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06/04/87 David M. Kaufman v. Lake County Trust Company

June 4, 1987





510 N.E.2d 919, 157 Ill. App. 3d 926, 109 Ill. Dec. 851 1987.IL.754

Appeal from the Circuit Court of Cook County; the Hon. Alan E. Morrill, Judge, presiding.


JUSTICE JIGANTI delivered the opinion of the court. McMORROW, P.J., concurs. JUSTICE JOHNSON, Dissenting.


This is an action to recover real estate brokerage commissions by the plaintiff, David M. Kaufman Associates (Kaufman), from the defendants, collectively referred to as Smith. The ultimate issue on appeal is whether Kaufman has produced a ready, willing and able buyer to purchase the property upon terms proposed by Smith. It is undisputed that Smith produced a buyer. At issue, however, is the determination of what the terms proposed by Smith actually were and whether the buyer was ready, willing and able to accept those terms. (Solomon v. Baron (1984), 123 Ill. App. 3d 255, 259, 462 N.E.2d 756.) Smith filed a motion for summary judgment which was allowed. Kaufman also filed a motion for summary judgment which was denied. Kaufman appeals the summary judgment entered in favor of Smith, an issue that we will consider. Kaufman also attempts to appeal from the denial of its motion for summary judgment and asks this court to enter judgment in its favor. The denial of a motion for summary judgment, however, is not an appealable order; consequently, the arguments relating to that issue will not be considered. Paulson v. Suson (1981), 97 Ill. App. 3d 326, 328, 423 N.E.2d 243.

Smith's terms are explicated incrementally. Smith was the owner of a four-building 395-unit apartment complex located in Merrillville, Indiana. Smith entered into a listing agreement on August 8, 1983, with a broker, The Cambridge Group, in which Smith authorized The Cambridge Group to offer the property for sale. The only terms were that Smith agreed to pay a commission of "three percent (3%) of the final agreed sales price." The seller did not wish to offer any financing. The commission would also be paid to any other cooperating broker to whom The Cambridge Group would forward the listing information. Kaufman was a cooperating broker who received the listing from Cambridge.

The terms were amplified upon on December 19, 1983. A letter was sent to The Cambridge Group by Smith's attorney which stated that Smith would "seriously consider selling" the property for $7,800,000. The letter contained other terms common in the closing of a real estate transaction, such as provisions for a title policy, Disposition of personal property, earnest money, inspection of documents, plat of survey and a provision that the sale would be subject to all terms of mortgages, contracts and leases. The letter provided that all deeds and documents would be placed in escrow upon signing of a preliminary agreement or letter of intent.

Kaufman obtained a prospective purchaser, Marvin Heiman. On January 5, 1984, Smith's attorney further expanded upon the terms when he sent a letter of intent to the attorney for Heiman which stated that he was authorized by Smith to sell the property to Heiman under certain terms and conditions. The price was now listed as $8,000,000. Many of the other terms in the letter of intent were similar to the previous letter. The letter stated that a formal contract was to be prepared by the purchaser and tendered to Smith no later than January 16, 1984, and that Smith would have until January 19, 1984, to accept or reject the agreement. If the sellers were to reject the agreement, the letter of intent was to be null and void and have no legal effect.

Two terms of Smith's letter of intent are the focal point of this appeal. First, the letter of intent expanded upon the escrow in that it provided that, upon finalizing a formal agreement and an escrow agreement, the sellers would execute three letters of direction to the trustee assigning the beneficial interest of the sellers to the purchaser. It also provided that for the fourth trust the beneficial owners would deposit a direction to the trustee to execute a trustee's deed. Second, the letter provided that it should be the responsibility of the purchaser to obtain the approval of John Hancock Insurance Company relative to the assumption of existing mortgages. The letter of intent was "accepted" and signed by Heiman and an earnest money deposit of $25,000 was given to Smith.

Kaufman submitted, in accordance with Smith's letter of intent, a formal real estate contract. It is at this point that Smith's terms and the determination of whether Kaufman was ready, willing and able to meet those terms becomes unclear. Smith's attorney, by way of letter, returned the earnest money deposit and informed Kaufman that Heiman's contract was unacceptable and that therefore the offer to sell was terminated. The property was subsequently sold to another purchaser.

The formal written contract which was submitted by Heiman was, as would be expected, more particular than the letter of intent. Smith had two major objections to the proposed formal contract. The first concerned the date of the delivery of the letters of direction and the second, whether or not the consent by the mortgagee must be in writing. Smith contends that Heiman was not a buyer ready to purchase the property on his terms because of these provisions in Heiman's contract. We believe the law to be that if there is a sufficient amount of certainty as to the essential terms in the agreement between Smith and Heiman, so that it can be concluded that the parties intended to make a bargain and, if the terms objected to by Smith are incidental or collateral terms, rather than essential terms, then Heiman was a ready, willing and able buyer. The incidental or collateral terms could be filled in by the court.

The issue of whether the parties' agreements are sufficient to conclude that there is a contract has been addressed by the Restatement (Second) of Contracts and Professor Corbin. Restatement (Second) of Contracts, section 33, deals with certainty. Comment a of that section states:

"Where the parties have intended to conclude a bargain, uncertainty as to incidental or collateral matters is seldom fatal to the existence of the contract. If the essential terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken, there is no ...

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