Court Opinion

ID: 6588369
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:51:39.780839+00
Date Added: 2024-06-11T15:57:34.763225
License: Public Domain

ON PETITION EOR REHEARING
Potter, Justice.
In this action to recover money alleged to be due as a broker’s commission, the judgment of the District Court in favor of the defendant, upon the verdict of a jury, was affirmed, and the case is again before us upon a petition for rehearing filed by the plaintiff in error, who was also plaintiff below.
The plaintiff’s right to recover was shown to depend primarily upon the effect of a conversation by telephone between him and C. C. Worland, the secretary and treasurer of the defendant company, as constituting the only agreement between the parties for the services and compensation of the plaintiff, in connection with the sale of the property in question. Each of said parties to that conversation testified concerning it, and their testimony in that respect is set out in the former opinion. (See 187 Pac. 189-190.) They do not exactly agree in their testimony as to what was said with reference to the payment of a commission, but they do agree that the said Worland stated that the company’s price for the property — ranch property and sheep— was $30,000 for the ranch property and $17 per head for the sheep, and that they would not pay any commission out of the $30,000. . And Worland testified that he told the plaintiff they would not pay any commission out of the stated price for either the ranch or the sheep. The con*472flict in their-testimony relates to what was said immediately after that as a part of the same conversation.
The plaintiff testified that he then told Worland that he had a man with him, one Eberhard, who would pay $35,000 for the ranch property and would take some sheep, and asked him how it would be to put the ranch property at $35,000 and “you pay us $5,000 and whatever is right for the sheep”, and that Worland said: “All right; it was all right; bring him over.” Worland’s version of-that part of the conversation, given in his testimony, was, that the plaintiff said: “How about me putting" a price of $35,000 on the ranch, and, after getting $30,000 for you for the ranch, the $5,000 will he my commission,” and that he, Worland, replied by saying that that would be agreeable with him. And he further testified that he told the plaintiff in said conversation that the $30,000 for the ranch, and $17, for the sheep must be net, — “that is what I told him; that is 'the price we had to have net.”
The prospective purchaser named in the conversation and Worland, representing the defendant, having been brought together by the plaintiff, and a contract entered into by them for the sale of the ranch property and some sheep, the plaintiff claimed to be entitled to a commission of $5,000 for the sale of the ranch property and a reasonable amount for the sale of the sheep, basing the claim upon the principles applicable to ordinary brokerage contracts, notwithstanding that, without the defendant’s fault, the sale was not completed and the only amount paid upon the agreed price was the advance cash payment of $10,000 at the time of making the contract. And the same point is again’ urged in support of the petition for rehearing, that is to say, that the plaintiff became entitled to his broker’s commission when the purchaser found by him and the owner entered into an enforceable contract for the sale of the property at the price named. That was conceded, in the former opinion, to be the law' governing an ordinary brokerage contract such as pleaded by the plaintiff in this case.
*473But the difficulty with the proposition in this case is that the defendant, by its answer, denied the contract pleaded in the pétition and alleged a different contract for the commission — a special contract — as shown in the former opinion by stating the substance of the averments of the answer to the first cause of action, to the effect: That plaintiff was advised by defendant that the latter was willing to sell the ranch property for $30,000, the sheep for $17 per head, and certain other personal property for $5,500, but would not pay any commission for a sale at those prices, and that any commission for plaintiff upon a sale to a purchaser procured by him at those prices would have to be obtained by him entirely from the purchaser; and that plaintiff having then represented that he had a purchaser who would pay $35,000 for the ranch and $17 per head for the sheep, and $5,500 for .the other property, it was agreed that if the plaintiff would procure a purchaser for said property who would purchase and pay for the same at the prices last named, “defendant would pay plaintiff the sum of $5,000, being the difference between the price for which defendant was willing to sell and the price which plaintiff represented the purchaser to be procured by him would pay therefor.” And defendant’s evidence introduced to show what the contract was not only contradicts the plaintiff’s evidence to prove the contract alleged by him, in some material respects, but it supports the averments of the answer as to the agreement or understanding concerning the payment of a commission. And the jury, by returning a verdict for the defendant, must have found in view of the instructions of the court, that the agreement or understanding was as stated in the testimony of Mr. Worland.
The general rule of brokerage contracts that-the broker is entitled to his commission when a purchaser procured by him and the employer have entered into a valid, binding, and enforceable contract of sale, whether the contract is after-wards carried into effect and the sale actually consummated or not, cannot, of course, govern where there is a provision to the contrary in the contract of employment. It is a rule *474of evidence, and does, not mean that in all cases a broker must show that his efforts have resulted in a valid and en-forfeable contract of sale to entitle him to his commission. But the fact that such a contract has been entered into is held to be presumptive evidence of the performance of the broker’s ordinary duty to produce a purchaser ready, willing, and able to buy at the price, and upon the terms, if any, proposed, or an acceptance of the purchaser by the owner waiving the latter’s right to object on the ground that the purchaser was not able to complete the purchase or pay the agreed purchase price (2 Mecham on Agency, 2nd Ed., Secs. 2440, 2441). The rule is, therefore, without controlling application when the commission is made dependent upon other conditions than the mere finding of a customer ready, able and willing to buy, at least where the failure of such conditions is not the fault of the owner or the result of a situation for which he is responsible.
And the principle is as well settled as the general rule aforesaid that where, by the contract of employment, the commission is made dependent upon certain conditions or contingencies, as upon the actual consummation of a sale, or the full payment of the purchase money, or a specified part thereof, such as an agreed first payment, or a net price to the owner, these stipulations will govern, and a fulfillment or performance of the prescribed conditions is generally essential to the right to compensation (2 Mecham Agency, 2nd Ed., Sec. 2427; 4 R. C. L. 310, 312; 9 C. J. 581, 587, 632; 23 Ency. L, 2nd Ed., 911, 918, 919, 923; Lindley v. Fay, 119 Cal. 239, 51 Pac. 333; Robertson v. Vasey, 125 Ia. 526; Cremer v. Miller, 56 Minn. 52; Van Norman v. Fitchette, 100 Minn. 145, 110 N. W. 851; Antisdel v. Canfield, 119 Mich. 229, 77 N. W. 944; Columbia Realty Co. v. Alameda Land Co. (Ore.), 168 Pac. 64; Orr v. Schwager & Nettleton, 74 Wash. 631, 134 Pac. 501; Lyle v. Univ. L. & Inv. Co. (Tex. Civ. App.), 30 S. W. 723; Burnett v. Edling, 19 Tex. Civ. App. 711; Larson v. Burroughs, 131 App. Div. N. Y. 877; Pratt v. Irwin, Mo. App. 189 S. W. 398; Murray v. Rickard, 103 Va. 132; Cies v. *475Gale, 168 Mo. App. 282; Laird v. Schmidt, 80 O. St. 108, and see note to Moore v. Irwin, 20 L. R. A. (N. S.) 1172-1174).
Thus, after stating the contention of plaintiff in Columbia Realty Co. v. Alameda Land Co., supra, that when it produced a purchaser with whom defendant made a binding contract of sale, it earned its commission and that its right thereto was not lost by the default of the purchaser or the cancellation of the contract, the court said, “This is the general rule (Stewart v. Will, 65 Ore. 138, 140, 141, 131 Pac. 1027). But it is subject to modification by the parties. The material question here is whether the contract on which plaintiff relies contains a promise to pay commission at all events or only out of a specified fund, to-wit, the amounts paid by the purchasers.” And in Lindley v. Fay, supra, the court said that the evidence “tends to show an agreement to pay commissions out of the first money received, and no money has ever been received. Under such a contract, the broker is not entitled to compensation when he finds a purchaser ready, Willing, and able to purchase on the prescribed terms. There must be a sale and a first payment to entitle him to recover. It is so nominated in the bond.” So in Pratt v. Irwin, supra, the court said respecting the general rule aforesaid as to the effect of a written binding contract and the refusal of the purchaser to perform the same: “But that rule does not forbid the parties from stipulating that the commission shall not accrue until the sale or exchange be consummated. The conversation between the parties in which they agreed upon the amount of the commission, as detailed by defendant, shows that both parties understood the contract of employment, which was oral, to mean that plaintiff would not be entitled to his commission until the exchange of farms was actually made.”
In Van Norman v. Fitchette, supra, the court said: “This is not the ordinary contract by which the broker agrees to furnish a purchaser ready, willing, and able to buy the property upon stated terms. * * * Here the parties entered into a different kind of a contract, expressly providing that *476the $2,500 commission should not be earned or paid" until the $12,500 should be actually paid on May 30, and the mortgage for $10,000 executed and delivered. * * * The commission was not earned, until the company (the purchaser) performed what it agreed to do.” And it was said by the court in Antisdel v. Canfield, supra, where there was an actual and completed sale, but for'less than a stated net price: “One of the conditions of the alleged agreement * * * was that he (the broker) should make a sale which should net Mr. Canfield (the owner) $1,200,000. This he did not do. * * * The judge should have directed a verdict in favor, of the defendant.” In the opinion disposing of Karr v. Moffett, 187 Pac. 683, on petition for rehéaring, the Supreme Court of Kansas said: “Appellee sued for an ordinary real estate dealer’s commission, alleging that he had earned it in the usual way. * * * The proof of existence of the special contract was surely an effective way of disproving that the defendants owed the plaintiff for services under an ordinary real estate dealer’s contract, such as would entitle the agent to the usual commission when he had brought buyer and seller together, whereby they consummated a sale on terms agreeable to each other ‘when he had been the procuring cause of the sale’, as the stock phrase in such cases is expressed.”
The testimony of defendant’s witness as to the words of the conversation about the commission, which we think must be regarded as having been accepted by the jury, seems clearly to show that defendant was to receive or be paid the sum of $30,000 for the ranch property before the right to any commission would accrue, or, in other words, the right to the commission was contingent upon defendant’s receiving said sum net, and the commission was to consist of the amount received or paid in excess of that sum, or the differ-' ence between it and $35,000, the amount to be named as the sale price for the purpose of providing an excess over the required net price for plaintiff’s commission. As said witness states, after he had informed the plaintiff that no commission would be paid out of his stated price for either ranch *477or sheep, plaintiff’s proposal was that he should name .$35,-000 as the price for the ranch, and “after getting $30,000 for you for the ranch, the $5,000 will be my commission”, and that is to be understood as intending and meaning, we think, that the extra $5,000, that particular part of the total price to be named, was to constitute the commission. . This, clearly, in our opinion, amounted to a special contract, taking the case out of the general rule aforesaid, and requiring a completion of the sale by the actual payment or securing of the purchase price to entitle the plaintiff to a commission. There were to be no deferred payments after the consummation of the sale. It was to be a cash transaction. The contract was dated October 1*5, 1918, at which time the cash payment of $10,000 was made, as recited in the contract, and the balance was required to be paid on or before 30 days from the date thereof, or as soon as abstracts of title should be completed, and the contract provided for the transfer of possession to the purchaser on December 1, 1918.
Where the broker’s contract of employment, as in this case, provides for a net price to the owner, or for a commission out of or to consist of the excess above a stated selling price, such contract is generally construed as requiring, as a condition to the right to the agreed commission, an actual or completed sale for an amount exceeding such net or selling price, unless the same has been prevented by the fault of the owner (Beale v. Bond, 84 L. T. Rep. 313; Fletcher v. Campbell, 29 Ont. L. Rep. 501; Gilmore v. Bolio, 165 Mich. 633, 131 N. W. 105, 35 L. R. A. (N. S.) 1050; Beatty v. Russell, 41 Neb. 321; Emery v. Atlanta Real Est. Exch. (Ga.), 14 S. E. 556; Wolverton v. Tuttle, 51 Ore. 501, 94 Pac. 961; Munroe v. Taylor, 191 Mass. 483; McCarty v. Bristow (Tex. Civ. App.), 145 S. W. 1029; Orr v. Schwager & Nettleton, 74 Wash. 631, 134 Pac. 501; Seabury v. Fidelity Ins., etc., Co., 205 Pa. St. 234; Burnett v. Potts, 236 Ill. 499; Nudelman v. Wildes, 160 Ill. App. 134; Hopkins v. Settles (Okla.), 149 Pac. 890; Cies v. Gale, 168 Mo. App. 282; Seattle Land Co. v. Day, 2 Wash. St., 27 Pac. 74; Ford v. Brown, 120 Cal. 551, 52 Pac. 817; *478Atwood v. Gugel, 166 Wis. 430; Larson v. Burroughs, 131 App. Div. N. Y. 877).
This is well illustrated in the Pennsylvania case of Sea-bury v. Fidelity etc. Co., supra. The agreement for the commission in that case was in the form of a written promise of the owner to pay, “in the event of a sale of the property” a commission of one per cent on the amount of $1,400,000, and, “in addition to the above * * * all the amount in excess of one million, four hundred thousand dollars”. The broker procured a purchaser who entered into a contract to buy at $1,500,000, but who, after extensions of time for payments under the contract, was unable to complete the required payments, but was negotiating with the owner about the matter when the owner died, and his executors refused to carry out the contract. Suit was brought for the one per cent on the stated selling price of $1,400,000, and for the excess of $100,000 over that sum which the purchaser had agreed to pay. Recovery was allowed for the one per cent on the owner’s fixed selling price, but denied for the excess over that price, the court saying: “In the first place, we think it clear that the rights of Seabury (the broker) rest solely on his contract with Moore; he does not sue on a quantum meruit; his statement is based on that contract; no reasonable interpretation can be given it other than that he was only to receive the excess over $1,400,000 in the event of a sale being actually consummated. It was not consummated, no matter from what cause.”
In the Illinois case above cited, of Burnett v. Potts, the case was thus stated: Appellees were the owners of land which they authorized appellant to sell for $35,000 net cash to appellees, appellant to have as compensation all that he could sell the land for over that sum. Appellant made a contract of sale with one; B'owman for $37,500, $1,000 of which was paid to him at the time of executing the contract, the balance to be paid at different times between the date of the contract and the first of March following. The ap-pellees furnished an' abstract showing a merchantable title and executed a deed and deposited it in escrow with a bank *479to be delivered to the purchaser when 'the $35,000 was paid to the bank for the appellees. Bowman made default and never paid anything except the $1,000. Suit was brought by the appellees against appellant for the $1,000 held by him, which he claimed as commission. The court said:
“The money sued for was paid to appellant in his capacity as agent for the owner. The money at no time belonged to the appellant, as between him and his principals. Appellant was not entitled to any compensation for making this sale until appellees received the $35,000, unless their failure to so receive it was the result of their own fault. That it was not the fault of appellees is determined against the appellant by the affirmance of this judgment by the appellate court. * * * Such contracts differ from the usual agency contract where the compensation is a per cent of the price at which the sale is made, only in that the compensation is contingent upon the agent’s obtaining more for the land than the owner has agreed to accept. If appellant had sold this land for $35,000 he would have been compelled to turn the entire proceeds over to his principals. We do not see upon what legal grounds he can retain any part of the purchase money when only $1,000 has been paid.”
In the English case, Beale v. Bond, supra, the owner gave a so-called commission note to the broker reading as follows: “I agree to accept the sum of 1,150 pounds for the above property, and you are to be at liberty to receive anything over aiid above that as a commission, it being understood that I am to receive the full sum of 1,150 pounds without deduction, except, of course, apportionments of outgoings. Completion to be‘within a month, and a deposit of 10 per cent to be paid down.” The broker made a contract in behalf of his principal for the sum of 1,250 pounds and was paid 25 pounds as a deposit. Owing to the purchaser’s default, the sale was not completed, and the owner brought suit to recover the deposit from the broker. The court said:
“This is a very special contract, by which the plaintiff made a special bargain with the defendant and not a bar*480gain to pay commission in the ordinary way. The plaintiff did not intend to pay anything; the defendant was not to be paid by the plaintiff at all, but was to take any difference above 1,150 pounds which might be actually received by the plaintiff.” ' .
In the syllabus to the Ontario case of Fletcher v. Campbell, supra, the decision is thus stated: “Where the only agreement for payment of an agent’s commission on a sale of land for his principal contains the term that it is to be paid out of the purchase money, the agent cannot recover if the sale falls through without the fault of his employer, and the only money the employer or agent receives on the purchase is the deposit, which falls to be forfeited.”
In the case cited from Massachusetts, Munroe v. Taylor, it appeared that there was an agreement placing the property in the agent’s hands for sale as follows: “The price asked by Ann E. Taylor is $10,000. All over that amount that it is sold for E. B. Munroe has as his commission for selling the property.” A second agreement was made authorizing a sale “for the sum of $10,330, and F. B'. Munroe is to have for himself as commission all over that amount he can get for it.” A binding contract to purchase at a price largely in advance of the amount so fixed was entered into as a result of the agent’s negotiations, but for reasons said to be not disclosed the sale was never consummated. The suit was to recover the broker’s commission. A verdict was directed for defendant, and on exceptions before the appellate court it was said, in disposing of and over-ruling the same:
“The case turns upon the construction to be given to the contract. By the language used it is manifest that the price at which the property sold was to fix the amount of plaintiff’s commission. It was contemplated that an actual sale should be effected, and that payments to him should be made from the price obtained, and it was not an undertaking whereby the broker is only to find a purchaser, and having done so it becomes wholly immaterial so far as earning his commission is concerned whether the principal accepts the *481bargain, or lets the opportunity lapse. * * * But here the written agreements out of which the plaintiff’s right of action arises, either considered separately or together, must be construed as meaning that the sale was to be completed, and then out of the price any surplus beyond the amount stipulated which the defendant was to receive shall be paid to- him for his services. What the plaintiff really undertook was not only to find a purchaser at a fixed price, but to effect a sale, which meant a payment of the price, and this having been done he would have earned the excess, but until the consideration became payable, or the defendant refused to convey, he could not demand any remuneration, or maintain an action for breach of the contract.”
The facts of the California case of Ford v. Brown, briefly stated, were: That the owner gave the brokers written authority to sell her real estate for $15,500, “or any less sum hereafter fixed by me in writing,” and thereby agreed “to pay them $500 of purchase price when property is sold or a purchaser found.” A little more than a year later the brokers found a purchaser at the price of $15,250, and made a contract of sale with him for that sum. Thereupon the owner gave the brokers a writing stating: “I hereby' ratify sale of my lot this day made by G. H. Umbson & Company, for the sum of $14,800 net to me.” It did not appear that the sale was ever consummated. The brokers brought suit for $450 commission. The court said that the sale was not made under the old contract, but under the new one whereby the brokers were authorized to sell at any price so that they gave the owner $14,800 net. “She did not agree to pay them anything for their services. On the contrary, the brokers were, in effect, told that she would not pay them, but they must get their pay from the purchaser. * *. * Under the contract last made it would follow that the brokers were entitled to no compensation, unless the sale was perfected, and purchase money exceeding $14,800 was received.”
The offer of the owner in the Georgia Case of Emery v. Atlanta R. E. Exch., supra, was to sell for $11,250 net. *482The broker accepted it, “upon condition that sale is perfected”, a condition which the court said was probably inserted for the protection of the broker against any obligation on their part to buy the land, but which operated also in favor of the seller. The court further said, that the sale for $11,250 net was to be for cash, i'n the absence of contrary specifications, and that the conclusion of a binding contract for the sale would not fulfill the broker’s obligation, but the sale itself must be perfected within the time limited.
In Wolverton v. Tuttle, supra, the Supreme Court of Washington say that “the use of the expression ‘net’ to the .vendor necessarily precludes any inference that Tuttle was to pay a commission in the event of a sale, unless the sum received should exceed the specified ‘net’ price. It can only be inferred that plaintiffs were either to look to this excess, if any, or to the purchasers for their compensation.”
Plaintiff strongly relies upon Yoder v. Randol, 16 Okla. 308, 83 Pac. 537, as sustaining his contention that upon the facts in the case his commission was earned when the con-, tract of sale was entered into. That case, with respect to the point here involved, was decided upon the pleadings, the trial court having rendered judgment upon the pleadings, and the Supreme Court held that the answer not only failed to rebut the averment in the petition of the employment and of a compliance with the terms thereof, but recognized the procurement of a purchaser by plaintiff, and acceptance of such purchaser by defendant, and it is stated in the opinion in the case that the petition alleged that the contract was to pay plaintiff a commission to consist of the excess above the net price to defendant of $2,750, that a purchaser was procured for $3,000, that defendant entered into a written contract of sale with said purchaser, "and has since then duly conveyed said land to said purchaser!’ A very different situation from that disclosed by the pleadings and evidence in the case at bar. The later Oklahoma case of Hopkins v. Settles, supra, which was cited and quoted from in our former opinion, shows the opinion of the Supreme Court of that state with reference to the right to recover a *483commission upon facts quite similar to those in this case, and, in effect, substantially the same. And, in that case the right to recover was denied.
The point is made in the petition for rehearing and brief that there was a variance between defendant’s proof and the allegations of the answer. And it is argued in support thereof that the answer admits the contract of employment alleged in the petition, and fails to allege a special contract. We think it very clear that the answer does not admit the contract between the parties as alleged in the petition, but does allege a special contract. It first denies, generally, each' and every allegation of the petition not specifically admitted, and then alleges that defendant advised plaintiff it was willing to sell at the prices of $30,000 for the ranch and $17 per head for the sheep, but would not pay any commission' at those prices, and that upon plaintiff then representing that he had a purchaser who would pay $35,000 for the ranch and $17 per head for the sheep, defendant agreed that, if plaintiff produced a purchaser who would purchase and pay for the property at the prices named, then the defendant would pay plaintiff the sum of $5,000, “the difference between the price for w-hich plaintiff was willing to sell and the price plaintiff represented the purchaser produced by him would pay thereforBy that averment plaintiff was to receive or be paid the sum named out of the purchase money when paid, and it was to be the excess above the net price to the owner of $30,000.
It seems to be also contended that by the execution of the contract of sale the defendant actually received the purchase money. Of course, no authority so holds, and it is perfectly obvious that no part of the purchase price, except the sum of $10,000, was received by the defendant. The balance was surely not paid, nor secured by the purchaser, and could not, therefore, have been received.
The petition for rehearing must be denied.

Rehearing denied.

Beard, C. J., and BlydENburgh, J., concur.