Source: https://law.justia.com/cases/california/supreme-court/3d/16/432.html
Timestamp: 2019-08-20 14:13:57
Document Index: 351430666

Matched Legal Cases: ['§ 3351', '§ 3511', '§ 452', '§ 391', '§ 4', '§ 430', '§ 430', '§ 392', '§ 4']

Skopp v. Weaver :: :: Supreme Court of California Decisions :: California Case Law :: California Law :: US Law :: Justia
Justia › US Law › Case Law › California Case Law › Cal. 3d › Volume 16 › Skopp v. Weaver
Defendants' demurrer rests primarily on the contention that plaintiffs' general allegations of agency are not averments of ultimate fact. Defendants also contend that the specific averments of plaintiffs' complaint fail to show that defendants accepted plaintiffs' alleged offer [16 Cal. 3d 435] for a contract of agency; furthermore, defendants argue, plaintiffs' failure to allege that defendants possessed discretionary authority demonstrates that defendants were not agents and thus owed no fiduciary duty to plaintiffs. The trial court sustained the demurrer without leave to amend and entered judgment of dismissal accordingly.
Shortly thereafter, in May of 1969, defendants discovered that plaintiffs' property had been sold to the state on June 30, 1965, for nonpayment of delinquent taxes. fn. 3 (See Rev. & Tax. Code, §§ 3351, 3436.) Plaintiffs retained, however, a right to redeem that property for five years from the date of sale and thereafter until the state disposed of the land. (See Rev. & Tax. Code, §§ 3511, 3707.) [16 Cal. 3d 436]
Plaintiffs posit defendants' fiduciary duty upon the allegations in paragraphs X, XXIII, and XXIV that defendants were plaintiffs' agents. [1a] Pointing out that a demurrer admits the truth of all properly pleaded allegations of fact (see, e.g., Barquis v. Merchants Collection Assn. (1972) 7 Cal. 3d 94, 99 [101 Cal. Rptr. 745, 496 P.2d 817]; [16 Cal. 3d 437] Serrano v. Priest (1971) 5 Cal. 3d 584, 591 [96 Cal. Rptr. 601, 487 P.2d 1241, 41 A.L.R.3d 1187]), plaintiffs contend that their general allegations of agency suffice to establish, for purposes of this appeal, that defendants are the agents of plaintiffs.
Defendants, in response, first maintain that allegations of agency do not constitute averments of ultimate fact, but conclusions of law, and are thus insufficient to avoid a demurrer. Admitting that they have no authority to support the proposition that an allegation of agency is a conclusion of law, defendants nevertheless seek to distinguish the numerous cases holding a finding of agency to be a finding of fact (see, e.g., Hale v. Wolfsen (1969) 276 Cal. App. 2d 285, 290 [81 Cal. Rptr. 23]; Trane Co. v. Gilbert (1968) 267 Cal. App. 2d 720, 726 [73 Cal.Rptr. 279]) on the ground that all such cases involve review of a trial court's findings, not a complaint's allegations. Defendants have overlooked both that courts, in determining whether an allegation is one of ultimate fact, consider pleadings in the same manner as findings (McCarthy v. Brown (1896) 113 Cal. 15, 17-18 [45 P. 14]) and that numerous cases have held a pleading of agency an averment of ultimate fact. (Farr v. Bramblett (1955) 132 Cal. App. 2d 36, 47 [281 P.2d 372]; fn. 6 Phillips v. Reserve Life Ins. Co. (1954) 128 Cal. App. 2d 540, 546 [275 P.2d 554]; General Mill & Lbr. Co. v. Robertson (1932) 126 Cal. App. 118, 120 [14 P.2d 327]; Cullinan v. Mercantile Trust Co. (1926) 80 Cal. App. 377, 383 [252 P. 647]; see 3 Witkin, Cal. Procedure (2d ed.) p. 1948.)
Defendants point to the language of paragraph VII which, it will be recalled, stated that plaintiffs' listing with McKillop constituted an offer to all realtors of the Santa Ynez area "for a unilateral contract, the acceptance of which is manifested by an agreement to sell to a buyer ready, willing and able to buy the listed property." Defendants interpret this as an offer for a contract of agency. Then, turning to paragraph X, defendants observe that although plaintiffs there allege that defendants contracted to sell the property and accepted a deposit, "thereby [16 Cal. 3d 438] accepting the above referenced offer," plaintiffs did not allege the existence of an agreement with a ready, willing and able buyer. Since the conduct described in paragraph X did not respond to the terms of the offer in paragraph VII, defendants conclude that the offer was not accepted, and hence that no contract of agency arose.
A basic rule commands us to construe the allegations of a complaint liberally in favor of the pleader. (See Code Civ. Proc., § 452; Buxbom v. Smith (1944) 23 Cal. 2d 535, 542 [145 P.2d 305]; Motor City Sales v. Superior Court (1973) 31 Cal. App. 3d 342, 345 [107 Cal. Rptr. 280]; 3 Witkin, Cal. Procedure (2d ed.) pp. 1999-2001 and cases there cited.) Yet defendants here ask us to do the very opposite: we are to construe the specific allegations of agency narrowly and against the pleader to overcome the general allegations of agency. We are asked thereby to find a contradiction in the allegations of the complaints between the general averment of agency and the specific language of paragraph X.
Applying the principle of liberal construction set forth above, we must reject the defendants' proposed interpretation that acceptance of the offer stated in paragraph VII precedes the creation of defendants' agency. We interpret the complaint, instead, to assert an agency created [16 Cal. 3d 439] or existing before the time when defendants contracted with the prospective purchasers and accepted a deposit. fn. 7 Thus the allegations of paragraphs VII and X do not contradict plaintiffs' positive and clear general averment that defendants were plaintiffs' agents.
The cases upon which defendants rely for the proposition that a realtor lacking discretionary authority is not an agent do not apply here. Those decisions concern the issue whether a realtor can recover a promised commission although he lacks a real estate broker's or salesman's license (see Tyrone v. Kelley (1973) 9 Cal. 3d 1, 8 [106 Cal. Rptr. 761, 507 P.2d 65] [16 Cal. 3d 440] and cases there cited) or whether he can, without disclosing his dual agency, collect a commission from both buyer and seller (Clark v. Allen (1899) 125 Cal. 276, 278 [57 P. 985]; Kennedy v. Johnson (1930) 109 Cal. App. 662, 665-666 [293 P. 698]; Carothers v. Caine (1918) 38 Cal. App. 71, 74 [175 P. 478]; fn. 9 King v. Reed (1914) 24 Cal. App. 229, 234-235 [141 P. 41]). But it is one thing to permit a realtor to retain a commission earned when his nondisclosure does not risk injury to the seller (see Rest.2d Agency, § 391, com. d), and quite another to permit him to conceal material facts and thereby acquire a profit at the seller's expense.
The issue presented by the instant complaint is not one of licensing or harmless nondisclosure, but of actual injury and unconscionable profit. As the court pointed out in Hale v. Wolfsen, supra, 276 Cal. App. 2d 285, 290-291, "whenever the acts or omissions of a [realtor] causes injury in a real estate transaction, there is a compelling reason" to find him an agent. (See 1 Miller & Starr, Current Law of Cal. Real Estate (rev. ed. 1975) § 4.5.) No California decision has held a realtor exempt from fiduciary obligation to the seller when the realtor has in fact acted to the seller's detriment. fn. 10
We conclude that the allegations of plaintiffs' first cause of action, incorporated by reference into their second and third causes of action, adequately plead agency, fiduciary duty, and breach of duty, and thus state facts sufficient to entitle plaintiffs to relief. fn. 11 We recognize that plaintiffs' complaint may be uncertain in some respects: the alleged acceptance stated in paragraph X could be clarified to show its responsiveness to the offer stated in paragraph VII; the relationship between that offer and acceptance and the allegations of agency could be made more certain by more precise pleading. But these uncertainties do not vitiate the essence of plaintiffs' complaint, the allegations of agency, [16 Cal. 3d 441] fiduciary duty, and breach of duty. Consequently, although such allegations might support a demurrer for uncertainty (Code Civ. Proc., § 430, subd. 9), they cannot justify the sustaining of a general demurrer (Code Civ. Proc., § 430.10, subd. (f), let alone an order sustaining such a demurrer without leave to amend. [4] As we stated in Minsky v. City of Los Angeles (1974) 11 Cal. 3d 113, 118 [113 Cal. Rptr. 102, 520 P.2d 726], "It is axiomatic that if there is a reasonable possibility that a defect in the complaint can be cured by amendment or that the pleading liberally construed can state a cause of action, a demurrer should not be sustained without leave to amend."
FN 1. We use the term "realtor" to refer to a person acting either as a real estate broker or a real estate salesperson.
FN 2. Plaintiffs' prior complaint proceeds to identify the prospective purchasers as Sam and Doris Wisnon, to state that they offered to buy the property for $23,000, and to explain that the negotiations failed when the Wisnons refused to accept certain easements on the property. The second amended complaint omits these allegations.
FN 3. Plaintiffs do not plead how defendants learned of plaintiffs' tax delinquency. At this point in the action -- defendants have yet to file an answer -- plaintiffs probably do not know how defendants acquired that information.
FN 4. Revenue and Taxation Code section 3701 requires the tax collector to mail notice of the sale to the last known address of the last assessee of the property. Plaintiffs do not allege whether they received that notice.
FN 5. Although defendants demurred also on the ground that specific paragraphs of the complaint were uncertain, the trial court order sustaining the demurrer rests solely upon the ground that the complaint failed to state a cause of action.
FN 6. Overruled on other grounds in Field Research Corp. v. Superior Court (1969) 71 Cal. 2d 110 [77 Cal. Rptr. 243, 453 P.2d 747].
FN 7. In a dual agency, "[t]he agent ... is under no duty to disclose, and has a duty not to disclose to one principal, confidential information given to him by the other." (Rest.2d Agency, § 392, com. b.) Thus defendants are in error in contending that an interpretation of the complaint which found them to be plaintiffs' agents at the time defendants contracted with the prospective buyers would place them in an untenable conflict of interest by compelling them to reveal matters told them in confidence by the buyers.
FN 8. Under the form of multiple listing agreement employed in many areas, a broker on the multiple listing is by virtue of the agreement an agent of the seller. (See 1 Miller & Starr, Current Law of Cal. Real Estate (rev. ed. 1975) § 4.8.) Plaintiffs do not allege that an express multiple listing agreement was in effect in the Santa Ynez Valley at the time of the transaction here at issue, but apparently maintain that by the custom of the profession in that area the multiple listing of a property, even in the absence of express agreement, created an agency relationship between the seller and the realtor.
FN 9. Overruled on other grounds in Butler v. Solano Land Co. (1928) 203 Cal. 231 [263 P. 530], as stated in McConnell v. Cowan (1955) 44 Cal. 2d 805, 812 [285 P.2d 261].
FN 10. In Smith v. Howard (1958) 158 Cal. App. 2d 343 [322 P.2d 1034], a broker told his mother of a buyer's offer; she made a higher offer which the seller accepted. The court held the broker did not breach a fiduciary duty to the buyer. Whatever the correctness of that decision, it has no bearing on the existence of fiduciary duty between the realtor and the seller.
FN 11. The three causes of action differ principally in terms of the relief sought by plaintiffs: the first cause of action seeks recovery of the property and damages for fraud; the second seeks recovery of lost profits; the third damages for emotional distress. Since a general demurrer cannot be sustained if plaintiffs' complaint states facts entitling them "to any relief either at law or in equity" (Kittle v. Lang (1951) 107 Cal. App. 2d 604, 611 [237 P.2d 673]), we need not discuss these different theories of recovery.