1.2% up to $600,000);

6. National agreed to refer all inquiries for listed real estate to the appropriate association member in the area.

The main issue at trial was whether National acted as a real estate broker with respect to the Williamson real estate transaction. The evidence showed that National was organized in the early 1970's by David Haas under the name "Teleview Realty, Inc." The corporation held, and has continued to hold, a corporate real estate broker's license issued by the Department of Registration and Education. Originally, it acted as a conventional brokerage; at that time, it participated directly in the sales of property and solicited listings through mass mailings. However, in December 1973, the business of the corporation changed from a conventional brokerage to a for-profit association of realtors organized to provide supportive services to its members in the sale of listed property. National's new business operated in this manner: upon receiving a listing of farm or commercial property, the association would make a color videotape of the real estate; these tapes were then distributed or made available to the association's members for their own ...


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