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


Civ. 15506.

Decided: May 06, 1947

Maurice Gordon, of Los Angeles, for appellants. William Ellis Lady, of Los Angeles, for respondent.

Plaintiff appeals from a judgment rendered for defendant in an action brought for the recovery of a real estate commission.

By his complaint, plaintiff alleged that on or about the 24th day of December, 1944, defendant by an instrument in writing employed and authorized plaintiff to procure a purchaser for certain of defendant's property at a price of $105,000, and further agreed in said written instrument to pay plaintiff, in compensation for his services, a sum equal to 5% of said purchase price. It is then alleged that pursuant to the authority in said instrument contained, and in reliance thereon, plaintiff in his capacity of agent for the defendant procured and induced Mr. and Mrs. Don MacQuarrie to make an offer on or about December 27, 1944, to purchase defendant's aforesaid property; that said offer was in writing, subscribed by Mr. and Mrs. MacQuarrie and the defendant. That the instrument in question read as follows:

‘Offer to Buy

‘Los Angeles, Calif. 12–27, 1944

‘We offer the sum of—($105,000.00), One Hundred Five Thousand Dollars, for that certain, Brentshire Motel, consisting of, Furniture, Furnishings & property, except furniture in living quarters, located at 12226 Wilshire Blvd. Santa Monica, California, we agree to the following terms,—($35,000), Thirty Five Thousand Dollars,—cash—, the balance, payable monthly at the rate of—($800.00), or more,

‘Eight Hundred & No/100 dollars,—or more, including, interest at the rate of—($5%), per annum, $400.00 on First and $400 on 2nd, T. D.

‘We are, herewith making a deposit of ($1000.00), One Thousand & no/100 dollars, to substantiate this offer.

‘It is fully agreed and understood that Mill-Edward-Mill will return this deposit, in full, if the above offer is not acceptable to the seller.

‘Subject to Satisfactory Inventory.

‘Above includes 5% Commission.

‘Sue E. Billow

‘Don MacQuarrie

‘Mrs. Don MacQuarrie’

It is further alleged that at all times said Mr. and Mrs. MacQuarrie have been ready, willing and able to purchase the property upon the terms specified in the aforesaid offer, but that defendant has refused to consummate the sale of said property to them.

By a second cause of action incorporated in his complaint, plaintiff alleged that defendant was indebted to him in the amount of said commission for services, work and labor performed by him for defendant at her special instance and request.

By her answer, defendant specifically denied any and all liability to the plaintiff as set forth in both of his pleaded causes of action.

As a further answer to plaintiff's complaint, defendant alleged that neither Mr. and Mrs. MacQuarrie, nor anyone else, have paid to defendant the sum of $105,000, either in cash or promissory notes, by reason whereof defendant has not received any monies out of which plaintiff is entitled to be paid his claimed commission of $5,250; that at the time the aforesaid agreement was entered into on December 24, 1944, the condition of defendant's eyes was such that she was unable to read, that she so informed the plaintiff, whereupon the latter advised defendant that it was unnecessary for her to read the agreement and that the same provided that plaintiff was to receive a commission only in the event that defendant should actually convey said property to a purchaser produced by plaintiff. That relying on such alleged false representations and for that reason alone, defendant signed said instrument. Finally, it was alleged that there was no consideration for the agreement in question.

Prior to trial an amendment to the answer was filed wherein it was alleged that there existed a confidential relationship between plaintiff's agent A. V. Siders and defendant; that her property was worth $125,000, of which fact she was unaware until discovery thereof during the taking of the deposition of said A. V. Siders, wherein he stated his personal opinion to be that defendant's property was worth $125,000; that had he disclosed such opinion on his part to her defendant would have been unwilling to sell the property for less than that amount.

When the taking of testimony was completed at the trial, the court permitted defendant to file a further amendment to her answer in which it was alleged that after execution of the foregoing offer to buy, escrow instructions were executed between defendant and the proposed buyers Mr. and Mrs. MacQuarrie, which provided that the consummation of the transaction was contingent on the obtaining of an agreement from the holders of a second trust deed on the property subordinating their lien to a proposed first lien in favor of defendant in the amount of $44,000. The failure to obtain such agreement is alleged, and that by reason of such failure and through no fault of defendant the transaction could not be cnsummated, by reason of which defendant was relieved of her obligation to pay plaintiff a commission.

The trial court made findings in which it found as true the execution of the aforesaid listing agreement and the offer to buy. Although not pleaded, the court found that it was the intention of the parties to the offer to buy as well as of plaintiff and his agent A. V. Siders, that the terms and conditions of sale, including payment of the commission, were to be incorporated in a further written agreement ‘in the form of written escrow instructions'; that in accordance therewith such escrow instructions were prepared and signed and contained the provision concerning procurement of the aforesaid subordination agreement. It was further found that at no time were the buyers willing or able to purchase ‘upon the terms offered, or upon any terms within the contemplation of the parties.’ That plaintiff did not produce a ready, willing and able buyer ‘upon the terms upon which she (defendant) offered to sell and dispose of the same by her listing contract with plaintiff or otherwise’ and that defendant is therefore, not obligated to plaintiff. The court further found that the buyers had not paid to defendant $105,000 from which the claimed commission could be paid.

In accordance with the first amendment to the answer, the court found that a confidential relationship did exist between plaintiff's agent A. V. Siders and defendant; that the property was worth $125,000, of which fact defendant was unaware, but that such fact was known to said A. V. Siders; that the latter failed to disclose to defendant his opinion of the value of the property, and that had defendant known of such opinion she would have been unwilling to sell for any lesser sum; that by reason thereof plaintiff, through his agent, did not act in good faith.

As to the affirmative defense wherein it was alleged that a commission should be paid only on an actual conveyance and further that there was a lack of consideration for the agreement entered into between plaintiff and defendant, the court made no findings for the declared reason that defendant had ‘abandoned such defenses'.

Finally, the court found in favor of defendant upon the second amendment to her answer, which was filed at the completion of the taking of testimony, and in which it was alleged that escrow instructions were executed between defendant and the proposed buyers Mr. and Mrs. MacQuarrie and that the same provided for the obtaining of a subordination agreement as hereinbefore narrated.

The situation with which we are here confronted may be epitomized by saying that the defendant was the owner of certain real property which she desired to dispose of for the sum of $105,000. To that end she entered into a listing agreement with plaintiff, who was a licensed real estate broker. Acting upon the authorization conferred upon him by such listing agreement, plaintiff procured the offer of Mr. and Mrs. MacQuarrie to purchase such property in accordance with an agreement titled ‘Offer to Buy,’ which is hereinbefore set forth, and which was signed by the MacQuarries and defendant owner. At the time the agreement was entered into there were two trust deeds outstanding upon the property in question, each payable at the rate of $400 per month; one in favor of the Santa Monica Commercial Savings Bank and the second in favor of Peter and Betty Xeniades, husband and wife. After an escrow was established by the parties, defendant owner desired to take over, as beneficiary, the first trust deed held by the bank. Defendant requested plaintiff's agent to secure from Mr. and Mrs. Xeniades an agreement subordinating their second trust deed to the new first trust deed in favor of the defendant. Mr. and Mrs. Xeniades refused to execute a subordination agreement in favor of defendant but were agreeable to the execution of such an agreement in favor of the bank as beneficiary under a proposed new trust deed.

At the trial it was established that the MacQuarries were ready, able and willing to purchase defendant's property for the sum of $105,000 and were willing and able to perform precisely in accordance with the terms of the aforesaid offer to buy, namely to deposit $35,000 in cash in an escrow as a down payment and to pay $800 or more per month on the balance of the purchase price, to be divided equally on a first and second trust deed. Mr. MacQuarrie deposited $10,000 in escrow and it was proved without refutation that he was able and willing to deposit the remainder of the required down payment.

The transaction was not consummated by reason of the fact that Mr. and Mrs. Xeniades, holder of a junior trust deed on the property in question, refused to subordinate their lien to a first trust deed lien that the defendant wanted placed on the property, running in her favor to replace the then existing first trust deed lien held by the aforesaid Santa Monica Commercial and Savings Bank.

Appellant first contends that the evidence is insufficient to support the judgment in respondent's favor. We are persuaded that in this contention appellant must be upheld. The terms of the foregoing ‘offer to buy’ agreement signed by respondent are clear and unequivocal. In her brief respondent states her position as follows:

‘It is the contention and position of the defendant that there never was a binding agreement of sale by defendant and purchase by the MacQuarries until the execution and delivery of the agreements in the form of escrow instructions prepared by the bank not only at the request but in the performance and in the interest and with the help of plaintiff, through his representative Mr. Siders, and consequently defendant was and is under no obligation to plaintiff for the payment of a commission.’

Appellant's obligations under his contract were completed when he produced a buyer ready, able and willing to purchase in conformity with the agreement, and he therefore, was entitled to the agreed commission. The agreement with appellant broker as to his commission was not in any way contingent upon either appellant or the prospective buyers obtaining a subordination agreement from the holder of the second trust deed. The subject of such subordination did not arise until after the written offer to buy was made and accepted by the respondent and after the appellant had produced a ready, willing and able buyer in conformity with the aforesaid agreement. Whatever may have been the contractual obligations imposed by the escrow instructions upon either or any of the parties to the offer to buy, the terms of such instructions did not in any way affect appellant broker, because he completed his contract and was entitled to his commission when he presented an able, ready and willing purchaser to his principal and they entered into an agreement. Respondent cannot evade payment of the broker's commission by changing the terms originally agreed upon, by refusing or neglecting to consummate the sale or by selling the property to another. It is the production by the broker of a purchaser ready, able and willing to buy that determines the right of such broker to his commission, and that, regardless of the consummation of the sale through the execution of a deed. Grove v. Lewis, 125 Cal.App. 357, 360, 13 P.2d 847; Purcell v. Firth, 175 Cal. 746, 749, 167 P. 379; Dixon v. Malloy, 70 Cal.App.2d 322, 327, 160 P.2d 896; Coulter v. Howard, 203 Cal. 17 25, 262 P. 751; Justy v. Erro, 16 Cal.App. 519, 522, 117 P. 575.

In so far as the questioned ability of the purchaser to buy is concerned, the case of Grove v. Lewis, supra, 125 Cal.App. at page 359, 13 P.2d 848, contains the following quoted from the syllabus of Sobaje v. Schubert, 37 Cal.App. 709, 174 P. 364: ‘Where an owner of real property accepts the offer therefor made by a person produced by the broker employed to make the sale, he thereby admits the readiness, willingness, and ability of the purchaser to consummate the sale.’

The cases cited by respondent in support of her position herein are not helpful because they have to do with contracts between the vendor and vendee, and do not involve a controversy between the seller and a broker regarding the latter's commission. We are not here confronted with a dispute between the seller and buyer as to their contract, but are concerned only with a contract between the seller and her broker, in connection with which the escrow instructions form no part.

Respondent's claim that the property was never actually sold, and that no money was paid to respondent or made available to her out of which appellant's commission could be paid is without merit. As heretofore pointed out, under her contract, respondent became obligated to pay appellant broker his commission when he produced a purchaser, ready, able and willing to buy regardless of whether the sale was actually consummated.

The case of Irwin v. Klimper, 56 Cal.App. 434, 205 P. 714, is not in point. It concerned an unwritten request of the defendant to plaintiff broker to procure a purchaser for certain real property and was therefore held not to be in compliance with subdivision 5, section 1624 of the Civil Code. Hargrave v. Moody, 56 Cal.App. 498, 205 P. 890, holds that where the written contract of employment to sell real property specifies the terms upon which the broker is authorized to sell the property, the vendor has a legal right to object to consummating the sale for a lesser amount of cash than that specified in the authorization of employment. In the instant case the broker produced an able, willing and ready buyer in exact accordance with the terms contained in the contract of employment. In Cannon v. Selmser, 85 Cal.App. 783, 260 P. 332, cited by respondent, it was held that where a broker's contract specified that the latter's commission was to be paid when the vendee made his first installment payment, such commission was not earned untill the contingency occurred.

Appellant challenges as unsupported by the evidence the court's finding that there existed between appellant and respondent a confidential relationship which the former breached through his agent A. V. Siders in that the latter did not disclose to respondent that ‘it was his personal opinion that said real property was reasonably worth the sum of $125,000.00 at the time of the transactions mentioned and described in plaintiff's complaint on file herein,’ of which respondent was unaware, and that had she been aware of the opinion of appellant's agent she would not have consented to a sale for $105,000; and that by reason of the foregoing, appellant did not act in good faith.

These findings are not only unsupported by any substantial evidence but are directly contradicted by the testimony of the respondent herself. We quote the following from the reporter's transcript:

‘Q. By Mr. Gordon (Appellant's attorney): What was your opinion of the value of the place in December of 1944? A. Well, I have answered that.

‘Q. How is that? A. I thought it was—at the time I thought it was worth $125,000.00, but I was willing to take $100,000.00 and get out, because that's what I put into it, and I wanted to get out on account of my health and my eyes. They meant more to me than anything else at that time.’

There is no evidence whatever in the record before us that an innocent principal was misled to her damage by any duplicity or concealment on the part of an agent charged with a fiduciary relationship. The foregoing testimony of the principal negatives any assumption or inference that she was damaged by an agent's abuse of confidence reposed in him.

The foregoing conclusions at which we have arrived renders it unnecessary to discuss or decide appellant's final contention that the trial judge committed prejudicial error in overruling appellant's objections to certain questions propounded to his agent A. V. Siders during cross-examination of the latter.

For the foregoing reasons the judgment is reversed.

WHITE, Justice.

YORK, P. J., and DORAN, J., concur.