Stefani v. Baird & Warner, Inc., 85-2773

• Decision Date: 12 June 1987
• Docket Number: No. 85-2773,85-2773
• Citation: 109 Ill.Dec. 444,510 N.E.2d 65,157 Ill.App.3d 167
• Parties: , 109 Ill.Dec. 444 Phil and Karen STEFANI, Plaintiffs-Appellants, v. BAIRD & WARNER, INC., Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 65

510 N.E.2d 65

157 Ill.App.3d 167, 109 Ill.Dec. 444

Phil and Karen STEFANI, Plaintiffs-Appellants, v. BAIRD & WARNER, INC., Defendant-Appellee.

No. 85-2773.

Appellate Court of Illinois,

First District, Fifth Division.

June 12, 1987.

John J. Lag, Chicago, for plaintiffs-appellants.

Beermann, Swerdlove, Woloshin, Barezky & Berkson (Alvin R. Becker, Steven P. Garmisa, of counsel), Chicago, for defendant-appellee.

Justice MURRAY delivered the opinion of the court:

Plaintiffs, Phil and Karen Stefani, appeal from a final order of the circuit court of Cook County dismissing their second amended complaint against defendant, Baird & Warner, Inc., a real estate broker, pursuant to defendant's section 2-615 motion (Ill.Rev.Stat.1983, ch. 110, par. 2-615).

Plaintiffs' second amended complaint, which contained four counts, alleged that in 1983 plaintiffs contacted Jennifer Sisto, an employee of defendant, to assist them in finding a suitable residence to purchase. Defendant, through Sisto, allegedly orally agreed to act as plaintiffs' agent and was to receive a commission from the seller as consideration for their representation of plaintiffs.

In February 1984, Sisto arranged for plaintiffs to inspect a residence located in Chicago and owned by Aldona Harris. Prior to that time, Harris had executed an exclusive listing agreement with Heritage Realty for the period of January 3, 1984, through March 3, 1984.

On February 18, Sisto prepared a real estate purchase offer on behalf of plaintiffs, which they executed and submitted to Harris for acceptance. Thereafter, a number of counteroffers were exchanged between the parties from February 18 to April 19. While the negotiations continued, defendant, through another one of its employees, contacted Carlos and Mary Jane Fernandez with respect to purchasing the Harris property. The Fernandezes subsequently offered a higher purchase price for the Harris property than the one offered by plaintiffs, and defendant submitted the offer to Harris on behalf of the Fernandezes.

On April 19, defendant received a listing of the real estate from Harris. On the same day, a contract of sale was entered into between Harris and the Fernandezes for the purchase of the involved residence, and the transaction subsequently closed. As a result of defendant's representation of the Fernandezes, it received a commission from Harris in connection with the sale of her property, as well as a commission from the Fernandezes relating to the sale of their former residence. Plaintiffs were never advised of defendant's representation of the Fernandezes or of their offer to purchase the Harris property.

On April 27, plaintiffs filed an action for specific performance against Harris and defendant. Summary judgment was entered thereafter in favor of Harris and against plaintiffs. Plaintiffs were granted leave to file an amended complaint, they did so, and, upon defendant's motion, the amended complaint was stricken on March 15, 1985.

On April 17, 1985, plaintiffs filed their second amended, four-count complaint against defendant. Count I alleged that defendant breached its fiduciary duty of disclosure owed by defendant to plaintiffs based on an alleged principal-agent relationship. Count II charged defendant with violation of certain provisions of the Real Estate License Act of 1983 (Ill.Rev.Stat.1983, ch. 111, par. 5818(e)(1), (3), (5), (15), (18)) and Rule V(A) of the Department of Registration and Education enacted pursuant to the Real Estate License Act. Count III alleged a violation of section 2 of the Consumer Fraud and Deceptive Business Practices Act (Ill.Rev.Stat.1983, ch. 121 1/2, par. 262) and a violation of section 2 of the Uniform Deceptive Trade Practices Act (Ill.Rev.Stat.1983, ch. 121 1/2, par. 312). Count IV claimed a tortious interference with a prospective business advantage.

On June 13, 1985, the trial court granted defendant's motion to strike all four counts of plaintiffs' second amended complaint for failure to state a cause of action, pursuant to section 2-615 of the Code of Civil Procedure (Ill.Rev.Stat.1983, ch. 110, par. 2-615), and entered its order striking same. Thereafter, plaintiffs indicated their election to stand on their second amended complaint. On August 21, 1985, the trial court entered its final order dismissing plaintiffs' cause of action against defendant, and this appeal followed.

For purposes of ruling on a motion to dismiss, all well-pleaded facts contained in a complaint must be taken as true and all inferences therefrom must be drawn in favor of the nonmovant. (Palatine National Bank v. Charles W. Greengard Associates, Inc. (1983), 119 Ill.App.3d 376, 74 Ill.Dec. 914, 456 N.E.2d 635.) A complaint should not be dismissed for failure to state a cause of action unless it clearly appears that no set of facts could be proved under the pleadings entitling a plaintiff to relief. 119 Ill.App.3d 376, 74 Ill.Dec. 914, 456 N.E.2d 635.

In the instant case, plaintiffs argue that count I of their second amended complaint stated a cause of action against defendant for breach of its fiduciary duties owed to them based upon a principal-agent relationship between the parties. Defendant argues that no agency relationship existed between it and plaintiffs and, instead, that it was a subagent of Heritage, the listing broker, and it owed a fiduciary duty to the seller, not plaintiffs.

It is well established that the existence and extent of an agency relationship may be established by circumstantial evidence based upon an examination of the situation of the parties, their acts, and other relevant circumstances (St. Ann's Home For The Aged v. Daniels (1981), 95 Ill.App.3d 576, 51 Ill.Dec. 64, 420 N.E.2d 478); an agency relationship need not be based on an express appointment and acceptance (Lilly v. County of Cook (1978), 60 Ill.App.3d 573, 17 Ill.Dec. 946, 377 N.E.2d 136). "Agency is a consensual, fiduciary relationship whereby the principal has the right to control the conduct of the agent, and the agent has the power to effect the legal relations of the principal." (Milwaukee Mutual Insurance Co. v. Wessels (1983), 114 Ill.App.3d 746, 749, 70 Ill.Dec. 550, 449 N.E.2d 897.) A prima facie case of agency can be created by inference or presumption and, unless the parties' relationship is so clear as to be undisputed, the existence and scope of an agency relationship are questions of fact to be determined by the trier of fact. St. Ann's Home For The Aged v. Daniels (1981), 95 Ill.App.3d 576, 51 Ill.Dec. 64, 420 N.E.2d 478.

We further observe that although under the law of agency a real estate broker generally cannot be the agent of both the buyer and seller, the law excepts those cases where a broker's dual agency is disclosed to the buyer and seller, and the broker acts with the consent of each of the parties. (Cole v. Brundage (1976), 36 Ill.App.3d 782, 344 N.E.2d 583.) We also note that notwithstanding the fact that a real estate broker is generally viewed as an agent of the seller of property (see Arthur Rubloff & Co. v. Drovers National Bank (1980), 80 Ill.App.3d 867, 36 Ill.Dec. 194, 400 N.E.2d 614), Illinois courts have held that "if a buyer requests a broker's assistance in obtaining a particular piece of property, the broker may be held to be the buyer's agent for that transaction, even though the broker is paid nothing by the buyer and it is expected that he will receive a fee from the seller." (Emphasis added.) (Duffy v. Setchell (1976), 38 Ill.App.3d 146, 149, 347 N.E.2d 218; see also Lerk v. McCabe (1932), 349 Ill. 348, 182 N.E. 388; Spindler v. Krieger (1958), 16 Ill.App.2d 131, 147 N.E.2d 457; Hyman v. Burmeister (1919), 216 Ill.App. 98.) Under such circumstances, an agent in the exercise of good faith is bound to keep his principal informed on all matters that may come to his knowledge pertaining to the subject matter of the agency. (Lerk v. McCabe (1932), 349 Ill. 348, 182 N.E. 388.) "An agent must not put himself, during the continuance of his agency, in a position adverse to that of his principal." 349 Ill. 348, 361, 182 N.E. 388; see also A.T. Kearney, Inc. v. INCA International, Inc. (1985), 132 Ill.App.3d 655, 87 Ill.Dec. 798, 477 N.E.2d 1326.

In the instant case, plaintiffs claimed in count I of their second amended complaint that they contacted Jennifer Sisto, a licensed real estate salesperson employed by defendant Baird & Warner, to represent them in the purchase of a residence; "that Baird, through Sisto, held themselves out and represented to Plaintiffs that they were the agent of the Plaintiffs for purposes of purchasing a residence"; that "the understanding and agreement of the parties was that the defendant, Baird & Warner, Inc., was to receive consideration for said agency from the seller of the property that the purchasers purchased"; and that Sisto arranged for the inspection of the Harris property for the purpose of procuring a purchase offer from the Plaintiffs, she prepared a real estate sale contract for the property which plaintiffs executed, she submitted plaintiffs' offer to purchase the property to Heritage Realty, she transmitted to plaintiffs and Harris (through Heritage) their respective counteroffers concerning the sale price of the property and the date of acceptance of the offer, and she conducted other negotiations on behalf of plaintiffs continually through April 19, 1984. Plaintiffs further claimed defendant breached its agency relationship by soliciting and representing the Fernandezes in the sale of the Harris property while negotiations were still being conducted between plaintiffs and Harris, and by failing to disclose that the Fernandezes were interested in the property and had submitted a higher purchase price offer to Harris than the one submitted by plaintiffs.

Although, as defendant argues, plaintiffs did not initially contact Sisto to purchase a particular piece of property on their behalf, we...