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Edens View Realty v. Heritage Enterprises





APPEAL from the Circuit Court of Cook County; the Hon. EDWIN M. BERMAN, Judge, presiding.


Plaintiff brought an action to recover a real estate broker's commission in connection with the sale of defendant's nursing home located in Ottawa, Illinois. Following a bench trial, the trial court entered judgment in plaintiff's favor for $35,000 plus costs of the suit. Defendant appeals from this judgment, and contends on review that (1) the written listing agreement between plaintiff and defendant was void; (2) plaintiff was not the procuring cause of the sale of defendant's nursing home; (3) plaintiff was not entitled to compensation from defendant under the theory of quantum meruit; (4) plaintiff's award should have been limited to that of a reasonable finder's fee; (5) plaintiff's award was erroneous since it acted as agent for both the purchaser of the nursing home and defendant without the latter's knowledge; (6) plaintiff's recovery should have been denied because it employed an unlicensed individual who negotiated on its behalf for the listing and sale of the nursing home; (7) the trial court erred in excluding evidence of other properties brought to plaintiff's attention by this unlicensed individual; and (8) the trial court improperly relied upon facts not in evidence in rendering judgment for plaintiff.

Plaintiff cross-appeals, contending that it was improperly denied prejudgment interest on the award it received.

Defendant employed plaintiff on April 3, 1975, as a real estate broker to sell its nursing home. This employment agreement was based upon a letter sent by defendant to plaintiff under which defendant "commissioned" plaintiff to represent defendant in the sale of its nursing home, and further agreed to pay plaintiff a 5 percent commission for its services. The letter stated:

"* * * I would like to officially commission your firm in representing us in the sale of our nursing home in Ottawa, Illinois.

Our organization will agree to a 5 per cent commission of the sales price of the building payable at closing."

This letter was the result of a conversation between Alex Green and Joseph Warner, defendant's chief executive officer. In March of 1975, Warner originally contacted Green, who was then employed by First Health Care Corporation (First Health Care) to see if First Health Care was interested in purchasing its nursing home. Green told Warner that First Health Care was not interested.

Several weeks later, Green telephoned Warner to see if the nursing home was still available. Green told Warner that he was no longer employed by First Health Care, but was aware of an agency that specialized in buying and selling nursing homes and offered to inform the agency of the proposed sale of defendant's nursing home. Warner expressed an interest in hiring the agency, and sent Green a letter with information about the nursing home indicating that defendant's asking price for the facility was $750,000. Green then turned the letter over to Leon Zarkin, president of plaintiff.

Green contacted Warner again, and asked him if defendant would be willing to list the nursing home with plaintiff, whose usual commission for such a sale was 7 percent. Warner thought that commission to be too high, so Green told him to write Zarkin a letter expressing what defendant was willing to pay for plaintiff's services. Warner sent Zarkin the letter dated April 3, 1975, which "commissioned" plaintiff to sell the nursing home for 5 percent of the purchase price of the building.

A few days later, Zarkin contacted David Gorenstein, a nursing home administrator with whom he had prior business dealings, and informed him of the availability of defendant's nursing home. Zarkin also told him about the purchase price, the size, the lot, and all other information he had about the nursing home. After Zarkin told Gorenstein that plaintiff was serving as broker for defendant, the two unsuccessfully attempted to arrange a time convenient for both to view the property. Eventually, Zarkin gave Warner's telephone number to Gorenstein and suggested that he contact Warner directly.

Gorenstein called Warner in April of 1975 and made an appointment to visit the property. They later met without Zarkin in Ottawa, Illinois, to negotiate the sale of the nursing home. Lengthy negotiations ensued between Gorenstein and Warner for the next few months. During these negotiations, Zarkin called Gorenstein to check on the progress of the negotiations, but Zarkin never visited the nursing home nor met with Warner. Then Zarkin received a letter from Warner dated June 21, 1975, which purportedly terminated the April 3, 1975, listing agreement between plaintiff and defendant. The letter stated that defendant would not pay the fee designated in the April 3, 1975, letter because plaintiff's services as a real estate broker were "unsatisfactory." Warner's letter further stated:

"As I said we recognize the fact that you passed on our name to the potential buyer. A reasonable fee may be negotiated for that service and nothing more."

In June of 1975, Gorenstein was having difficulty arranging conventional financing for the purchase of the nursing home. Therefore, Gorenstein and Warner orally agreed the following month that Gorenstein would purchase the nursing home on contract for $700,000 rather than the original asking price of $750,000. The written contract between Gorenstein and defendant to that effect was executed in October of 1975. Thereafter, defendant refused plaintiff's demands for the brokerage fees owing from the sale of the nursing home.

The trial court found for plaintiff in the amount of $35,000 plus costs of suit, which was the full 5 percent commission on the $700,000 purchase price of the nursing home. Plaintiff's request for prejudgment interest on the award was denied. The trial court indicated that plaintiff's award was justified on the basis of both the listing agreement and under a theory of quantum meruit.


Defendant's initial contention is that the written listing contract between plaintiff and defendant was void for violation of section 19 of the Real Estate Brokers and Salesmen License Act (the Act) (Ill. Rev. Stat. 1977, ch. 111, pars. 5701-5743), which provides in pertinent part:

"No registrant shall obtain any written listing contract which does not provide for automatic expiration within a definite period of time. * * *. Any listing contract not containing a provision for automatic expiration shall be void." Ill. Rev. Stat. 1977, ch. 111, par. 5737.

Defendant argues that its April 3, 1975, letter to plaintiff is a "listing contract" according to the Act, and since it contained no expiration date for plaintiff's services, it is void and bars plaintiff's recovery.

Plaintiff responds by asserting that defendant's letter does not constitute a contract, but is merely a "listing" and falls outside of the Act.

Defendant's letter "commissioned" plaintiff to sell defendant's nursing home in return for payment of 5 percent of the purchase price. Plaintiff made no oral or written promises in response to this letter to use its best efforts to sell the property. In short, defendant's letter was merely an offer of a unilateral contract which was accepted by the actual rendition of plaintiff's services in securing a purchaser for the nursing home. In Dixon v. Betten (1971), 2 Ill. App.3d 708, 277 N.E.2d 355, the court analyzed a similar listing agreement and found Corbin on Contracts § 50 (1963), in a section titled "Real Estate Brokerage and Other Agency Cases," to be helpful in explaining why only a unilateral contract exists:

"`The cases with which we are now dealing include those in which an owner merely puts his land in the broker's hands, promising him a commission for the service of producing an able and willing purchaser, the broker making no return promise that he can or will produce such a purchaser. Such a transaction as this is an offer of a unilateral contract, an offered promise by the owner creating in the broker a power of ...

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