Court Opinion

ID: 9859896
Source: CourtListenerOpinion
Date Created: 2023-09-24 22:56:19.006916+00
Date Added: 2024-06-11T11:09:18.854269
License: Public Domain

Mr. PRESIDING JUSTICE SIMON, dissenting: My view is that Kenilworth did not have a ready, willing and able buyer at any time prior to March 7, 1974, when Sandquist terminated Kenilworth’s agency. Because the February 1,1974, offer was contingent upon the prospective purchaser obtaining a mortgage, it was only a proposal without consideration for an option to purchase. Had Sandquist accepted the offer, Triangle Builders would have tied up the property for 20 days without any reciprocal obligation to Sandquist. Triangle Builders was free to walk away at the end of 20 days and recover its earnest money deposit, while the proposal would have required Sandquist to commit his property to Triangle Builders during the 20 days. If during that period Sandquist found someone offering an all-cash deal at his price, and ready to sign without contingencies, he would have been precluded from concluding such a deal. Nothing in the listing agreement Sandquist gave Kenilworth indicates he intended to subject himself to such a contingency. The conditional nature of the February 1 offer submitted by Triangle Builders is demonstrated by the offer’s failure to set forth the pertinent details of the desired mortgage, such as the interest rate and the period of amortization, as is usually done where mortgage availability is a condition of a contract. (See, e.g., O’Brien v. Kawazoye (1975), 27 Ill. App. 3d 810, 812, 327 N.E.2d 236.) Even though an offer including such details still would have been inconsistent with the terms of the listing (see Katz v. Brooks (1965), 65 Ill. App. 2d 155, 158, 212 N.E.2d 508), it would have given Sandquist the information needed to decide whether to supply the required financing himself if Triangle Builders was unable to obtain the mortgage. It also would have given Sandquist a basis for determining the likelihood of Triangle Builders obtaining the financing, and in turn determining whether to tie up his property on the offered contingency. The February 1 offer further prejudiced Sandquist by another condition not included in the listing. It precluded him from extending any of the apartment leases pending the closing of the transaction. With more than one-third of the leases expiring within 90 days, it was clearly disadvantageous for Sandquist to be unable to negotiate with his tenants during the 20-day period while Triangle Builders remained uncommitted. The majority points out that Sandquist’s brief acknowledges that the April 8, 1974, offer, which did not contain a mortgage contingency, was a conforming offer even though it contained an identical prohibition against extending leases. The majority then concludes that this condition was not a valid reason for the rejection of the February 1 offer. From Sandquist’s viewpoint, a requirement not to extend leases was far more onerous in the context of the February 1 offer because it did not bind Triangle Builders to anything. In contrast, the April 8 offer committed Triangle Builders to the deposit of *25,000 in earnest money with no requirement that Sandquist return it. This fund would have mitigated damages he suffered from loss of tenants in the event the purchaser backed away. Thus, the reference to the apartment leases in the February 1 offer was an additional condition which justified Sandquist’s rejection. Neither the mortgage contingency nor the restriction on extension of leases was mentioned in the listing agreement between Kenilworth and Sandquist as an acceptable condition of any offer submitted. Therefore, regardless of whether Sandquist had second thoughts about selling his property or whether he acted out of a concern about his income tax liability in the event of a sale, his rejection of the February 1 offer was justified. A broker who produces a buyer offering to purchase on terms which vary from those contemplated by the listing agreement is not entitled to a commission unless the seller accepts the terms offered. (Sharkey v. Snow (1973), 13 Ill. App. 3d 448, 452, 300 N.E.2d 279.) Although the majority states that inserting contingency clauses in real estate contracts while financing arrangements are being made, where the listing agreement does not specify what form the contract should take or the mechanics of the sale, is not an unusual practice, the record in this case does not support the conclusion that this is a trade custom or usage in the real estate business. Even if it were, it would be necessary to establish such a trade custom or usage by evidence of what percentage of the purchase price the usual mortgage contingency clause provided for and what the interest rate and period of amortization was required to be to satisfy the trade custom or usage. The record is devoid of such evidence. I believe the majority improperly discounts the authority of Katz v. Brooks. That opinion holds that a broker who produces an offer containing even a more specific mortgage contingency clause than the one in this case has failed to produce a buyer ready, willing and able to meet the seller’s requirements where the listing agreement is silent as to financing. Although in Katz the offer was produced 2 days before the termination of the listing agreement, the court did not rely on this fact. And while the court did rely on the offer’s failure to meet the owner’s requested price as a ground for the decision, it used the mortgage contingency clause as an alternative ground for the decision. The opinion dealt at length with the significance of the mortgage contingency clause, holding: “The purchaser was not legally bound to buy the property under the proposed contract since he had the discretionary right to cancel it if the leases contained ‘unusual clauses or other provisions’ and since by its terms the contract became null and void if the mortgage was not obtained. In Cooper v. Liberty Nat. Bank of Chicago, 332 Ill. App. 459, 75 N.E.2d 769, the court rejected a broker’s claim for his commission where the contract of purchase contained a mortgage contingency clause substantially similar to that in the instant case. The court stated that the contract was conditional, not binding, and that the purported purchaser was not presently ‘able’ to buy the subject property. Plaintiff in the instant case went to great lengths to prove that the proposed purchaser had the assets necessary to finance the deal. However, since the contract became null and void unless the *80,000 was obtained through a mortgage, the worth of the purchaser was of no significance whatsoever.” (Katz, at 158-59.) I regard Katz as well as Sharkey v. Snow as adequate authorities for the conclusion that the mortgage contingency as well as the restriction on lease extensions gave Sandquist the legal right to reject the offer. Having failed to produce a buyer prepared to meet Sandquist’s terms, Kenilworth should have been denied recovery as a matter of law. The majority reasons that Sandquist’s rejection of the offer and subsequent revocation of the listing agreement made the issue of whether Triangle Builders had command of the funds required for the transaction within the 20-day period a question of fact for the jury. Even if this had been a proper issue for the trier of fact, the evidence does not support Kenilworth’s recovery on this basis. In Epstein v. Howard (1955), 5 Ill. App. 2d 553, 558, 126 N.E.2d 162, this court said: “In William C. Bender & Co. v. Tritz, the late Judge Tuohy stated the general rule announced in McCabe v. Jones, 141 Wis. 540, to the effect that financial ability presupposes sufficient funds on hand or ability to command the necessary funds in the time allowed by the offer. The term ‘command’ is important. In Walton v. Hudson, 83 Ohio App. 330, 79 N.E.2d 921, 924 cited by plaintiff the court said the cases uniformly hold the purchaser cannot show ability by depending on third persons ‘ “in no way bound to furnish the funds.” ’ We think command here means ‘To have control of.’ ” Epstein, at 558. The only way Triangle Builders could have commanded the necessary funds within the 20-day period was by obtaining a mortgage commitment, but the evidence indicates that neither of the two lenders which Triangle Builders approached was willing to make a binding commitment during the period. Roy Gromke of Triangle Builders testified that he made written applications to Northwest Federal and Fidelity Federal for a loan of *712,500, but he had no written commitment on February 1, and he could not say whether Triangle Builders was able to close the deal without a mortgage. While Mr. Holtzer of Northwest testified that he orally agreed to loan 80 percent of the lower of the purchase price or appraised value, no document reflecting this commitment was ever prepared. Mr. Pettise of Fidelity testified that he orally committed Fidelity to Mr. Gromke for *712,500, but there was to be no written commitment until Mr. Gromke had a signed contract from Sandquist, the lender had made an inspection of the interior, and the loan had been approved' by both the loan committee and the board of directors of Fidelity. There was no evidence that Fidelity ever made an interior inspection. Given these contingencies, Triangle Builders did not have command of funds from Fidelity. In fact, Fidelity never extended a written mortgage commitment to Triangle Builders on Sandquist’s property. The only written commitment actually obtained by Triangle Builders came from Northwest more than 2 months after the first offer was rejected and also after Kenilworth’s authority was terminated. And not only was it tardy, but the commitment was for only *680,000, a sum which did not satisfy the mortgage contingency in the February offer. Thus, Triangle Builders did not have the financial ability to proceed with the purchase on February 1 when the offer was submitted or at any time up to the termination of Kenilworth’s agency on March 7. Mr. Pettise’s testimony does not support the conclusion that Sandquist prevented Triangle Builders from obtaining financing from Fidelity by refusing to sign the February 1 offer. If a contract signed by Sandquist was in fact the only obstacle to obtaining a loan from Fidelity, Triangle Builders could have submitted an offer without the mortgage contingency and then delivered the resulting contract to Mr. Pettise to obtain the commitment. The majority seems to believe that oral commitments from Northwest and Federal made prior to any offer by Triangle Builders represented adequate command of the required cash. If this was so, Triangle Builders would not have incorporated the mortgage contingency into the offer, particularly after Sandquist stated his objection to it. In short, Triangle Builders’ insistence upon the mortgage contingency clause indicates that it did not have command of the necessary funds notwithstanding the oral commitments it claimed to have prior to February 1. It is entirely speculative whether Triangle Builders could have secured its financing sooner if Sandquist had accepted the February 1 contingent offer. In fact, both Mr. Gromke and Mrs. Manker of Kenilworth testified that an MAI appraisal was a prerequisite for a mortgage, and Mrs. Manker told Sandquist at the end of February that the only way Triangle Builders could submit a full price cash offer was to have an MAI appraisal. The appraisal was not conducted until March 1, and, according to Sandquist, Gromke told him a week after the appraisal that the appraisal figure was *100,000 less than Sandquist’s price of *950,000. Sandquist’s testimony was corroborated by the loan Northwest later offered. As pointed out above, Mr. Holtzer said Northwest was willing to loan 80 percent of the appraised value. The loan of *680,000 that institution offered in writing on April 3,1974 is 80 percent of *850,000. Undoubtedly, this is the explanation for Triangle Builder’s inability to demonstrate that it had adequate financing until a month after Sandquist revoked Kenilworth’s authority. The evidence is clear that Triangle Builders did not have financing prior to April 8 and thus was not a ready, willing and able buyer prior to March 7, when Sandquist terminated Kenilworth’s agency. There was not sufficient evidence to submit to the jury on the issue of whether Triangle Builders was in command of the necessary funds prior to March 7,1974. The verdict returned was, therefore, against the manifest weight of the evidence. Pedrick v. Peoria & Eastern R.R. Co. (1967), 37 Ill. 2d 494, 229 N.E.2d 504; Belleville National Savings Bank v. General Motors Corp. (1974), 20 Ill. App. 3d 707, 313 N.E.2d 631; Yates v. Cummings (1972), 4 Ill. App. 3d 899, 282 N.E.2d 261. Garrett v. Babb (1975), 24 Ill. App. 3d 941, 322 N.E.2d 217, does not support Kenilworth’s right to receive a commission. In that case, the seller accepted an earnest money deposit, shook hands with the buyer and said, “You have bought yourself a good farm.” In the case before us, Sandquist rejected the offer and did not accept any earnest money. And in Garrett the buyer managed to arrange for additional financing during the time the seller took to prepare a satisfactory contract and submit it to the buyer, a period of approximately 34 to 41 days. In this case, it was not until 66 days after its unaccepted offer that Triangle Builders indicated to Sandquist that it had arranged for financing. As the majority points out, the parties agree that Sandquist had the power to revoke Kenilworth’s listing at any time. (Nicholson v. Alderson (1952) , 347 Ill. App. 496, 107 N.E.2d 39; 5 Ill. L. & Prac. Brokers §28 (1953) .) Although Kenilworth would have earned its commission if Sandquist revoked the agency after the broker had produced a purchaser able, ready and willing to buy, that did not occur here. The first indication that Triangle Builders was prepared to meet the terms specified by Sandquist in its agreement with Kenilworth was on April 8,1974,1 month after Sandquist revoked the agency. I would reverse and remand so that Kenilworth can recover on a quantum meruit basis for its expenses and the value of its services.