McNENY v. TOUCHSTONE

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District Court of Appeal, First District, Division 2, California.

McNENY v. TOUCHSTONE et al.*

Civ. 10004.

Decided: January 31, 1936

James E. Neville, of Los Angeles, for appellant Blake Touchstone. Loyd Wright and Charles E. Millikan, both of Los Angeles, for appellant Weatherford W. Touchstone. Shaw & Bailey and Charles D. Shaw, all of Los Angeles, for respondent.

Plaintiff had judgment against defendants in an action based upon a written agreement between plaintiff and defendant Weatherford Touchstone. Defendants appeal from said judgment.

Said agreement was made on October 1, 1931, for the purpose of dissolving the real estate brokerage partnership, known as McNeny and McNeny, theretofore existing between plaintiff and defendant Weatherford Touchstone. Defendant Blake Touchstone was not a member of said partnership and was not a party to said agreement.

Said agreement provided for the dissolution of the partnership as of October 1, 1931, for the sale of the furniture and good will to defendant Weatherford Touchstone, for the division of certain commissions then earned, and then followed paragraph 8, which is the paragraph upon which plaintiff bases his claims. Said paragraph reads as follows: “8. It is expressly agreed that the parties hereto, have prior to the date hereof, expended a great deal of time and effort in preliminary negotiations on the proposed transactions hereinafter referred to, and that said parties agree, that if and in the event, within two years from the date hereof, any of the following transactions are consummated, all commissions accruing therefrom, shall be distributed as hereinafter specified, when and as said commissions are paid. In so far as this agreement is concerned, a transaction shall be deemed to have been consummated when a prospective purchaser, seller, lessor or lessee has been produced who is ready, able and willing to and thereafter does consummate a transaction upon terms acceptable to the clients involved in said proposed transactions. The obligations to divide said commissions shall extend to transactions consummated by either of the parties hereto, directly or indirectly or by any person employed by or associated with either of said parties. (a) If a lease is obtained for the W. T. Grant Company on any location on Broadway between Third Street on the North and Tenth Street on the South, in Los Angeles, California, forty-five (45%) per cent of the gross commission received by such of the parties hereto as may receive or be entitled to receive such commission for obtaining said lease, shall be paid to the other when and as such commission is received. * * * (f) If a transaction is consummated for a hotel in Hollywood, San Diego, Fresno, Oakland, Bakersfield, Los Angeles, or San Francisco, in California, or Portland in Oregon, forty-five (45%) per cent of the gross commission received by such of the parties hereto as may receive or be entitled to receive such commission for negotiating said transactions, shall be paid to the other, when and as such commission is received.”

There were six other subparagraphs of said paragraph 8, each relating to a different proposed transaction, and in each of said subparagraphs is the provision that a certain percentage of the commission “received by such of the parties hereto as may receive or be entitled to receive such commission * * * shall be paid to the other when and as such commission is received.”

Upon the dissolution of said copartnership, defendant Weatherford Touchstone formed a partnership with defendant Blake Touchstone under the name of Touchstone and Touchstone. The partnership agreement between defendants did not cover any transaction mentioned in the above-quoted paragraph 8, but a separate agreement was entered into by defendants with reference thereto by way of a letter written by defendant Weatherford Touchstone and accepted by defendant Blake Touchstone. After setting forth the prospective deals enumerated in said paragraph 8 and excepting them from their general partnership agreement, the letter provided that: “In the event I uncover or am the procuring cause of a deal on any of the above, and should I ask your help and cooperation with reference thereto, and where there are no other brokers connected with the deal, you are to have one-third (1/313) of the commission, but where there are other brokers connected with the deal, you are to have one-sixth (1/616) of the commission.” It further provided that if defendant Blake Touchstone should “uncover” one of said prospective deals or be “the procuring cause” and should ask the help and cooperation of defendant Weatherford Touchstone, the latter should receive one-third of the commission if there were no other brokers, and one-sixth thereof if there were other brokers connected with the deal.

Two deals mentioned in said paragraph 8 were consummated within the two years following the date of the agreement between plaintiff and defendant Weatherford Touchstone. In December, 1931, a lease was consummated for the W. T. Grant Company which was the prospective deal referred to in subparagraph (a) of said paragraph 8. In that transaction, defendant Weatherford Touchstone had associated the firm of Coldwell, Cornwall & Banker, and had also associated defendant Blake Touchstone. The total commission was $25,000, which was paid by the owners of the property by their three promissory notes as follows: To Coldwell, Cornwall and Banker, $12,500; to Weatherford Touchstone, $8,333.33; to Blake Touchstone, $4,666.67. In May, 1932, a transaction was consummated involving the Mayflower Hotel in Los Angeles, which was the prospective deal referred to in subparagraph (f) of said paragraph 8. The commission was $3,712.50. This deal was “uncovered” by defendant Blake Touchstone, and out of said commission the sum of $1,237.50 was received by defendant Weatherford Touchstone, and the sum of $2,475 was received by defendant Blake Touchstone.

A controversy arose over the amount of the commissions due to plaintiff upon the foregoing transactions under the provisions of said paragraph 8, and plaintiff commenced this action. The trial court concluded that plaintiff was entitled to judgment against both defendants for 45 per cent. of the total commissions received by both defendants, and entered its judgment accordingly. Separate appeals were taken by the two defendants.

The parties agree that the principal question on this appeal concerns the construction placed on said paragraph 8. Appellants contend that the trial court misconstrued said paragraph 8 and erred in awarding judgment for any sum greater than 45 per cent. of the commission to which appellant Weatherford Touchstone was entitled. In our opinion this contention must be sustained. When said paragraph 8 is read in its entirety, we believe it to be free from ambiguity. It related to certain “proposed transactions” or “prospective deals.” It expressly contemplated that other brokers might be “associated with either of said parties” in consummating said deals. In each of the subparagraphs fixing the percentages for particular transactions, it provided for the payment of a certain percentage of the commission “received by such parties hereto as may receive or be entitled to receive such commission.” There was neither allegation nor proof that appellant Weatherford Touchstone received or was entitled to receive any greater commissions than those above specified upon said transactions. It was neither alleged nor proved that there was any fraud or bad faith in the association of other brokers in said transactions upon the terms above set forth. Such being the case, respondent's rights must be measured by the agreement and he was entitled to only 45 per cent. of the commissions which appellant Weatherford Touchstone received or to which said appellant was entitled as a result of the consummation of said transactions.

Furthermore, respondent was entitled to judgment only against appellant Weatherford Touchstone. Respondent attempts to justify the judgment against appellant Blake Touchstone upon the theory that said appellant had “received funds which plaintiff contends belonged to the partnership composed of plaintiff and defendant Weatherford W. Touchstone.” This theory is untenable. Said partnership had been dissolved and the partners had adjusted and terminated their rights as partners by their agreement for dissolution. Thereafter, nothing belonged to the partnership as such, and the rights of the former partners were governed entirely by the terms of the said agreement for dissolution. Bennett v. Paulson (Cal.App.) 45 P.(2d) 369. As above indicated, respondent's rights under said agreement were limited to a portion of any commissions which might accrue to appellant Weatherford Touchstone, and the record discloses no basis for any judgment against defendant Blake Touchstone.

The judgment is reversed.

SPENCE, Justice.

We concur: NOURSE, P. J.; STURTEVANT, J.