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Ruskin v. Rodgers





APPEAL from the Circuit Court of Cook County; the Hon. REGINALD J. HOLZER, Judge, presiding.


Rehearing denied January 14, 1980.

Jerrold Ruskin (plaintiff), a real estate broker, and James T. Rodgers (defendant), a real estate salesman, entered into a written agreement for joint purchase of a luxury apartment building and its conversion into condominiums. Plaintiff brought an action for specific performance and other relief also joining as party defendants Pelham Corporation and First Wilmette Corporation who were interested as ultimate buyers of the property. The trial court found for plaintiff. Defendant appeals.

Aimco, Inc., a real estate consulting corporation, and Louis F. Allocco, a real estate broker, had filed a petition to intervene as plaintiffs, naming the same parties as defendants. The trial court allowed the petition to intervene but ultimately denied the intervening plaintiffs' claim. Intervening plaintiffs also appeal. Consequently, we have two appeals with different plaintiffs and different factual situations. We will consider each appeal separately beginning with plaintiff's action.


The Issues Between Ruskin (Plaintiff) And Rodgers (Defendant).

In May 1977, defendant met with Allen Marrinson, executive vice-president of the Upper Avenue National Bank. Marrinson told defendant a luxury apartment building at 1550 North State Parkway was for sale. It was not widely marketed so as to avoid arousing the tenants. The building was owned by Carver Nixon, president of the bank, and Robert Nixon, his brother. Defendant expressed his desire to purchase the building if he could arrange financing. Marrinson said he did not believe defendant could handle such an ambitious undertaking. Marrinson told defendant a $2.2 million offer was pending on the building.

A few weeks later, defendant spoke with Marrinson again and learned the $2.2 million offer had been rejected by the Nixons. Defendant told Marrinson he would pay $2.7 million for the building if he was given a chance to get the money. Marrinson transmitted this information to Carver Nixon. Nixon replied that if defendant could make a firm offer of $2.7 million he would consider it.

Marrinson communicated Nixon's response to defendant. He further told defendant there could be no negotiation of the price. If defendant could not make a $2.7 million offer that would be the end of any dealings with him. Defendant offered Marrinson a $25,000 fee to help him in his negotiations with the Nixons. Marrinson accepted the offer with approval of the board of directors of the bank. Defendant also met with the building owners. They reiterated that the price was $2.7 million and nothing less.

Defendant approached plaintiff in May 1977, and asked him general questions concerning the appropriate procedures for acquiring a rental unit and converting it to condominium ownership. Plaintiff had been engaged in real estate brokerage and development for several years and had developed a number of apartment buildings. In subsequent talks, defendant told plaintiff he had an opportunity to acquire, develop and market a "plum" of a building in the Gold Coast area of Chicago. Defendant asked plaintiff about his ability to fund the purchase of a building. Plaintiff responded that he could do so. Defendant asked plaintiff if plaintiff would be his consultant for a fee. Plaintiff responded he wanted an equity position in such a project.

The parties met again in June 1977. Defendant disclosed the location of the building and explained his development concept in detail. He agreed to give plaintiff 50 percent of any profits received from the project. Defendant explained the conditions imposed by the sellers as to the firmness of the $2.7 million offer. Plaintiff and defendant verbally agreed to work jointly to acquire and develop the building.

On June 16, 1977, at defendant's suggestion, a memorandum of understanding was prepared by defendant's attorney, Edward Joyce. It provided:


WHEREAS, James Rodgers has been offered the opportunity to purchase and market a building located at 1550 North State Parkway; and

WHEREAS, Jerrold Ruskin wishes to join with James Rodgers in the purchase and marketing of said structure.

NOW, THEREFORE, it is agreed between and among the parties that Messrs. Rodgers and Ruskin will work together and in good faith attempt to purchase the 1550-1540 North State Parkway Building from its present owner, obtain the necessary financing for the conversion of said building to a condominium, arrange for the marketing of said building through James Rodgers and do all else reasonable and necessary to accomplish the above described goals.

IT IS FURTHER AGREED between the parties that the profit derived from the purchase and conversion of the 1550-1540 North State Parkway Building will, after deducting all expenses, be split between Messrs. Rodgers and Ruskin on a 50/50 basis.

For purposes of this Agreement, the term `expense' shall mean and include any item, whether or not ordinarily considered an expense for accounting or tax purposes, which is paid to a third party, whether or not said third party is a lender or investor.

Dated: June 16, 1977.

/signed/ James Rodgers

/signed/ Jerrold Ruskin"

Joyce testified that when he first met plaintiff and defendant he (Joyce) stated his understanding that plaintiff was to be responsible for obtaining all the financing. Defendant signed a copy of the agreement as soon as Joyce had prepared it. Plaintiff took a copy signed by defendant and said he would take it to his attorney. Plaintiff testified he signed and returned a copy of the agreement to defendant about June 18. Defendant denied that he had ever received a copy of the agreement from plaintiff. A xerox copy of the agreement reflecting signatures of both parties was received in evidence. There is no provision in this signed copy of the agreement requiring plaintiff to be responsible for financing.

Later in June 1977, plaintiff contacted John Wendlund, a real estate syndicator with whom he had worked before, to inquire if Wendlund would be interested in securing the money needed to purchase the building. Wendlund testified that in July he informed plaintiff he "was prepared to acquire the property for $2.7 million" on a 50/50 partnership basis. Wendlund described this as "a conditional offer." Plaintiff testified that one-half of the profit would go to Wendlund and the remaining half would be divided between plaintiff and defendant. Plaintiff told defendant about this offer without mentioning Wendlund's name. Defendant testified he was not interested in this. He told plaintiff he did not need plaintiff to give away half of the profits. Defendant also contacted other potential investors such as a Mr. Kaufman and a Mr. Fox as possible sources of financing. The parties met with some of these individuals in July, without tangible results.

Plaintiff and Wendlund continued to seek financing for the project despite defendant's unwillingness to split the profits on a 50/50 basis with Wendlund. Plaintiff and Wendlund had a preliminary conversation with the Continental Bank. The bank, while interested in the project, would require several prerequisites to supply financing. Reports of various kinds on the building would be required as well as an earnest money deposit and a purchase agreement. Wendlund told plaintiff that they would have to enter into a partnership agreement before he would put any money into the venture. Defendant testified he had never been advised of Wendlund's participation in the meetings with the bank. However, defendant was aware of plaintiff's contact with the Continental Bank. In fact defendant provided plaintiff with certain information requested by the bank.

On June 23 or 24, plaintiff and Wendlund met with attorney Joel Carlins. They discussed with him a possible purchase agreement for the building and a possible partnership agreement. Carlins was partially selected due to his personal friendship with Marrinson. Carlins and Marrinson are presently law partners. Plaintiff and defendant both testified that the person who had previously offered $2.2 million had made a new offer of $2.45 million on July 11, complete with a check and a written contract. Defendant then agreed with plaintiff to a partnership arrangement with Wendlund. Defendant was anxious to submit an offer for $2.7 million before the expiration of the new offer on July 15, 1977.

Subsequently, during a telephone discussion with plaintiff and Carlins, Wendlund instructed Carlins to contact Marrinson and discuss with him whether a figure lower than $2.7 million would be acceptable. Plaintiff concurred that this "informal" approach would be appropriate. Plaintiff testified he told defendant about what he characterized as this "off the record call." Defendant testified he agreed with plaintiff to use Carlins but only to negotiate with Marrinson. Defendant stated neither defendant nor plaintiff mentioned any other figure but $2.7 million would be suggested.

Carlins contacted Marrinson on July 15 concerning an offer of $2.5 million. Marrinson responded that such an offer was totally different than what had been agreed upon and he "would not even pass the offer along." He told Carlins "the deal was dead."

Marrinson testified he knew then that plaintiff and defendant were working together. After speaking with Carlins, Marrinson phoned defendant and told him about the conversation. He told defendant that as far as he was concerned the deal with defendant was dead. Defendant became very angry and said that plaintiff had ruined the deal for him. Marrinson also called Carver Nixon who approved of his rejection of the proposed offer.

After receiving the phone call from Marrinson, defendant phoned plaintiff concerning this alleged offer. Plaintiff testified he told defendant that no offer had been made but rather the phone call to Marrinson was an "informal inquiry." Defendant testified he immediately called Marrinson and told him that there had been a misunderstanding. Marrinson responded that there had been no misunderstanding, an offer had been made. Defendant testified Marrinson also told defendant the Nixons would not entertain a contract from plaintiff. Defendant testified he again called plaintiff and told him they were "dead, dead, dead." Defendant stated he had no further conversation with plaintiff for at least 10 days. Defendant said, "I was quite intemperate with him."

On the contrary, plaintiff testified defendant told plaintiff on the phone that defendant was going to see Robert Sheridan to inquire if he wished to buy the building. Sheridan was a real estate developer and vice-president of Pelham Corporation. Plaintiff testified defendant did not tell him on that day that the partnership was terminated. Plaintiff further testified, that after speaking with defendant the second time, he called Wendlund and told him the telephone inquiry had been misinterpreted. Wendlund stated he was prepared to offer $2.7 million for the building but could not get a contract drafted until at least Monday. This information was not communicated to defendant.

Plaintiff testified he called defendant later on July 15, or possibly on July 16, to find out the results of defendant's meeting with Sheridan. Plaintiff further testified defendant said Sheridan had agreed to buy the building for $2.7 million and he and plaintiff would receive 10 percent of the profit. Plaintiff testified he spoke with defendant concerning the Sheridan deal on Friday, on Saturday, on the following Monday or Tuesday and almost every day that week. He testified he discussed with defendant their negotiations with Sheridan. Plaintiff stated he was never told he was not to participate in the Sheridan deal or that his partnership with defendant was terminated.

Defendant testified he contacted Marrinson on July 15 and asked if he could still be involved in the purchase of the building if he could put the deal together within the 24 hours remaining before the pending offer expired. Marrinson responded he doubted if defendant could get the deal together in the time remaining.

Defendant stated he then contacted Sheridan and told him about the building. Sheridan told defendant he was interested in purchasing it, and they scheduled a meeting for the next day. Sheridan and defendant both testified that defendant originally wished to become a partner in purchase of the property. Sheridan rejected this type of arrangement. At their meeting, defendant and Sheridan entered into an oral agreement. Defendant was to receive 20 percent of the profits and 1 percent of the gross selling price of the units and was to have responsibility for marketing the apartments. Sheridan testified defendant told him he had been working with another individual, but the relationship had been terminated.

Defendant phoned Allen Marrinson and said Mr. Sheridan would buy the building for $2.7 million. Defendant said a cashier's check for $100,000 and a contract would be forthcoming. The contract and check were delivered to the sellers by defendant and attorney Joyce. On Monday, July 18, the sellers executed the contract. The transaction was closed in due course.

Defendant's agreement with Sheridan did not remain as originally negotiated. Apparently differences of opinion developed between defendant and Sheridan. Actually attorney Joyce, acting for defendant, prepared a proposed complaint by defendant which he sent to Sheridan's attorney. The covering letter stated a deadline for a satisfactory arrangement. Ultimately, on September 20, 1977, a written agreement was worked out and executed. It provided that defendant was to have 25 percent of the net profits resulting from the entire transaction with a cash advance of $75,000. Defendant was to have no duties or connection with the marketing of the condominium units. This initial advance was actually paid to defendant. He received $65,000 net after payment of an attorney's fee of $10,000 to Joyce. The history of these changes in their agreement will be discussed later in this opinion as they are relevant to the issue raised by the intervening plaintiffs, Aimco, Inc., and Louis Allocco.

On October 31, 1977, plaintiff filed an action against defendant for specific performance of their written agreement and other relief. Plaintiff joined as defendants herein Pelham Corporation and First Wilmette Corporation, the joint venturers who acquired the property. An amended complaint was filed January 11, 1978. Essentially, plaintiff sought one-half of the profits realized by defendant as a result of defendant's dealings with Sheridan, an accounting and damages for breach of the alleged partnership agreement. All funds accruing as a result of the Sheridan agreement are being held in escrow by the law firm of D'Ancona, Pflaum, Wyatt & Riskind, subject to further order of court.

On August 25, 1978, plaintiff filed a motion for summary judgment. The motion was denied on November 13, 1978, and the cause was then set for trial on November 29, 1978. On November 27, 1978, defendant's attorney moved for a continuance stating he was unprepared for trial because he had been involved in another case. The trial court denied his motion. On the day of trial, defendant made another motion for a continuance due to his "long depressive illness." This motion was also denied and the trial began. During cross-examination of the first ...

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