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M.j. Mccarthy Motor Sales v. Argiris & Co.





APPEAL from the Circuit Court of Cook County; the Hon. GEORGE A. HIGGINS, Judge, presiding.


Plaintiffs M.J. McCarthy Motor Sales Co. and Mike McCarthy, individually, appeal from a summary judgment dismissing their complaints against defendants Ford Motor Co. and Hogan & Farwell, Inc. Plaintiffs alleged that Hogan & Farwell, acting as an agent for Ford, fraudulently induced the sale of real estate to Ford. Ford was an undisclosed principal. Additionally, Mike McCarthy, suing as an individual, alleged that Ford breached an oral contract to award him a dealership in California. The trial court granted summary judgment for Ford and Hogan & Farwell because it concluded that Hogan & Farwell was not in a fiduciary relationship with plaintiffs and therefore owed them no "duty" and further concluded that plaintiffs' claims were barred by the statute of limitations and statute of frauds.

On appeal, plaintiffs argue that the summary judgment was improper because (1) a fiduciary relationship is not necessary for claims based on unjust enrichment and fraud; (2) section 46(2) of the Civil Practice Act precluded the running of the statute of limitations for the causes of actions based on unjust enrichment and fraud; and (3) Mike McCarthy's action for breach of an oral contract came within the "Merchant's Exception" of the Uniform Commercial Code and was therefore not barred by the statute of frauds.

We reverse in part, affirm in part, and remand.

In 1964, plaintiff Mike McCarthy was the principal owner of three Lincoln-Mercury dealerships. Two of the dealerships were located in Chicago and the third was located in Huntington Park, California.

The Huntington Park dealership was in a deteriorating neighborhood. From 1965 to 1967 the value of the property allegedly depreciated from $100,000 to $200,000 in value. On several occasions during this period, McCarthy met with representatives of defendant Ford Motor Company, asking to be relocated at a new dealership that was to open in Huntington Beach, California. His requests were denied but he was allegedly told to "be patient."

In May of 1967, McCarthy received a firm offer to purchase one of his Chicago dealerships. The dealership was also situated in a deteriorating neighborhood on 95th Street. The developer was willing to pay $350,000 for the property, with the intent of building an apartment complex.

After receiving the offer, McCarthy contacted the general manager of the Lincoln-Mercury division of Ford Motor Company, in Detroit, Michigan. As a result of this call, defendant Ford also offered McCarthy $350,000 for the 95th Street property. McCarthy stated that he would not accept Ford's offer unless he were relocated on the West coast. Subsequently, Ford informed him that no West coast dealerships were available. McCarthy responded that if such were the case, then Ford would have to pay $500,000 for the 95th Street property. Late in 1967, McCarthy closed the 95th Street dealership.

In March of 1968 McCarthy also resigned his Huntington Park, California, dealership. As a replacement, he opened a new Buick (General Motors) dealership just south of Los Angeles.

At this time, McCarthy also decided to put his 95th Street property on the market. The dealership was known as M.J. McCarthy Motor Sales Co., Inc., and is a plaintiff in this suit. On behalf of the 95th Street dealership, McCarthy hired defendant real estate broker Van C. Argiris & Co. to sell the property. The agreement provided that Argiris was to sell the property for $330,000 and receive the standard commission. However, the agreement also provided that "If owner sells property to Ford Motor Co., Van C. Argiris & Co. will be paid $1,000 expenses by owner." McCarthy argues that this last provision evidenced his strong desire that the property not be sold to Ford.

Also, in March of 1968, Ford management decided that it should pursue purchasing the 95th Street property. Defendant Hogan & Farwell, Inc., was retained by Ford to acquire the property on its behalf. Because Ford was not willing to pay the price previously demanded ($500,000 or $350,000, plus a California dealership), Ford and Hogan & Farwell, Inc., decided that the latter should acquire the property as purchaser and agent for Ford. Ford would be an undisclosed principal. It was also agreed that Ford would indemnify Hogan & Farwell for any legal "repercussions."

Negotiations between plaintiff and representatives of Hogan & Farwell began. On June 13, 1968, a representative from Hogan & Farwell was present in Argiris' office when one of Argiris' salesmen called McCarthy about a proposed offer of $280,000. McCarthy replied that he would accept $280,000 for the 95th Street property as long as the buyer was not "Ford or other auto dealers." The Hogan & Farwell representative remained silent as Argiris' salesman assured McCarthy that Ford was not the purchaser.

The negotiations eventually resulted in a written offer being submitted to McCarthy in the form of a real estate contract dated July 23, 1968. The purchaser named in the contract was Hogan & Farwell, Inc., as agent for an undisclosed principal, who agreed to purchase the property for $295,000. It also provided that the $15,000 broker's commission was to be divided equally between Argiris and Hogan & Farwell.

On September 19, 1968, the sale was closed. During the closing, McCarthy again was allegedly reassured by Hogan & Farwell's representative that the premises were not ...

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