Court Opinion

ID: 9545022
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:04:45.956532+00
Date Added: 2024-06-11T15:13:53.752391
License: Public Domain

DISSENTING OPINION OE
LEWIS, J., WITH WHOM CASSIDY, J., JOINS.
To recover, the broker had to show that he had earned a commission in the manner specified by the terms of his employment, or that his client (hereinafter referred to as the “seller” or the “sellers”)1 had prevented him from fully performing by arbitrary action or other fault, without any fault on the part of the broker or the customer found by the broker (hereinafter referred to as the “buyer”). Walker v. Chancey, 96 Fla. 82, 117 So. 705; Livingston v. Malever, 103 Fla. 200, 137 So. 113; Dickey *238v. Waggoner, 108 Colo. 197, 114 P.2d 1097; Middleton v. Thompson, 163 Pa. 112, 29 Atl. 796; Cheatham v. Yarbrough, 90 Tenn. 77, 15 S.W. 1076; Sibbald v. Bethlehem Iron Co., 83 N.Y. 378, 383; Blunt v. Wentland, 250 Iowa 607, 93 N.W.2d 735; Tracy v. O’Neill, 103 Conn. 693, 131 Atl. 417; Restatement, Agency, § 445e.
Under the terms of the printed “Exclusive Authorization to Sell,” Exhibit 1 (hereinafter referred to as the “authorization”), the seller promised to pay the broker his commission “upon any such sale being effected or contracted for * * We are not concerned with the word
“effected” as there was no cash sale contemplated. The authorization had this to say about a sale being “contracted for”:
“* * * I, the undersigned principal, hereby employ said Agent as my sole agent and give said Agent the exclusive right to sell, * * * in cash, or on the terms set forth below, or for such lesser price, or upon such other terms as may be hereafter agreed upon by me in writing, or by cable or wireless * * *.
“I hereby agree and bind myself, upon demand, to convey said described real property, * * * to any purchaser secured therefor by said Agent * * * for the cash price above stated, or on the terms set forth on the reverse side hereof, or for such lesser price, or upon such other terms as may be hereafter agreed upon by me in writing, or by cable or wireless as aforesaid.” (Emphasis added.)
Under the heading “Special Conditions” there was typewritten: “25% Down Payment, Balance on Agreement of Sale.” Below this, in handwriting, the following appeared: “Balance payable in 5 years.” The reverse side of the document was blank. The terms to be contained in the agreement of sale were not set forth in the document or attached thereto.
*239All that the broker pleaded was that:
“* * * Defendant secured a buyer, within the time allowed in the said Exclusive Authorization to Sell, who was ready, willing and able to buy the said land, and an Agreement of Sale had been prepared, a copy of which is attached hereto as Exhibit ‘B’ and by reference made a part hereof, but the Plaintiffs refused to sell or enter into an agreement to sell the said land to the buyer secured by the Defendant.”
The theory of the counterclaim, therefore, was that the broker need only have secured a buyer “ready, willing and able to buy * * The broker did not plead that the sale had been “contracted for.” While alleging that the seller refused to enter into an agreement of sale, he did not allege that such refusal was wrongful or that the attached Exhibit B contained all the terms to which the seller was entitled. This Exhibit B was admitted in evidence as Defendant’s Exhibit 2 and I shall refer to it by that number. It showed on its face that it was executed on December 2, 1960 by the buyer, Kauwe’s Land & Research Development, Inc., but was not executed by the seller.
There is a difference between the employment of a broker to find a purchaser and the employment of a broker to procure a contract of sale, as the court points out. This difference is explained in Malever v. Livingston, 95 Fla. 272, 116 So. 15; Livingston v. Malever, supra, 103 Fla. 200, 137 So. 113; Ormsby v. Graham, 123 Iowa 202, 98 N.W. 724.
It has been said that even though the commission is conditional upon the execution of an enforceable contract, the seller is liable if the broker procures a customer who is willing to enter into an enforceable contract on the seller’s terms and whose failure to do so is because of the seller’s refusal to execute such agreement. Smith v. *240Gibraltar Oil Co., 254 F.2d 518, 522 (10th Cir.), quoting Restatement, Agency, § 445e. However, this is merely recognition of the principle that the seller cannot by his .arbitrary action prevent the broker from earning his commission.
The requirement that the sale be “contracted for” is a condition precedent, which is set aside if it remains unfulfilled because of fault of the seller. Cf., Amies v. Wesnofske, 255 N.Y. 156, 161-63, 174 N.E. 436, 437-38. This is in the class of conditions precedent which can only be performed by the promisor or with his cooperation. Cf., Moore v. Scott Stamp & Coin Co., 178 F.2d 3 (2d Cir.); Wolbarsht v. Donnelly, 302 Mass. 568, 20 N.E.2d 415. One who prevents the happening of a condition precedent upon which his liability depends cannot avail him-self of the condition. 5 Williston, Oontracts, § 677 (3d ed.) ; 12 Am. Jur., Oontracts, § 329; Restatement, Contracts, § 295. However, the burden is on the promisee to :show the prevention. Wolbarsht v. Donnelly, supra.
There is a question in some of the cases as to the nature of the contract required. 8 Am. Jur., Brokers, § 173. I have no doubt that the words “contracted for” require •that a valid, enforceable contract shall have been entered into. Ormsby v. Graham, supra, 123 Iowa 202, 98 N.W. 724, 729; Massie v. Chatom, 163 Cal. 772, 127 Pac. 56; Folinsbee v. Sawyer, 157 N.Y. 196, 51 N.E. 994; Measell v. Baruch, 152 Va. 460, 147 S.E. 203.
The counterclaim in this case incorporated by reference the terms of the authorization. As seen, the allegations of the counterclaim were insufficient to show compliance with those terms. The seller interposed as the first defense to the counterclaim that it “fails to state -a claim upon which relief can be granted.” No application was made under H.R.C.P., Rule 12(d), for a separate hearing of this matter before trial. No objection was made at *241the trial based on the insufficiency of the pleadings in relation to the evidence offered. This defense therefore is to be judged in the light of the evidence adduced, in all respects as if the broker had properly alleged that Exhibit 2, which the buyer executed, contained all the terms to which the seller was entitled and the sale would have been “contracted for” but for the wrongful refusal of the seller to execute the same on his part.2
I now come to the meaning of the words “Balance on Agreement of Sale” appearing in the authorization. The broker contends that all that the seller had a right to expect under this document was an agreement of sale setting out the down payment and deferred payments, the ■interest rate, and such additional provisions as the seller might show were implied under the usual practice. I do not agree. The broker did not prove that there was a usage under which the words “Balance on Agreement of Sale” in themselves defined the content of the agreement of sale. The burden of proof is on one who relies on a usage or custom to plead and prove its existence. 55 Am. Jur., Usages and Customs, § 51; of., Francone v. McClay, 41 Haw. 72.
The seller denied the allegations of the counterclaim and further alleged that the buyer “refused and failed to execute an Agreement of Sale containing the normal and customary conditions of such agreements.” If the latter allegation be taken as a concession that there were identifiable “normal and customary conditions” it likewise was an assertion that Exhibit 2 did not fall within the usage. And if usage supplied the terms to be included in the agreement of sale the burden was on the broker, who relied on Exhibit 2, to show that it conformed to the usage.
*242The quoted allegation of the seller was not an affirmative defense. It was not pleaded as a separate defense. It merely negatived the broker’s case. It therefore was surplusage3 except as it admitted the possibility of identifying the “normal and customary conditions.”
It also is appropriate to consider whether the words “Balance on Agreement of Sale” have a meaning in the case law whereby the terms to be included are routine. The contrary is true. The preparation of an agreement of sale involves discretion and constitutes the practice of law, though a few courts recognize that standard forms may be used in certain ways without practicing law. See Martineau v. Gresser, 88 Ohio L. Abs. 550, 182 N.E.2d 48; Oregon State Bar v. Security Escrows, Inc., 377 P.2d 334 (Ore.); State ex rel. Indiana State Bar v. Indiana Real Estate Ass’n, 191 N.E.2d 711 (Ind.).
In this case we lack evidence that the words “Balance on Agreement of Sale” contemplated use of a standard form. All we know is that on an earlier occasion Mr. Ikeoka, presently the seller, when purchasing the land in question had executed an agreement in the form of Exhibit 2. As purchaser on the former occasion he was in a different position from that which he occupied on this occasion, as his attorney pointed out to him on his return to Honolulu. There is no evidence of any agreement for use of this form at the time the authorization was entered into.
This then is a case in which at the time of the authorization terms remained to be negotiated. The broker cannot recover if there was no meeting of the minds on the remaining terms. Ormsby v. Graham, supra, 123 Iowa 202, 98 N.W. 724; Costilla Land Co. v. Robinson, 238 F.2d 105 (10th Cir.); Best v. Kelley, 22 Wash. 2d 257, 155 P.2d *243794; Greene v. Waggoner Refining Co., 278 S.W. 492 (Tex. Civ. App.); Jacobs v. Schneider, 152 Cal. App. 2d 452, 313 P.2d 142. This principle applies as well to the terms of any formal contract contemplated. Mengel v. Lawrence, 276 App. Div. 180, 93 N.Y.S.2d 443, 446.
According to some cases it is the duty of the seller to negotiate in good faith the remaining terms, and if the broker shows that the buyer was ready to meet all reasonable terms he may recover though the parties did not agree on the remaining terms. Mengel v. Lawrence, supra; Costilla Land Co. v. Robinson, supra. According to other authorities it is a complete defense that the buyer and seller never got together to negotiate the remaining terms. Restatement, Agency, § 445d, Illustration 5; Ormsby v. Graham, supra. It is unnecessary to resolve this point, as the seller on the argument conceded that the seller must act reasonably.
The basis of the trial court’s holding was:
“* * * The purchaser accepted the offer to sell the properties on the terms proposed by the sellers. * * * “It is the general rule that a broker who produces a purchaser able, ready and willing to buy on the terms fixed by the seller is entitled to his commission. * * *
“* * * The Defendant had no legal right to deprive the Plaintiff of his commission by capriciously and unreasonably refusing to consummate this sale. * * *” The evidence shows, as stated by the trial court, “that
the consideration for sale of the properties and the terms of payment had been agreed upon.” That is, the seller and buyer reached agreement not only on the price of $64,000 but also on a down payment of approximately 29%, of which $5,000 was tendered at the time in the form of a check and the remaining $13,500 was to be paid on January 15, 1961. The balance of $45,500 was to be paid with 6)4% interest over a five-year period. These nego*244tiations were oral and the evidence shows that the parties at the time contemplated a formal contract. Discussion was had as to who should draw it up.
A Hilo attorney was selected to draft the agreement of sale. The seller and buyer each had an attorney, the seller in Honolulu and the buyer in Hilo. However, the attorney selected to draw it up was the one who previously had drawn the agreement of sale covering acquisition by Mr. Ikeoka — presently the seller — of the land in question, and according to the broker’s testimony that was why he was selected. Asked whether this attorney was his attorney, the broker so testified. The seller testified that the broker told him all agreements of sale were the same. There was no finding as to whether the broker so stated.
It is undisputed that this Hilo attorney supplied the terms and provisions of Exhibit 2, other than the price and terms of sale above noted. The trial court in its decision, after referring to the price and terms of sale orally negotiated, stated: “There is, however, an irreconcilable conflict as to whether or not any other provisions of Defendant’s Exhibit 2 in evidence had been agreed upon.” After summarizing the conflicting evidence the court resolved the conflict to the extent of finding that the seller did not expressly reserve the right to consult his own attorney, basing this finding on the corroboration of the broker’s testimony by Dr. Chock, the buyer’s treasurer, and upon the seller’s admission that he had not told the Hilo attorney who drafted Exhibit 2 that his own attorney must approve it. At a later point in the decision the court below said that “his [seller’s] actions, in cashing the [$5,000] check and paying $2,500.00 to Mr. John H. Kong [the broker], speak more eloquently than his testimony in Court as to what actually transpired on December 2, I960.” This again was with reference to the question whéther the seller expressly reserved the right to consult his own attorney.
*245Therefore on this record we must take it that the seller, despite his testimony that he informed both the broker and Dr. Ohock that if his Honolulu attorney did not approve the agreement a new one would be drawn up, did not expressly reserve the right to consult his own attorney. The trial court’s finding is not “clearly erroneous.” (H.R.C.P., Rule 52(a).) .However, this finding is material only to the question whether the complete terms were approved by the seller by acquiescence on his part in the form in which Exhibit 2 was drafted, a question taken up later in this opinion.
•. There was no contract between the buyer and seller. The parties intended a formal agreement of sale, as in Measell v. Baruch and Massie v. Chatom, supra. When Exhibit 2 was drafted it supplied additional provisions, not previously discussed between the buyer and seller. Moreover, it was drafted in such form as not to be binding unless both parties signed. Cf., Shortridge v. Ghio, 253 S.W.2d 838 (Mo. App.).
Since the sale was not “contracted for” (the majority makes no holding that it was), the question of prevention of performance of the condition precedent that it be “contracted for” is the turning point. The first matter to be considered is: Were the negotiations as to the terms of the formal contract completed, so far as the broker was concerned, when he secured the buyer’s execution of Exhibit 2? The seller contends that since he had not executed Exhibit 2 it was not too late for him to raise objections to its provisions. The broker contends that the seller acquiesced in the provisions of Exhibit 2, that full agreement was reached on all the terms of the contract, and that the broker could not be deprived of his commission by the seller’s refusal to execute the agreement.
As a matter of general principle, a seller who has negotiated and agreed to terms which are complete — leaving *246nothing for further negotiations — is liable for the broker’s commission when a suitable buyer has been found to contract upon those terms, though the seller subsequently experiences a change of mind. Cf., Notkins v. Pashalinski, 83 Conn. 458, 76 Atl. 1104; Buckner v. Tweed, 157 F.2d 211 (D.C. Cir.). However, the trial court made no finding on the question whether the seller acquiesced in the provisions of Exhibit 2 and thus completed the terms which in the original authorization were incomplete. While holding that the buyer “accepted * * * the terms proposed by the sellers” the trial court so held on the erroneous assumption that Exhibit 1, the original authorization, contained all of the terms.
There was testimony of the broker that the seller read Exhibit 2 while sitting in the reception room of the Hilo attorney’s office and then said he was satisfied. But there was testimony of the seller that the broker told him all agreements of sale were the same. Hence if the seller did express his satisfaction it may have amounted to nothing more than concurrence that the price and other terms of sale which previously had been discussed were correctly stated in Exhibit 2, a point on which there is no disagreement. While the payment of $2,500 to the broker after cashing of the $5,000 check is evidence of the sellex*’s acquiescence in Exhibit 2, and there also was testimony of the broker that the seller said the document would be executed in Honolulu and sent back “no later than Wednesday” and the balance of the commission would be paid January 15, there are other circumstances to be considex*ed.
The evidence shows that on the seller’s return to Honolulu he consulted his attorney and was advised the agreement was not in satisfactory form. The broker learned this when he came to Honolulu. He testified this was two weeks later but it evidently was earlier. He talked with the seller’s attorney and was informed this attorney *247was preparing a new draft of the agreement. He testified that the attorney asked him if Dr. Chock would sign as a guarantor. “So I said, ‘That, I do not know. But if you want to make up one, I’ll bring it back and give it to him.’ ” The next day he received a new draft from the seller’s attorney, executed by the seller on December 9, 1960. He brought this draft back to Hilo, and gave it to Dr. Chock, the buyer’s treasurer. This was Exhibit I. An attorney in Hilo, not the attorney who prepared Exhibit 2 but the one who was attorney for the buyer corporation, was consulted by Dr. Chock about Exhibit I, and still another draft was prepared. This was Exhibit II, executed by the buyer on December 20, 1960. The new draft was given to the broker who mailed it to the seller. At the time of seller’s demand for return of the $2,500 which the seller had paid the broker, the seller through his attorney, by letter of January 10, 1961, informed the broker that this last draft was unacceptable.
Thus the broker participated in additional negotiations after the date — December 2, 1960 — when he says the negotiations were completed. The trial court should have considered this. As in Folinsbee v. Sawyer, supra, 157 N.Y. 196, 51 N.E. 994, the “subsequent acts [of the broker] were not consistent with his claim at the trial.” Distinguishable is Peet v. Sherwood, 43 Minn. 447, 45 N.W. 859, in which the loan sought was prevented by a defect in the principal’s title. In the present case the question turns on the understanding of the parties as to the point at which all negotiations were completed, as to which the broker’s subsequent actions are clearly relevant. Folinsbee v. Sawyer, supra.
Moreover, a question of law is presented by the seller’s contention that by reason of his not having executed Exhibit 2 it was not too late for him to raise objections after his return to Honolulu. Where it is provided by a broker’s *248authorization that the sale shall be upon the terms there set out or “on any other terms to which the seller may consent in writing” the seller may defend on the ground the terms he allegedly, accepted were not in writing. Marschalk v. Weber, 11 N.J. Super. 16, 25, 77 A.2d 505, 509. The broker’s authorization in the present case contained such a provision. Since the seller had signed nothing but the original incomplete authorization and was not bound to accept any terms to which he had not agreed in writing he did not have to expressly reserve the right to consult his own attorney.
But as further held in Marschalk, the protection of a provision concerning consent in writing may be waived. Whether there was such waiver has not been determined.
“* * * A waiver takes place where a man dispenses with the performance of something which he has a right to exact and is a technical doctrine introduced and applied by the courts for the purpose of defeating forfeitures. Estoppel is the inhibition to assert a right from the mischief that has resulted or might follow. Waiver belongs to the family of estoppel yet they are distinguishable. * * *” Silverhorn v. Pacific Mut. Life Ins. Co., 24 Haw. 366, 371-72.
“The question of whether or not a given state of facts brings the case within principles of the law of waiver is not always an easy one to determine. In Pabst Brewing Co. v. Milwaukee, 126 Wis. 110, 116, a statement of the principles which should govern in such cases, and which meets with our approval, is as follows: ‘It would seem that the more satisfactory ground on which to support the doctrine of waiver is that it is a rule of judicial policy, the legal outgrowth of judicial abhorrence, so to speak, of a person’s taking inconsistent positions and gaining advantages thereby through the aid of courts, — a rule by which, regardless *249of absence of any element of estoppel or consideration -as those terms are popularly understood, the maxim that one shall not be permitted to blow hot, then with advantage to himself turn and blow cold, within limits sanctioned by long experience as required for the due administration of justice, has been prohibitively applied. * * *’ ” Scott v. Pilipo, 25 Haw. 386, 391.
It is not apparent that the seller enjoyed any advantage, or that the broker suffered any prejudice, by reason of the seller’s acquiescence in the provisions of Exhibit 2 while in Hilo on December 2, 1960, if there was such acquiescence. The broker’s agency -had not expired at that time and did not expire until 180 days after June 27, 1960, that is, December 24, 1960. The situation in Mars chalk was different, as the sellers there maintained their acquiescence until a date after the expiration of the agency. Here the broker learned of the seller’s dissatisfaction when his exclusive agency had not yet expired.
Even if a waiver may be found where there is no element of estoppel, the present record does not make out a case of waiver. By his participation in the negotiations subsequent to December 2, 1960 without any claim that he already had earned his fee, the broker may have done the seller an injustice instead of the other way around. This should have been considered by the trial court.
Coming now to the reasonableness of the seller’s demands, it is to be noted that this matter is not reached if, upon consideration of all the circumstances, it is concluded that the seller’s failure to execute Exhibit 2 was contrary to his arrangements with the broker. If, however, by reason of the broker’s acquiescence in further negotiations or by reason of the provisions of the authorization requiring that all terms be in writing, the seller was within his rights in conducting further negotiations, we come to the question of the reasonableness of the seller’s demands in these further negotiations.
*250The broker does not take the position that the seller should have accepted the last draft, Exhibit II, prepared by the buyer’s own attorney. It provided for partial releases as payment was made, at the rate of $1,000 per acre, the down payment also to be applied in this manner. The seller did not yet have fee simple title to the property, which was being acquired from one Souza under an agreement of sale. This was pointed out in the letter of January 10, 1961 written by seller’s attorney to the broker, informing him that the draft prepared by the buyer was unsatisfactory. It was known to the broker, who handled the purchase from Souza. Indeed, he testified that at the beginning of the negotiations with the buyer on December 2, 1960 he explained to the buyer that there could be no partial release provision because Souza had not been paid off. Dr. Chock, the buyer’s treasurer, was one of those who was told this, according to the broker’s testimony. But Dr. Chock, according to his testimony, was aware that the buyer’s attorney was putting a partial release provision in Exhibit II. No finding was made concerning the alleged information given the buyer on December 2, 1960 that there could be no partial release provision.
As seen, it is the position of the broker that the first draft, Exhibit 2, contained all the terms the seller had a right to expect. This draft did not contain two provisions the inclusion of which was satisfactory to the buyer upon proposal by the seller, as demonstrated upon comparison of the drafts prepared by the attorneys representing the respective parties, Exhibits I and II. One of these omissions in Exhibit 2, as advanced by the seller in argument though not in his briefs, concerned the charges to be paid by the buyer. All that Exhibit 2 provided was that the buyer would pay “real property taxes” beginning with the assessment for the year 1961. The authorization *251had provided for prorating as of closing of “any and all rents, taxes, insurance premiums, water rates, and other carrying charges.” At the very least the seller was entitled to have the agreement of sale contain the language of the authorization as to prorating of charges. The draft prepared by the attorney for the seller, Exhibit I, required the buyer to pay “all real property taxes and all assessments of every kind and all sewer and water rates, and all other rates and charges which shall hereafter be legally payable upon or with respect to said premises, whether charged against the Vendors or the Purchaser.” This was set out verbatim in the draft prepared by the attorney for the buyer, Exhibit II.
Another provision proposed by the seller and satisfactory to the buyer was one requiring the consent of the seller for any sale, assignment, mortgage or other disposition of the premises, or of the agreement, or of the interest of the purchaser therein. To this the buyer, in his draft, added the above-mentioned partial release provision which the seller obviously could not accept.
The case would stand differently had the buyer, without the addition of the partial release provision, rejected the seller’s demand that the officers of the corporate buyer individually guarantee performance. It then would be plain that the negotiations broke down over the guarantee provision, and the turning point would be the broker’s acquiescence in the making of this demand.
As the record stands the negotiations broke down on two points, and while one was advanced by the seller the other point, the one advanced by the buyer, was independent of the first point and unless explained leads to the conclusion that the buyer was not ready to contract on acceptable terms.
True, the buyer before consulting its own attorney did sign Exhibit 2, the first draft, but that did not contain *252the complete prorating provision to .which the seller was entitled. It also did not contain the consent provision which was acceptable to the buyer and has not been shown to have been unusual or more than the seller was entitled to. The seller’s further negotiations on these two points have not been shown to have been unreasonable.
. I therefore have concluded that the judgment for the broker on the counterclaim is not sustained by the trial court’s decision and there should be a reversal and remand for a new trial. As to the claim of the seller for return of the $2,500 paid the broker out of the $5,000 check, together with incidental expenses, it . may be doubtful whether he has brought himself within the doctrine of recovery for money paid under mistake. However, in view of the court’s opinion I deem it unnecessary, to pursue this matter.

 Literally, there were two sellers involved, Katsunori Ikeoka and his mother. However, the former was active on behalf of both and it is convenient at times to refer to the “seller,” meaning Katsunori Ikeoka.

 H.R.C.P., Rule 15(b), provides that: “When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.” See Godoy v. County of Hawaii, 44 Haw. 312, 321, 354 P.2d 78, 83.

 See 2 Moore, Federal Practice, § 827(3) (2d ed.).