Hallmark & Johnson Properties, Ltd. v. Taylor
| Decision Date | 13 July 1990 |
| Docket Number | No. 1-89-2999,1-89-2999 |
| Citation | 559 N.E.2d 141,147 Ill.Dec. 141,201 Ill.App.3d 512 |
| Parties | , 147 Ill.Dec. 141 HALLMARK & JOHNSON PROPERTIES, LTD., an Illinois corporation, and Andreas Berggreen, d/b/a Mutual Realty, Plaintiffs-Appellants, v. Wesley TAYLOR, Defendant-Appellee. Wesley TAYLOR, Plaintiff-Appellee, v. HALLMARK & JOHNSON PROPERTIES, LTD., an Illinois corporation, Defendant-Appellant; Terrance W. Honan and Filip Rotheimer, Defendants. |
| Court | United States Appellate Court of Illinois |
Saul R. Wexler, Chicago, for plaintiffs-appellants.
Rieck and Crotty, P.C., Chicago (Jerome F. Crotty, Thomas M. Cannon, of counsel), for defendant-appellee.
Plaintiffs, Hallmark & Johnson Properties, Ltd. (Hallmark & Johnson), and Andreas Berggreen, doing business as Mutual Realty (Mutual Realty), brought this action in chancery against defendant, Wesley Taylor, seeking a declaration of their rights to earnest money deposited by Taylor pursuant to a contract for the purchase of certain real estate. Taylor filed a separate action at law which was consolidated with the plaintiffs' chancery action. The circuit court granted summary judgment in favor of Taylor, finding that the real estate sales contract had been cancelled and that Taylor was entitled to the earnest money he had deposited under the contract. The trial court also awarded Taylor prejudgment interest. Hallmark & Johnson and Mutual Realty have appealed, contending that the court erred in entering summary judgment in favor of Taylor and in awarding prejudgment interest.
In early March 1985, an agent for Mutual Realty, in cooperation with an agent of Hallmark & Johnson, showed the properties to Taylor. On March 7, 1985, Taylor and Rotheimer executed an installment agreement for the sale of the properties under which Taylor was obligated to make a down payment of $100,000 and Rotheimer was to hold a mortgage in the amount of $480,000, based upon a 30-year amortization. Interest on the mortgage was set at 10% for three years, and at 12% for an additional three years, with the [balance] due in 1991. Paragraph five of the supplementary provisions to the real estate sales contract provided as follows:
"[i]f this contract is terminated without Purchaser's fault, the earnest money shall be returned to Purchaser, but if the termination is caused by Purchaser's fault, then, at the option of Seller, and upon notice to Purchaser, the earnest money shall be forfeited and applied first to payment of broker's commission and any expenses incurred, and the balance paid to Seller."
Taylor tendered the sum of $30,000 as his earnest money deposit, which was to be held by Hallmark & Johnson in escrow for the benefit of both parties to the sales contract.
The original closing date of March 13, 1985, was postponed by mutual agreement due to a delay in processing the order for title commitment. When a title report was received showing numerous judgments against Taylor, the parties decided to proceed with a sale on articles of agreement and to place the properties into a land trust.
The closing was rescheduled for April 16, 1985. Although Rotheimer was ready, willing, and able to complete the sale, Taylor failed to appear at the closing because he had been arrested by federal law enforcement authorities. Two days later, on April 18, 1985, Rotheimer's attorney sent a letter to Taylor's attorney, with copies to Honan and Rotheimer, which stated that his client declared a default in the performance of the contract and that he would exercise his rights under paragraph five of the supplementary provisions to the contract. Neither Taylor nor his attorney responded or objected to this declaration of default and forfeiture.
Rotheimer's attorney also sent a letter on April 18, 1985, to Terrance Honan, the listing broker for Hallmark & Johnson, which stated that "Taylor was not a competent and qualified buyer" and that suit would be filed against Taylor. The letter indicated further that suit might be brought against the brokers and sales personnel if necessary and requested that the brokers waive or compromise their claims to commissions.
After April 24, 1985, Honan had no communications with Rotheimer in connection with the earnest money with the exception of one telephone call regarding the possibility of reimbursement for certain costs incurred by Rotheimer out of the earnest money.
On May 22, 1985, Honan sent a letter on behalf of Hallmark & Johnson to Rotheimer, Taylor, and their respective attorneys advising that "[they had] applied the earnest money deposit in part payment of the broker's commission." Hallmark & Johnson received no response or objection to this letter other than an inquiry by Rotheimer regarding his costs for the title report and survey.
Between June 10, 1985, and July 16, 1985, Hallmark & Johnson disbursed to the appropriate realtors and sales persons the earnest money deposited by Taylor. Seventeen months later, on December 9, 1986, an attorney acting on behalf of Taylor sent a letter to Hallmark & Johnson, its counsel, and Mutual Realty demanding return of the earnest money deposited by Taylor. This letter made reference to a cancellation of the real estate sales agreement executed by Rotheimer and Taylor. The purported cancellation agreement bore the date May 3, 1985, and stated that the parties agreed to cancel the real estate sales contract and provided further that the parties agreed that the earnest money was to be returned to Taylor, less $750 for title charges and attorney fees, $300 for survey, and $2,500 for lost rents incurred by Rotheimer.
Thereafter, Hallmark & Johnson filed its complaint in chancery for declaratory and other relief, and Taylor filed his complaint at law to which Rotheimer filed a counterclaim against Hallmark & Johnson and Honan. The actions were then consolidated in the chancery proceeding.
Rotheimer testified at his deposition that although Taylor's financial statement was not satisfactory, he agreed to reschedule the closing date to April 16, 1985, and to proceed with the sale by installment agreement. Rotheimer stated further that he had not seen or communicated with Taylor since Taylor's arrest in mid-April 1985. Although Rotheimer acknowledged his signature on the May 3, 1985, cancellation of the real estate sales contract, he did not recall when he signed it or whether Taylor's signature already appeared on the document when he signed it. Rotheimer also testified that it was possible that the date on the cancellation was incorrect or that he had signed the document in blank. Exhibit 9 to Rotheimer's deposition was a letter from Rotheimer's attorney to Taylor's counsel dated June 10, 1985. This letter indicated that Rotheimer had signed the cancellation of the contract in triplicate and requested that the documents be signed by Taylor and returned to Rotheimer's attorney.
Taylor testified at his deposition that he did not know whether the cancellation was signed on May 3, 1986 or on June 10, 1985, but stated that his counsel had sent the document to the real estate brokers. Taylor could not recall how many requests he had made for the return of his earnest money or whether any demand letters had been sent. Taylor stated further that he had received a copy of the April 18, 1985, letter from Rotheimer's attorney which declared a default and forfeiture of the contract. He also testified that he had received a copy of the May 22, 1985, letter from Honan which stated that pursuant to the declaration of forfeiture, the earnest money had been applied toward payment of the brokers' commissions.
Honan testified at his deposition that he had no conversations with Taylor after his arrest, and his only communication with Rotheimer after April 24, 1985, involved reimbursement for the cost of the survey incurred by Rotheimer. He stated further that the commissions were paid to the appropriate brokers and sales people between June 10, 1985 and July 16, 1985. Honan also testified that Rotheimer and Taylor never advised him that the contract had been cancelled and that the first time he saw a copy of the purported cancellation agreement was after the litigation had been commenced in February 1987.
After a hearing on the parties' cross-motions for summary judgment, the trial court entered judgment in favor of Taylor, finding that there was no question of material fact that Rotheimer and Taylor had agreed to release each other from the contract and that Taylor was entitled to the return of the earnest money. The court also sua sponte granted Taylor leave to amend his complaint to add a claim for prejudgment interest. The court did not grant plaintiffs leave to amend their complaint to include allegations of equitable estoppel, and plaintiffs did not request leave to amend. After an additional hearing, the court awarded Taylor prejudgment...
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