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Felbinger & Co. v. Traiforos





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


Plaintiff, Felbinger and Company (Felbinger), appeals an order of the circuit court of Cook County dismissing count I of its second amended complaint against defendant, Nicholas Traiforos (Traiforos), for his breach of an exclusive right to sell agreement. The issues for review are (1) whether the brokerage agreement signed by the defendant beneficiary of the land trust in which the subject property was held is enforceable, (2) whether, under the terms of the agreement, the defendant's conveyance of the property by a deed in lieu of foreclosure obligated him to pay the plaintiff a commission; and (3) whether the defendant's conveyance of the property occurred within the 18-month period of the plaintiff's exclusive agency. The facts are as follows.

On July 15, 1968, the subject property known as Mayfair Industrial Park, located in Elk Grove Village, Illinois, was placed in a land trust. The LaSalle National Bank (bank) held title to the property; defendant Traiforos and Gus King were the named beneficiaries of the trust. On or about July 26, 1971, defendant Traiforos employed the plaintiff real estate brokerage company as its agent for the sale or lease of the subject property for a period of 18 months. In the real estate brokerage agreement, the defendant agreed, inter alia, to pay the plaintiff a real estate brokerage commission in an amount determined by the applicable rate established by the Chicago Real Estate Board "if the property is sold or leased by you, by me (owner), or by or through any other person, during the period hereof."

Three months later, in October 1971, Jack R. Courshon, as nominee of the trustees of First Mortgage Investors' (FMI), instituted a proceeding against the bank to foreclose its mortgage on the subject property. On December 26, 1972, the bank deeded the property to Courshon, as nominee. On March 13, 1973, the foreclosure suit was dismissed with prejudice on the stipulation of the parties. On February 27, 1975, plaintiff filed its complaint alleging, inter alia, that in full performance of its obligations it had expended and incurred expenses of $20,000, that the defendant had sold the property for approximately $1,300,000, and therefore that defendant was obligated to pay it a commission of $75,000. The plaintiff sought a recovery of $95,000.

Defendant Traiforos thereafter filed a motion to dismiss the plaintiff's complaint pursuant to section 48 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 48), alleging, inter alia, (1) that the exclusive right to sell agreement was unenforceable since it had not been signed by the bank legal titleholder; (2) that upon the institution of the foreclosure proceedings, the plaintiff's exclusive right to sell the subject property became void and against public policy, the defendant's authority to act pursuant to the agreement was revoked, and the defendant's deed in lieu of foreclosure was involuntarily given and therefore did not constitute a sale; and (3) that the alleged sale did not occur until either January 29, 1973, or after February 21, 1973. In support of his motion to dismiss, the defendant filed (a) a copy of the February 21, 1973, order of the circuit court dismissing some of the claims on the mechanics liens filed against the property in FMI's mortgage foreclosure proceedings, but leaving other claims unaffected, and (b) a copy of the March 13, 1973, order dismissing with prejudice FMI's petition for foreclosure.

Following a hearing, the trial court sustained the defendant's motion but granted the plaintiff leave to file an amended complaint. Count I of plaintiff's amended complaint realleged the original allegations with the exception that it increased the alleged sale price to $1,500,000. Following the defendant's second motion to dismiss, plaintiff was granted leave to file a second amended complaint to add Courshon as nominee of FMI as a party. In count II of the second amended complaint, plaintiff alleged that at all times FMI knew of the July 26, 1971, brokerage agreement and tortiously interfered with the plaintiff's contractual rights thereunder.

Following a hearing on the defendant's motions to dismiss, the trial court found (1) that the debt for which the property stood as security was delinquent; (2) that there was a conveyance of the real estate by deed in lieu of foreclosure; (3) that there was no financial consideration for the conveyance other than the cancellation of the debt; and (4) that as a matter of fact and law, the deed in lieu of foreclosure was not a conveyance under the terms of the agreement which would give rise to the defendant's obligation to pay a brokerage commission. Based on these findings, the trial court dismissed count I of the plaintiff's second amended complaint against defendant Traiforos; dismissed count II against defendant FMI with leave to file a third amended complaint; entered the order nunc pro tunc as of June 12, 1978; and ordered FMI to file an affidavit in support of its representation to the court that no consideration other than the cancellation of the defendant's note was given for the deed in lieu of foreclosure.

Plaintiff appeals only from that portion of the order dismissing count I of its complaint seeking vacature of the judgment for the defendant, and either a new trial or the entry of judgment for it.


The defendant first contends that the exclusive real estate brokerage agreement is unenforceable because it was signed by him as the owner of the subject property rather than by the LaSalle National Bank, the legal titleholder of the property.

• 1-4 While contracts of sale or lease signed by beneficial owners as the unauthorized agents of the trustees or signed without disclosing to the purchasers or lessees that the beneficiary was acting as a beneficiary and that the property was held in trust are unenforceable (see Feinberg v. Great Atlantic & Pacific Tea Co. (1970), 131 Ill. App.2d 1087, 266 N.E.2d 401, and Madigan v. Buehr (1970), 125 Ill. App.2d 8, 260 N.E.2d 431), as stated by this court in Ellis Realty v. Chapelski (1975), 28 Ill. App.3d 1008, 1011, 329 N.E.2d 370:

"A seller engages a real estate broker to find a purchaser, and this is the extent of the broker's undertaking. [Citations.] A real estate broker earns his commission when he produces a purchaser who is ready, willing and able to meet his principal's terms. [Citations.] The broker can perform the services requested of him without affecting title to or possession of the property being offered for sale. Consequently, liability for payment of the commission does not depend on whether the principal has authority to enter into a binding contract to sell or to convey. The land trustee's participation is necessary to convey the trust property and under some circumstances may be required to execute a binding contract of sale, but the trustee's approval is not required to engage the services of a real estate broker or to authorize a broker to find a purchaser at a specified price."

Thus, we agree with the plaintiff that the listing agreement in question is a simple contract for services which may render the signer personally liable on performance by the plaintiff regardless of the status or type of title to the property involved. See Erbach & Haunroth ...

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