BURGE v. Hofmann Homes Realty, Inc., and Arthur “Mac” McBride, Defendants, Cross-Complainants, Cross-Defendants, and Appellants. (1984)

The appeal of Junior H. Dixon and Mary E. Dixon, his wife (hereafter Dixon), is from an adverse judgment:  (1) requiring their specific performance of an agreement (the agreement) for the sale of a building lot (hereafter the property) and awarding $30,000 in damages, in favor of Jack Burge and Joy Burge (hereafter Burge), and (2) awarding Hofmann Homes Realty, Inc., and Arthur “Mac” McBride (hereafter sometimes, the Broker) $8,560 as and for a real estate broker's commission and attorney's fees in the action.

The appeal concerns the effect of the so-called “equal dignities” rule of Civil Code section 1624, subdivision 4, rendering invalid an agreement for the sale of real property” made by an agent of the party sought to be charged ․ unless the authority of the agent is in writing, subscribed by the party sought to be charged.”

The following superior court's findings of fact were based upon uncontroverted evidence.

“2. At all times pertinent hereto defendants Junior H. Dixon ․ and Mary E. Dixon (hereinafter ‘Dixons') were the owners of that certain real property more particularly described in Exhibit ‘A’ attached hereto․

“3. On or about December 16, 1977 the Dixons executed an exclusive authorization and right to sell the property ․ in favor of Hofmann Realty Co., plaintiffs' Exhibit ‘1.’

“4. On or about February 27, 1978 the Dixons entered into an agreement in writing [^* ] ․ entitled purchase agreement & deposit receipt, (hereinafter ‘The Agreement’) with the Burges whereby the Burges agreed to purchase and defendants agreed to sell the subject real property for a cash payment of $57,000.00․

“7. The Agreement sets forth among others the following terms and conditions:  (a) Buyer shall have ninety (90) days to sell his property ․ plus thirty (30) days additional to close and (b) subject to buyer being able to obtain a written commitment for the above construction loan within forty-five (45) days.

“8. The Agreement provides for the closing of escrow within one hundred and twenty (120) days;  time was made of the essence of the Agreement;  and the Agreement contains a clause which provides that in the event legal action is instituted by either party to the Agreement ‘to enforce the terms of this agreement or arising out of the execution of this agreement or the sale,’ the prevailing party shall be entitled to a reasonable attorney fee from the other party.

“9. At all times pertinent hereto Art McBride was a licensed real estate salesman employed by Hofmann Homes Realty, Inc., a California corporation, duly licensed as a California real estate broker.

“10. At all times pertinent hereto Art McBride was acting on behalf of the Dixons.”

(The issue of the appeal concerns the subject matter and effect of the next finding of fact.)

“11. On or about June 12, 1978 McBride agreed in writing, on behalf of the Dixons and with their consent and approval to extend the close of escrow to August 1, 1978.”

It will be noted that it was Arthur “Mac” McBride, and thus his principal Hofmann Homes Realty, Inc., and not Dixon, who, on or about June 12, 1978, agreed in writing “to extend the close of escrow [by approximately an additional month] to August 1, 1978.”

(For reasons as will also soon appear, we find irrelevant the testimony of Arthur “Mac” McBride that he was orally authorized over the telephone by Dixon to so extend the close of escrow, and Dixon's insistence that he had not given such oral, or any, authorization.)

Burge did not close the escrow within the 120 days prescribed by the agreement.   And Dixon thereafter refused to recognize, or to be bound by, the writing of Arthur “Mac” McBride extending “the close of escrow to August 1, 1978.”   Burge's belated effort to “close the escrow” within the purportedly extended period was rejected, and the instant action ensued.

As earlier suggested, Civil Code section 1624, subdivision 4, provides:

“The following contracts are invalid unless the same, or some note or memorandum thereof, is in writing and subscribed by the party to be charged or by his agent:  ․ 4. An agreement ․ for the sale of real property, or of an interest therein;  and such agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged; ․”  (Emphasis added.)

 The statute is a statute of frauds.

“The object of the statute of frauds is to preserve, in definite and enduring form, concrete evidence of the terms which persons, on entering into contractual relations with each other in certain kinds of transactions specified by the statute, have mutually agreed on, and to prevent in this fashion the commission of fraud and the practice of perjury in such transactions.   Therefore, in order to prevent the commission of fraud and perjury, which is so likely to occur whenever a transaction within the operation of the statute has not been reduced to writing, the statute requires that reliable evidence of an agreement within its provisions be set forth in a writing signed by the party to be charged.”  (35 Cal.Jur.III, Frauds, Statute of, § 2, p. 10, and see authority there collected.)

And:  “We must, of course, apply the California statute of frauds to a situation which is precisely covered by the language of the statute.”   (Sunset-Sternau Food Co. v. Bonzi, 60 Cal.2d 834, 838, 36 Cal.Rptr. 741, 389 P.2d 133.)

 It will be remembered that Arthur “Mac” McBride, and his principal Hofmann Homes Realty, Inc., purportedly acting as Dixon's agent, had, without the latter's written authority modified the agreement by extending the time for Burge's performance under it, by about 30 days.   The extension was accordingly invalid under Civil Code section 1624, subdivision 4.

 Without the unauthorized extension of the agreement, Burge was in default under it.  “The basic rule is, of course, that in an action for specific performance the plaintiff must ․ prove that he was ready, willing, and able [our emphasis] to perform” according to the contract's terms.   (Doryon v. Salant, 75 Cal.App.3d 706, 714, 142 Cal.Rptr. 378;  Am-Cal Investment Co. v. Sharlyn Estates, Inc., 255 Cal.App.2d 526, 539, 63 Cal.Rptr. 518;  Pike v. Von Fleckenstein, 203 Cal.App.2d 134, 136–137, 21 Cal.Rptr. 390.)

We have considered Burge's many incidental arguments.

 He first says that:  “Appellants may not raise the ‘equal dignities rule’ for the first time on appeal.”

The record indicates that the issue is not raised for the first time on appeal.

Civil Code section 1624, subdivision 4, was not pleaded as a defense in Dixon's answer.   But much of the trial was given over to the issue whether Arthur “Mac” McBride or Hofmann Homes Realty, Inc. had written authority from Dixon to modify the agreement.   And at the trial's close, when Dixon's attorney was arguing the point that Hofmann Homes Realty, Inc. “did not have authority, specifically written authority [our emphasis] to execute the [extension] document,” upon adversary objection that the matter was not pleaded or “raised,” the trial court ruled:  “I think to have a completely clean record of this thing I'm going to permit counsel to amend to insert the statute of frauds.”   Such an amendment lies within the trial court's discretion (3 Witkin, Cal. Procedure (2d ed. 1971) Pleading, §§ 1056, et seq., pp. 2631 et seq.);   we discern no contrary contention in the superior court, or here.   There was no abuse of discretion.

 It is next argued that Dixon's offer of, and failure to object to, evidence of the circumstances of the real estate broker's claim of authority to modify the agreement, in some way constituted a waiver of the statute of frauds.   Waiver, of course, “always rests upon intent.”  (Roesch v. De Mota, 24 Cal.2d 563, 572, 150 P.2d 422;  Trujillo v. City of Los Angeles, 276 Cal.App.2d 333, 343, 81 Cal.Rptr. 146;  and see In re Marriage of Moore, 113 Cal.App.3d 22, 27, 169 Cal.Rptr. 619.)   We find no evidence of such an intent or waiver, nor did the superior court make a finding of waiver.

 A related argument of Burge is that Dixon waived the agreement's “time is of the essence” provision by voluntarily extending the “closing date.”   This argument also is baseless;  it ignores the apposite statute of frauds, Code of Civil Procedure section 1624, subdivision 4.

 It is also urged that the broker's extension of the agreement's closing date without written authority so to do, was but a “mechanical act,” which did “not involve the exercise of discretion.”   Such an argument that a broker may unilaterally and “mechanically” extend the performance date of a contract's “time is of the essence” provision, without lawful authority therefor, is patently lacking in legal support, or in reason.

Nor did the brokers have “ostensible” authority to extend the time for performance of the agreement.   The argument is unsupported by citation of authority and need not be considered by us (see 6 Witkin, Cal.Procedure (2d ed. 1971) Appeal, § 425, p. 4391).   It also contravenes the settled rule that such issues may not be raised for the first time on appeal.  (See Damiani v. Albert, 48 Cal.2d 15, 18, 306 P.2d 780.)   And our independent research otherwise reveals no merit in the argument.

 By virtue of the foregoing we conclude that the Broker's consent to a 30-day extension of the agreement was invalid, that Burge was in default under the agreement when he tendered performance, and that he was not entitled to judgment against Dixon.

We advert now to the appeal as it relates to the portions of the judgment in favor of the Broker.

 We first consider the judgment's award of a commission for services as a real estate broker.   The Broker's claim was premised upon the validity of the extension of time for performance of the agreement by Burge, and their production of a buyer ready, willing, and “able ” to close the transaction within the agreement's time for performance.   For the reasons above stated, the portion of the judgment awarding a broker's commission was erroneous.

 As to the judgment's attorney's fees award against Dixon in favor of the Broker, we note that it was founded upon a provision that:  “In the event legal action is instituted to collect this commission ․, Seller [Dixon] agrees to pay the agent [the brokers] such additional sum as the court may adjudge reasonable for attorney fees.”   By virtue of Civil Code section 1717 the provision operated reciprocally in favor of the action's prevailing party.   Here, as we hold, the Broker was not the prevailing party.   The portion of the judgment awarding the Broker attorney's fees from Dixon will accordingly, also be set aside.

 We are brought to the issue of Dixon's entitlement to attorney's fees.

The agreement had also provided:  “In the event legal action is instituted by any party to this agreement to enforce the terms of this agreement, or arising out of the execution of this agreement or the sale, the prevailing party shall be entitled to receive from the other party a reasonable attorney fee to be determined by the court in which such action was brought.”  (Our emphasis.)

All of the parties to the action, and to this appeal, were “parties to the agreement.”  Under our holding Dixon is the prevailing party of the action, and Burge and the Broker are not.

We are taught by the high court's case of International Industries, Inc. v. Olen, 21 Cal.3d 218, 224, 145 Cal.Rptr. 691, 577 P.2d 1031, that “any award of contractual attorney fees is governed by equitable principles.”   Equitable principles, we opine, dictate that the action's attorney's fees be paid by the Broker whose fault in ignoring Civil Code section 1624, subdivision 4, was the genesis of the action.   Such fees should not fairly be paid by Burge, in whole or in part.   We accordingly so rule.

Nothing we have said in this opinion shall preclude Burge from pursuing such rights, if any he has, against the Broker, arising out of the within described transaction.

The judgment is reversed.   The superior court will determine and fix reasonable attorney's fees for services rendered defendants, cross-defendants, and cross-complainants Dixon in the action, including this appeal.   Judgment will thereafter be entered:  (1) in favor of such defendants, cross-defendants, and cross-complainants, and against defendants, cross-complainants, and cross-defendants Arthur “Mac” McBride and Hofmann Homes Realty, Inc., for such attorney's fees;  (2) that plaintiffs Burge and defendants, cross-complainants, and cross-defendants Arthur “Mac” McBride and Hofmann Homes Realty, Inc., take nothing in or by the action;  and (3) otherwise in a manner not inconsistent with the views we have expressed.   Defendants, cross-defendants, and cross-complainants Dixon will recover their costs of appeal.

FOOTNOTES

FOOTNOTE.   It is significant that the agreement was executed March 6, 1978.   As stated by the Broker:  “[T]he trial court's finding refers to the contract of February 27, 1978, an obvious typographical error;  the trial court clearly intended to refer to the contract dated February 21, 1978 and signed by the Dixons on March 6, 1978.”

ELKINGTON, Associate Justice.

RACANELLI, P.J., and HOLMDAHL, J., concur.