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Connecticut General Life Insurance Co. v. Chicago Title and Trust Co.

August 12, 1983


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 78 C 3520 -- George N. Leighton, Judge.

Author: Cudahy

Before CUDAHY and ESCHBACH, Circuit Judges, and SWYGERT, Senior Circuit Judge.

CUDAHY, Circuit Judge. Plaintiff-appellee Connecticut General Life Insurance Company sued defendants-appellants, who are real estate developers ("the Developers"), for breach of a real estate financing contract. The Developers disputed Connecticut General's claim, insisting that they had not accepted Connecticut General's offer and thus no binding contract had been created. The district court held that the Developers had accepted the offer. We affirm.


Connecticut General is an institutional mortgage lender which loans money for real estate development. The Developers are several individuals who build commercial real estate in the Chicago area. B.B. Cohen and Company ("B.B. Cohen") is Connecticut General's regional correspondent mortgage broker in Chicago. Benjamin Cohen, President of B.B. Cohen, acted as the Developer's agent in the loan negotiations with Connecticut General. In September 1976, B.B. Cohen, through Benjamin Cohen and on behalf of the Developers, submitted an application for commercial real estate mortgage financing to Connecticut General. On January 12, 1977, Connecticut General made a written offer to the Developers to provide such financing. Connecticut General's offer was in the form of a detailed commitment letter and provided that the Developers' "acceptance of the agreement must be accompanied by a fee of $600,000, in cash" or "a certificate of deposit in form and substance satisfactory to [Connecticut General], payable to [Connecticut General], and maturing no later than thirty days beyond the expiration of this agreement."*fn1 App. at B. The commitment letter also provided that "this agreement will not become effective unless on or before January 28, 1977, [the Developers] accept by signing the attached copy of this letter and mailing to [Connecticut General] the fee provided . . . together with the signed copy." Id.

In response to Connecticut General's letter of January 12, the Developers wrote B.B. Cohen on January 28 and requested an extension of time until March 11, 1977. On March 2, 1977, the Developers wrote Connecticut General requesting modifications in the commitment letter. Among the requested modifications was one that would allow the Developers to pay the $600,000 fee by paying $300,000 in cash and giving Connecticut General a $300,000 letter of credit. Together with the March 2 letter, the Developers sent Connecticut General a check for $300,000.

Connecticut General and the Developers thereafter met and negotiated the modification requests. On May 16, 1977, Connecticut General made a new offer incorporating some of the requested modification. The May 16 offer allowed the Developers until May 31 to accept and provided that the Developers could pay the $300,000 balance of the commitment fee in a certificate of deposit payable to, and satisfactory in form to, Connecticut General. Connecticut General did not modify its commitment letter so as to allow the Developers to give Connecticut General a $300,000 letter of credit in lieu of cash or a certificate of deposit.

The Developers' lawyer, David Malfar, responded in writing to Connecticut General's May 16 offer on May 31, 1977. Malfar asked for an extension of time for acceptance of the offer. Malfar did not mention the certificate of deposit requirement. Connecticut General again extends its offer, first to July 29, and then, at the Developers' request, to August 12, 1977.

The Developers signed their acceptance of Connecticut General's commitment letter on August 9, 1977, and delivered it to B.B. Cohen on August 11. At the Developers' request, the vice-president of B.B. Cohen, Jay Strauss, gave the Developers written acknowledgment of "receipt of your acceptance of [the] commitment," and advised the Developers that he would forward "this acceptance" to Connecticut General on their behalf. PX 20 (emphasis supplied).

The following day, on August 12, 1977, Strauss wrote to Connecticut General:

We are pleased to enclose copies of two amendments to the above captioned commitment, fully executed, by the borrowers. These were delivered to us yesterday, satisfying the August 12 expiration date.

The borrowers have respectfully requested that the second $300,000 of the good faith deposit be allowed in a letter of creidt issued by the Continental National Bank of Chicago rather than a certificate of deposit.

These funds will be forwarded as soon as you advise us of your decision in this matter.

PX 21 (emphasis supplied). On August 15, Conneticut General advised Strauss that the letter of credit ...

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