Sawyer Realty Group, Inc. v. Jarvis Corp., No. 54516

• Court: Supreme Court of Illinois
• Writing for the Court: CLARK
• Citation: 89 Ill.2d 379,432 N.E.2d 849,59 Ill.Dec. 905
• Parties: , 59 Ill.Dec. 905, 28 A.L.R.4th 189 SAWYER REALTY GROUP, INC. et al., Appellants, v. JARVIS CORPORATION et al., Appellees.
• Docket Number: No. 54516
• Decision Date: 02 February 1982

Page 849

432 N.E.2d 849 89 Ill.2d 379, 59 Ill.Dec. 905, 28
A.L.R.4th 189 SAWYER REALTY GROUP, INC. et al., Appellants,
v.
JARVIS CORPORATION et al., Appellees. No. 54516. Supreme Court of Illinois. Feb. 2, 1982.

[89 Ill.2d 382]

Page 850

[59 Ill.Dec. 906] Boodell, Sears, Sugrue, Giambalvo & Crowley, Chicago (N. A. Giambalvo and Martha L. Ashenhurst, Chicago, of counsel), for appellants.

Lord, Bissell & Brook, Chicago (Robert A. Knuti and Thomas C. Walsh, Chicago, of counsel), for appellees Reed Beidler, Lark Management Co., Jarvis Corp., and LaSalle Nat. Bank, as trustee under trust No. 101307.

Ruben, Kaplan & Rosen, Skokie (Bernard M. Kaplan, Skokie, of counsel), for appellees Abel R. Kaplan and Greenleaf Realty Management Co., Inc.

CLARK, Justice:

The plaintiffs, Sawyer Realty Group, Inc., et al., asserted a claim against the defendants based on an alleged violation of the Real Estate Brokers and Salesmen License Act (Ill.Rev.Stat.1977, ch. 111, par. 5701 et seq.; hereinafter referred to as the Brokers Licensing Act). Any claim against the named defendants Harris Trust and Savings Bank, La Salle National Bank, Jarvis Corporation, Continental Illinois National Bank and Trust Company of Chicago, and Pacific Mutual Life Insurance Company, as owners, or in any other capacity as interested parties, is not at issue here. The question for review involves count I of the plaintiffs' complaint concerning the alleged conduct of defendants Reid L. Beidler, Abel R. Kaplan, Lark Management Company, and Greenleaf Realty Management Company, Inc. (hereinafter referred to as defendants), who are real estate brokers licensed under the Brokers Licensing Act. The owners of a certain piece of real estate situated in the city of Chicago listed the property with these defendants for sale. According to the complaint, the plaintiffs, as prospective purchasers, negotiated with the defendants for the purchase of the property. The negotiations began in [89 Ill.2d 383] November of 1978 and continued over a period of several months, ending in August of 1979. An offer of $1,675,000 dated June 4, 1979, together with an earnest money deposit of $50,000, was submitted to the defendants. Count I of the plaintiffs' complaint asserts that approximately 10 days later the offer and earnest money were returned and at that time the defendants informed the plaintiffs that the owners had sold the property to "others." Count I further asserts that shortly thereafter the plaintiffs learned from "other sources" that the property was purchased by one or both of the defendants Beidler and Kaplan, and that defendants Beidler, Kaplan, Lark, and Greenleaf made misrepresentations to and concealed information from the plaintiffs. The plaintiffs claimed that the defendants' conduct violated rules and regulations promulgated under the Brokers Licensing Act by the Department of Registration and Education pursuant to provisions of the Act. The trial court dismissed count I of the plaintiffs' complaint, which asked the circuit court of Cook County to imply a private right of action for compensatory damages. The appellate court affirmed the ruling of the trial court. (91 Ill.App.3d 1134, 47 Ill.Dec. 560, 415 N.E.2d 565.) We granted plaintiffs' petition for leave to appeal from that judgment.

A motion to dismiss pursuant to section 45 of the Civil Practice Act (Ill.Rev.Stat.1977, ch. 110, par. 45) admits all facts well

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[59 Ill.Dec. 907] pleaded. (Acorn Auto Driving School, Inc. v. Board of Education (1963), 27 Ill.2d 93, 96, 187 N.E.2d 722.) The action should not be dismissed unless it is apparent that no set of facts could be proved that would entitle the plaintiffs to relief. (Fitzgerald v. Chicago Title & Trust Co. (1978), 72 Ill.2d 179, 187, 20 Ill.Dec. 581, 380 N.E.2d 790; Edgar County Bank & Trust Co. v. Paris Hospital, Inc. (1974), 57 Ill.2d 298, 312 N.E.2d 259; Fechtner v. Lake County Savings & Loan Association (1977), 66 Ill.2d 128, 5 Ill.Dec. 252, 361 N.E.2d 575.) The plaintiffs claim that the defendants purchased the property from the owner on terms less favorable[89 Ill.2d 384] than those offered by the plaintiffs. Thus for the purpose of judging the adequacy of count I of the plaintiffs' complaint, we must accept that factual allegation as true.

Section 8(a) of the Brokers Licensing Act empowers the Department of Registration and Education to make and enforce reasonable regulations in connection with the issuance, revocation and suspension of a broker's certificate (Ill.Rev.Stat.1977, ch. 111, par. 5715(a)). The Department may suspend or revoke a certificate of registration or censure a registrant (Ill.Rev.Stat.1977, ch. 111, par. 5732), where the registered broker is found guilty (Ill.Rev.Stat.1977, ch. 111, par. 5732(e)) of violating published regulations promulgated by the Department to enforce the Act (Ill.Rev.Stat.1977, ch. 111, par. 5732(e)(21)).

The Department published revised regulations in 1979. Included in that publication were rules V(A) and (C):

"V. Disclosure

(A) A registrant shall disclose to any and all purchasers, prospective purchasers, lessors or lessees and to any and all sellers, or prospective sellers, or parties to an exchange, any and all material knowledge he may have as soon as it may be practical for him so to do. This rule shall not be construed to require a registrant to violate his duties under the laws of agency.

(C) A registrant shall disclose to all parties in any transaction, in writing, any and all interest he or it does or may have as an owner, purchaser, seller, renter, or lessor, or otherwise in the real estate constituting the subject matter thereof or in such transaction, directly or indirectly. " (Department of Registration and Education Rules and Regulations Promulgated for the Administration of the Real Estate Brokers and Salesmen License Act (1979 rev. ed.).)

These rules were duly promulgated pursuant to statutory authority. As such they have the same force and effect as [89 Ill.2d 385] the statute. (Brown v. Sexner (1980), 85 Ill.App.3d 139, 39 Ill.Dec. 947, 405 N.E.2d 1082; Williams v. New York Central R. R. Co. (1949), 402 Ill. 494, 501, 84 N.E.2d 399; B. Schwartz, Administrative Law sec. 59, at 157 (1976); United States v. Mersky (1960), 361 U.S. 431, 437-38, 80 S.Ct. 459, 463, 4 L.Ed.2d 423, 429.) These substantive promulgations drafted pursuant to the express language of the Brokers Licensing Act are accorded as much weight as the language the General Assembly used in defining other violations. People ex rel. Colletti v. Pate (1964), 31 Ill.2d 354, 359, 201 N.E.2d 390.

For the purposes of this appeal we accept as true the plaintiffs' assertions that they relied upon the advice, recommendations and suggestions of defendants in the preparation of their offer to purchase. If, as alleged, the defendants dealt with the plaintiffs while secretly in a position personally adverse to and in conflict with that of plaintiffs and concealed material facts in failing to communicate their personal interest to purchase the property for themselves, then such actions on the part of the defendants constitute violations of sections V(A) and (C) of the rules and regulations promulgated by the Department of Registration and Education pursuant to the Act.

A broker's relationship to his employer is one of principal-agent. (Georgacopulos v. Hruby (1925), 316 Ill. 439, 147 N.E. 376; City of Chicago v. Barnett (1949), 404 Ill. 136, 88 N.E.2d 477; Arthur Rubloff & Co. v. Drovers National Bank (1980), 80

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[59 Ill.Dec. 908] Ill.App.3d 867, 36 Ill.Dec. 194, 400 N.E.2d 614.) That fiduciary relationship of principal and agent requires full disclosure. (Moehling v. W. E. O'Neil Construction Co. (1960), 20 Ill.2d 255, 170 N.E.2d 100.) In 1928 this court held that in the absence of such a relationship there is no duty to disclose material facts. (Fish v. Teninga (1928), 330 Ill. 160, 161 N.E. 515.) That holding is no longer viable. The primary fiduciary duties that run from the broker to the seller are not undermined by the obligation the broker owes to the prospective buyer. (See Bliesener v. Baird & Warner, Inc. (1967), 88 Ill.App.2d 383, 232 N.E.2d 13; Duffy v. Setchell [89 Ill.2d 386] (1976), 38...