Court Opinion

ID: 5446803
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:12:09.955174+00
Date Added: 2024-06-11T08:32:13.263756
License: Public Domain

Harrison, J., dissenting.
A broker’s contract for the sale of real estate is to be construed under the same principles as is any other contract. It is a contract of employment wherein the right to compensation is established when the broker has performed the contract according to the terms of his employment; and until he has rendered the services for which he was employed he has no right to compensation. “The general rule of law as to commissions undoubtedly is that the whole service or duty must be performed before the right to any commissions attaches, either ordinary or extraordinary; for an agent must complete the thing required of him before he is entitled to charge for it.” (Story on Agency, sec. 329.) The rendering of such services being in the nature of a condition precedent to his right of recovery, the burden of proving the performance of the condition is upon him, and its performance must be .satisfactorily established in the mode and to the extent stipulated by the contract of employment. (Wharton on Contracts, sec. 601; Hinds v. Henry, 36 N. J. L. 328.) For the purpose of showing, therefore, whether he has performed his contract, it is first necessary to ascertain the terms of the contract. The ordinary contract between a broker and the owner is that he will find a purchaser upon certain specified terms who will be acceptable to the owner. Sometimes other terms are included in the contract, such as that a sale shall be effected (Walker v. Tirrel, 101 Mass. 257; 3 Am. Bep. 352), or that his commission shall be payable out of the ^purchase money (McPhail v. Buell, 87 Cal. 115), or that *658he shall have a fixed compensation for his services, irrespective of the result. But, in the absence of some term qualifying his employment, his contract is performed only when he finds a purchaser who is able, ready and willing to make the purchase according to the terms upon which he was employed to make the sale.
To find a purchaser, however, means more than to procure some one who will offer to negotiate for the purchase. It implies the production of one who is not only ready and willing to comply with the terms of the purchase, but who has also the present ability to corn-sum mate it, and to comply with all of its terms, and who is also willing and ready to do all the acts that may be required to make an actual purchase of the land. • To produce one who makes an offer to purchase, and who is without means, or who is not in condition to comply with the terms of the sale, and against whom a claim for damages resulting from a failure to perform the contract of purchase could not be enforced, does not constitute the finding of a purchaser within the terms of the agreement (Iselin v. Griffith, 62 Iowa, 671); and the mere statement by one who is produced that he is ready and willing to make the purchase, even if he has the ability to do so, does not render him a purchaser, if at the same time he refuses to do the acts which are requisite to consummate the purchase.
Upon the production of such purchaser, if the transaction is not to be consummated by an immediate delivery of the deed and payment of the purchase money, the owner has the right to demand that a valid, enforceable contract for the purchase of the land shall be executed by him, and the services of the broker have not . been fully performed until such agreement is executed. The owner may, however, waive the execution of such contract; as, if after the broker has introduced the purchaser to him, he himself assumes to prepare a contract which afterwards proves defective, or to deal with the purchaser upon other terms, or accepts a parol obligation from him. The broker is entitled to his commis*659sions whenever the purchaser who is produced by him is- accepted by the owner, even though the owner fail to make a binding contract or to enforce the execution thereof, or though either by reason of defect of title, or a refusal of the vendor or vendee to perform such contract, the sale be not afterwards consummated. So, too, the owner may by his own conduct prevent the execution of the contract, or its fulfillment on the part of the purchaser by insisting on other terms, or by a refusal to sell, or from a defect in his title. In such case the broker is entitled to his commissions, upon the principle that he has fully complied with all the terms of his employment, except those which have been waived, or from which he has been released by the acts of the owner.
It is not essential, however, that the owner and the purchaser should be brought face to face. The broker sufficiently performs his agreement if he tenders to the owner a valid, written contract containing the terms of sale agreed upon, executed by a part;; able to comply therewith, or to answer in damages if he should fail to perform. (Hayden v. Grillo, 35 Mo. App. 647.) The contract must, however, be one which the owner can enforce against the vendee, and must be delivered to the owner. The owner is not bound to accept the statement of the broker that he has a contract, or that a deposit had been made with him on account of the purchase. He is entitled to the contract itself, and also to the deposit made thereunder, and to know whether the purchaser is able to carry it out. The person proposed by the broker may be insolvent, and thus during the pendency of the transaction the owner might lose the opportunity of making a valid sale. Much less is the owner required to accept a verbal contract made on his behalf by the broker, even though a deposit has been made with the broker upon such verbal contract. A verbal contract made by the purchaser with the broker is insufficient. A sale of real estate can be made only by an instrument in writing, and is “negotiated” only when such instrument has been executed. A binding con*660tract for a sale constitutes a sale within the meaning of such an agreement (Rice v. Mayo, 107 Mass. 550), and an employment to negotiate a sale has been held to be satisfied by finding a purchaser. (Phelps v. Prusch, 83 Cal. 626.) It is not, however, a part of the broker’s employment to prepare a contract of purchase to be executed by the purchaser. (Cook v. Kroemeke, 4 Daly, 268.) He has done all that he was employed to do when he has produced a purchaser who is acceptable to the ■owner. The preparation of such agreement, and any further negotiations regarding the terms of purchase, are to be made between the owner and the purchaser. In the absence of special authority therefor the broker has no authority to enter into any contract on behalf of the owner (Duffy v. Hobson, 40 Cal. 240; 6 Am. Rep. 617,) or to make any contract on behalf of the purchaser, a broker being “ one who makes a bargain for another, and receives a commission for so doing.” (Pott v. Turner, 6 Bing. 706.) “The duty assumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the price and terms on which it is to be made, and until that is done his rights to commissions do not accrue” (Sibbald v. Bethlehem Iron Co., 83 N. Y. 378; 38 Am. Rep. 441); but the agreement for the purchase must be one that is valid and can be enforced.
The foregoing principles have been established in various decisions, and may be regarded as settled rules for construing the contract between brokers and their principals. (Masten v. Griffing, 33 Cal. 111; Phelan v. Gardner, 43 Cal. 306; Gonzales v. Broad, 57 Cal. 224; Hyams v. Miller, 71 Ga. 608; Veazie v. Parker, 72 Me. 443; Buckingham v. Harris, 10 Col. 460; Moses v. Bier-ling, 31 N. Y. 462; Mooney v. Elder, 56 1ST. Y. 240; Barnard v. Monnot, 3 Keyes, 203; Love v. Owens, 31 Mo. App. 510; Hayden v. Grillo, 35 Mo. App. 654; McGavock v. Woodlief, 20 How. 221; Coleman v. Meade, 13 Bush, 363; Watson v. Brooks, 11 Or. 271; Hinds v. Henry, 36 H. J. L. 328; LoveY. Miller, 53 Ind: 294; 21 Am. Rep. 192; Glent*661worth v. Luther, 21 Barb. 145; Leete v. Norton, 43 Conn. 219.)
There are expressions in the opinions in some cases to the effect that a written contract of purchase is not necessary in order to entitle the broker to his commissions, but an examination of these cases will show that in each one of them the written contract was waived by the owner, or that the owner himself refused or was unable to consummate the sale. We know of no authority in which it has been held, or even stated, that if the owner insists upon the execution of a valid contract of purchase, and the purchaser produced by the broker fails or declines to enter into such contract or to comply with the other terms of purchase, the broker is nevertheless entitled to his commissions. «
The owner does not lose his right to make a sale of the property by reason of his having employed a broker (Dolan v. Scanlan, 57 Cal. 264; Hungerford v. Hicks, 39 Conn. 259; McGlave v. Paine, 49 N. Y. 561; Wylie v. Marine Nat. Bank, 61 N. Y. 415), or to employ other brokers for the same purpose; and the mere fact that he has made a sale within the time allowed the broker by his employment does not entitle the broker to his commission unless the broker has, within the terms of his employment, found a purchaser ( Waterman v. Boltinghouse, 82 Cal. 659; Stewart v. Murray, 92 Ind. 543; 47 Am. Rep. 167); and however much he may have labored for the purpose of securing the purchaser, he is not entitled to commissions unless he produces one.
“A broker is never entitled to commissions for unsuccessful efforts. The risk of failure is wholly his. The reward comes only with his success. That is the plain contract and contemplation of the parties. The broker may devote his time and labor and expend his money with ever so much of devotion to the interests of his employer, and yet if he fails, if, without effecting an agreement or accomplishing a bargain, he abandons the effort, or his authority is fairly and in good faith terminated, he gains no right to commissions. He loses *662the labor and effort which was staked upon success, and in such event it matters not that after his failure and the termination of his agency, what he has done proves of use and benefit to the principal.” (Sibbald v. Bethlehem Iron Co., 83 N. Y. 383; 38 Am. Rep. 441.)
Under the foregoing principles the plaintiffs did not negotiate a sale or find a purchaser for the land, and consequently did not become entitled to compensation for their services. No agreement in writing for the purchase of the land "was ever made by Barrows, and when he was introduced to the owners as the purchaser he not only did not comply with their demand that such contract be executed, but he also failed to comply with their terms of sale. It was specified in the instrument of September 17th that $10,000 of the purchase price should be paid “ within the five days.” This can only be construed as meaning that this amount of money should be deposited with the owners within that time as a payment on account of the purchase price, without any condition, and as an earnest of good faith on behalf of the purchaser that he would complete the purchase, subject, of course, to the implied agreement on behalf of the owners that it would be repaid if, through any fault on their part, the sale should not be completed. The succeeding clause in the agreement that $5,000 additional should be paid “on confirmation of the title” shows that this $10,000 was to be paid irrespective of and before any examination of title.
At the first interview between the plaintiff Lyon and the owners on the morning of the 22d, he had neither a contract on behalf of Barrows, nor did he produce Barrows as a purchaser, nor did he offer to pay or deposit with the owners the ten thousand dollars, but insisted that as broker he had the right to retain this amount of money until after the examination of the title and completion of the sale. The function of a broker, however, as we have seen, is merely to make bargains, and not to execute contracts, and he was neither authorized to retain the money *663which his customer had given him with which to make a deposit or part payment on account of the purchase, nor to receive or hold the money for the account of the owners. Budd, on behalf of the owners, refused to accept the check as a compliance with the terms of the sale, on the ground that it was not money, and so stated to the plaintiff Lyon, and also stated to him that, if Barrows would come with the money or what they knew to be money, he would then close the matter up, and put the agreement in writing so that it would be binding on all parties. Lyon then went away, and after a few minutes returned with Barrows, who stated that he was willing to purchase the land according to the terms of agreement, if the title was good, and again tendered the check as a performance of the condition to pay the ten thousand dollars. The owners, however, again declined to accept the check, upon the express ground that it was not a legal tender, or the equivalent of money, and Budd said to him that he was ready to draw up the contract and accept the money, but would not accept the check. This interview took place before the hour for the opening of the bank in Stockton. The check was drawn upon a bank in San Francisco, and was made payable to the order of the plaintiffs, Gaman & Lyon; and McDougald on behalf of the owners thereupon stated to Lyon and Barrows that he would wait at Budd’s office until half past nine o’clock, and that if they then had the money there, the trade would be made; otherwise he would close with the other parties. To this Lyon assented, and thereupon Barrows and Lyon left the office without saying whether or not they would return, but neither of them did in fact return, and a little after noon of that day Barrows left Stockton, and about the same time Lyon obtained the money on the check, and took from the bank a certificate of deposit, payable to his own order. McDougald and Budd waited at the office of the latter until about ten •o’clock, and afterwards on the same day closed the contract for the sale with the other parties.
*664When it was thus shown to the court below that no contract for the purchase of the land was ever made by or on behalf of Barrows, and that when he was introduced to the owners he did not comply with the terms, of the sale, and that when he was informed by them that they would require a contract of purchase to be-made by him, and that the ten thousand dollars should be paid to them in money at the same time, instead of complying therewith, or saying that he was willing to do so, he went away, and soon after left town, and did not thereafter in any form offer to make such payment, or to enter into such contract, the court was justified in finding and adjudging that the plaintiffs had not performed their contract of employment, and that they were not entitled to a recovery from the defendants.