Court Opinion

ID: 3960423
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:20:51.245924+00
Date Added: 2024-06-11T07:43:45.186629
License: Public Domain

The majority of the court, having concluded that the facts established liability on part of appellees, reversed the judgment of the trial court and rendered judgment in favor of appellant for $1,625. This allowed 5 per cent. commission on the cash consideration of $10,000 and on $22,500 indebtedness assumed. In addition to this, I am of the opinion that appellant should have recovered commissions on the amount of the corporation stock received by appellees as part consideration for the land. On this point, however, Mr. VAUGHAN, Associate Justice, and I do not agree; but we do agree on the judgment rendered.
I will state my reasons for the opinion that appellant should have been permitted to recover commissions on the amount of the corporation stock:
The Harston Sand  Gravel Company, the corporation, was organized by Mr. Callahan, and resulted from negotiations between Callahan and appellees that were set on foot after appellant had produced Callahan, the purchaser, and had earned his right to a commission.
The organization of the company was a means to the end desired by the parties, and was a proximate result of services performed by appellant. It cannot, In my opinion, be successfully contended that the conveyance of the land to the company under the circumstances was simply a change in the *Page 608 
evidence of ownership of the land existing in individuals to that of stock ownership in the corporation. The circumstances forbid this idea. Appellees received a cash consideration of $10,000. The company was chartered with an authorized capital stock of $120,000, being $75,000 in excess of the amount of the stock received by appellees; the excess being subscribed by others. Therefore it cannot be said that the corporation was formed by or for the use or convenience of appellees. This body of land owned and managed by the corporation as an active business is a materially different and more attractive proposition than it was in its inactive, undeveloped state prior to the change in ownership.
This added value to the holdings of appellees resulted proximately from the services of appellant.
In the case of Fouke v. Jordy (C.C.A.) 289 F. 220, the facts were almost identical with the facts of this case. The broker produced purchasers, to whom the owners, after negotiations, sold their properties in consideration of cash, $125,000, indebtedness assumed, $227,000, and $200,000 of the capital stock of a corporation organized to take over and handle the properties. It will be observed that the different elements that emered into the consideration for the sale of the property in that case, to wit, cash, the assumption of indebtedness, and stock in a newly formed corporation, are all present in the case under consideration. Plaintiff sued defendants for his commission based on the entire consideration — cash, indebtedness assumed, and the amount of corporation stock. At the trial it appeared that the owners had guaranteed any shortage of timber that might be ascertained at $5 per thousand feet. This shortage was ascertained to be $85,000. It also appeared that the owners had used of the stock in the corporation received by them as part consideration the sum of $86,000 in payment of various creditors.
The trial court permitted the broker to recover commission on the amount of cash paid and indebtedness assumed, but instructed the jury that he could not recover a commission on the corporation stock received. Verdict and judgment followed accordingly. The defendants contended on appeal that the judgment was excessive, in that they were compelled to pay a commission on the amount they had to make good on the guaranty, to wit, $85,000, which they claimed should have been deducted from the purchase price before the percentage of commission was calculated. The Circuit Court of Appeals denied this contention, saying:
"But the defendants are not in a position to claim a deduction on account of their guaranty, because they received as a part of the purchase price, upon which they were not required to account to the plaintiff for a commission, one-third of the capital stock of the new corporation, out of which they have assigned in payment of their debts stock of the par value of $86,000. It thus appears that the defendants paid debts greater in amount than their estimated liability upon their guaranty, unless the stock was accepted by their creditors at less than par, as to which the evidence is silent."
This holding of the court was evidently based on the idea that, by reason of the erroneous instruction of the trial court, defendants escaped the payment of a commission on the corporation stock, and, as defendants had used a part of this stock to pay debts amounting to $86,000, they were in no position to claim a deduction in the amount of the commission on the $85,000 paid on the guaranty, because under no other process of reasoning could the judgment have escaped being held excessive. In this indirect way the court indorsed the idea that the plaintiff was entitled to a commission on the amount of corporation stock received by the owners of the property as a part of the consideration paid them on the sale.
The court further held in that case that the conveyance by the owners of the properties to the newly formed corporation, organized for the purpose of taking title to and operating the same, just as was accomplished in the instant case, constituted a sale within the meaning of the broker's contract of agency. The court said:
"We are of opinion that the transactions between the defendants and the parties produced to him by the plaintiff constituted a sale. The title was conveyed to a corporation organized and financed by the parties whom the plaintiff interested as prospective purchasers."
Applying this rule to the facts under consideration, I am of the opinion that the transactions involved in the instant case constituted a sale of the land; hence it follows that appellant, having performed the contract, is entitled to commissions contracted for, that is, on the entire consideration received by appellees for the land, and not simply on a part of the consideration. To resolve the matter otherwise places the court in the attitude of introducing into the contract of agency a limitation not placed therein by the parties.
For these reasons I am of the opinion that the judgment rendered for appellant should have included the additional sum of $2,250, being 5 per cent. commission on $45,000, the amount of capital stock of the Harston Sand  Gravel Company paid to appellees as a part of the purchase price for the land.