Case Title: Lake Company v. Molan

Citation: 131 N.W.2d 734

Docket Number: 

State: minnesota

Court: Minnesota Supreme Court

Date: 1964-11-25T00:00:00Z

Document:
131 N.W.2d 734 (1964) The LAKE COMPANY, Respondent, v. Charles MOLAN, Appellant. No. 39208. Supreme Court of Minnesota. November 25, 1964. *735 Sigal, Savelkoul, Cohen & Sween, Minneapolis, for appellant. Perry W. Copeland, Minneapolis, for respondent. NELSON, Justice. This action, brought by The Lake Company to recover a real estate commission, resulted in a directed verdict in its favor and defendant appeals from the judgment entered pursuant thereto after denial of his alternative motion for judgment n. o. v. or a new trial. On February 27, 1960, defendant signed an exclusive listing agreement with plaintiff which provided: The agreement also provided that the price was to be $30,000, with a downpayment of $7,500, and that the listing was for a period of 60 days. On April 4, 1960, plaintiff's president, Peter Petro, procured an offer to buy from Clark Oil & Refining Corporation, hereinafter referred to as Clark, and presented it to defendant, and requested that he sign it. The price specified in this offer was $25,000, with the downpayment to be $1,000 and the balance to be paid when the deal was closed. The offer was dated April 4, 1960, addressed to defendant, and expressly required acceptance within 10 days. It also provided as follows: Defendant rejected this offer. Mr. Petro then changed the price specified therein from $25,000 to $30,000 the price provided in the listing agreement and the amount to be paid on closing from $24,000 to $29,000. Defendant wrote his initials opposite these changes and signed the offer as thus modified. Plaintiff introduced the instrument signed by defendant into evidence. It shows execution as follows: The record fails to disclose whether Clark's officer signed the original offer or signed it after the changes required by defendant had been made. On April 20, 1960, defendant's attorney sent the abstract of title to the property involved to plaintiff. On June 30, 1960, Clark's attorney sent the following telegram to defendant's attorney: Defendant's attorney then wrote Clark as follows: Neither plaintiff nor Clark responded to this letter, nor did either appear on July 5 for the closing. Mr. Petro testified that he tried to reach defendant's attorney but was unsuccessful. An explanation for their absence was not offered at the trial. On July 13, more than 90 days following the date of the offer, defendant's attorney telegraphed Clark as follows: On July 29 Clark's attorney sent the following telegram to defendant's attorney: On the same day he sent Mr. Petro a copy of the telegram and sent the following letter to Mr. Petro: Petro testified that he received a copy of the telegram of July 29, 1960, and that he went to the defendant's home to discuss the suggested closing. Defendant told him to see his attorney. Mr. Petro testified that he telephoned the attorney and asked him if it was agreeable to close the transaction, but the attorney told him to see defendant about it, and that upon again contacting defendant he was again told to see his attorney. No meeting took place between the parties on August 3 or thereafter. About a week later plaintiff received a note from defendant stating in part: On September 30, Mr. Petro returned the $1,000 deposit made by Clark. Whether Petro consulted with defendant in regard to returning the downpayment is not shown by the record. The only evidence submitted regarding a building permit showed that a permit for erection of a service station, dated May 12, 1960, had been issued, not to Clark, but to "Peter Petro, Master Craft Const. Co." as owner. There is no evidence that defendant complied with the provision in the offer requiring him to obtain driveway openings or location of a service road next to the property. The issue presented is whether plaintiff upon the record before this court has established by sufficient proof that it is entitled to recover a real estate commission under the foregoing facts. Defendant contends that no binding and enforceable contract was entered into between Clark and himself; that plaintiff failed to produce a buyer ready, willing, and able to purchase the property in accordance with the terms of the listing agreement or otherwise; and that plaintiff was not entitled to a directed verdict. Defendant further contends that, assuming that a contract had been made, Clark was clearly in default on essential terms and he therefore was entitled to terminate the agreement. 1. Minn.St. 513.05 provides: As early as Lanz v. McLaughlin, 14 Minn. 55 (72), this court laid down the rule that to constitute a contract, valid within the statute of frauds, to convey real estate, an offer in writing to sell must be accepted in writing. See, Kileen v. Kennedy, 90 Minn. 414, 97 N.W. 126; Newlin v. Hoyt, 91 Minn. 409, 98 N.W. 323; Ferguson v. Trovaten, 94 Minn. 209, 102 N.W. 373. In Bey v. Keeping, 192 Minn. 283, 256 N.W. 140, also, we held that in order to conform to the requirements of the statute of frauds the acceptance of the terms of a written proposal for the purchase of real estate must be in writing. The question *739 presented in that case was whether or not there was a sufficient contract to justify specific performance. We held that there had not been an unqualified, written acceptance and hence there was no contract under Mason St.1927, § 8460 (now Minn. St. 513.05). 2. This court has consistently held that the broker does not become entitled to his commission by tendering a contract signed by a proposed purchaser, unless the contract can be enforced against the purchaser if accepted and executed by the owner. Huntley v. Smith, 153 Minn. 297, 190 N.W. 341; 3 Dunnell, Dig. (3 ed.) § 1147, p. 30. In the Huntley case it was held that the contract was not enforceable against the defendant seller because it had not been executed in her behalf by an agent authorized in writing as required by the statute of frauds and that it was not enforceable against the purchaser because it was too indefinite and uncertain. We also said in that case that a contract for the sale of land, to be enforceable, must be sufficiently definite so that all the terms thereof can be determined from the information given by the contract. 3. No contract is complete without the mutual assent of the parties thereto, and an offer to buy or sell property imposes no obligation until it is accepted according to its terms. A proposal to accept, or an acceptance upon terms varying from those offered, is a rejection of the offer, and puts an end to the negotiations unless the party who made the original offer renews it or properly assents to the modifications suggested. Kileen v. Kennedy, supra. 4. It has therefore been consistently held to be the rule in this state that a real estate broker, in order to earn a commission for finding a purchaser, must either obtain a contract from a proposed purchaser able to buy, whereby he is legally bound to buy on the authorized terms, or must produce a proposed purchaser, able, willing, and ready to buy on the authorized terms. McDonald v. Smith, 99 Minn. 42, 108 N.W. 291; Hare v. Bauer, 223 Minn. 285, 26 N.W.2d 359. In Gopher State Business Opportunities, Inc. v. Stockman, 265 Minn. 185, 121 N.W.2d 613, we stated: 5. The trial judge in directing a verdict in the instant case concluded that the parties had entered into a complete and binding agreement to convey the land in question, but the record is unclear as to when such agreement was consummated. The telegram sent by Clark to defendant's attorney on June 30, 1960, is the only written evidence of any type of acquiescence to defendant's counteroffer. But that telegram refers to closing the transaction in accordance with the terms of the offer of April 4, 1960, the date of Clark's original offer. Why would plaintiff return the $1,000 deposited with it as earnest money at the time of submitting the offer to purchase if there had been a legal written acceptance by Clark of defendant's counteroffer? Assuming, however, that a purchase agreement had been made, the failure of Clark to appear at the scheduled July 5, 1960 closing was a default and the contract thereby became void. Moreover, it appears that Clark did not obtain the permits within the 90-day period provided therefor and defendant did nothing to obtain the necessary driveway openings or service road. Under the circumstances defendant, after expiration of that period, had no right to specific performance or any other remedy. He could not sue on the contract since the conditions precedent to Clark's liability were never performed in the manner provided manner provided by its terms. This court has held, speaking through Mr. Justice Mitchell in Chambers *740 v. Northwestern Mutual Life Ins. Co., 64 Minn. 495, 497, 67 N.W. 367, 368, that See, also Liebsch v. Abbott, 265 Minn. 447, 122 N.W.2d 578; 17A C.J.S. Contracts § 338; Monteleone v. Blache, 11 La.App. 99, 120 So. 900; Annotation, 76 A.L.R.2d 1195. Bankers Service Co. v. Schouweiler, 163 Minn. 25, 203 N.W. 417, involved an action by a broker for a commission he was to receive upon a sale of stock. The broker procured a purchaser and an agreement with the seller was consummated. The purchase agreement was subject to a condition and it was provided that if the condition was not fulfilled the contract was to become null and void. The condition was not fulfilled. We held that no enforceable contract had been made and therefore the broker had not earned a commission. 6. Plaintiff's action in returning the downpayment to Clark is also a ground for denying him recovery. Decisions are collected in Annotation, 69 A.L.R.2d 1244, 1246, and summarized there as follows: In Politte v. Wall, Mo.App., 256 S.W.2d 283, the broker returned the deposit to the purchaser without the knowledge or consent of the sellers. The Missouri court said that the broker by doing so exceeded his authority. His agency was limited and he thus had no implied or apparent authority to rescind or abandon a sale. The court thus held (256 S.W.2d 285): In Somers Co. v. Pix, 75 Wash. 233, 134 P. 932, the broker allowed the purchaser to withdraw the earnest money because of an objection to the title which did not in fact prevent it from being marketable. The court held that in doing so he waived his right to his commission, commenting (75 Wash. 237, 134 P. 934): On the authority of these decisions we hold that where an agreement for the sale of land gives the seller the right to declare a forfeiture of the purchaser's deposit upon the latter's failure to consummate the sale, a broker who returns such deposit to a defaulting purchaser without the seller's authorization may not recover a commission from the seller. Application of this rule to the instant case depends upon whether or not defendant authorized the return of the *741 downpayment. The record fails to establish when defendant was informed of the return, but it is apparent he did not authorize it. Clark's offer of April 4, 1960, clearly indicated that it was not willing to buy on the terms specified in the listing agreement with respect to the price and the downpayment. The offer to buy also contained the other conditions heretofore discussed. Defendant required a change in the purchase price by increasing it to $30,000 and requiring $29,000 to be paid on closing, but required no other changes in the provisions of the offer. However, the final telegram sent by Clark, suggesting a closing date, referred to the terms of the offer of April 4, 1960. Without explanation of the several apparent inconsistencies, it could well be assumed from the facts shown by the record that plaintiff returned the earnest money payment wholly of its own accord due to a failure to obtain a written acceptance, in compliance with the statute of frauds, of defendant's counteroffer. Clark's telegram of July 29, 1960, to defendant's attorney, stating that its representatives would come to his office on August 3 for the closing "in accordance with terms of purchase contract dated April 4, 1960," and the contemporaneous letter to Petro, stating that they did not expect to come to Minneapolis on the date designated unless they had some assurance that the closing could be made on Clark's terms, make it clear that plaintiff had not, as of July 29, 1960, produced a buyer who was able, willing, and ready to purchase on the seller's terms. Since the record fails to prove that plaintiff as defendant's real estate agent presented him with a binding and enforceable offer or contract of sale from Clark or a buyer able, willing, and ready to purchase on defendant's terms, we are required to reverse in this case. It was error for the trial court to direct a verdict in plaintiff's favor under the circumstances. Reversed.