BRITSCHGI v. McCALL

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

BRITSCHGI v. McCALL et al.

THOMAS et al. v. McCALL et al.

LIEBMAN et al. v. McCALL et al.*

Nos. 15325–15327.

Decided: January 27, 1953

Cosgrove, Molinari & Tinney, San Francisco, Campbell, Hayes & Custer, San Jose, for appellants. Crist, Stafford & Peters, Elton F. Martin, Palo Alto, for respondents.

In three actions in which the defendants are the same, and which were consolidated for trial, plaintiffs appeal from the judgments in favor of defendants.

Question Presented.

The principal question is whether a buyer may waiver a condition in the agreement of sale to the effect that the sale is subject to the seller's ability to eliminate a claimed outstanding interest in the property for a specified sum.

Record.

Action No. 15325 is by plaintiff Britschgi, a licensed real estate broker, to recover $10,000 damages for alleged breach by defendants of a written contract giving him the exclusive authorization to sell certain Santa Clara County real property. Action No. 15326 is by plaintiffs Britschgi and Thomas to recover $10,250, the alleged reasonable value of services rendered to defendants by them as real estate brokers. Action No. 15327 is by plaintiff Liebman and others as copartners doing business as Brentwood Company,1 a copartnership, for specific performance of a written agreement by which defendants agreed to sell and Brentwood agreed to buy defendants' property for $205,000, and for $50,000 damages for wilful withholding. In a second cause of action Brentwood sought $30,000 damages allegedly incurred because relying on said agreement of sale, Brentwood purchased adjoining lands in order to bring to defendants' land utilities from the city of Palo Alto. Defendants filed a general answer in all three cases. In the third action they also set up as a defense the fact that the agreement provided that it was contingent upon their being able within 120 days to eliminate the interest of one Santana in the property, and that they were unable so to do.

Evidence.

Most of the evidence is uncontradicted. Taking, as we are required to do, the evidence and the reasonable inferences therefrom most strongly in favor of defendants, the facts follow.

After a discussion in which McCall2 stated that he wanted $200,000 net, defendants executed a written exclusive authorization to Britschgi for a period of 90 days to sell their property, referred to as 175 acres, more or less, for that sum ‘Net to seller.’ Britschgi submitted the property to several brokers including plaintiff Thomas, asking $225,000. Thomas brought Brentwood to the property, who objected to buying as it was not adjacent to public utilities of the city of Palo Alto. Property owned by one Eells intervened. Britschgi informed McCall of this difficulty. McCall told him that at one time he had dug a well on the property for its sale as a golf course. Britschgi discussed with the Palo Alto authorities the possibility of bringing utilities to the property. Thereafter Thomas told Britschgi that Brentwood was now willing to negotiate. Britschgi, in turn, so informed McCall. The next day Thomas brought to Britschgi a deposit receipt form signed by Brentwood in which they agreed to purchase the property for $205,000, accompanying it with Brentwood's check for $5000. As it was necessary to use the Eells property to get utilities to the McCall property, Brentwood had signed a deposit receipt to purchase it from Eells. This receipt plus a down payment check Thomas also gave to Britschgi. In checking the McCall property Brentwood's engineers discovered that it contained 168 acres rather than 175. The receipt recited that the property contained 160 acres more or less, and that if it turned out that it contained less than 160 acres the purchase price would be reduced pro tanto. It provided that the balance of the price should be paid within 120 days. Britschgi took the receipt and check to McCall. McCall then told him that he had found an option for a golf course which he had given to one Santana sometime before, and asked Britschgi what he thought of it. Britschgi told him he had better see his attorney. McCall testified that on discovery of this option he called Britschgi to his home and told him to do nothing further about selling the property unless some arrangement could be made with Santana. After that Thomas and Britschgi again discussed the matter with McCall and then with Brentwood. They suggested that McCall see Santana. McCall saw Santana and reported that the latter was going ahead with the golf course. Britschgi and Thomas told McCall to get legal advice. McCall then told them that he had gone to see his lawyer, Crist, who told him he could not advise him as he, Crist, had an interest in the property. Britschgi recommended that McCall see Attorney Curry. This McCall did and employed him to represent him in the Santana matter. Britschgi met McCall at Curry's office. McCall stated he wanted to go through with the sale to Brentwood and McCall was to contact Santana to see if he would settle for a price. McCall had no success with Santana, and another meeting was held at Curry's office. Curry asked McCall what he would pay Santana for a release. McCall said he would pay $5000. Curry then contacted Brentwood and the latter agreed that if Santana would not settle for that sum Brentwood would pay additionally for a settlement. Curry advised McCall that if Santana would not settle for $5000 a quiet title action should be brought by McCall against Santana. Previously the receipt and check had been left with Curry. There was then added to the receipt ‘This acceptance is contingent upon the seller being able to eliminate the interest of George E. Santana, if any, in the above described property, for a sum of not to exceed $5000.’ It was then signed by the McCalls. The check remained with Curry. McCall testified he signed the receipt because of Curry's advice that $5000 would be all he would have to pay for a settlement. In the acceptance portion of the document the McCalls agreed to pay Thomas and Britschgi a 5 per cent commission on the selling price. The agreement also provided that Thomas and Britschgi might without notice extend the time of performance for an additional 30 days. Apparently the signed receipt was delivered to Brentwood. Curry filed a quiet title action for the McCalls against Santana. Next, in June, a meeting was held at Santana's attorney's office, at which Curry, Brentwood, the McCalls and Santana were present. A settlement was discussed. On July 15, another meeting with substantially the same persons present was held. Santana was willing to settle for $40,000. McCall said he would put up $5000. Brentwood offered an additional $17,500. No settlement was made. The $40,000 figure was left upon, although there was nothing binding, for four or five days and the parties adjourned. No offer has been made to Santana since. McCall made no other effort to eliminate Santana. Santana filed a cross-complaint in the quiet title action apparently seeking specific performance of his option or in the alternative for $40,000 damages. From the time of the meeting in Curry's office Brentwood kept pressing Curry to prosecute the action. Brentwood asked Curry to get a 90 day extension of their agreement with McCall. Curry stated he was having difficulty getting McCall to come to his office. He would not answer his letters or seem to cooperate. About June, a large tract south of the McCall property was sold. A large development to take place on it was advertised. From then on, Britschgi testified, McCall's attitude towards desiring the Brentwood sale consummated changed. Sometime in August the Brentwood agreement was extended 30 days by Britschgi and Thomas under the power given them therein. The extension was made in Curry's office and McCall then said he was still willing to go through with the Brentwood sale if they eliminated Santana. About August 13 or 14 Brentwood went to Curry and offered to take the property and would pay Santana $40,000, of which McCall was to pay $5000. August 16, Cosgrove, one of the Brentwood partners, had the three actions now on appeal prepared, and went to Curry's office. Cosgrove told Curry of the actions they were going to file. Cosgrove stated they would pay $240,000 less the $5000 promised by McCall. Cosgrove had with him a blank check signed by Brentwood and a savings bank book showing a credit to Brentwood's account of $325,339.94. Cosgrove offered to pay the $235,000 and demanded a deed. Curry stated that he did not know if he still represented McCall, that he was unable to get McCall in and that he thought Attorney Crist represented him. Cosgrove first filed the suits and then went to Crist's office. On being informed by Crist that he represented the McCalls, Cosgrove offered to pay McCall the $235,000 and demanded a deed. Crist then told him ‘McCall cannot sell that property because I have an interest in it.’ Cosgrove then requested Crist to have McCall place a deed in a certain title company and Brentwood would pay the $235,000. No objection was made to the form of the tender by check. Crist stated he would let Brentwood know in a few days whether McCall would go through with the sale, but Brentwood did not hear from Crist. In the meantime Brentwood purchased the Eells property.

Findings.

The court found in effect that the agreement between Brentwood and defendants provided that defendants agreed to sell for $205,000 ‘upon defendants being able to eliminate the interest’ of Santana for not to exceed $5000, the sale and purchase to be consummated within 120 days after April 19, 1950; that the consideration set forth in the agreement is the fair and reasonable value of the property; that within the 90 days provided by the authorization Brentwood was able but not willing or ready to purchase the property for $200,000 net to sellers (in the Brentwood action the court found that Brentwood was ready, able and willing); that Brentwood paid a $5000 deposit to Britschgi on the purchase price of $205,000 with the provision, however, that defendants should pay to Thomas and Britschgi a commission of $10,250 and revenue stamps on the proposed deed amounting to $2,255, leaving net to sellers only $192,495.

Specific Performance.

Defendants' main defense to this action is that the provision that defendants' acceptance of Brentwood's offer to purchase was contingent upon the seller being able to eliminate the Santana interest for not to exceed $5000, was one for defendants' benefit, and the Santana interest not having been eliminated within the time limit of the agreement, Brentwood cannot enforce the agreement. While this provision was a shield to protect defendants against being required to convey the property if the elimination of the Santana interest should cost them more than $5000, it nevertheless does not protect them when the purchaser was willing to accept the property subject to the Santana interest. The effect of the provision is that defendants were to get $200,000 net, they undertaking to eliminate Santana if it did not cost them more than $5000. Brentwood offered to pay the $200,000 and take the property subject to the outstanding Santana interest. While the provision was for defendants' benefit, it was also for Brentwood's benefit, in that it meant that they were to get the property free of the Santana interest if it did not cost the sellers more than $5000. Now, they were willing to take the property subject to the Santana interest. Defendants got the $200,000 that they originally contemplated getting.

The trial court erroneously adopted defendants' theory that this provision constituted a condition precedent to Brentwood's right to the property and one which they could not waive. Cases like Schwab v. Bridge, 27 Cal.App. 204, 149 P. 603, where a party guaranteed a debtor's account provided the account was presented by a certain date, Peterson v. Montgomery Holding Co., 89 Cal.App.2d 890, 202 P.2d 365, where the contract provided that a real estate commission was payable when a certain contract was executed, and other cases cited by defendants, are not in point. The situation here is rather peculiar. McCall testified that subsequent to the meeting with Santana above mentioned he did not try to eliminate the Santana interest, in spite of the fact that he entered into an agreement to sell if the Santana interest could be eliminated. Moreover, he employed as his attorney to resist the efforts of Brentwood to consummate the transaction the very attorney who had an interest under the Santana option. It is apparent from the record that defendants were willing, if not anxious, to sell for $200,000 at the time they entered into the agreement. Then, for some reason, possibly the prospective development of another tract nearby and the probability of being able to obtain a higher price, they evidenced an intention of doing nothing towards the consummation of the sale. Long before the time limit of the agreement had expired they employed an attorney adverse to Brentwood's interests. During the trial both McCalls as well as Santana testified that no agreement other than the original option agreement had been entered into between the McCalls and Santana. Yet Crist, defendants' attorney, stated to the court that on February 12, 1951, a written agreement between them had been entered into although he objected to its terms being disclosed. As before stated, Curry had filed a quiet title suit on behalf of McCalls against Santana. Attorney Crist had filed in it a cross-complaint on behalf of Santana, asking specific performance of the Santana option or for $40,000. At the opening of the trial here, Crist testified that he was now defendants' attorney in that action. Crist on behalf of McCalls as plaintiffs and Santana as cross-complainant moved for a dismissal of that action, stating that an agreement of settlement of the case had been executed. Apparently Crist also was a party to the agreement. Defendants contend that they should be permitted to stand on a clause of the agreement which, while in their favor in one sense, is primarily to the detriment of Brentwood, although Brentwood is willing to take the property subject to that detriment. The absurdity of defendants' contention is shown by the following illustration: In an agreement of sale of real property the seller inserts a clause that the sale is subject to his being able to eliminate a right of way in a third person. Could it reasonably be contended that if the buyer was willing to accept the property subject to that right of way, the seller could not be compelled to perform? Although the facts of Twisselmann v. Cohn, 57 Cal.App.2d 987, 136 P.2d 33, are different, its rule is applicable here. ‘It is no answer for a vendor to say, when specific performance is sought under his contract, that the interest or title which the decree seeks to affect, is not as complete as he agreed to convey.’ 57 Cal.App.2d at page 990, 136 P.2d at page 34. See also Miller v. Dyer, 20 Cal.2d 526, 126 P.2d 901, 141 A.L.R. 1428.

Isaacson v. G. D. Robertson & Co., 85 Cal.App.2d 71, 192 P.2d 486, is not in point here. There the seller owned certain lots in a block in Los Angeles which was zoned for residence only. He agreed to sell one of them but in the sales agreement, the seller inserted a clause to the effect that proceedings for the rezoning of the block to business were now proceeding and that if the lot was not rezoned to business within six months, the agreement would ipso facto terminate. Prior to the expiration of the six months the buyer offered to take the property without it being rezoned. The court held that rezoning was a condition for the benefit of the seller which the buyer could not waive, pointing out that ‘the sellers contemplated a uniform development of the block in which this lot was situated, and that such development could proceed only if the area was rezoned.’ 85 Cal.App.2d at page 76, 192 P.2d at page 489. The court drew a distinction between the situation there and in ‘those cases in which the vendee under a contract of sale can compel the vendor to convey such title as he has, even though that title be defective’ 85 Cal.App.2d at page 76, 192 P.2d at page 489, holding that there was no question of defective title. In our case the whole question is one of defective title, against which the seller provided that the clearing of it could not cost him more than $5000. The buyer is willing to accept the defective title, bringing itself under the rule of the defective title cases. McCall testified when asked if he felt that the price, $200,000 net, was a fair one, ‘I was willing to take the price and they were to eliminate all the interest of Mr. Santana, to go ahead.’ To refuse to require defendants to convey to Brentwood the property subject to the Santana interest for that price would be a travesty on justice. It would put the courts in a position of placing a premium on the actions of defendants who, after agreeing to sell their property to Brentwood for $200,000, causing Brentwood to purchase adjoining property in order to bring in utilities, suddenly sense a chance of getting a better price from someone else, and employ the very attorney who is standing in the way of their fulfilling their agreement to help them break their agreement.

The court's finding that Brentwood was not ready or willing to purchase the property for $200,000 is not supported by the evidence. As pointed out before, the court also found that Brentwood was able, ready and willing. We find nothing in the evidence to support the finding that Brentwood's offer to take the property was contingent upon defendants' paying Thomas and Britschgi a $10,250 commission and placing $2,255 revenue stamps on the deed. Defendants did agree in writing to pay Thomas and Britschgi a 5 per cent commission on the selling price. Undoubtedly the sellers would have to provide the stamps on the deed by which they would convey, but the evidence is silent upon either of these matters being a condition to Brentwood's demand to go through with the sale.

Tender.

The trial court found that Brentwood did not tender defendants any portion of the purchase price. It is doubtful if the tender to either Curry or Crist would constitute a tender to defendants. However, the evidence demonstrates and the court should have found that defendants were avoiding all the plaintiffs, were repudiating their agreement and would not have accepted any tender. They had employed Crist to represent them as against Brentwood even before the time limit had expired and before these suits were filed. ‘* * * the positive repudiation of a contract of sale by the vendor excuses the vendee from a formal tender of the price as a condition precedent to an action for specific performance * * *.’ Buckmaster v. Bertram, 186 Cal. 673, 676, 678, 200 P. 610, 612. Technical defects in the matter of tender become unimportant where it appears that the tender would not have been accepted. Boro v. Ruzich, 58 Cal.App.2d 535, 541, 137 P.2d 51; Civ.Code, § 1440.

The condition requiring elimination of the Santana interest is one which Brentwood could and did waive and hence specific performance should have been granted.

Britschgi Action.

This action is to recover $10,000 damages for defendants' violation of the written authorization given Britschgi by defendants to sell their property for $200,000 net. The agreement did not provide for any commission. Britschgi's remuneration, if any, was to come from the excess over $200,000 for which he might sell the property. There was no such excess. Hence he was not damaged either by the failure of defendants to go through with the Brentwood contract, or by the consummation of that contract as here required by specific performance. Britschgi alleged in his complaint that he had been damaged in the sum of $10,000. Defendants' answer denied generally all of the allegations of the complaint. Britschgi urges that such a denial constituted a negative pregnant admitting that Britschgi was damaged in any sum less than $10,000, such as $9999.99, and that Britschgi is entitled to judgment in such amount. As the case was tried on the theory that Britschgi was not entitled to any damages at all, we see no necessity of going into technical questions of niceties of pleading.

The Thomas and Britschgi Action.

This action is based upon the agreement at the bottom of the deposit receipt. This agreement, signed by defendants, provided for payment to Thomas and Britschgi of a real estate commission of 5 per cent of the selling price. While the original authorization to Britschgi to sell the McCall property was on the basis of no commission being paid other than the excess over the $200,000, this was a new agreement made between defendants and both Thomas and Britschgi, and definitely provided for a commission. As we have held that the Brentwood sale was repudiated without cause by defendants, Thomas and Britschgi earned their commission in bringing Brentwood and defendants together.

The judgment in action No. 15325 (Britschgi) is affirmed; those in actions No. 15326 (Thomas and Britschgi) and No. 15327 (Brentwood) are reversed, appellants to recover costs in the latter who actions.

FOOTNOTES

1.  Herein referred to as ‘Brentwood.’

2.  As most of the discussions were with William McCall, generally he alone will be referred to.

BRAY, Justice.

PETERS, P. J., and FRED B. WOOD, J., concur.