Case Name: James C. Young v. Metcalf Land Co.
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1909-03-19
Citations: 18 N.D. 441
Docket Number: 
Parties: James C. Young v. Metcalf Land Co.
Judges: Morgan, C. J., and Fisk and Spalding, JJ., concur.
Reporter: North Dakota Reports
Volume: 18
Pages: 441–462

Head Matter:
James C. Young v. Metcalf Land Co.
Opinion filed March 19, 1909.
Rehearing November 5, 1909.
Brokers — Employment of Broker —» Construction of Contract.
1. A contract in writing was entered into between an owner of large tracts of land in this state and a real estate dealer, by the terms of which the real estate dealer should have the exclusive sale of said lands for a period of ten years at such prices as he may deem best, provided that no tract should 'be sold for less than the appraised value named in Schedule A. attached to the contract. Out of the proceeds from sales made a stipulated amount was to be paid to- the landowner and the balance equally divided between the parties to the contract. Held, that the dealer had the sole right to fix the selling price of lands, provided, however, that the prices were not less ■than the appraised value, and that -the -owner could not arbitrarily refuse to approve the sales for the reason- that the prices- were not satisfactory to the owner.
Contracts — Interpretation — To Give Effect to Intention of Parties.
2. A contract must be interpreted so as to -give effect to the mutual intention of the parties as it existed at the time of contracting so far as the same is ascertainable and lawful. A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable and capable of being carried into effect.
Broker — Sale Prevented by Owner — Measure of Damages.
3. The dealer having been prevented- by the landowner from making the sales is entitled to the profits he would have made had the •offers been accepted, and sales approved by the landowner.
Appeal from District Court, Cass -county; Chas. A. Pollock, J.
Action by James C. Young against the Metcalf Land Company. Judgment for plaintiff, and defendant appeals.
Affirmed.
Koon, Wehlan & Bennett :and Ball, Watson, Young & Lawrence, for appellant.
Where no terms are fixed by contract, the broker is to submit offers for his employer’s approval; the broker is not entitled to his commission until his employer accepts the offer. 23 Am. & Eng. Enc. -of Law (2nd.) 921; Sawyer v. Bowman-, 59 N. W. 27; Goin v. Hess, 71 N. W. 218; Berry v. Tweed, -61 N. W. 858 ; Kiam v. Turner, 21 Tex. Civ. App. 417.
A broker must submit a buyer who is ready, willing and able to purchase on terms proposed by, or acceptable to the vendor. Clark & Styles on Agency, p. 1658; Neeley v. Lewis, 38 Wash., 20 ; Mattingly v. Pennie, 39 Pac. 200. Such broker must not only produce such purchaser, but he must secure a binding contract from him, or bring such buyer and vendor together, so the latter can secure such contract if desired. Flynn v. Jordal, 100 N. W. 326; Johnson v. Wright, 99 N. W. 103; Mattingly v. Pennie, supra; Kalley v. Baker, 29 N, E. 1091; McDonald v. Smith, 108 N'. W. 291; 19 Cyc., 255;' Hayden v. Grillo, 35 Mo. App. 647; Gerding v. Has-kin, 141 N. Y. 514; Simpson v. Smith, 36 Misc. (N. Y.) 815.
Where the broker does not disclose to his principal the purchaser’s name, the owner may refuse to sell without being liable for commission. 23 Am. & Eng. En-c. of Law (2nd Ed), 921; 19 Cyc., 266, note 72; Hayden v. Grillo, 35 Mo., App. 347; Gerding v. Haskin, 141 N. Y., 514; Simpson v. Smith, 36 Misc., (N. Y.) 815.
Broker must allege and prove that the purchaser found was able, willing and ready to buy on the terms-of his proposed contract. Tracy v. Fobes, 109 Ni. W. 772; McDermott v. Mahoney, 106 N. W. 925; Iselin et al. v. Griffith, 62 la. 668; 18 N. W. 302; Pratt v. Hotchkiss, 10 111., App. 603; Leahy v. Hum, 33 111. App. 431; Coleman v. Mead, 76 Ky. 358; Russell v. Hurd, 113 111. App 63; Alt v. Doscher 92 N. Y. Sup. 439; Colburn v. Seymour, 76 Pac. 1058; Clark and Styles on Agency, p. 1668 and cases cited; Snyder v. Fidler 101 N. W. 130.
L. W. Collins, Emerson H. Smith, and Engerud, Holt & Fraine, for respondent.
In construing contracts, regard must be had to surrounding circumstances and situation of parties; and their intent given effect if it can be done without violence to the language of the contract. Stewart v. Marvel, 101 N. Y. 357; Taylor v. E. M. S. Co. 124 N. Y. 184; Jacquin v. Bontard, 35 N. Y. Supp. 493. Rev. Codes 1905, Sec. 5340.
The measure of plaintiff’s damages was the profits he would have earned had the sales been consummated. Taylor Mfg. Co. v. Hatcher, 39 Fed. 440; Jacquin v. Boutard, '35 N. Y. Supp. 496; Taylor v. E. M. S. Co., 124 N. Y. 184; Fairchild v. Rogers, 20 N. W. 191; Durkee et al. v. Gunn,- 21 Pac. 637.
The value of a contract is the sum stated on its face. Sutherland on Damages, Vol. III. pp. 520, 521 (1884 Ed.); Hart v. Hoffman, 44 How. Pr. 168; Goss v. Brown, 31 Minn. 484; 18 N. W. 290.

Opinion:
Carmody, J.
This is an action by respondent, a real estate dealer of Minneapolis, Minn., to recover damages against appellant, a N!ew Jersey corporation, that owned a large number of tracts of land in Barnes, Stutsman, and other counties, in this state. On January 20, 1897, they entered into the following contract:
"This agreement, made this 20th day of January, A. D. 1897, by and between the Metcalf Land Company, of New Jersey, party of the first part, and James C. Young, of Minneapolis, Minnesota, party of the second part.
"Witnesseth: Whereas said Metcalf Land Company is the owner in fee of the following described lands in the County of-State of North Dakota, as shown by Schedule 'A' hereunto annexed, and marked 'Exhibit A.'
"And whereas, the said Metcalf Land Company has this day given the exclusive sale and management of said lands to said James C. Young, now, therefore, the said parties hereto hereby agree with each other, as follows: That said James C. Young has caused to be made a careful^ examination of said lands and an appraisement thereof, which said appraisement is marked opposite each tract upon said Exhibit A and is hereby accepted by said Metcalf Land Company. That said James C. Young shall have the authority to sell said land, or any part thereof, at such a price as he may deem best, provided, however, that no tract shall be sold for less than the appraised value named in said schedule A and it is distinctly understood that before any sale shall be binding upon the said Metcalf Land Company, the contract shall be approved and terms of payment thereof accepted by the said Metcalf Land Company. That said James C. Young is further to give reasonable amount of time and attention to the management and sale of said lands, and agrees to give to the benefit of the said Metcalf Land Co., the highest price for the sale of such lands which he can obtain, and to faithfully account to said Metcalf Land Company for all the proceeds which may be derived from such sales and make quarterly return of such sales and payments of such funds as may then be in his possession. And said James C. Young further agrees that he will use all faithful and reasonable effort to have the land sold under this contract put under cultivation as rapidly as possible by the purchasers thereof, and it is mutually agreed that in case of said James C. Young advancing money for the purchase of seed, grain or any other necessary improvements on premises sold under this contract, that he may take as security the seed lien on crops, or take any other sort of security which he deems expedient or desirable, and the money so advanced by the said James C. Young shall be first returned with interest from the purchaser before any application of payment is made under the contract of sale, any -balance remaining, or paid in by the purchaser after the money so advanced has been returned shall be applied in the usual way under the contract of sale.
"It is further mutually agreed, that the proceeds derived from the sale of said lands shall be applied as follows:
"First: To the payment of said Metcalf Land Co. of the sum of two dollars ($2) per acre, together with interest thereon at six per cent. (6%) per annum, from the date of this contract, and also o-f all taxes accruing or becoming -due upon said lands from and after the date of this contract, including the tax of 1896, paid by said Metcalf Land Co., together -with interest at the rate -of six per cent. (6%) -per annum thereon, from date of -payment thereof.
"Second: The remainder of said proceeds shall be divided equally and one-half part thereof shall be paid to the said Metcalf Land Co., its successors or assigns, and the remaining one-half part thereof shall be paid to James C. Young, his heirs, administrators or assigns.
"It is further mutually agreed, that said James C. Young shall retain no profit under this contract until the whole amount of two dollars ($2) per acre, with interest thereon, and taxes, with interest thereon as herein provided, has been returned to the said Metcalf Land Company.
'It is further mutually agreed, that this contract shall remain in force and be mutually binding upon the -parties hereto for a period of ten years (10) from the date hereof, unless sooner dissolved by written mutual consent, or by the death of James C. Young.
"It is distinctly understood and agreed that this contract is personal to James C. Young, and that no interest of any kind whatsoever in said lands, or any paid thereof, is hereby -conveyed or intended so to be conveyed by -the said Met-calf Land Company to said James C. Young, and same shall terminate upon the death of the said James C. Young, provided, however, that in the event of the death of said James C. Young be fore the expiration of this contract, his administrators or assigns are to be entitled to his interest in the proceeds of all lands which have been sold, either for cash or on credit, and shall receive therefor the same amount as he himself would have done had he continued to live. It is understood and agreed that said James C. Young shall have no right or claim against the said Metcalf Land Company, or on said lands, or any part thereof, for commissions, expenses, or otherwise, except only for his one-half share of the profits arising from said sales, to be ascertained and divided as hereinbefore mentioned, stipulated and agreed.
"In witness whereof, the said parties hereto have hereunto set their hands and seals the day and year first above written."
Afterwards, and on or about the 18th day of November, 1905, the parties entered into a supplementary contract for the purpose of settling some disputes between them; none of .them, however, relating to the transactions mentioned in this action. The-supplementary contract, so far as material here, is as follows: "As a part of this proposition it is understood that under the original contract Mr. Young has the right to sell the lands at reasonable figures, not less than the appraised values, and that it is the duty of the company to approve of such sales without delay. And Mr. Young concedes that as to all tracts of land which he has not contracted for sale or sold prior to the expiration of the ten-year period prescribed in the original contracts, he will make no further claim upon or assert any agency rights therein when said ten-year periods have expired, and contracts for sale have not been made."
The complaint contains 17 causes of action. Briefly stated the allegations are: That appellant is a corporation organized under the laws of New Jersey; the execution of the contract; that the respondent proceeded to carry out the terms .thereof, and sold a large quantity of the lands at prices, and on terms mutually satisfactory to both of said parties, and in accordance with the contract; that appellant duly approved of said sales; that each of the parties to this action made a profit after paying to appellant its fixed charges; that respondent negotiated the sale of one tract covered by the contract on the usual terms at a fair price; that appellant refused to sell at the price named; and arbitrarily fixed a higher price on the land, and declined to permit respondent to sell land at a fair price fixed by him. In other words, respondent claims that appellant violated the terms of the contract by withdrawing from respondent the right given by the contract to determine the selling price of the land. As a result, he was prevented from selling the land, and thus lost the profits which he would have earned on the sale. Each 'of the other causes of action is the same, but relates to different tracts of land. The contract and a list of the lands owned by appellant and their appraised value were attached to and made a part of the complaint. The appellant answered, admitting its incorporation under the laws of New Jersey, the execution of the contract, the ownership of the lands mentioned in the complaint, and their appraised value, that respondent sold a portion of said lands at prices and on terms mutually satisfactory, which sales were approved by the appellant, and denied each and every other allegation in said complaint.
This action was tried in the district court of Cass county before Judge Pollock and a jury. Respondent dismissed as to his sixth cause of action. After both parties rested, respondent asked leave to amend his complaint by adding thereto in each of the causes of action a paragraph to the following effect, viz: "That said purchaser so contracting or offering to purchase said land was one who was ready, willing, and able to purchase the said land on the terms stated." Appellant objected to the allowance of the amendment, and insisted that it came too late, having been made after all the evidence was in, which objection was overruled, and amendment allowed.
At the commencement of the trial appellant objected to the introduction of any evidence under the complaint, as follows: "The defendant objects to the introduction of any evidence in this case upon the ground that the complaint does not state a cause of action, or sufficient facts to constitute a cause of action, and specified as grounds for the objection that it appears from the complaint that the plaintiff is seeking to recover commissions as a real estate broker for the sale of real estate; that it appears that his action is based upon a written contract of agency, 'Exhibit 1' attached to the complaint, and that under such contract he is entitled to no commissions except upon sales actually made and approved, and it appears affirmatively from the complaint that no' sales were made or consummated upon which he is claiming commissions; the sales were not approved; further, that if plaintiff's complaint be construed as; an action to recover damages for the. arbitrary refusal of the defendant to approve the sales that it does not constitute a cause of action, for the reason that the complaint, with the contract attached thereto, shows affirmatively that there was no legal duty or obligation upon the defendant to approve these proposed sales upon which his cause of action is based, and this objection is made as to each and every oiie of the 17 causes of action' embraced in the complaint." Which objection was overruled.
At the close of the respondent's case appellant moved for a directed verdict, as follows: "The plaintiff having rested its case, the defendant now moves the court for a directed verdict in its favor upon all the issues and as to each cause of action, upon the ground that the plaintiff has failed to make out a .case, and without waiving, and intending to reserve all other grounds for this motion, the defendant specifies particularly the following reasons for the granting of its motions: (1) That the plaintiff has not alleged or proved the consummation of any sale of land under the contract attached to agency .contract attached to the complaint, which would entitle him to a commission. (2) That the plaintiff does not allege, and the proof does not show, facts sufficient to entitle the plaintiff to recover commissions in the absence of the consummation of the proposed sales. (3) Upon the ground that the' undisputed evidence shows that the authority of the plaintiff to sell at a price of his own making, or at a reasonable price, if any such authority he had was revoked, and terminated prior to the making of the sales which constitute his causes of action; and the only authority as shown by the undisputed evidence which the plaintiff had at the time of making the sales in question was.to sell at the figures named by defendant. The foregoing motion is made applicable to each and every one of the 17 causes of action, and is not meant to be exclusive, but for the purpose of attracting the count's attention to the chief grounds upon which we rely in this motion. And this motion is made with the sole purpose of obtaining a ruling upon a question of law, and reserving its right to a submission of the issues of fact to the jury, notwithstanding the making of this motion. That there is no pleading or competent evidence upon which a recovery can be had for a wrongful revocation of plaintiff's agency as to the lands in question, if there was in fact a revocation, and it was in fact wrongful." This motion was denied. Appellant rested without introducing any evidence. The appellant renewed the motion for a directed verdict which was made at the close of the respondent's case in the language and with the reservations therein stated. This motion was denied. The respondent then moved the court to instruct the jury to return a verdict in. his favor for the sum of $7,592.26, which motion was granted. Judgment was entered on the verdict and appeal taken therefrom.
It was stipulated that respondent's share of the profits which he would have made had the sales been approved by the appellant were $7,592.26. The terms of the sale were not fixed in the contract, but the evidence shows that their course of dealing had established a form of sale contract, which both parties understood, consented to, and acted upon. Nio question' had been -raised as to respondent's right to fix the selling price of each tract until near the end of the contract period. On April 13, 1906, appellant wrote respondent complaining of the prices at which he was selling the land, and stating that it would not approve any more sales unless they showed an advance over previous ones. To this respondent replied that he did not recognize appellant's right to make any ruling that would prohibit him from making sales at reasonable prices. The first sales made by respondent which were disapproved by appellant (unless possibly one of which the -evidence is not very clear) were made during the months of May and June, 1906, and were disapproved by appellant on-June 13, 1906. From this time on appellant insisted on fixing the selling price of the lands, but did not furnish any new appraisement of the lands remaining unsold until Septenaber, October, and November, 1906. During the period from June, 1906, until the end of the contract period, January 20, 1907, respondent sold some lands at prices fixed by appellant but at the same time denied the right of appellant to fix arbitrary prices on the lands. Between May 18, 1906, and January 20, 1907, appellant refused to approve of 16 sales made by respondent on the ground that the prices were inadequate; these being the sales involved in this action. "In construing contracts, regard must be had to the surrounding circumstances and the situation of the parties; and the real intent of the -parties must be given effect -if that can be done without doing violence to the language of the contract." Stewart v. Marvel, 101 N. Y. 357, 4 N. E. 743; Taylor v. E. M. S. Co., 124 N. Y. 184, 26 N. E. 314; Jacquin v. Boutard, 89 Hun. 437, 35 N. Y. Supp. 496. "A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting so far as the same -is -ascertainable and lawful." Rev. Codes 1905, § 5340. "A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being -carried into effect, if it can be done without violating the the intention of the parties." Rev. Codes, 1905, § 5347. "A contract may be explained by íeference to the -circumstances under which it was made and the matter to which it relates." Rev. Codes 1905, § 5351. "Stipulations which are necessary to make a contract reasonable or conformable to usage are implied in respect to matters concerning which the contract manifests no contrary intention." Rev. Codes 1905, § 5359. Applying these principles, it is clear to us that -respondent 'had the right to fix. the selling price of the land, provided, however, that no t-ract -could be sold for less than the appraised value ot the time of the contract. The -contracts of sale and the terms of payment thereof were subject to approval'and acceptance by appellant. But appellant could not arbitrarily withhold its approval, and could- not withhold- its approval at all if -the land sold at a fair price, and for not less than its appraised value as hereinbefore stated. The measure of respondent's damages was the profits he would have earned had the sales been consummated. The amount of these profits was fixed by stipulation. Appellant, having disapproved of the proposed sales on an untenable ground, prevented respondent from earning the profits which he would have earned had the sales -been made. Taylor Mfg. Co. v. Hatcher (C. C.) 39 Fed. 440, 3 L. R. A. 587; Jacquin v. Boutard, 89 Hun. 437, 35 N. Y. Supp. 496; Taylor v. E. M. S. Co., 124 N. Y. 184, 26 N. E. 314; Fairchild v. Rogers, 32 Minn. 269, 20 N. W. 191; Durkee v. Gunn, 41 Kan. 496, 21 Pac. 637, 13 Am. St. Rep. 300; Hunter et al. v. Wenatchee Land Co., 50 Wash. 438, 97 Pac. 494. In Durkee et al. v. Gunn, supra, Durkee & Stout entered into a written contract with Gunn & Marr, of which plaintiff was a member, by the terms of which Gunn & Marr were given the exclusive sale of a tract of 40 acres of land belonging to defendants, which was platted by said Gunn & Marr as part of Ft. Scott, Kan. The land was appraised at $300 per acre, the profits above that amount to be divided equally between the contracting parties, except that the owners of the land might withdraw from the agreement that portion of the tract south of- a -certain road, but if they did so, Gunn & Marr had the right to retain it on the terins stated, except the net price to Durkee & Sto-ut was to be $350 per acre. Gunn & Marr afterwards dissolved partnership, which was known to defendants, and Gunn continued the business. The property advanced in value to $T50' per acre. Gunn made some sales which defendants refused to approve. They conceded the contract, and prevented the plaintiff from making any more sales. He then brought an action for damages for breach of the contract. Held, that he was entitled to recover such compensation as damages as was equal in amount to his, share of the profits which would have resulted had the land 'been .sold by him.
In Hunter et. al. v. Wenatchee Land Company, supra, the Wenatchee Land Company, owning large tracts of land in the state of Washington, entered into a written contract Vith the plaintiffs by the terms of which they were to have the exclusive sale of the land at a fair value and not less than $2.52 per acre. Out of the proceeds derived from the sale of said land they were to pay to defendants the sum of $1.52 per acre, together with the interest thereon at the rate of 6 per cent, per annum from date of the contract. The remainder of the proceeds arising from such sales to be divided equally, one-half to each party. This land was chiefly valuable for timber. After making the contract, and before any sales had been made, the defendant sold the timber on said lands. The plaintiffs then brought an action for breach of contract. The jury found that plaintiff would have sold the land for $146,000, which was $2.52 per acre, had not the contract been broken by the defend-ant. Held, that the plaintiffs were entitled to recover the profits they would have made, -had they sold the land- at the price hereinbefore mentioned.
It is urged that the court erred in overruling appellant's objection to the introduction of any testimony in behalf of respondent under his complaint, in allowing respondent to amend his complaint at the close -of the testimony, in denying appellant's motion for a directed verdict, and in its ruling on the admission of evidence against the objections of appellant. Under our view of the case, as hereinbefore stated, these rulings were correct. Appellant makes :a very elaborate argument on the theory thait a broker is not entitled to his commissions unless he alleges and proves that he found a purchaser who was financially ready, able, and willing to purchase on the proposed terms, and cites a large number of authorities. We have examined the authorities thus cited. Most of them hold that a broker, to recover his commissions for producing a purchaser where the sale is not made, must show that the person presented by him was able financially, as well as reády and willing to purchase. There are other cases, however, which hold that the burden of proof is on the principal to show that the person produced is not responsible on the ground that it is presumed, until the contrary appears, that the person procured as a purchaser is solvent and pecuniarily able to make the purchase. In our opinion neither of these two lines of authorities apply to the facts in this case. It is undisputed that the parties had by their course of dealing for several years established a form of contract and certain terms of sale deemed acceptable to both parties. The appellant found no fault with the terms of the sale, and expressed no desire to change, but refused to approve the sales on the sole ground that the prices -were inadequate. This he could not do as hereinbefore stated. McFarland v. Lillard, 2 Ind. App. 160, 28 N. E. 229, 50 Am. St. Rep. 234, was an action brought by the plaintiff to recover commissions for finding a purchaser for some real estate belonging to the defendant. The court says: "It is doubtless true that, if the purchaser was not able to buy and pay for the land upon the terms cf the contract, the agent could not claim to have procured a purchaser. But it is not always necessary that the agent, before he will be entitled to recover, must allege and prove the financial ability of the purchaser as the same will often be presumed." The court further says that this conclusively shows that the appellant repudiated the contract of sale not on account of the financial inability to comply with the contract, but because the purchaser's wife was dissatisfied, and further says that the owner cannot after repudiating the sale on some other ground than the purchaser's financial inability to complete the purchase defeat an action for a broker's commission on the last-mentioned ground unless that ground is made an element of the contract between the broker and the owner. Colburn v. Seymour, 32 Colo. 430, 76 Pac. 1058, cited by appellant, was an action by a broker to recover commissions on proposed sales which the property owner refused to make. The following language is used: "Certainly he has not been prevented from earning his commissions by the mere fact that the defendant refused to sell the property unless he proves that, but for the conduct of the defendant, the sale would have been consummated." In the case at bar it was stipulated as follows: "That the plaintiff's one-half of the profits on each of the causes of action which he would have made had the offers been accepted by the defendant were the following amounts, -respectively" — and then follows the amounts of the different causes of action which make a total of $7,592.26, the amount of the verdict. We think the evidence shows that respondent would have made the sales as set forth in his complaint, and the profits asked for, if appellant had accepted the offers made.
Appellant urges that, under the terms of the contract, respondent was not entitled to any commissions until he secured an offer which was accepted by his employer. We do not think the contract bears this construction. It is true that it required all sales negotiated by respondent to be made, subject to the approval of appellant, but this did not mean that the company could arbitrarily withhold its approval. To so construe the contract would defeat its purpose. Taylor v. E. M. S. Co., 124 N. Y. 184, 26 N. E. 314. Appellant insists that respondent's agency not being coupled with an interest was revocable, and that, before any of the alleged sales upon which respondent relied were made, appellant revoked any authority that respondent had to sell at prices fixed by 'him if he ever had any such authority. However this may be, appellant would still be liable to respondent for all damages resulting from the breach of the contract. Hawley v. Smith, 45 Ind. 183; Durkee et al. v. Gunn, 41 Kan. 496, 21 Pac. 637, 13 Am. St. Rep. 300.
Thi-s is not an action to recover commissions for the sale of real estate, but an action to recover damages for breach of contract.
Finding no reversible error in the record, judgment affirmed.
Morgan, C. J., and Fisk and Spalding, JJ., concur.