APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION
508 N.E.2d 239, 155 Ill. App. 3d 417, 108 Ill. Dec. 78 1987.IL.324
Appeal from the Circuit Court of Cook County; the Hon. Reginald J. Holzer, Judge, presiding.
PRESIDING JUSTICE McNAMARA delivered the opinion of the court. WHITE and FREEMAN, JJ., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCNAMARA
Plaintiffs Raymond Cinman and Eugene Brodsky brought this action against defendant Reliance Federal Savings and Loan for specific performance of an alleged contract for sale of a building owned by Reliance. Plaintiff DeMoon Realty, Inc., filed suit against Reliance for a real estate broker's commission allegedly due and owing because it produced a buyer who was ready, willing, and able to consummate that sale. The two matters were consolidated for trial before Judge Reginald Holzer. Plaintiffs maintained that a letter, dated February 25, 1981, constituted a contract for the sale of the property in the amount of $1,620,000. Reliance countered that the letter was simply evidence of preliminary negotiations and that no contract came into existence. At the Conclusion of plaintiffs' case in a trial without a jury, the trial court granted Reliance's motion to dismiss Brodsky as a plaintiff, and he is not involved in this appeal. At the Conclusion of the case, the trial court found that the aforesaid letter did constitute a binding contract and it ordered Reliance to specifically perform according to the terms of that contract. The court also awarded DeMoon a commission of $45,000. Thereafter, DeMoon filed a motion for reconsideration of the amount of its award. The matter had been transferred to Judge Brian Duff, and, after a hearing but without taking evidence, Judge Duff granted DeMoon's motion for reconsideration and increased its award to $162,000.
On appeal, Reliance contends that the court erred in awarding specific performance because the letter of February 25, 1981, did not constitute a valid contract and because Cinman failed to provide an acceptable contract and other necessary documents to Reliance. Reliance also contends that DeMoon was not entitled to receive a broker's commission because no contract for sale was concluded. Reliance argues in the alternative that the trial court erred in increasing DeMoon's commission award of $45,000 to $162,000.
Reliance was a savings and loan association which was having serious financial problems in 1980. The institution's net reserves were being depleted by the high cost of its operations. Reliance's primary office was located in a building in Streamwood, Illinois. The building, which is the subject matter of this litigation, was a major asset of Reliance. Tenants in the building included a dentist, an employment agency, and a mortgage company. Because of Reliance's poor financial condition, the Federal Savings and Loan Insurance Commission was contemplating a forced merger between Reliance and another institution. Reliance had also been under supervision by the Federal Home Loan Bank Board for several years. Pursuant to that supervision, Reliance could not make loans in excess of $100,000 and could not dispose of any assets without first obtaining permission from the Federal authorities. Subsequent to the negotiations involved here, Reliance was merged with another savings and loan institution.
In early 1980, Reliance's board of directors authorized its president, Edward Ross, to procure a purchaser for the main office building. Reliance intended to sell the building and property to the purchaser and then lease the building back from the purchaser in a sale and leaseback arrangement. At that time, Carl DeMoon, owner of DeMoon, was a member of the board of directors of Reliance. Carl DeMoon attended several meetings with the other directors at the FHLBB in Chicago. Because of the information he had received at these meetings, Carl DeMoon was aware that in order to sell the Streamwood property, the sale would require ratification by the Federal authorities. Carl DeMoon resigned as a director of Reliance in September 1980 because he wished to become involved in locating a buyer for the Reliance property. He testified that Ross asked him to act as the broker in the sale of the Reliance property.
Cinman first became interested in the Reliance property in October 1980. Eugene Brodsky was Cinman's business partner. On December 10, 1980, Brodsky gave a written power of attorney to Cinman regarding the purchase of the property. Brodsky furnished the money while Cinman was to supply the expertise, and the two men were to be equal partners. After Cinman met with Ross, there were several meetings among Cinman and his broker, Saul Pulia, and Christine Caliendo, a broker-employee of DeMoon. These meetings led to the submission of a $1,575,000 offer to purchase the property by Cinman and Brodsky in a letter dated February 12, 1981. Caliendo sent the letter at Cinman's direction. The letter contained the following sentence: "If these terms of [ sic ] . . . [are] acceptable to you and your Board of Directors, a formal contract to purchase and earnest monies will follow." That offer, however, was not accepted by Reliance. Ross testified that during negotiations, he informed Cinman that any agreement arrived at would have to be submitted first to the Federal authorities for approval because of the supervisory situation. Cinman stated that Ross had represented that he had full authority to sell the property.
Cinman testified that during a telephone conversation on or about February 19, 1981, he and Ross agreed to the sale of the property and the leaseback to Reliance. The sale price was to be $1,620,000. According to Caliendo, Cinman called her on the same date to say that he had made an agreement with Ross. Cinman recited the terms of the agreement to Caliendo. Caliendo testified that she called Ross, who confirmed the figures given to her by Cinman.
Caliendo testified that on February 23, 1981, she spoke to another real estate broker who informed her that he had received a copy of an offer for the same property from Ross in the morning mail. The other broker asked if the property was still on the market. Caliendo informed Cinman that Ross had sent an offer to another broker. Caliendo stated that Cinman was angered and told her that he would not deal with Ross until he received something in writing. Caliendo called Ross, who still wanted to go ahead with the agreement and stated that he would send a telegram to that effect. On February 24, 1981, DeMoon received a telegram signed by R.E. Fischer, secretary of Reliance. It stated:
"I have received a call from Mr. Ross advising me to assure you that the proposed sale between Reliance Federal and yourself is in force. Kindly have contract and lease prepared by Friday, February 27, if possible."
Caliendo informed Cinman of the telegram, and he told her to proceed with preparation of the agreement.
On February 26, 1981, Caliendo hand delivered to Ross a three-page letter prepared by her and dated February 25. The letter purported to confirm the terms arrived at in the telephone conversation between Ross and Cinman. The letter described the property and included the following terms: a sales price of $1,620,000; a down payment of $340,000 consisting of a $100,000 payment at closing and $240,000 to be paid within 90 days of closing; a $1,280,000 mortgage from Reliance at 12 1/4% interest to be amortized over 29 years; a commitment fee of $25,600 and an option for Reliance to buy back the property at the end of 10 years for $2,050,000. The letter provided for the leasing back of the property to Reliance for a 10-year period if the buy-back option was exercised by Reliance and a 20-year period if it was not exercised. Rent for each of the 20 years was set forth in the letter. The letter also stated as follows:
"Having been engaged in negotiation since late October of 1980, I am sure all parties are most anxious to consummate this transaction; therefore, time being of the essence, formal Contracts to Purchase, and Lease Agreements will follow at the earliest possible date."
The following sentence was at the bottom of the letter. "The above written terms are hereby acknowledged and approved, and accepted this 26th day of February, 1981." ...