COLLINS v. VICKTER MANOR

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District Court of Appeal, Second District, Division 3, California.

Si COLLINS, d/b/a Si Collins & Associates, and Irwin Lachman, Plaintiffs and Appellants, v. VICKTER MANOR, Inc., a Corporation, Joseph Engle, Abe Vickter, Does I through V, Inclusive, Defendants and Respondents.*

Civ. 21504.

Decided: July 24, 1956

Frye & Yudelson and Collman E. Yudelson, North Hollywood, for appellants. Peter T. Rice and Sam Lipson, Los Angeles, for respondents.

Appeal by plaintiffs from a judgment of dismissal entered on an order sustaining a demurrer to the second amended complaint without leave to amend.

The second amended complaint, referred to as the complaint, contains six counts. In the first four counts plaintiffs seek to recover a real estate broker's commission from defendant corporation for the sale of unimproved realty. In the fifth and sixth counts plaintiffs seek to recover damages in the amount of the alleged commission from defendants Engle and Vickter respectively, for wrongful interference with plaintiffs' contractual relations with defendant corporation.

The First count alleges: Plaintiffs are licensed real estate brokers doing business under the name of si Collins & Associates and have complied with the provisions of sections 2466 and 2468 of the Civil Code authorizing them to do business under a fictitious name. On October 20, 1954 defendant corporation was the owner of 13 parcels of unimproved realty in Los Angeles. On that day defendant corporation orally employed plaintiffs to procure a buyer for the realty and promised to pay plaintiffs a commission of $3,000 for their services. On October 20, 1954 an agreement of purchase and sale in the form of a deposit receipt was executed by Leonard Grayson as buyer and defendant corporation as seller.1 The sale price was $65,000. The seller agreed to pay plaintiffs $3,000 as commission. Plaintiffs have duly performed all of the conditions of the contract on their part to be performed. Defendant corporation has neglected, refused, and failed to pay plaintiffs, or either of them, the commission earned by them. There is now due, owing, and unpaid from defendant corporation to plaintiffs the sum of $3,000.

Counts II, III, and IV reiterate the allegations of the first count. The second count adds that plaintiffs procured a buyer who accepted in writing the oral offer to sell made by defendant corporation by entering into an escrow on October 26, 1954; and at all times the buyer was ready, willing, and able to complete the purchase of the property. The third count alleges plaintiffs procured a buyer who was ready, willing, and able to purchase the property on the terms specified by defendant corporation.

The fourth count alleges conditions that were set out in the deposit receipt. It avers that in the receipt there were two conditions subsequest that the seller had to meet, but which were precedent to the buyer's duty to pay the purchase price. These conditions were: (1) ‘Seller to furnish satisfactory soil compaction report on each bldg. site from a reliable testing firm such as D. D. Warren Co.’ and (2) ‘Final contour map and filing map subject to buyers approval.’ The count further pleads: On October 26, 1954 an escrow was opened with an escrow company, and defendant corporation prevented performance by the buyer by failing to deposit in the escrow a soil compaction report and a contour map or filing map for the buyer's approval and by giving written notice of withdrawal from the escrow on November 19, 1954. At all times the buyer was ready, willing, and able to complete the purchase of the property but was prevented from doing so by the acts of defendant corporation.

The fifth and sixth counts are against Engle and Vickter respectively. The allegations of the two counts are similar and reiterate the allegations of count I. In addition they allege that Engle and Vickter and one Sam Lipson are the officers and directors of defendant corporation. No stock of the corporation was ever issued and the directors and officers are the beneficial owners of the corporation's property. While the escrow was still open Engle and Vickter, with full knowledge of plaintiffs' contract with defendant corporation, wrongfully, intentionally, and without justification interfered with and prevented defendant corporation from deposition the necessary papers in the escrow; they did so to prevent the closure of the escrow and to permit the corporation and themselves to profit by another sale. While the escrow was pending Engle and Vickter were negotiating with other persons to purchase the property. The fifth count alleges that defendant Engle was able and empowered either to complete the contract or prevent its completion by and on behalf of the corporation. The sixth count avers that defendant Vickter joined with defendant Engle to send the written notice of withdrawal. The prayer was for judgment against defendants Engle and Vickter severally in the sum of $3,000.

Defendants' demurrer to the complaint was sustained without leave to amend. Plaintiffs appeal from the judgment which followed.

The Case Against Defendant Corporation

A complaint in an action to recover a real estate broker's commission must allege: (1) the licensing of the plaintiff as a real estate broker; (2) the compliance by the plaintiff with the provisions of sections 2466 and 2468 of the Civil Code of California, where use of a fictitious firm name is averred; (3) the employment of the plaintiff as a broker by the defendant for the sale of the defendant's realty, in a form sufficient to satisfy the statute of frauds; (4) that the plaintiff obtained a buyer who was ready, willing, and able to buy on the terms set forth by the seller; (5) the amount agreed upon as a commission, or the reasonable value of the services; (6) the defendant's refusal to pay. McAlinden v. Nelson, 121 Cal.App.2d 136, 138, 262 P.2d 627; Meyer v. Selggio, 80 Cal.App.2d 161, 181 P.2d 690; 9 Cal.Jur.2d 277, § 101.

The liability of an owner to a broker cannot be avoided by the owner's wrongful refusal to consummate the sale. 9 Cal.Jur.2d 265, § 95. ‘If the performance of an obligation be prevented by the creditor, the debtor is entitled to all the benefits which he would have obtained if it had been performed by both parties.’ Civ.Code, § 1512.

In Realty Bonds, etc., Co. v. Point Richmond Canal & Land Co., 171 Cal. 238, 152 P. 433, 434, the defendant in writing constituted the plaintiff its agent to sell realty. The contract provided the defendant should make extensive improvements on the land. The defendant failed to make the improvements and in consequence of such failure many purchasers failed to make the deferred payments on the property. The plaintiff claimed he was entitled to the full commission on all lots sold whether the full purchase price was paid or not. The court held that the defendant ‘by its breaches of the agreement, had prevented purchasers from paying the full amount of the 40 per cent. of the purchase price of the property sold under the agreement during the agency of the plaintiff, although more than that amount had become due. Under these circumstances, the plaintiff was entitled to the full amount of its commissions upon the sales made, notwithstanding the fact that less than 40 per cent. of the purchase price had been paid.’

Coulter v. Howard, 203 Cal. 17, 262 P. 751, 752, was an action by a real estate broker for a commission. The escrow instructions, signed by the seller, said “Pay F. Bradley Coulter a commission of $5% at close of escrow but only out of funds then due and payable to me out of this escrow.” Prior to the time fixed for its close, defendant cancelled the escrow. The court held, 203 Cal. at page 23, 262 P. at page 753:

‘Respondent next asserts that, conceding the writing signed by her to be sufficient under the law, nevertheless the sum was not to be paid until the close of the escrow and then only out of funds payable to her thereunder. This would undoubtedly be true if she were free from fault in the premises. Jennings v. Jordan, 31 Cal.App. 335, 160 P. 576, and Brion v. Cahill, 34 Cal.App. 258, 262, 165 P. 704. But, prior to the time provided for completion of the transaction, respondent not only sold the property to another with intent to repudiate the transaction with Mr. Driver, but she actually served notice of attempted cancellation of the whole transaction. The law will not lend an ear to such contention on her part; therefore the payments provided will be held due as of the date of repudiation. The law requires of the vendor good faith and the doing of no intentional act to discourage, embarrass, or prevent the completion of the purchase. [Citations.]’

‘[203 Cal. at page 25, 262 P. at page 754.] Defendant, therefore, having refused on her part to carry out the transaction, and having deliberately repudiated the same by making a contract to sell the property to another, there is in reality no equity whatsoever in her position, and it may well be doubted whether she had a right, on June 28th, to cancel the escrow after having herself first repudiated it by contracting, on June 27th, to sell the property to another. Plaintiff, therefore, on this record, clearly earned her commission.

‘It is not necessary that a binding contract be executed by the purchaser. It is only necessary that he be ready, able, willing, and offer to purchase.’

‘[203 Cal. at page 26, 262 P. at page 754.] ‘Whether the sale was prevented by the failure of perfect title or by the mere will of the vendor makes no difference. In either case the compensation had been earned by the agent. [Citations.]’ * * *

“Second, the law as to this contract is no different from the law as to brokers' contracts generally; that is to say, where the contract fixes the broker's right to remuneration upon his sale, if he shall produce a purchaser able and willing to buy, he has performed his part of the contract, and the owner's liability for his compensation or commission is complete, and cannot be avoided by any arbitrary or wanton refusal to consummate the sale.”

In Stanton v. Carnahan, 15 Cal.App. 527, 115 P. 339, the contract said “And the buyer (Carnahan, the defendant) agrees to pay Stanton & Welch $300 commission. Seller (Crawford) agrees to pay Stanton & Welch $100 commission when deal is complete.” The action was against Carnahan to recover the $300. On a motion for a judgment of nonsuit the court suggested there was an absence of any showing that the deal had been completed and under the contract the $300 was not to be due and payable until the deal was completed. ‘Plaintiffs then offered to prove that Crawford had, pursuant to the terms of the contract, offered to perform his part thereof, but that Carnahan had refused so to do on his part and made default therein, and that the reason for not completing the deal was due to the acts of defendant, Carnahan’. The court, assuming those facts, nevertheless granted a nonsuit. Reversing, the court said that ‘the words ‘when deal is complete’ referred to and fixed a time contemporaneous with the performance of such act, not only when Crawford should pay the $100, but likewise the time when Carnahan should comply with his obligation to pay the commission of $300', that ‘[a]s the deal was not consummated, and inasmuch as under the terms of the contract the commission was not due until the deal was complete, the [trial] court held that plaintiffs were not entitled to recover’, and continued 15 Cal.App. at page 529, 115 P. at page 340:

‘Upon this record, however, we must assume that evidence was introduced which tended to establish the fact that the failure to complete the deal was due to want of performance on the part of defendant, and hence the due performance or completion of the deal upon which payment was made contingent was excused.’

Lathrop v. Gauger, 127 Cal.App.2d 754, at page 770, 274 P.2d 730, at page 739, says:

‘Defendant having frustrated by her own remissness the realization of the contractual objectives, she cannot take advantage of such conduct to efface the broker's right to his commission. Richardson v. Walter Land Co., 118 Cal.App.2d 459, 464, 258 P.2d 42; Showers v. Rober, 92 Cal.App. 171, 175–176, 267 P. 884.’ (Also see Barnes v. Osgood, 103 Cal.App. 730, 284 P. 975.)

The facts alleged in the case at bar come squarely within the principles of law enunciated in the foregoing cases.

Cases relied on by defendant are factually inapposite. In Lawrence Block Co. v. Palston, 123 Cal.App.2d 300, at page 308, 266 P.2d 856, at page 861, we said: ‘Plaintiff was entitled to a commission only if defendant [seller] and Neidorf [buyer] came to a meeting of the minds as to the terms of sale and if the contract did not fail of consummation through the fault of defendant.’ (Emphasis added.) The contract in that case did not fail of consummation through the fault of the defendant—here it did. In Ridgway v. Chase, 122 Cal.App.2d 840, 265 P.2d 603, the broker's contract was not to procure a person ready, willing, and able to enter into a lease; it was to procure a lease. His compensation was dependent on procuring a lease. He did not procure one.

The complaint as against defendant corporation alleges sufficient facts to show that plaintiffs procured a buyer ready, willing, and able to buy the property on the terms imposed by it. Since plaintiffs procured a buyer ready, willing, and able to buy and defendant corporation wrongfully refused to consummate the sale, plaintiffs' right to payment of their compensation was not dependent on the performance of the contract of sale. The fact that a principal and a customer procured by a broker execute a writing which is not binding as between themselves does not affect the broker's right to recover his commission for services rendered in bringing the parties together where the transaction is not consummated because of the fault of the principal. Cf. Leckey v. Holst, 97 Cal.App. 698, 702, 275 P. 1015. The contract describes the property as a ‘tentative tract.’ We take it that the ‘filing map’ which the seller agreed to furnish means a subdivision map. No standard or basis for the buyer's approval of a subdivision map is fixed and he could not have been compelled to approve one if it had been furnished.2 Even though the buyer had a right to disapprove a subdivision map if the seller had furnished one, defendant corporation cannot take advantage of that fact when it did not furnish a map as it had agreed to do. A cause of action is alleged. It was error to sustain the demurrer of defendant corporation.

The Case Against the Individual Defendants

The case against these defendants is governed by different principles of law. The counts against them are an attempt to plead causes of action on the principle that one who, without a privilege so to do, induces a third person not to perform a contract with another, is liable to the other for the harm caused thereby. Imperial Ice Co. v. Rossier, 18 Cal.2d 33, 39, 112 P.2d 631; Augustine v. Trucco, 124 Cal.App.2d 229, 244, 268 P.2d 780; Rest., Torts, § 766; annotations 84 A.L.R. 43; 26 A.L.R.2d 1227. The existence of an enforceable contract is an essential condition of liability for unjustifiably inducing a breach of contract. 30 Am.Jur. 73, § 21. In Sweeley v. Gordon, 47 Cal.App.2d 385, 118 P.2d 16, 842, it was held that since the seller had the legal right to stand upon the defense of the statute of frauds, the third person, the buyer, did not become liable in damages to the plaintiff broker when the buyer in fact induced the seller to stand upon his legal rights and assert the invalidity of the contract. (See Duell v. Sanstrom, 120 Cal.App. 414, 7 P.2d 1087.)

In a similar case a Texas court held that the third person who prevented the broker from earning his commission was not liable therefor. In Roberts v. Clark, Tex.Civ.App., 103 S.W. 417, the plaintiff broker procured the defendant Clark to purchase realty. Clark had the option to withdraw from the contract. The other defendant, Morrison, a stranger, induced Clark to refuse to carry out the contract. The owner then conveyed the land to Morrison, who later conveyed to Clark. The plaintiff sued Clark and Morrison on the ground they had conspired to induce the owner of the property to breach his contract, whereby he lost his commission. The court held that because Clark was not bound by his contract to consummate the purchase negotiated, he had a right to withdraw and forfeit his deposit, and that the plaintiff had no cause of action against Clark and Morrison for the alleged tort. (See 97 A.L.R. 1273; 146 A.L.R. 1417; and cases cited.)

The contract between defendant corporation and Grayson was unenforceable. It gave Grayson the opportunity to decline to purchase the property. No one could compel him to approve a filing or subdivision map. By refusing to approve, he could withdraw from the contract. One who promises to do a thing only if it pleases him, is not bound to perform. Central Oil Co. v. Southern Refining Co., 154 Cal. 165, 97 P. 177; 12 Cal.Jur.2d 317, § 114. Where a contract imposes no definite obligation on one party to perform, it lacks mutuality of obligation. It is elementary that where performance is optional with one of the parties no enforceable obligation exists. Patty v. Berryman, 95 Cal.App.2d 159, 167, 212 P.2d 937; Shortell v. Evans-Ferguson Corp., 98 Cal.App. 650, 660–661, 277 P. 519; Charles Brown & Sons v. White Lunch Co., 92 Cal.App. 457, 461, 268 P. 490; Seymour v. Shaeffer, 82 Cal.App.2d 823, 825, 187 P.2d 95; Williston on Contracts (rev. ed.), Vol. 1, pp. 123–128, 349. When by the terms of an agreement the owner of property binds himself to sell on specified terms, and leaves it discretionary with the other party to the contract whether he will or will not buy, it constitutes simply an optional contract. Johnson v. Clark, 174 Cal. 582, 586, 163 P. 1004.

The complaint does not state facts sufficient to constitute a cause of action against the individual defendants.

The judgment in favor of defendant corporation is reversed. The judgment in favor of defendants Engle and Vickter is affirmed.

FOOTNOTES

1.  The deposit receipt, made a part of each count, in pertinent part reads: ‘Deposit Receipt ‘PO. 6–3092‘Si Collins and Associates, Realtors ‘Received from Leonard Grayson * * * the sum of (x) Check 1000.00 ( ) Cash dollars as deposit on account of purchase price of following described property [description]. Purchase price to be $61,750.00. Balance to be paid as follows: $30,875.00 cash upon issuance of commissioners (real estate) report or close of escrow. Balance to be thirteen (13) equal trust deeds @ 6% yr all due one (1) yr or sooner if property is resold. Trust deeds to be subordinated to construction loans. Seller to provide all improvements such as sidewalks sewers, curbs, paving and all public utilities at his expense[.] Seller to furnish satisfactory soil compaction report on each bldg site from a reliable testing firm such as D. D. Warren Co. Final contour map and filing map subject to buyers approval[.] Property to be turned over to purchaser on close of escrow as of real estate commissioners report.‘We, the undersigned, OK 10/20/54 approve and agree to the foregoing, and agree to pay said broker a real estate commission of$3087.50 65000.00 sixty five thousand to seller—— 3000.00 comm. Vickter Manor, Inc. Abe Vickter (secy.) 10/23/54 Seller ‘Si Collins & Associates, RealtorsBy I. LachmanWe, the undersigned, agree to purchase the above described property for the price and terms outlined above.‘Purchaser Leonard Grayson’

2.  Without deciding the question, it would seem that the buyer could not unreasonably disapprove soil compaction reports or a contour map had the seller furnished them as it agreed to do. (See Melton v. Story, 113 Cal.App. 609, 613, 298 P. 1032; 12 Cal.Jur.2d 440, § 219.)

VALLEÉ, Justice.

SHINN, P. J., and PARKER WOOD, J., concur.

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