Arthur Rubloff & Co. v. Drovers Nat. Bank of Chicago

• Decision Date: 29 January 1980
• Docket Number: No. 67187,No. 79-122,67187,79-122
• Court: United States Appellate Court of Illinois
• Parties: , 36 Ill.Dec. 194 ARTHUR RUBLOFF & CO., an Illinois Corporation, Plaintiff-Appellant, v. DROVERS NATIONAL BANK OF CHICAGO, a National Banking Association, as Trustee under Trust, and Harold Robbins, Defendants-Appellees.

Page 614

400 N.E.2d 614

80 Ill.App.3d 867, 36 Ill.Dec. 194

ARTHUR RUBLOFF & CO., an Illinois Corporation, Plaintiff-Appellant, v. DROVERS NATIONAL BANK OF CHICAGO, a National Banking Association, as Trustee under Trust No. 67187, and Harold Robbins, Defendants-Appellees.

No. 79-122.

Appellate Court of Illinois, First District, Second Division.

Jan. 29, 1980.

Slutzky & Slutzky, Rodney C. Slutzky, Chicago, for plaintiff-appellant.

Law Offices of Kenneth S. Rosenblum, Chicago (James A. Smith, Chicago, of counsel), for appellee Harold Robbins.

DOWNING, Justice:

Plaintiff, Arthur Rubloff & Co., filed a two-count complaint in the circuit court of Cook County against defendant Drovers National Bank of Chicago (subsequently known as Drovers Bank of Chicago), a trustee holding legal title to certain real estate located in Chicago, and defendant Harold Robbins, the beneficiary of the trust. Recovery of a brokerage commission was sought for the sale of the real estate allegedly effectuated through the efforts of plaintiff's agent, Stanley Rubin, a licensed real estate broker. Motions to dismiss the complaint made by each defendant pursuant to section 45 of the Civil Practice Act (Ill.Rev.Stat.1977, ch. 110, par. 45) were granted by the trial court. Plaintiff appeals only that portion of the trial court's order dismissing the action as to defendant Robbins. Since the bank is not a party to this appeal, the designation, defendant, will hereinafter refer only to defendant Robbins.

Count I of the complaint alleged the following. On or about March 8, 1976, plaintiff through its agent, a licensed real estate broker, entered into a written six-month exclusive listing agreement with the defendant for the sale of certain property which defendant owned and managed. About one month later, plaintiff's broker tendered to defendant an offer to purchase the property from Vincente V. Benig. The terms of the offer did not meet those specified in the listing agreement and the defendant rejected the offer. Just prior to May 2, 1977, about seven months after the exclusive listing agreement had expired, plaintiff's broker contacted the defendant and inquired whether his property was still for sale. Defendant replied that the property had not been sold and was still available for purchase. On or about May 2, 1977, plaintiff's broker tendered to defendant an offer of purchase from the same Vincente V. Benig. The defendant told the plaintiff's broker that the offer was acceptable, but that the tenant who was then occupying the property had an option to buy the property as a right of first refusal upon any acceptable offer of purchase made on the property. Defendant then tendered the offer to his tenant. The tenant exercised his option to purchase the property upon the same terms and conditions as the offer tendered by plaintiff's broker. Plaintiff alleged that it had performed all acts required of it by the exclusive listing agreement in procuring a purchaser for the property; that the property was sold to the tenant as a result of plaintiff's diligent efforts; and that defendant had refused to pay the brokerage commission to which plaintiff was entitled.

Count II of the complaint alleged that plaintiff had procured a ready, willing, and able purchaser for the property; that plaintiff performed such services without any written agreement with the defendant, but that defendant accepted these services and the benefits therefrom and knew plaintiff expected to be compensated; and that to deny plaintiff restitution would constitute an unjust enrichment to the defendant.

In granting defendant's motion to dismiss, the trial court found: (i) that Count I of the complaint failed to state a cause of action in that there was no allegation that plaintiff procured a ready, willing, and able buyer acceptable to the defendant before the time his written employment contract expired pursuant to Ill.Rev.Stat.1977, ch. 111, par. 5737 ¹; and (ii) that Count II failed to state a cause of action in that plaintiff broker failed to produce a ready, willing, and able buyer unconditionally acceptable to the defendant, or that plaintiff broker was the procuring cause of the ultimate sale to the defendant's tenant.

I.

In accordance with the traditional rules regulating pleading in civil actions, the complaint of a real estate broker who brings an action to recover compensation must set forth facts which show that the broker is entitled to receive the compensation. A broker's right to recover compensation for his services must be based on his employment to render services for which the compensation is claimed, and he must have been employed by the person from whom compensation is sought. (5 I.L.P. Brokers § 72 at 553.) The relationship which exists between a broker and an owner of property is one of agency and is created by a contract of employment between the parties. Bau v. Sobut (1st Dist. 1977), 50 Ill.App.3d 732, 737, 8 Ill.Dec. 486, 365 N.E.2d 724; Doss v. Kirk (3rd Dist. 1956), 8 Ill.App.2d 536, 539, 132 N.E.2d 49.

Although the statute of frauds in Illinois requires that any contract for the sale of land must be in writing (Ill.Rev.Stat.1977, ch. 59, par. 2), it makes no such requirement with regard to real estate brokers' contracts of employment. No particular form is required; all that is necessary is that the broker act with the consent of his principal, either by written instrument, orally, or by implication from the conduct of the parties. (Bau v. Sobut ; Doss v. Kirk ; Van C. Argiris Co. v. Caine Steel Co. (1st Dist. 1974), 20 Ill.App.3d 315, 323, 314 N.E.2d 361; Graff v. Whitehouse (1st Dist. 1966), 71 Ill.App.2d 412, 417, 219 N.E.2d 128.) A broker's contract, in whatever form, must possess the elements which are essential to contracts generally. There must be a meeting of the minds of the parties through offer and acceptance, the contract must be definite in its terms (Bau v. Sobut ), and there must be sufficient consideration to support the contract (O'Dea v. Throm (3rd Dist. 1928), 250 Ill.App. 577, 582).

Plaintiff argues that under the facts as alleged in Count I of the complaint, a meeting of the minds through offer and acceptance occurred when defendant told the plaintiff that the offer he had submitted was acceptable and that this acceptance was a ratification of the original written contract.

According to the complaint, defendant's acceptance of the offer submitted by plaintiff was made conditional on his tenant's right of first refusal. Before acceptance creates a binding and enforceable contract, it must comply strictly with the terms of the offer. (Brook v. Oberlander (1st Dist. 1964), 49 Ill.App.2d 312, 317, 199 N.E.2d 613.) Where one accepts an offer conditionally or introduces a new term into the acceptance, no acceptance occurs, rather it becomes in effect a counterproposal which must be accepted by the offeror before a valid contract is formed. (Brook v. Oberlander at 318, 199 N.E.2d 613; Krause v. Buttino (2nd Dist. 1954), 4 Ill.App.2d 75, 78-9, 123 N.E.2d 337; Corbin, Contracts § 82 (1963).) Because defendant's tenant exercised his option to purchase, no acceptance of the offer presented by the plaintiff ever occurred.

Yet it is plaintiff's contention that once the defendant found the offer conditionally acceptable, his job as a broker was complete in that the property was in effect sold as it could make no difference to the defendant in monetary terms whether the plaintiff's client or the tenant became the ultimate purchaser, and that it was the submission of the offer which triggered the sale to the tenant. This argument assumes a finding that plaintiff was employed by defendant at the time the offer was submitted.

We cannot agree with the plaintiff that defendant's conditional acceptance of the offer amounted to a ratification of the exclusive listing agreement which had formerly established an employment relationship between the plaintiff and the defendant. The exclusive listing agreement expired by its own terms, seven months prior to the time plaintiff submitted the offer to defendant. Thus at the time plaintiff submitted the offer to defendant, the employment relationship between the parties had lawfully terminated and plaintiff's acts were unauthorized.

It is true that an alleged principal may become liable to compensate the broker for his unauthorized acts by subsequent ratification of the broker's acts. (Carlson v. Marshall (1st Dist. 1912), 174 Ill.App. 438.) But it is necessary that the party seeking ratification allege the essential elements necessary for a finding that ratification has occurred. (Farmers National Bank v. Trautwein (2nd Dist. 1923), 228 Ill.App. 356, 362.) These elements include timely knowledge on the part of the alleged principal that the broker is participating in the transaction and assuming to act for him and some act or declaration, whether it be express or implied, which indicates his acceptance of the broker as his agent. (12 C.J.S. Brokers §§ 44, 63.) Ratification will not be implied from a principal's acts where at the time he was not fully informed of the facts, nor will it be implied from acts or conduct which are as consistent with an intention not to ratify as to ratify. Farmers National Bank v. Trautwein at 361-62.

The only communication alleged to have been made between plaintiff and defendant after the listing agreement expired and prior to the submission of the offer was an inquiry by plaintiff as to whether defendant's property was still for sale and the response by defendant that his property was still available for purchase. No further conversation or specifics are alleged in the complaint. It cannot be said, based on this conversation, that defendant had full knowledge of the fact that plaintiff would conduct negotiations in his behalf. Plaintiff's inquiry could have been made for any number of reasons. At no time did plaintiff inform defendant that it...