Allen v. Powell

• Citation: 56 Cal.Rptr. 715,248 Cal.App.2d 502
• Court: California Court of Appeals
• Decision Date: 14 February 1967
• Parties: , 29 A.L.R.3d 1218 Charles Howard ALLEN and Robert C. Steele, individually and as co-partners doing business under the firm name and style of Frank Howard Allen & Son, Plaintiffs and Appellants, v. Robert D. POWELL, Robert B. Monroe, and Lee Bros., Inc., a corporation, Defendants and Respondents. Civ. 23157.

Page 715

56 Cal.Rptr. 715

248 Cal.App.2d 502, 29 A.L.R.3d 1218

Charles Howard ALLEN and Robert C. Steele, individually and as co-partners doing business under the firm name and style of Frank Howard Allen & Son, Plaintiffs and Appellants, v. Robert D. POWELL, Robert B. Monroe, and Lee Bros., Inc., a corporation, Defendants and Respondents.

Civ. 23157.

Court of Appeal, First District, Division 2, California.

Feb. 14, 1967.

Riede & Elliott, San Rafael, for appellants.

Thiel, Sassone, Howard, Wallace & Bolton, Oakland, for respondent Lee Bros., Inc.

Freitas, Allen, McCarthy & Bettini, San Rafael, for respondents C. V. Lyons and Emily Lyons.

AGEE, Associate Justice.

Plaintiffs operate a duly licensed real estate brokerage firm. On July 17, 1961 those defendants who are hereafter referred to as the original owners listed their parcel of commercial real property located in Larkspur with plaintiffs. Under the listing agreement plaintiffs were to receive the standard real estate commission for services rendered in the leasing of said property.

On November 6, 1961 plaintiffs negotiated a 25-year lease of a 4.5 acre portion of said property to defendant Lee Bros., Inc. and thereby became entitled to receive a commission of $60,000 from the original owners, who acknowledged such debt in writing on December 15, 1961.

Nothing was ever paid on the commission, and plaintiffs filed this action on November 19, 1962, not only against the original owners but also against Lee Bros.

The general demurrer of Lee Bros. to the first amended complaint was sustained without leave to amend. Judgment was thereupon entered in its favor and plaintiffs have appealed therefrom.

The case proceeded to trial against the original owners on the first cause of action alleged in the first amended complaint and resulted in a judgment of $60,000 in favor of plaintiffs. No appeal has been taken from this portion of the judgment.

FIRST COUNT

The first cause of action is based on the contract and does not attempt to state a cause of action against Lee Bros. However, we summarize its allegations because they are incorporated by reference in the remaining four causes.

The first cause of action alleges the execution of the listing agreement by the original owners, the procuring of the Lee Bros. lease by plaintiffs, the acknowledgment by the original owners of the commission due, and the nonpayment of such commission.

SECOND COUNT

The second cause of action alleges a tortious conspiracy between Lee Bros. and the original owners to interfere with and frustrate plaintiffs' contractual right to collect the commission provided for in the listing agreement.

The following allegations are added to those of the first cause of action referred to above: that Lee Bros. knew at the time of the execution of the lease that the funds for the payment of plaintiffs' commission were to come from the monthly rental payments provided for in the lease; that the amount of such commission was a part of the total cost of the lease to the lessee, Lee Bros.; that the lease required the original owners to construct certain buildings and other improvements on the leased land and to complete the same on or before October 1, 1962; that no such construction was ever commenced by the original owners; that after said lease was executed the original owners represented to plaintiffs that they were in financial difficulties and might not be able to meet their commitments under the lease.

With this background, the conspiracy is alleged as follows: that Lee Bros. and the original owners 'collusively and without plaintiffs' knowledge and with a joint intent to deprive, and for the purpose of depriving, plaintiffs of the commission which plaintiffs had earned, entered into a written contract of sale in which defendant Lee Bros. agreed to purchase the land involved in the lease from defendants Original Owners, and in which defendants Original Owners agreed to sell the said land to defendant Lee Bros.'; that the sale was completed on September 6, 1962, for $363,000, which amount was in full payment for the land with no improvements thereon; that Lee Bros. then knew the financial condition of the original owners; that the sale was made in a form which called for payments by Lee Bros. to creditors of the original owners Other than plaintiffs, thereby leaving plaintiffs with a claim for their commission against insolvent debtors.

The motive of Lee Bros. in entering into the conspiracy is alleged to be that it thereby acquired the land and the use thereof for an amount which did not include plaintiffs' commission as a part of the cost of such acquisition.

Plaintiffs allege that the damages suffered as the result of the conspiracy is the amount of their commission, $60,000, no part of which has been paid.

Preliminarily, this count arguably might state either of two causes of action: interference with contract on the part of Lee Bros. of conspiracy to interfere with the contract on the part of Lee Bros. and the original owners.

Interference with contract. The elements which must be pleaded for this cause of action are specified in Freed v. Manchester Service, Inc. (1958) 165 Cal.App.2d 186, 189, 331 P.2d 689, 691: 'Specifically, plaintiff must allege the existence of a valid contract (citations); that the defendant had knowledge of the existence of the contract and intended to induce a breach thereof (citations); that the contract was in fact breached resulting in injury to plaintiff (citations); and the breach and resulting injury must have been proximately caused by defendant's unjustified or wrongful conduct. (Citations.)'

The acts which induce the breach need not be unlawful. It is sufficient if they are lawful, but without justification. Such '(j)ustification is an affirmative defense and may not be considered as supporting the trial court's action in sustaining a demurrer unless it appears on the face of the complaint. (Citations.)' (Herron v. State Farm Mutual Ins. Co. (1961) 56 Cal.2d 202, 207, 14 Cal.Rptr. 294, 296, 363 P.2d 310, 312; see Imperial Ice Co. v. Rossier (1941) 18 Cal.2d 33, 39, 112 P.2d 631; Roberts v. Wachter (1951) 104 Cal.App.2d 281, 290, 231 P.2d 540.)

It was sufficient in Remillard-Dandini Co. v. Dandini (1941) 46 Cal.App.2d 678, 679, 116 P.2d 641, that the plaintiff there alleged that the defendant went to certain of the plaintiff's creditors to induce them to Plaintiffs have sufficiently pleaded a cause of action for interference with contract within the rules set forth in these cases. Their position is closely akin to that of a real estate broker who has a listing contract for the sale of property, but who, after he performs by securing a suitable buyer, discovers that the prospective purchaser and the owner consummate the sale in such a way that they intentionally breach the agent's commission contract. In such a case, the agent may recover from the purchaser. (See Zimmerman v. Bank of America (1961) 191 Cal.App.2d 55, 12 Cal.Rptr. 319; California Auto Court Assn. v. Cohn (1950) 98 Cal.App.2d 145, 219 P.2d 511; cf. also Freed v. Manchester Service, Inc., supra.)

cease dealing with the plaintiff, as a result of which the plaintiff was unable to procure necessary materials.

Of course, plaintiffs must prove that Lee Bros. actively induced the original owners to breach their contract with plaintiffs. (Imperial Ice Co. v. Rossier, supra, 18 Cal.2d, at 39, 112 P.2d 631.) If it developed in the proof that Lee Bros. merely paid the price requested by the original owners and that the breach of the commission contract resulted from the unilateral acts of the original owners, then Lee Bros. would not be liable for interference.

Lee Bros. argues that plaintiffs had no contractual relationship because they had no right in the lease. Plaintiffs have not claimed any property right in the lease. Rather, they have alleged that the original owners were obligated by a listing contract to pay a $60,000 commission and that Lee Bros. wrongfully interfered with that contract. (See Zimmerman v. Bank of America, supra, and California Auto Court Assn. v. Cohn, supra, in which real estate brokers have been protected without any necessity of alleging an interest in the subject property.)

Lee Bros. contends that no acts of interference are alleged because it had an absolute right to rescind the lease and substitute in its place a contract of sale, to neglect to provide for the commission due to appellants, and to pay the purchase price to creditors of the original owners other than plaintiffs.

This overlooks the allegation that 'defendant Lee Bros. obtained the land and/or the use thereof, for an amount which did not include plaintiffs' commission as a part of the cost of the lease contract; * * *.' When coupled with the allegation that all defendants joined together with an intent to deprive plaintiffs of their commission, it is reasonable to conclude, if plaintiffs can prove their allegations, that Lee Bros. actively induced the breach in order to secure the property for a lower price. This sufficiently alleges acts amounting to an interference with contract.

Lee Bros. contends also that plaintiffs have failed to allege a causal connection between the acts of interference and the breach. The first amended complaint alleges that 'as a result of said tortious interference by defendant Lee Bros., plaintiffs have been damaged in the amount of ($60,000) * * *.' Reading the complaint as a whole, it is clear that the damage suffered is the breach of contract.

Lee Bros. relies on a statement in Hill v. Progress Co. (1947) 79 Cal.App.2d 771, 780, 180 P.2d 956, 961, that plaintiffs 'must establish, by the evidence, that the contract which otherwise would have been performed, was breached and abandoned by reason of their wrongful act and that such act was the moving cause thereof.' This is the requirement of proximate causation, and the court therein reversed because the...