IN RE: MITCHELL'S ESTATE.

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District Court of Appeal, First District, Division 1, California.

IN RE: MITCHELL'S ESTATE.

Civ. 11634.

Decided: July 02, 1941

Thos. A. Allan, of San Francisco, for appellants. Stanley Pedder and Kenneth Ferguson, both of San Francisco, for respondents.

The estate of James McL. Mitchell, deceased, was the owner of a 1,400 acre ranch in Santa Clara county, which was sold to Mrs. Rose Doudell for a purchase price of $30,600. The respondent, O. L. Hamilton, a real estate broker, claimed a commission of 5% on the sale, and objections were filed to the confirmation of the sale upon the ground that the petition therefor contained no request for the allowance of said commission. The sale was confirmed, but the probate court directed the executors to impound the sum of $1,530 to await the determination of the claim for said commission. As a result of the hearing had thereafter the court made an order allowing the commission and instructing the executors to pay the same. From the order so made the executors have appealed.

Respondent at the outset contends that the order is not appealable, citing In re Estate of Seng, 52 Cal.App. 149, 198 P. 809, and In re Estate of Smith, 63 Cal.App. 474, 218 P. 636. But those cases were decided prior to 1931, at which time those portions of sections 963, 1616, 1664, and 1701 of the Code of Civil Procedure enumerating the probate decrees and orders which were appealable, were re–enacted into section 1240 of the Probate Code, and in 1935, St. 1935, p. 1972, said section 1240 was amended by adding to the probate orders therein made appealable orders “instructing or directing an executor or administrator”. It is quite obvious that the amendment so inserted is broad enough in its terms to include therein an order instructing an executor or administrator to pay a real estate commission allowed pursuant to the provisions of section 760 of the Probate Code.

With respect to the merits of the appeal, two main issues are involved, first, whether the claim for commission is founded on a valid written contract, and secondly, whether the evidence is legally sufficient to support the trial court's finding that respondent was the procuring cause of the sale.

Resolving all conflicts in the evidence in favor of respondent, the facts of the case may be stated as follows: On December 1, 1938, about a year after Mitchell's death, respondent wrote to the appellant bank asking if the ranch was for sale, and if it was, that he be given authority to show it. On December 2, 1938, the bank replied that it was not in a position to discuss the sale of the property until the inheritance appraisal was made. On February 7, 1939, the bank wrote the following letter to respondent: “We refer to your letter of December 1, 1938, in which you inquired of the James McL. Mitchell ranch near Morgan Hill. We would be pleased to list this property with you for sale. For your information, the inheritance appraisal on this property is $34,000. Any sale would be subject to court approval, and all offers should be accompanied by a check for not less than 10% of the offered price. Before taking any client to the property, it will be necessary to make an appointment with Mrs. Mitchell who is now residing on the premises.” The letter was signed by P. S. Scales, vice president of the bank. The property was likewise listed for sale with other San Jose real estate agents. On February 20, 1939, A. C. Geisenhoff, a real estate broker operating in Santa Clara county, showed Mrs. Doudell, her son John, who did the business for his mother, and another son named Ray, a ranch known as the Pritchard ranch, which was located near the Mitchell property. John Doudell said they would like something with more open land, and Geisenhoff first pointed out the Armsby ranch, adjoining the Pritchard ranch, and then called their attention to the Mitchell ranch, which was next to the Armsby ranch, saying that on account of Mitchell's death the preceding fall he believed the place would be sold. John Doudell asked him to check up on the matter and let him know. Geisenhoff immediately contacted a real estate broker named Bray who was familiar with the property, and was informed by Bray that he and Hamilton were working together on the sale of the Mitchell ranch, and had authority to show it. Thereupon Geisenhoff and Bray made arrangements with Hamilton to work on the sale of the ranch as Hamilton's agents. Two days later and on February 23, Geisenhoff and Bray took the Doudells out to the Mitchell ranch and showed them over the property. Bray either exhibited or told the Doudells about the letter from the bank, and explained to them the procedure necessary to bid in the property. In this regard he informed them of the appraised valuation, and that the bid would have to be 90% of the appraised value, and accompanied by a check for 15%. The Doudells said they thought the property was too expensive, and some discussion was had as to how the ranch could be subdivided and some of it sold. On the following day, February 24, 1939, John Doudell, without advising Bray or Geisenhoff of his intention so to do, called at the bank in San Francisco and opened negotiations with the executors for the purchase of the property. His conversation was had with Mr. Neuman, connected with the real estate department of the bank; and Doudell's version of the conversation was as follows: “* * * I told him that Mr. Bray and Mr. Geisenhoff had went with me to the Mitchell Ranch. I told him they were real estate men, and I asked him, if I bought this property, if I would have to pay them a commission. He said: ‘I don't believe so.’ I said: ‘Will the bank have to pay a commission?’ And he said: ‘I don't think so.’ He said: ‘Just a minute’, and he opened his desk underneath there, and he pulled some papers out, and he looked them over, and he said: ‘What are these gentlemen's names?’ And I told him. He said: ‘We don't know those gentlemen.’ He said: ‘I feel sure that you would not have to pay any commission.’ ” In answer to the question as to whether he told Mr. Neuman that there was no broker involved in the matter he said that he had not; and continuing he stated: “I told him that Mr. Geisenhoff and Mr. Bray had went out there, and we had looked the ranch over, but I did not consider them my brokers, but being real estate men I was wondering if I bought the ranch if they would come back on me for the commission.” The Doudells continued to discuss with Geisenhoff and Bray the possibilities of the purchase of the Mitchell ranch and other properties up to about March 23, 1939. In the meantime, however, and on March 8, 1939, without advising said real estate brokers, Mrs. Doudell entered into a contract with the executors to purchase the Mitchell ranch for the price stated. The real estate brokers did not learn of these dealings with the bank until shortly before April 5, 1939, on which date they called at the bank and informed Mr. Scales of the negotiations which had been carried on between them and the Doudells, and made claim for the allowance of the commission. The next day said brokers called on the Doudells and informed them what they had learned, and requested John Doudell to write to the bank and tell “the truth” as to what part they had taken in the sale. Doudell replied that he would prefer to call at the bank for that purpose, and made an appointment to do so the following day, but failed to keep his appointment. On April 10, 1939, the executors' return of sale of the property came on for hearing, at which time objections were filed to the confirmation upon the ground that the return of sale did not provide for the payment of said commission.

The facts above narrated are legally sufficient in our opinion to support the probate court's finding that respondent was the procuring cause of the sale. Justy v. Erro, 16 Cal.App. 519, 117 P. 575; Sessions v. Pacific Improvement Co., 57 Cal.App. 1, 206 P. 653. But as held in the case of Wilson v. Fleming, 106 Cal.App. 542, 289 P. 658, 661, the right to collect a commission for the sale of property belonging to the estate of a deceased person depends upon whether the services were performed pursuant to a contract of employment which conforms to statutory requirements; and we are unable to sustain the conclusion that the contract here relied on meets those requirements.

The law governing in such cases is embodied in section 760 of the Probate Code, which is a re–enactment of the first two paragraphs of former section 1559 of the Code of Civil Procedure, and is as follows: “The executor or administrator may enter into a written contract with any bona fide agent to secure a purchaser for any real or personal property of the estate, which contract shall provide for the payment to such agent out of the proceeds of a sale to any purchaser secured by him of a commission, the amount of which must be fixed and allowed by the court upon confirmation of the sale; and when said sale is confirmed to such purchaser, such contract shall be binding and valid as against the estate for the amount so allowed by the court. By the execution of any such contract no personal liability shall attach to the executor or administrator, and no liability of any kind shall be incurred by the estate unless an actual sale is made and confirmed by the court.” (Italics ours.) It will be noted that two of the essential requirements of such a written contract are that it shall provide for the payment of a commission and that the commission shall be paid out of the proceeds of the sale of the property; and as held in effect in Wilson v. Fleming, supra, failure to comply with such requirements renders the contract unenforcible against the estate.

In the present case the letter dated February 7, 1939, written by the vice president of the executor bank listing the property for sale with respondent, is relied upon by respondent as constituting the contract of employment, and admittedly nowhere therein, nor elsewhere in any of the correspondence preceding it, is there any provision whatever for the payment of a commission out of the proceeds of the sale of the property. In fact no reference at all is made anywhere in any of the correspondence to the matter of a commission. Nor did the probate court find that the written contract contained any such provision. It found merely that the executors, on or about February 7, 1939, employed respondent in writing to procure a purchaser for the ranch “with the understanding and agreement” that in the event he procured a purchaser the executor would pay the customary commission from the proceeds of the sale as confirmed by the probate court. Therefore, in the absence of such a provision in the contract, it must be held that the contract failed to meet the mandatory requirements of said section 760; and that being so, it is unenforcible against the estate.

In contending that the contract is not fatally defective because of such omission, respondent relies on certain language used by the court in Wilson v. Fleming, supra, to the effect that the code section “is by law a part of any such contract, and the provisions thereof must be read into the same”. An examination of the opinion in that case shows, however, that the language quoted was employed only in connection with the last clause of the last sentence of the code section, to–wit, “* * * and no liability of any kind shall be incurred by the estate unless an actual sale is made and confirmed by the court”; and as will be noted, the code section does not declare that the written contract of employment shall contain such a provision as it does with respect to the provision relating to the payment of the commission out of the proceeds of the sale of the property. The language used in Caine v. Polkinghorn, 54 Cal.App. 387, at pages 391, 392, 201 P. 936, is for the same reason not pertinent here because there it was employed only in connection with the first clause of the last sentence of said section, exempting the representative of the estate from personal liability on such contracts, which, like the second clause of the last sentence, is not required to be made part of the written contract.

It is true that in the case of Wilson v. Fleming, supra, the broker was attempting to enforce a form of contract for the payment of a commission which under the provisions of the code section the representative of the estate was not authorized to enter into; nevertheless, in order to decide that question, it became necessary for the court to construe the provisions of said code section, and in doing so it held that to be enforcible against an estate, the written contract of employment must provide, as expressly declared by said section, for the payment to the agent of a commission out of the proceeds of the sale to the purchaser secured by the agent.

Respondent also cites sections 1656, 1643, and 1636 of the Civil Code, which set forth certain rules for the construction and interpretation of contracts generally, and which admittedly may be invoked where, in the case of contracts between individuals, omissions may be supplied by implication. Justy v. Erro, supra; Sessions v. Pacific Improvement Co., supra. But here respondent is seeking to bind the estate of a deceased person by a contract entered into by the representative thereof in its representative capacity; and as held in Wilson v. Fleming, supra, in such cases neither the representative nor the contracting agent has the right to enter into a contract which shall be binding on the estate unless it conforms to the provisions of the statute. In other words, the terms of the statute constitute the measure of the authority.

The order is reversed.

KNIGHT, Justice.

We concur: PETERS, P. J.; WARD. J.