Court Opinion

ID: 9537773
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:23:26.702321+00
Date Added: 2024-06-11T14:56:59.759481
License: Public Domain

CARTER, J.
I dissent.
The majority opinion not only sanctions a palpable fraud, but reaches án absurd result which is the product of fallacious reasoning.' After declaring that there is ample “evidence to support the finding of the trial court that the plaintiff was employed as a broker on commission in the sale of the real and personal property known as the Béverly-Wilshire Hotel, ” and that “there was also evidence from which the court could properly find that the plaintiff was the procuring cause of the sale,” it further declares that while-the contract between ■the owner and purchaser for the sale of both the real and personal property is indivisible, the contract for the payment of a commission on’ such sale is divisible, and that- plaintiff may, therefore, recover a commission on the sale of the personal'property but not on the sale of the real property. In my opinion, there is no basis in reason, common sense,- or sound legal philosophy for such holding. It cannot be denied that the same proof which established plaintiff’s right to a commission on the. sale of the personal property is applicable to the sale of the real’property. In fact, the sale of both the real and personal property was but a single transaction. There is nothing in the record to indicate that either would have been sold separately. Of course, the amount of the purchase price of each would have to be specified in the contract of sale or escrow instructions in order to determine the amount of the revenue stamps to be placed on the deed and tbe amount of profit or loss for' income tax purposes. In view of the fact that the Beverly-Wilshire Hotel was a going concern at the time of the sale, it must be assumed that the personal prop*825erty would not have been sold separately from the real property. Furthermore, plaintiff’s “exhibit #4” shows that the major portion of the purchase price of the property listed (almost four-fifths) was for the real property and that the sale of the personal property was merely incidental to the sale of the real property. In view of this situation, the majority opinion postulates a legalistic paradox by holding that under the documentary evidence presented in this case plaintiff may recover a commission on the sale of the personal property, and in the same action be denied recovery of a commission on the sale of the real property, notwithstanding the fact that the documentary evidence applies with equal probative force to both the real and personal property.
The result reached by the majority in this case permits what has always been condemned, namely, the use of the statute of frauds as an instrument for the perpetration of a fraud rather than as a shield against fraud. It is conceded, and there is no room for dispute on the subject, that defendant agreed to and did employ plaintiff to procure a purchaser for both the real and personal property, consisting of the BeverlyWilshire Hotel, its furniture and equipment, and agreed to pay a commission on the sale of both, yet defendant is permitted to hide behind the statute of frauds, insofar as the real property is concerned, and escape its just obligation.
As I see the situation, it is as follows: The evidence shows and the court found, that prior to April 17, 1944, defendant was the owner of real property known as the Beverly-Wilshire Hotel, and personal property consisting of the furniture and equipment therein; that on October 13, 1943, and thereafter until November, 1944, plaintiff was employed, by agreement with defendant, as a broker to sell the real property for $1,-750,000 and the personal property for $500,000 for which he was to receive a commission of $57,500; that the agreement was evidenced and supported by written notes and memoranda authenticated and subscribed by defendant, thus denying defendant’s defense of the statute of frauds; that pursuant to that agreement, plaintiff procured a purchaser (Kirkeby Hotels, Inc.) for the property who bought the property at the prices above mentioned.
The chief issue is whether recovery should be denied by reason of the statutes which provide that; “An agreement authorizing or employing an agent or broker to purchase or sell real estate for compensation or a commission” is invalid unless it or some note or memorandum thereof is in writing. *826(Civ. Code, § 1624(5), Code Civ. Proc., § 1973(5).) Defendant’s real contention is that the evidence is not sufficient to support the finding of an agreement because there was no note or memorandum sufficient to satisfy the statute of frauds.
Turning to that contention, the following appears: In October, 1943, defendant was the owner of the real and personal property here involved. Plaintiff was a licensed real estate broker. He was introduced to McCarty at that time by O’Neill, the manager of the Beverly-Wilshire Hotel. McCarty told him the hotel was for sale for $2,000,000, and the commission would be 5 per cent. Plaintiff said he wished to work on the deal and had O’Neill show him the hotel and furnish financial statements of the business. Either at that meeting or one shortly thereafter McCarty gave plaintiff two typewritten sheets (plaintiff’s Exhibit No. 3) headed: “Re Beverly-Wilshire Hotel—October 14, 1943,” followed by a description of the property, the sale price and terms, and provisions for an escrow. McCarty in his testimony described those papers as a “listing” of the property like he had given to many brokers, and stated that he listed the property with plaintiff and would pay him a commission of 5 per cent on the first $50,000 and 2% per cent on the balance. Plaintiff contacted various persons to form a syndicate to buy the hotel including Mr. Kirkeby (to whom the property was ultimately sold). He had at least weekly conferences with McCarty in regard to the matter. In February, 1944, McCarty told plaintiff the price was raised to $2,250,000 and that he could work on it at that price. At that time McCarty gave plaintiff a carbon copy of a typewritten writing (plaintiff’s Exhibit No. 4) headed with a picture of the hotel followed by printing, reading: “The BeA^erly-Wilshire Hotel, Walter G. McCarty Corporation, Wilshire Blvd. between El Camino and Rodeo Drives, Beverly Hills, California.” Thereafter followed in typing the date (Feb. 15, 1944), the price of the hotel fixed at $2,250,000, and the’ terms of sale thereof, with other items such as stock inventories to be paid for in cash and an offer of an option on other mentioned property, and finally: “Commission on hotel property $57,500.00. (5% on first $50,000 2%% on $2,200,000.00) Will pay commission on optioned property if exercised.” As related by plaintiff the conversation between McCarty and him at that time was: “. . . I said to Mr. McCarty, ‘I am surprised that you are raising the price of the hotel when we are having so much difficulty in making the sale at two million dollars.’ He said that was *827the price, and that they would have to take it or leave it. I said, 'All right. I believe I will still work on the thing and that I can still make the sale, and I think I have the one buyer in the United States who will buy the hotel.’ I looked down further in the document [plaintiff's Exhibit No. 4] and I found he had changed the commission to $57,500.00, and I said, 'Mr. McCarty, we have had an agreement all the time that I was to receive five per cent commission on the sale of this hotel.’ He said, ‘ Well, other brokers are willing to work on it for $57,500.00. Maybe if you worked on it, you might get a little more, biit that is the price, $57,500.00.’ ... I said to him, ‘Well, it seems a little hard on me to raise the price of the hotel and make the deal harder for me to make, at the same time cutting my commission from the hundred thousand dollars which I had hoped to make to fifty-seven thousand five hundred dollars,’ but I was not one who could hold back working on a deal because the commission was a question, so long as it was agreed upon that the amount of $57,500.00 net to me. That is all I cared. . . . Mr. McCarty said to me that other broker's were willing to work on this deal on the basis of a business property commission, Los Angeles Realty Board rate.” McCarty testified that he “no doubt gave” that memorandum, do plaintiff and- intended to pay a commission to any broker who consummated a deal. Thereafter plaintiff continued to work on a sale to Kirkeby, according to his testimony, until April when he told McCarty he believed a deal could be closed with Kirkeby but he wanted a written memorándum so there would be no question of the terms. McCarty wrote a memorandum in longhand on a piece of yellow paper (plaintiff’s Exhibit No. 10) which he handed to plaintiff. It was headed: “Kirkeby deal, Walter Marks, Broker.” Then followed details as to price and terms, and near the end “. . . commission to Broker $57,500 payable at close of escrow. ’ ’ Some alterations were made in the paper by plaintiff with McCarty’s consent.
It seems to be the position of the majority that the contract on its face did not show that the defendant’s name printed on the heading of plaintiff’s “exhibit #4” indicated an intent that such heading be an authentication, and that even if it was, the evidence was not sufficient to prove an intent to authenticate. From all of the circumstances, it is obvious that McCarty intended the document (Exhibit No. 4) to be a contract—his memorandum of employment. They show more than merely an intent to contract. They establish that such *828memorandum was Ms way of giving a written listing of the property which was his document and authorized by him. Looking only at those circumstances, we find that: (1) The memorandum was a carbon copy and it was not McCarty’s practice to use a letterhead for carbon copies, thus indicating that it was used in this case for some special purpose; we may infer the purpose was to adopt the letterhead as his signature—his authentication of the memorandum. At least we cannot say as a matter of law that such an inference is so unreasonable that it could not be drawn by the trial court from the evidence before it. (2) The use of such memorandums by McCarty was, according to his own testimony, for listing the property with brokers, that is, his method of employing brokers, and that he intended to pay a commission, thus justifying the inference that this memorandum was his contract and the letterhead his authentication. (3) The defendant owner-employer is a corporation and customarily its signature would be made by printing or typewriting. To conclude that such evidence is insufficient is to usurp the function of the trial court. It means that in no case can there be a signature or authentication of a memorandum unless it appears at the bottom or end of the document. No purpose has been suggested, and none can be within the realm of reason, for the delivery of “exhibit #4” with the letterhead thereon other than that it was intended as the authenticated memorandum of defendant. It is counterfeit logic to argue that defendant intended to contract when he prepared the document (Exhibit No. 4), but did not intend to do that which was necessary to complete the contract, namely, sign such document and thus make it a binding contract. It is wholly reasonable to infer that if McCarty intended to contract, he intended to make a legally binding contract, that is, that he intended the letterhead as a signature. In fact, he testified that he intended to pay a commission, thus clearly evincing an intent to make a legally binding instrument. If it is not true that he so intended, then the only other inference is that he intended to contract with his “tongue in his cheek”—with the thought that he would not abide by the contract—that he would defraud the plaintiff. We should assume that he did not intend - to defraud plaintiff, but rather, that he intended to make a legally binding contract and thus intended the letterhead as the signature. Indeed, as before stated, he testified that he intended to pay a commission to brokers with whom he listed the property. In fact, there is a presumption that *829compels the foregoing determination of intent. It is presumed that “a person is innocent of crime or wrong,” [Code Civ. Proc., § 1963(1)], and that “private transactions have been fair and regular,” [Code Civ. Proc., § 1963(19)]. Therefore, it must be presumed that McCarty did not intend to defraud plaintiff by leading him to believe he had a binding contract of employment. Eather it must be inferred that he intended the letterhead to be the signature. At least it can be said that such is not an unreasonable view of the case, and we are bound by the finding of the trial court. Moreover, in connection with the sufficiency of the exhibit, it must be remembered that insofar as a writing is required by the statute of frauds, there are two ways of satisfying the statute, namely, by a formal written contract or by a written memorandum which is not the contract but is merely an informal written sketch of the essential terms of the oral agreement between the parties. (Civ. Code, §1624; Code Civ. Proc., § 1973; King v. Stanley, 32 Cal.2d 584 [197 P.2d 321]; Lindley v. Fay, 119 Cal. 239 [51 P. 333]; Elbert v. Los Angeles Gas Co., 97 Cal. 244 [32 P. 9]; Breckinridge v. Crocker, 78 Cal. 529 [21 P. 179]; Joseph v. Holt, 37 Cal. 250; Gibson v. De La Salle Institute, 66 Cal.App.2d 609 [152 P.2d 774]; Derrick v. C. W. R. Ford Co., 27 CaL.App. 456 [150 P. 396] ; Rest. Contracts, §§ 207, 208, 209, 214.)
But we have more in the instant case. We have the positive testimony of McCarty himself. That cannot properly be ignored as does the majority, except by usurping the function of the trial court. McCarty testified: “Q. That is just my point, and that is just why I am asking you, isn’t it a fact that contrary to your usual custom of using yellow paper for carbon copies, in this instance you were selling a hotel and you wanted to authenticate the memorandum [plaintiff’s Exhibit No. 4] which you were giving out to the brokers, so you had the memorandum typed and all the copies of the memorandum typed on your own corporate stationery; wasn’t that the reason? A. Well, that is probably the reason.”
As I see this case, it involves some important questions of law with reference to the statute of frauds which should be clarified. In connection with the sufficiency of a memorandum to satisfy the statute of frauds, it should be noted that we are speaking of the second method of complying with the statute —a note or memorandum of the contract, rather than a formal written contract (see authorities cited supra). There are two objections to the memorandums relied upon (plaintiff’s *830exhibits above discussed): (1) that they, fail to show the employment of plaintiff as a broker, and (2) that they are not signed by defendant, the party to be charged. Generally in this connection it"should be observed that the memorandum required by the statute need not consist of .one. instrument but may be made up of several properly connected papers (King v. Stanley, supra; 12 Cal. Jur. 904).
With reference to the first point, it has been held that a writing given by an owner to a broker which merely states that the former will sell certain property for a certain price; is insufficient because it shows no employment of the broker (Herzog v. Blatt, 80 Cal.App.2d 340 [180 P.2d 30]; Sweeley v. Gordon, 47 Cal.App.2d 381 [118 P.2d 14]; Egan v. Pacific Southwest Trust & Sav. Bk., 92 Cal.App. 1 [267. P. 719]; Patterson v. Torrey, 18 Cal.App. 346 [123 P. 224]; Kleinsorge & Heilbron v. Liness, 17 Cal.App. 534 [120 P. 444]; but see, Needham v. Abbot Kinney Co., 217 Cal. 72 [17 P.2d 109]). There need not be a statement that a commission will be paid. (Toomy v. Dunphy, 86 Cal. 639 [25 P. 130]; Caminetti v. National Guar. Life Co., 56 Cal.App.2d 92 [132 P.2d 318]; Muncy v. Thompson, 26 Cal.App. 634 [147 P. 1178]; Kennedy v. Merickel, 8 Cal.App. 378 [97 P. 81].) It is also held, however, that where there is an oral agreement employing the broker and the owner gives him a memorandum describing the property and its sale price and providing for the payment of a commission, the memorandum is sufficient. It may be inferred or implied from the provision for a commission in the memorandum, that the broker is employed and authorized to act. (Moore v. Borgfeldt, 96 Cal.App. 306 [273 P. 1114]; see Needham v. Abbot Kinney Co., supra; Coulter v. Howard, 203 Cal. 17 [262 P. 751]; Corvin v. Smead Investment Co., 115 Cal.App. 175 [1 P.2d 507]; Fritz v. Frost, 114 Cal.App. 602 [300 P. 454]; Avis v. Rebhan, 92 Cal.App, 178 [267 P. 898]; Johnson v. Krier, 59 Cal.App. 330 [210 P. 966]; Carrington v. Smithers, 26 Cal.App. 460 [147 P. 225]; In re Balfour & Garrette, 14 Cal.App. 261 [111 P. 615]; Sanchez v. Yorba, 8 Cal.App. 490 [97 P. 205].) Certainly the implication is irresistible from the provision that a commission is to be paid, that the broker is thereby employed, as commissions are not paid to someone not employed. Insofar as Egan v. Pacific Southwest Trust & Sav. Bank, supra, and Morrill v. Barneson, 30 Cal.App.2d 598 [86 P.2d 924]; are contrary to this view, they should be disapproved. Herzog v. *831Blatt, supra, is distinguishable as there was no provision for a commission in that case.
In the instant case the memorandums refer to plaintiff as a broker and make provision for a commission. Taken together these provisions are sufficient to satisfy the statute.
Turning to the statutory requirement that the note or memorandum be subscribed by the person to be charged, it appears (referring to plaintiff’s Exhibit No. 4) that it was McCarty’s practice to make a memorandum under the letterhead of defendant corporation in listing the property with brokers; that he had so listed it with many brokers; that he did not intend to evade payment of a commission; that he expected to pay one; that the memorandum (plaintiff’s Exhibit No. 4) was a carbon copy on the letterhead of the corporation; and that it was not customary to use sheets with the printed heading thereon for carbon copies of general correspondence.
- The law on the subject is well settled. The signature may be typewritten or printed. (Little v. Union Oil Co., 73 Cal.App. 612 [238 P. 1066]; Rest., Contracts, §§ 207, 210; Williston on Contracts [rev. ed.], § 585.) The term “subscribed” in the- statute of frauds means “signed” and therefore the signature need not be at the end of the document; it may be at ány place therein. (California Canneries Co. v. Scatena, 117 Cal. 447 [49 P. 462]; 12 Cal.Jur. 915-916; 112 A.L.R. 937; Williston on Contracts [rev. ed.], § 585.) It is of course necessary that- there be proof that the “signature” was intended as such—as an authentication of the document. (McNear v. Petroleum Export Corp., 208 Cal. 162 [280 P. 684]; Little v. Union Oil Co., supra.) As we have seen, there is evidence in the instant case of such intent.
It is -urge’d, however, that such parol evidence was not competent as it must appear on the face of the instrument itself- that the name of the defendant was placed thereon or adopted as his signature or authentication of the document, citing McNear v. Petroleum Export Co., supra, and Little v. Union Oil Co., supra. In the McNear ease the document showed' on its face that the name of the defendant thereon did not purport to be an authentication. In the Little case the court had before it an appeal from a judgment of dismissal and the court pointed out that from the allegations of the complaint it was clear that the typewritten name was not intended as a- signature. In the instant case we have the significant factors that the writing was a carbon copy, yet *832was on the letterhead of defendant. It was delivered to plaintiff as a broker, and it was customary for defendant to list the property for sale with brokers in that manner and in so doing it intended to pay a commission. In the light of these circumstances it cannot be said that it affirmatively appears that the heading was not intended to be adopted as a signature. On the contrary, it is reasonable to infer there was such an intent and McCarty’s testimony verified it. Evidence of surrounding circumstances is admissible to explain a memorandum of a contract within the statute of frauds. (Brewer v. Horst & Lachmund Co., 127 Cal. 643 [60 P. 418, 50 L.R.A. 240]; Towle v. Carmelo L. & C. Co., 99 Cal. 397 [33 P. 1126] ; Preble v. Abrahams, 88 Cal. 245 [26 P. 99, 22 Am.St.Rep. 301]; Mann v. Higgins, 83 Cal. 66 [23 P. 206]; Gibson v. De La Salle Institute, supra; see King v. Stanley, supra.)
The majority advance the argument that plaintiff was at fault in not procuring a signed agreement for the payment of a commission—that he should have known better—a sort of in pari delicto or contributory negligence theory of defense. That argument is indeed unique. What bearing it has upon the sufficiency of the writing (Exhibit No. 4) to meet the requirements of the statute of frauds does not appear. Certainly such writing would be just as invalid, according to the test laid down by the majority, if plaintiff had been illiterate and inexperienced in such transactions. The only possible purpose in injecting such argument into the case is that the majority feel that it tends to ameliorate the harshness of the injustice which this court is inflicting upon plaintiff by means of a strained and tortured application of a salutary principle of law (statute of frauds), which was never intended to be so applied as to produce such a result. It seems to me that it would be much more logical for the majority to argue that plaintiff was fully justified in relying upon the written memorandum on the letterhead of defendant prepared by its president, which covered every detail of the transaction, and that plaintiff had the right to assume that the defendant intended to act in accord with the statements contained in such memorandum—that such memorandum was not delivered to him as a mere idle act or for the purpose of inducing him to render services and incur expenses for which defendant did not intend to reimburse him if he procured a purchaser for the property described therein. In other words, that plaintiff had the right to assume that McCarty’s, intentions were honorable and not fraudulent. Although the majority *833concede that plaintiff so believed and acted, they permit defendant to escape liability by the mere assertion that the record does not show that McCarty intended to authenticate the memorandum and thus make it binding on defendant. This assertion is not justified, and, as I have heretofore pointed out, the record amply supports the finding of the trial court that McCarty intended the name on the letterhead on which the memorandum was prepared to constitute an authentication of the document.
Finally, it is stated in the majority opinion that to hold contrary to the view there expressed would “repeal” the statute of frauds. Plainly, there was no fraud or opportunity for fraud on the part of plaintiff, as there is clearly no doubt as to the nature of the contract between the parties here.
The conclusion reached by the majority is based upon a strained legalistic approach to the problem with no regard for considerations of justice or fair dealing. The decision in this case makes a statute, which was designed to prevent fraud, an instrument which may be used to aid unscrupulous persons in the perpetration of fraud, and it is obviously being so used in this case.
For the foregoing reasons, I would affirm the judgment as rendered.
Appellant’s and respondent’s petitions for a rehearing were denied June 9, 1949. Carter, J., voted for a rehearing.