O'LEARY v. CROW

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Docket Number

No. 77-366

Attorney(S)

Marks, Katz, Walker Blatt, of Chicago (Donald L. Johnson, of counsel), for appellants. George V. Bobrinskoy, Jr., and Kenneth J. Jurek, both of Chicago (Mayer, Brown Platt, of counsel), for appellees.

Judges

Mr. PRESIDING JUSTICE JIGANTI delivered the opinion of the court:

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Smart Summary

Factual and Procedural Background

The plaintiffs, a partnership and trustees operating as Bennett Kahnweiler Associates, licensed real estate brokers, filed suit seeking damages equal to a commission or brokerage fee allegedly due in connection with a real estate transaction between Trammell Crow Company and Holleb Company. The defendants moved to strike and dismiss, which was denied, but after discovery, the trial court granted summary judgment for the defendants. The plaintiffs appealed, contending genuine issues of material fact existed.

Bennett Kahnweiler Associates specialized in industrial and commercial real estate brokerage. Trammell Crow Company owned commercial real estate in the Chicago area, and defendants Trammell Crow and Allan Hamilton were involved in soliciting tenants and representing the company. Holleb Company, a family-owned wholesale grocery business, was seeking to relocate and consolidate its operations.

Beginning in the late 1950s and intensifying in the late 1960s, Bennett Kahnweiler, on a nonexclusive basis, searched for suitable relocation properties for Holleb Company. Bernard O'Leary, one of the plaintiffs, worked closely with Bert Holleb, a Holleb Company executive, exchanging information about potential properties. By late 1972, Holleb Company focused on relocating to the northwest suburbs, including inspecting the "Clearing" property in Bensenville, which was then being negotiated for sale to Trammell Crow Company. Neither O'Leary nor the Hollebs were aware of those negotiations at that time.

Trammell Crow Company had knowledge of Holleb Company's relocation plans since May 1970 through its representative John Wauterlek, who had unsuccessfully attempted to negotiate with Holleb Company prior to 1972. O'Leary first contacted Allan Hamilton of Trammell Crow in January 1973, arranging a meeting with Bert Holleb to discuss Holleb's relocation plans and potential properties, including some that O'Leary had shown to Holleb but not the "Clearing" property, which was not discussed.

Following this meeting, O'Leary focused on the Goodyear property, where Holleb Company entered into a contract to purchase subject to soil tests. Meanwhile, another broker, Bert Hamilton of Nicholson, Porter List, contacted Holleb Company about the availability of the "Clearing" property, which Trammell Crow had acquired. After soil tests revealed problems with the Goodyear property, Holleb Company ceased pursuing that deal and began negotiations for leasing the "Clearing" property, ultimately entering into a 30-year lease in April 1974.

The plaintiffs alleged that they had brought the Holleb deal to the defendants and that Allan Hamilton had made implied promises recognizing Holleb Company as O'Leary's prospect, entitling plaintiffs to a commission because they introduced the Hollebs to the property ultimately leased.

Legal Issues Presented

Whether the trial court erred in granting summary judgment by finding no genuine issue of material fact existed regarding the plaintiffs' entitlement to a brokerage commission.
Whether the plaintiffs were the procuring cause of the transaction between Holleb Company and Trammell Crow Company.
Whether implied promises made by defendant Allan Hamilton to O'Leary created an enforceable brokerage agreement entitling plaintiffs to a commission.

Arguments of the Parties

Plaintiffs' Arguments

The plaintiffs contended that they brought the Holleb deal to the defendants and that Allan Hamilton implicitly recognized Holleb Company as O'Leary's prospect.
They argued it was customary and understood by Hamilton that if a deal was made with Holleb Company, O'Leary would be entitled to a brokerage fee.
The plaintiffs asserted that implied promises by Allan Hamilton prevented depriving them of commissions they might earn.
They maintained that the existence of such implied promises and custom and practice should be presented to a jury rather than decided on summary judgment.

Defendants' Arguments

The defendants argued that the plaintiffs were not the procuring cause of the transaction because their contact with Holleb Company ended before negotiations for the "Clearing" property began.
They contended that the subsequent negotiations involving another broker, Bert Hamilton, were independent and thus broke the chain of causation for plaintiffs' claim.
The defendants denied any implied brokerage agreement with plaintiffs and emphasized the absence of any express acceptance or sufficient facts to imply such a contract.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Camp v. Hollis (1947), 332 Ill. App. 60, 74 N.E.2d 31	Broker must prove sale or procurement of buyer ready, willing, and able to purchase on stipulated terms; broker must be procuring cause of sale to recover commission.	Established general rule for broker commission claims applied to determine plaintiffs’ burden of proof.
Waghorne v. Hogstrom (1956), 11 Ill. App.2d 345, 137 N.E.2d 497	Same as above regarding broker’s right to commission.	Reinforced the requirement that broker be procuring cause of sale.
Modern Tackle Co. v. Bradley Industries, Inc. (1973), 11 Ill. App.3d 502, 297 N.E.2d 688	Broker’s right to commission depends on procuring cause of the sale.	Used to emphasize the necessity of proving procuring cause.
Mammen v. Snodgrass (1957), 13 Ill. App.2d 538, 142 N.E.2d 791	Broker entitled to commission only if procuring cause; prior introduction insufficient if intervening broker consummates sale.	Applied to conclude plaintiffs were not procuring cause due to intervening broker’s successful negotiations.
McGuire v. Carlson (1895), 61 Ill. App. 295	When multiple brokers are employed, commission belongs to the efficient cause of the sale, not merely the first to engage purchaser’s attention.	Quoted to clarify that initial introduction does not guarantee commission if another broker is procuring cause.
Moehling v. Brickman (1968), 98 Ill. App.2d 156, 240 N.E.2d 210	Intervention of another broker who successfully negotiates sale breaks claim of original broker to commission.	Used to support finding that plaintiffs’ initial introduction was insufficient due to subsequent independent negotiations.

Court's Reasoning and Analysis

The court analyzed the timeline and interactions between the parties, noting that Trammell Crow Company had knowledge of Holleb Company's relocation plans since 1970 through its own representative. The January 1973 meeting arranged by O'Leary did not disclose any new interest, and the "Clearing" property was not discussed at that meeting. After the meeting, O'Leary's contact with the defendants ceased as he focused on the Goodyear property, which Holleb Company contracted to purchase.

The court found that the eventual lease of the "Clearing" property resulted from independent negotiations initiated by another broker, Bert Hamilton, after the Goodyear deal collapsed. This intervening broker's involvement constituted a new and independent procuring cause, severing the link between the plaintiffs' initial introduction and the final transaction.

Regarding the plaintiffs' claim of implied promises by Allan Hamilton, the court held that no express or implied brokerage contract was formed. The facts showed only an agreement to meet and discuss Holleb's needs, which was insufficient to imply a brokerage agreement. The court concluded that reasonable inferences from the evidence supported only a fruitless meeting, and the subsequent transaction was consummated independently of the plaintiffs.

Because no genuine issue of material fact existed as to procuring cause or existence of a brokerage agreement, the court affirmed the grant of summary judgment for the defendants.

Holding and Implications

The trial court's grant of summary judgment in favor of the defendants is affirmed.

The court held that the plaintiffs were not the procuring cause of the transaction between Holleb Company and Trammell Crow Company due to the intervening and successful negotiations by another broker. Additionally, the evidence was insufficient to establish an implied brokerage contract with the defendants. The decision directly resolves the dispute between the parties by denying the plaintiffs' claim for commission, without establishing new precedent beyond applying established principles of brokerage law in Illinois.

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BERNARD G. O'LEARY et al., Plaintiffs-Appellants, v. TRAMMELL CROW et al., Defendants-Appellees.

Mr. PRESIDING JUSTICE JIGANTI delivered the opinion of the court:

The plaintiffs, a partnership of three partners and numerous trustees for 30 family trusts doing business as Bennett Kahnweiler Associates, brought an action to recover damages in an amount equal to a commission or brokerage fee allegedly due them in connection with a real estate transaction between the Trammell Crow Company and Holleb Company. The defendants' motion to strike and dismiss was denied. Following discovery, the court granted the defendants' motion for summary judgment. The plaintiffs appeal from that order, contending that it was error for the trial court to enter summary judgment where there were genuine issues of material fact.

The plaintiffs, Bennett Kahnweiler Associates, are licensed real estate brokers specializing in the brokerage and development of industrial and commercial real estate. Trammell Crow Company owns real estate for commercial development in various locations throughout the Chicago area. The defendants, Trammel Crow and Allan Hamilton, solicit tenants for properties owned by Trammel Crow Company; Hamilton is the Chicago representative of Trammel Crow Company. Holleb Company is a family owned and operated wholesale grocery business which has three divisions.

In the late 1950's, the Holleb firm discussed the relocation and consolidation of its business operations into one location and had from time to time reviewed its real estate requirements with Louis Kahnweiler of Bennett Kahnweiler. In the late 1960's, this effort to consolidate was intensified. Sometime prior to October 1969, Bennett Kahnweiler, on a nonexclusive basis, began a search for property sites in the Chicago area which might be suitable for Holleb Company's relocation. It was at this time that Bernard O'Leary, one of the plaintiffs, became involved in the Hollebs' search for a new location. During this time, O'Leary worked principally with Bert Holleb, president of the Oh Boy Division and a director of Holleb Company. O'Leary would telephone Bert Holleb whenever he learned of newly available property which might be suitable for the Hollebs' purposes, and Holleb would contact O'Leary whenever he came across anything, asking O'Leary to check it out. During the period from 1969 to 1972, the Hollebs constantly reviewed their needs and revised their requirements. By the fall of 1972, the Hollebs had decided that they wanted to relocate to the northwest suburbs, and were concentrating their efforts in that area. One of the parcels of land inspected on December 20, 1972 was the "Clearing" property in Bensenville. Since the Hollebs expressed interest in the "Clearing" property, O'Leary contacted Clearing and was told that there were no plans to develop the property. However, at that very time, Clearing was apparently negotiating a deal with the Trammell Crow Company through Allan Hamilton to sell the property to the Trammell Crow Company. O'Leary and the Hollebs were not aware of these discussions.

While the first contact between O'Leary and the defendants concerning Holleb Company came in January 1973, the Trammell Crow Company was aware of the Hollebs' desire to relocate as early as May 1970. Trammell Crow Company business records reflect attempts by John Wauterlek, a representative of Trammell Crow Company to negotiate a deal with Holleb Company for a new place of business. Wauterlek spoke with Neil Holleb by phone on May 25, 1970, and discussed relocation plans. Subsequently, on May 27, 1970, and October 21, 1971, Wauterlek wrote to Neil Holleb and on November 19, 1971, to Bert Holleb, regarding various sites as possibilities. However, these overtures were unsuccessful and Wauterlek's communications with the Hollebs ceased in 1972. O'Leary admitted that Neil Holleb had mentioned to him that he had met with someone from Trammell Crow "possibly several years prior" to 1973.

In early January 1973, O'Leary called Allan Hamilton of Trammell Crow to arrange a meeting to discuss the Hollebs' relocation plans. On January 11, 1973, O'Leary, Bert Holleb, and Allan Hamilton met at Hamilton's office, principally to discuss the Hollebs' interest in some property in Elk Grove Village owned by the Crow Company (the "Crow property"). At that meeting, the parties generally reviewed the purpose of the meeting: who the Hollebs were, why and what they were trying to do, why they might be interested in the Crow property, how much land they thought they would require, what other properties had been inspected, how the Hollebs had decided to focus on the area near O'Hare International Airport. O'Leary indicated to Hamilton that the Hollebs were giving serious consideration to a parcel of land in Elk Grove known as "the Goodyear parcel." O'Leary also mentioned that he had shown the Mohawk Country Club and a "Klefstad" property to the Hollebs and may have mentioned the "Clearing" property, but did not discuss the "Clearing" property because the Clearing owners had told him they had no plans for development. Allan Hamilton suggested with regard to at least three of the properties mentioned, including the Goodyear property and property in the southwest suburban area owned by the Santa Fe Railroad, that Crow could purchase the property and then build-to-suit and lease it back to the Hollebs. However, the Hollebs preferred to own their property. Allan Hamilton did not mention that he had met with representatives of the Clearing owners three days before, on January 8, 1973, and had discussed terms for purchase of that property with them. Allan Hamilton showed O'Leary and the Hollebs plats of the property he had available, but apparently Bert Holleb found little that was suitable for their needs.

On the following day, January 12, 1973, O'Leary spoke with Allan Hamilton regarding the availability of the Santa Fe property and was told that the railroad was not interested in selling to the Hollebs. O'Leary had no further contact with Allan Hamilton or the Trammell Crow Company until more than five months later.

After the meeting with Allan Hamilton, the Hollebs decided that the Goodyear property was the parcel of land they wanted to acquire, and all of O'Leary's work for them centered on negotiations aimed at working out a deal for that property. At the end of February 1973, the Hollebs entered into a contract to purchase the Goodyear property, subject to their approval of the results of soil tests.

On April 5, 1973, while the Hollebs were still awaiting the results of the soil tests on the Goodyear property, Bert Hamilton of the brokerage firm of Nicholson, Porter List, telephoned Robert Holleb, president of the Holleb Company, regarding the availability of the property the Hollebs were then occupying and inquiring as to when they would be vacating that property. Robert Holleb told Bert Hamilton that he was uncertain whether they would be leaving their present location due to the possibility of certain problems because of the soil condition of the property they had contracted to acquire. Bert Hamilton asked if the Hollebs were considering alternate sites, and when Holleb answered affirmatively, Hamilton told him he might have something for him and would get back to him. Later that afternoon, Bert Hamilton again spoke with Robert Holleb and advised him that the "Clearing" property in Bensenville, which by this time had been acquired by the Trammell Crow Company, was available. The Hollebs expressed interest in that property, and later that month, Bert Hamilton brought Neil and Robert Holleb to meet with Allan Hamilton to discuss the "Clearing" property in Bensenville which the Trammell Crow Company had acquired. Discussions and negotiations continued throughout May and into June regarding that property. During this time, the Hollebs were still deciding whether or not to proceed with the Goodyear deal. The soil tests had shown a large area of peat in the ground which would prove costly to remove and refill in order to provide a suitable base for the proposed buildings and would have justified a cancellation of the contract by Holleb Company under a contingency clause. Finally, on June 20, 1973, the Hollebs informed O'Leary's firm, Bennett Kahnweiler, that they were not going through with the Goodyear deal.

On June 22, 1973, O'Leary spoke with Bert Holleb to discuss suitable alternatives to the Goodyear property. Holleb mentioned that Neil Holleb was negotiating with Allan Hamilton about developing a facility on the "Clearing" property in Bensenville. On June 26, 1973, O'Leary had a telephone conversation with Allan Hamilton during which he learned that the Hollebs had been brought back to the Trammell Crow Company by Bert Hamilton of Nicholson, Porter List.

In April 1974, the Hollebs entered into a 30-year lease with Trammell Crow Company for a portion of the "Clearing" property in Bensenville.

The plaintiffs filed this action alleging that they had brought the Holleb deal to the defendants, that the defendant, Allan Hamilton, made implied promises to O'Leary that he recognized Holleb Company as O'Leary's prospect, that it was custom and practice and so understood by Allan Hamilton that if a deal was made with Holleb Company, O'Leary would be entitled to a fee for having brought the prospect to the developers, and that since O'Leary had introduced the Hollebs to the property which they ultimately leased from the Trammell Crow Company, the plaintiffs were entitled to a commission.

• 1, 2 The general rule in Illinois is that before a broker may recover a commission allegedly due him he must prove that he has sold the property in question or procured a buyer ready, willing and able to purchase at the stipulated terms, that the sale was the proximate result of the broker's efforts, or that he was the procuring cause of the sale. ( Camp v. Hollis (1947), 332 Ill. App. 60, 66, 74 N.E.2d 31; Waghorne v. Hogstrom (1956), 11 Ill. App.2d 345, 137 N.E.2d 497 (abstract); Modern Tackle Co. v. Bradley Industries, Inc. (1973), 11 Ill. App.3d 502, 297 N.E.2d 688; Mammen v. Snodgrass (1957), 13 Ill. App.2d 538, 142 N.E.2d 791.) As the court stated in McGuire v. Carlson (1895), 61 Ill. App. 295, 299-300:

"[A]n owner may employ two or more brokers; in such case it is the broker who is the efficient cause of the sale who is entitled to commissions; and this right is not affected by the fact that such broker sells to one whose attention to the property had before been called by another broker. It is not the broker who first speaks of the property, but he who is the procuring cause of the sale, be he the first or second who engaged the attention of the purchaser. [Citations.]"

• 3 In the case at bar, it is undisputed that Trammell Crow Company was aware of the Hollebs' desire to relocate in May 1970. The January 1973 meeting arranged by O'Leary at which he introduced Bert Holleb to Allan Hamilton did not involve any new disclosure of interest. While O'Leary may have mentioned that he had shown the "Clearing" property to the Hollebs, there is no question that the "Clearing" property was not discussed at that meeting. Following that meeting and a phone call the next day, there was no further contact between O'Leary and the defendants. O'Leary concentrated his efforts on the Goodyear property, with the result that the Hollebs entered into a contract to purchase that property. It was only after Bert Hamilton, another broker, learned that the Goodyear deal was nearing collapse that the Hollebs and Trammell Crow Company began negotiations which eventually led to their leasing of part of the "Clearing" property. Any question as to whether the services performed by the plaintiffs entitled them to a commission as the "procuring cause" of the transaction between the Hollebs and Trammell Crow Company are resolved by the subsequent intervention of the second broker, Bert Hamilton. Where there is an intervening instrumentality such as successful negotiations by another broker, a broker will not be entitled to a commission merely because of his initial introduction of the property to the purchaser. ( Moehling v. Brickman (1968), 98 Ill. App.2d 156, 163, 240 N.E.2d 210.) O'Leary had concluded his contact with the defendants and focused his efforts on the Goodyear deal. The deal eventually worked out between Holleb Company and the defendants was begun upon an entirely independent solicitation. There is no question that it was the action of Bert Hamilton in bringing a prospect already known to Trammell Crow Company through the meeting with O'Leary and Bert Holleb in January 1973, and through the dealings of its own John Wauterlek from 1970-1972, that led to the consummation of the transaction involving the "Clearing" property. See Mammen v. Snodgrass (1957), 13 Ill. App.2d 538, 541-42, 142 N.E.2d 791.

• 4 The plaintiffs also allege the existence of implied promises made by the defendant, Allan Hamilton, to O'Leary and contend that they should be allowed to present evidence of custom and practice to a jury on the issue rather than have it decided on motion for summary judgment. The plaintiffs argue that Allan Hamilton promised by implication that he recognized Holleb Company as O'Leary's prospect and that it was custom and practice and so understood by Hamilton that if and when a deal was made with Holleb Company, O'Leary would be entitled to a fee for having brought the prospect to the developers, and that he also promised by implication that he would act in such a way as would not deprive the plaintiffs of any commissions they might earn on a deal. This argument is without effect unless we infer that when Allan Hamilton agreed to O'Leary's request for a meeting with Bert Holleb, that acquiescence gave rise to a contract of brokerage on behalf of Trammell Crow Company. There are no facts alleged which show that when O'Leary was in Allan Hamilton's office he sought or received any express indication of an acceptance of his implied offer of brokerage; nor do the facts provide any basis for the assertion that the implied promises allegedly made by Allan Hamilton gave rise to a brokerage agreement by implication. While an express contract is unnecessary, more has to be shown than appears here to establish the existence of an implied contract. We think that reasonable men could draw but one conclusion from the evidence and any inferences therefrom to which the plaintiffs are entitled, and that is that the facts and circumstances are insufficient to imply anything more than an agreement by the defendants to meet and discuss the Hollebs' needs and the possibility of Trammell Crow Company being able to satisfy those needs. That meeting proved fruitless, and the subsequent transaction between Holleb Company and the defendants was consummated independently of the plaintiffs.

Since we find no genuine issue of material fact exists, we find no error in the decision of the trial court to grant summary judgment in favor of the defendants.

The judgment of the circuit court of Cook County is affirmed.

Affirmed.

McNAMARA and McGILLICUDDY, JJ., concur.