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Palos Bk. & Trust Co. v. Kardaras





APPEAL from the Circuit Court of Cook County; the Hon. JAMES L. HARRIS, Judge, presiding.


The parties entered into a contract, the plaintiff to sell and the defendants to buy, certain real estate. The contract was contingent upon the defendants being able to obtain financing in a specified amount or a lesser amount accepted by defendants. The only issue before this court is whether the trial court, as trier of fact, erred in ruling that the defendants, who paid $2,000 to secure a mortgage commitment for a lesser amount than specified in the contract from one bank while seeking secondary financing, had not accepted that first mortgage as the sole financing within the meaning of the real estate contract. We agree with the trial court that they did not and affirm.

Palos Bank and Trust Company, the plaintiff, as trustee, was the owner of certain real estate. A contract was entered into between seller and Sirles and Son Realty Company, Inc., giving the latter exclusive right to list and sell the property for 24 hours. Despite contrary testimony at trial, the date on the contract which was in the record and stipulated to is January 21, 1978. A contract to sell the property for $275,000 to defendants Kardaras and Berios was executed on October 21, 1978. This contract was conditioned on the purchasers beng able to procure, within 60 days, a firm commitment for a loan to be secured by a mortgage "in the amount of $225,000, or such lesser sums as PURCHASER accepts" with interest not to exceed 10% a year to be amortized over 25 years, the commission not to exceed 3%. First Federal of Chicago (First Federal) on February 2, 1979, offered defendants a 25-year, $200,000 mortgage, at 10 3/4%. According to the letter, the commitment would terminate two months from the date of the letter. However, to secure the commitment, a nonrefundable fee of $2,000 would have to be paid by February 12. The loan approval was subject to several requirements including the condition that there be no secondary financing. A copy of this letter was sent to Dominick Ferro, a salesman of Sirles and Son.

The Bank of Hickory Hills (Hickory Hills) on February 9, 1979, sent a letter approving a seven-year assignment of beneficial interest loan for $30,000 at 13.70%, the commitment to expire in five days. Upon acceptance of the commitment, the letter was to be signed by defendants and returned to Hickory Hills. The letter was neither signed nor returned to Hickory Hills. Furthermore, no appraisal fee or credit report fee was paid to Hickory Hills although the commitment was made subject to both conditions.

On March 2 David Hill, a vice president of the beneficial owner, demanded that defendants close the transaction, stating that the financing contingency was satisfied by the $200,000 loan from First Federal and the $30,000 from Hickory Hills. Defendants responded that the loan commitments were unacceptable because (1) the commitment with First Federal was for $200,000 and not $225,000 and it forbade secondary financing; (2) even if that prohibition would be overlooked, the arrangement with Hickory Hills was unacceptable because of the time period and interest rate.

All of these facts were stipulated by the parties before trial. It was also stipulated that the sole issue between the parties was whether defendants accepted the financing made available to them as acceptable but different than the terms specifically set forth in the contract.

Seller sued for forfeiture of the $10,000 held in escrow by Sirles and Son. Defendants counterclaimed for its recovery. The case was decided on the merits after a full trial before the judge, sitting as trier of fact as well as law. The court ruled for the defendants on both the claim and counterclaim.

At trial, three witnesses testified: Dominick Ferro, salesman of Sirles and Son, David Hill, stipulated to be plaintiff's agent, and Gus Kardaras, one of the defendants.

Ferro at the time in question had been a salesman for Sirles and Son. He testified that there had already been a listing agreement on behalf of Sirles and Son with the plaintiff and he was instrumental in having a contract executed. He admitted that if the plaintiff won the case, the company would receive 25% of the award and he personally would receive 12 1/2% of that.

As a real estate man, he helped defendants to get a mortgage. He suggested certain banks. Ferro denied that he ever went with Kardaras to the banks but agreed that an office manager did go with Kardaras to Hickory Hills. That officer called the bank to arrange for the loan review application. While Ferro testified that it was his opinion that the First Federal commitment met the terms of the contingency clause of the real estate contract, he had recommended that Kardaras go to Hickory Hills because Ferro knew Kardaras needed $225,000 by way of mortgage. The first mortgage was acceptable, but it obviously was not enough since it was only for $200,000 and not $225,000.

According to Ferro, Kardaras telephoned Ferro and informed him of his acceptance by First Federal. Likewise sometime after February 9, 1979, Kardaras telephoned him and said he had been accepted by Hickory Hills. First, Ferro stated that Kardaras did not express any satisfaction or dissatisfaction regarding the latter. Later he contradicted himself and said Kardaras had indicated that the financing issued and available was satisfactory. This was after February 9, but the witness did not know how soon after that date. At another point he admitted that he did not remember most of the telephone conversations.

Ferro stated that Kardaras did not indicate his dissatisfaction untill three or four weeks later. The thing he was dissatisfied with was that he had to transfer his assets from Continental Bank to Hickory Hills.

Ferro also testified that he sent copies of the commitment to Hill. Ferro had received the letters from the banks.

Hill, at the time in question, had been the executive vice president of all marketing of multi-family and single-family and land developments of Town and Country, the beneficial owners of the property. He testified that he recommended to Ferro that he direct the purchaser to First Federal. Ferro called him about the middle or end of the first week of February and informed him that a first mortgage commitment had been issued by First Federal. About 48 hours later, Ferro telephoned him and informed him that a second mortgage had been arranged, that a copy of the commitment would be forthcoming and Hill should "pull title; they had a deal." Ferro sent him the copies of the commitment letters. Neither ...

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