Title: Killam v. Tenney

State: oregon

Issuer: Oregon Supreme Court

Document:

Affirmed November 22, 1961.
*135 Denton G. Burdick, Portland, argued the cause for appellant. On the brief were Hutchinson, Schwab & Burdick.
Mark A. Hathaway, Portland, argued the cause for respondent. On the brief were Hathaway & Arnold.
Before McALLISTER, Chief Justice, and ROSSMAN, WARNER, PERRY and LUSK, Justices.
AFFIRMED.
*136 LUSK, J.
This is an action to recover a real estate broker's commission. In a trial before the court without a jury the court entered a judgment for the plaintiff in the sum of $10,000 as an agreed commission and $1,750 attorneys' fee. Defendant appeals.
The plaintiff Graham Killam, dba Graham Killam Co., is a licensed real estate broker in the city of Portland, Oregon. The defendant G.U. Tenney, dba West Coast Pictures, was the owner of real property in Portland improved by a building in which the business referred to was conducted. On December 9, 1958, the defendant signed a listing agreement by which he gave the plaintiff
Other material parts of the listing agreement are the following:
A salesman employed by the plaintiff introduced Mr. Carter Stanley as a prospective purchaser to the defendant and as a result of direct negotiations between the defendant and Stanley, the defendant gave to the latter on January 13, 1959, the following option agreement:
Garnet R. Tenney is the wife of the defendant G.U. Tenney.
On February 16, 1959, Mr. Stanley informed the defendant and his wife orally that he was exercising the option. Getting "no reaction" from the defendant, Mr. Stanley had his attorney, Mr. Donald J. Griswold, write the following letter addressed to the defendant and his wife under date of February 25, 1959:
Following the mailing of the foregoing letter, a meeting was had between Mr. Griswold, his partner Mr. David D. Pattullo, and Mr. Royal, who was then attorney for the defendant. Thereafter, on March 5, 1959, Mr. Griswold wrote Mr. Royal the following letter:
On March 11, 1959, the plaintiff wrote a letter to Mr. Royal in which he stated his "acceptance of the $10,000.00 Sales Commission referred to by Mr. and Mrs. Tenney, in that certain option agreement dated *144 January 13, 1959, granting to Carter Stanley and Associates the right to purchase the West Coast Pictures." A copy of this letter was sent to Mr. Griswold. On March 12, 1959, Mr. Stanley wrote the following letter on the stationery of his attorney to Mr. Royal:
The foregoing letter was delivered personally by Stanley and Griswold to Royal, and the latter wrote on it "rejected" without giving any reason therefor. On March 16, 1959, Mr. Royal wrote to Messrs. Stanley and Griswold "that the counter offers contained in your respective letters of February 25th, 1959, March 5th, 1959 and March 12th, 1959, in the above matter are hereby not accepted by G.U. Tenney and Garnet R. Tenney." This brought a response from *146 Mr. Griswold to the effect that no counteroffers had been made, but that the previous letters of February 25, March 5 and March 12 were "all attempts to secure performance by G.U. Tenney and Garnet R. Tenney pursuant to the Option Agreement which they signed."
Under the terms of the listing agreement, the defendant promised to pay the plaintiff a fee of $20,000 "[i]n the event said property is sold, leased, or exchanged during the period of this contract." If Tenney entered into a valid and binding contract with Stanley for the sale of the machinery, furniture, fixtures, name, and good will, and the inventory of West Coast Pictures and the lease of the premises, this stipulation was fulfilled and Tenney became liable for payment of the broker's fee, reduced later to $10,000 by agreement of the plaintiff. Scott v. Merrill's Estate, 74 Or 568, 572, 146 P 99; Stewart v. Will, 65 Or 138, 140, 131 P 1027; Columbia R.I. Co. v. Alameda L. Co., 87 Or 277, 286, 168 P 64, 440; Oregon H. Builders v. Montgomery Inv. Co., 94 Or 349, 363-364, 184 P 487.
1. The rule approved by these authorities, as it is stated in 8 Am Jur 1094, Brokers, § 179, is that "unless the broker and his employer have expressly stipulated to the contrary, the broker is entitled to his compensation upon the completion of the negotiations which he undertook, irrespective of whether or not the contract negotiated is ever actually consummated or whether the failure to complete the contract is due to the default or refusal of the employer or to that of the party procured by the broker, so long as the failure to carry it through to a successful completion is not due to any fault of the broker or so long as he has not been guilty of fraud or bad faith." The defendant contends that the listing agreement in this case *147 does contain a stipulation "to the contrary", in that it provides:
Support for this position is claimed to be found in Oregon H. Builders v. Montgomery Inv. Co., supra. That case involved an exchange of properties, together with a cash payment to be made by one of the parties to the agreement. The broker's contract of employment contained a promise of the employer to pay a commission
It was further provided that the defendant agreed to pay
In an action brought by the broker to recover his commission from his employer, the defendant contended that the words "consummate a deal" referred to a completed transfer and not to a contract for sale or exchange and that unless a transfer was completed no liability for the payment of a fee would arise. Construing together the two provisions which we have quoted, the court held that the words "$750.00 cash of the price" indicated that "the commission would be *148 paid out of the price" and that the words "to consummate a deal" meant, in the case of an exchange of properties, a completed transfer. The court said:
In the instant case the contract of employment provides:
Here is an absolute promise to pay the stipulated fee "for performing the above services" without any limitation whatever. The provision upon which the defendant relies is found further along in the contract and *149 is separated from that just quoted by several other provisions on unrelated subjects. It is followed immediately by this language:
Thus, there are significant differences between the agreement in this case and that in Oregon H. Builders v. Montgomery Inv. Co. The agreement here is not one to pay a fee out of moneys paid or deposited on the purchase price, but to pay $20,000 for the services rendered regardless of the source of the money. The provision on which the defendant depends, instead of being a limitation on this promise, is a reservation of the right to be paid out of a deposit or payment on the purchase price, which is additional to the promise first expressed and not a limitation of it. Finally, the sentence last above quoted negatives the notion that no fee would be payable unless a "deal" should be "consummated" by expressly providing that, if there should be a deposit or part payment of the purchase price, the broker would be entitled to payment from such deposit or part payment up to the amount of his fee "as fully as if the said sale or exchange had been fully consummated."
2. Oregon H. Builders v. Montgomery Inv. Co. is not in point and the general rule that the broker earns his fee when an enforceable contract of sale has been executed applies to this case.
3, 4. The option contract was based upon a consideration *150 and was "both an offer and also a unilateral contract." 5 Williston, Contracts (rev ed) 4025, § 1441. Upon the seasonable unqualified acceptance of the offer there would emerge a valid bilateral contract which the courts will specifically enforce. Herndon v. Armstrong, 148 Or 602, 608, 36 P2d 184, 38 P2d 44; Strong et al. v. Moore et al., 105 Or 12, 21, 207 P 179, 23 ALR 1217; Sprague v. Schotte, 48 Or 609, 611, 87 P 1046; House v. Jackson, 24 Or 89, 95, 32 P 1027; Northern Illinois Coal Corp. v. Cryder, 361 Ill 274, 197 NE 750, 101 ALR 1420, Annotation 1432; James, Option Contracts, 320, § 814; Williston, id. As stated in James, id., it may be said that an option "is an agreement giving the optionee the right to turn the option agreement into a contract to convey upon the performance by him of an act called election. In short, an option is a conditional agreement to convey."
5, 6. The manner in which election shall be exercised, whether by notice or tender of the purchase price, and execution of the lease, is not stated in the instrument and is to be discovered from its language. Breen v. Mayne, 140 Iowa 399, 118 NW 441; Snead v. Wood, 24 Ga App 210, 100 SE 714. Where there is nothing in the option limiting the way in which notice of its exercise is to be conveyed, anything that amounts to a manifestation of the optionee's determination to accept is sufficient. Gordon v. Curtis Bros. et al., 119 Or 55, 62-63, 248 P 158; 55 Am Jur 507, Vendor and Purchaser, § 38. Here, not only was there no stipulation as to the manner of exercise of the option, but, since the amount of the purchase price and of the down payment was not definitely fixed and could be ascertained only after the inventory should have been valued, "as of the date this option is exercised," it was not necessary for Stanley to tender anything in *151 order to exercise the option, but notice to Tenney of his decision to do so was sufficient.
The case is like Northern Illinois Coal Corp. v. Cryder, supra. There the option agreement for the sale of a farm contained a provision that the optionee should assume a mortgage on the property in the sum of $21,000, but that if, at the time of exercising the option, any part of the encumbrance had been paid off, the optionee would pay to the optionors the difference between $21,000 and the then existing encumbrance. The optionee gave notice of exercise of the option within the time provided in the instrument and afterwards brought suit for specific performance of the contract. The defendant contended, among other things, that the plaintiff was required not only to exercise the option by notice within the time fixed by its terms, but also within the same time to tender the purchase price. The court pointed out the distinction, not always observed, between "the provisions pertinent to the exercise of the option, by which acceptance [of] it has been converted into an executory contract, and those relating to its performance." Among the latter, it was said, was the duty of the optionors "to furnish the optionee with information as to the amount, if any, by which the mortgage debt had been reduced, in order that the optionee might know the amount to be paid to the optionors to conclude the purchase of the premises." It was held that giving of the notice was all that was required and the court concluded the discussion of the question by saying:
This is precisely the posture of the instant case. The intention of the parties as disclosed by their agreement was that the amount of the purchase price and, therefore, of the down payment should be ascertained after the giving of notice by Stanley and that thereafter payment of the down payment and delivery of the necessary instrument transferring title to the machinery, etc., and execution of the lease were all to be done concurrently and in performance of the contract. The distinction to be observed is between provisions in the option contract which make tender of the price one of the acts necessary to constitute an election and those in which such tender is performance of the contract arising from the act of acceptance. James, Option Contracts, 369, § 844. Similar decisions to Northern Illinois Coal Corp. v. Cryder, supra, are Wachovia Bank & Trust Co. v. United States, 98 F2d 609 (4th Cir.1938); Moore v. Kirgan (1952, Tex Civ App) 250 SW2d 759; Abrahamson v. Wilson, 131 Colo 580, 284 P2d 662; Turner v. McCormick, 56 W Va 161, 49 SE 28, 107 Am St Rep 904, 67 LRA 853. See, also, James, Option Contracts, 369, § 844; Snead v. Wood, supra.
Oregon cases relied on by defendant do not support his position. Among these is Leadbetter v. Price, 103 Or 222, 202 P 104. The case involved an alleged oral option for the repurchase of stock. As testified to by the plaintiff, the defendant said to him: "All right; you pay me back what I paid you and 6 per cent interest and you can have it." This court denied relief to the plaintiff on the ground, among others, *153 that the option could only be exercised by payment of the price. The court said:
The other cases cited by the defendant need not be specifically discussed for they all involve agreements similar to that construed in Leadbetter v. Price and are distinguishable for the reasons hereinabove given from the agreement with which we are now dealing. See Aspinwall, Executrix, v. Ryan et al., 190 Or 530, 538, 226 P2d 814; Albachten v. Miller et ux., 216 Or 379, 383, 339 P2d 427, 72 ALR2d 1122. We hold that in this case exercise of the option by notice was sufficient.
7, 8. As stated, the acceptance of the offer must be unqualified and unconditional. The defendant contends that it was conditional. The answer to that contention is to be found in the language of the letter written by Mr. Griswold, on behalf of Mr. Stanley, to Mr. and Mrs. Tenney under date of February 25, 1959. The letter opens with the statement that its purpose is "to repeat and confirm" the verbal exercise of the option "made on February 16, 1959." It next refers briefly to the terms of the option, that is, the purchase of the machinery etc. of West Coast Pictures and the purchase price, and states "Mr. Stanley also exercises the right to lease your existing premises in accordance with the option agreement." So far, we think it is not *154 even arguable that the letter does not constitute an unqualified and unconditional exercise of the option.
The contention of the defendant is based upon the concluding paragraph of the letter which we again quote:
It is not suggested that the expression of a desire to close the purchase before March 1, 1959, and to hear from the Tenneys immediately in regard to the inventory valuation or the request to name an escrow agent are in any way effective to dilute the exercise of the option. The whole reliance is upon the use of the words "and other matters which must be resolved", which are said to qualify the acceptance and make it contingent upon the decision of other unspecified and unknown questions. And the nature of these "other matters", it is argued, is disclosed in the subsequent letters written by Stanley's attorneys which contain what are claimed to be counteroffers.
With this interpretation we are unable to agree. It would be unreasonable to say that anything in the concluding paragraph of the letter of February twenty-fifth was intended to qualify the exercise of the option so clearly expressed in the first part of the letter or could have been reasonably so understood by Tenney, and it is significant that nothing in the record discloses that either Tenney or anyone acting on his behalf ever gave this or any other reason to Stanley *155 for refusing to go through with the transaction until Mr. Royal's letter of March 16, 1959, in which he referred to the "counter offers" in the previous letters of Mr. Griswold and Mr. Stanley.
The concluding paragraph of the letter of February twenty-fifth relates entirely to the performance of what had now become a binding contract  the valuation of the inventory, the appointment of an escrow agent, and other matters of a similar nature which would have to be decided upon or "resolved", as the letter expresses it, to the end that the transaction might be completed in an orderly fashion. So far from language making the acceptance conditional on a change in the terms of the contract, there is not even a suggestion of such a change. The words "other matters which must be resolved" can be justly interpreted only in the context of the paragraph in which they are found and that paragraph deals exclusively with proposals for carrying out the contract, not for changing it or adding new terms. Beyond that, there is no language making the acceptance of the offer contingent upon anything. It was not even a "grumbling" acceptance. 1 Corbin, Contracts (1950 ed) 266-267, § 84. And even though the letter had contained a request for a change or addition to the terms of the offer, this would not have been sufficient to alter its unconditional character, unless the acceptance was made to depend on an assent to the change or added terms. 1 Restatement, Contracts § 62; 1 Williston, Contracts (3d ed) 261-262, § 79; 1 Corbin, Contracts (1950 ed) 266-267, § 84; Turner v. McCormick, supra; Snead v. Wood, supra.
9. It is argued, however, that the subsequent proposals in Mr. Griswold's letter to Mr. Royal under *156 date of March 5, 1959, had the effect of conditioning the acceptance. This letter listed six items "to be decided upon and, in some cases, an indication of our understanding of the disposition of these items." Some of the items as, for example, the suggestion that it was necessary to obtain Mr. Graham Killam's consent to reduction of his sales commission (which was a condition stated in the option) and the desirability of allocating the option price between the land and building for tax purposes are clearly not subject to the defendant's objection. Others might fairly be construed as merely a statement of the attorney's understanding of terms agreed upon by the parties in addition to those not expressed in the option contract. As to the item relating to the vacant lot adjoining the plant, it is possible that, due to the ambiguity in the reference in the option contract to the land to be leased, the contract might be construed, with the aid of parol evidence, to include the vacant lot. Such evidence was offered on the trial, but excluded on objection. But whether the ruling was correct or not, the conclusiveness of Stanley's previous acceptance of the offer would not be in any way affected by his contention about the vacant lot, for the reason that when he gave notice of his election he accepted the terms of the offer in the option contract with whatever construction might be placed upon them by a court in case of subsequent litigation. There are no words of ultimatum in the letter, and it is arguable that it was not written with the intention of qualifying the acceptance in any manner. We do not pass upon any of these questions, but will assume, arguendo, that the defendant's view of the purpose and meaning of the letter is the correct one. Even so, the defendant is not aided.
*157 As stated in 1 Corbin, Contracts (1950 ed) 268, § 85:
To the text is cited Frederick Raff Co. v. Murphy, 110 Conn 234, 147 A 709. In this case the plaintiff, desiring to obtain the contract for installation of the heating in a building to be erected, was required to include as a part of his bid, a bid for the plumbing work. The plaintiff invited a bid for the plumbing from the defendants, who submitted a bid which the plaintiff accepted. The plaintiff submitted the combined bids to the owner and was awarded the contract. The next day plaintiff advised the defendants of the fact and mailed them an order to install the plumbing for a sum less than the amount of the defendants' bid. The difference represented a deduction of the defendants' proportionate share of the bond required to be filed by the plaintiff. The defendants refused to go forward with the work. The plaintiff employed another contractor to do the plumbing and brought action against the defendants to recover as damages the difference between the amount of the defendants' bid and the amount that the plaintiff was required to pay to the other contractor. The court, speaking through Mr. Justice Maltbie, after holding that the plaintiff had accepted the defendants' offer and communicated that acceptance so as to constitute a binding contract, said:
Another illustration of the application of this rule is to be found in McCormick v. Stephany, 61 NJ Eq 208, 48 A 25. A lease contained a provision granting to the lessee the right to purchase the property in the event that the lessor should find a purchaser. In other words, the lease gave the lessee a "preferential right" to purchase. The lessee, learning that the lessor had found a purchaser, gave the lessor notice of exercise of the option to purchase the property at the stipulated price and that the same would be paid on tender of a deed "with full covenants." There was no such requirement in the option. The lessor refused to convey. Later the lessee tendered the purchase price and demanded a deed "with full covenants free of all encumbrances." This demand also met with a refusal and the lessee brought suit for specific performance. The lessor contended that the lessee's demand was in effect a new offer and a rejection of the right to purchase granted in the lease. The decree went for the lessee, requiring merely that the lessor execute "a good and sufficient deed" for the premises upon payment of the purchase price and not requiring full covenants. The court said that the agreement was "a completed purchase of a right to have a conveyance *159 if the purchaser shall choose to buy, upon the terms named" and that the "overdemand" did not release the lessor from his obligation. Like Frederick Raff Co. v. Murphy, supra, the case stands for the proposition that after an offer has been accepted in accordance with its terms, subsequent demands for additional or different terms not assented to by the other party will not be given effect as a rejection of the offer nor will they change the rights and obligations of the parties.
It is our conclusion that the evidence shows that the defendant entered into a valid binding contract for the sale and lease to Stanley of the property described in the contract of employment between the plaintiff and the defendant and that the plaintiff is entitled to recover the amount of the stipulated commission.
The judgment is, therefore, affirmed.