Batson v. Strehlow

• Court: California Court of Appeals
• Writing for the Court: ROTH; HERNDON; FLEMING
• Citation: Batson v. Strehlow, 59 Cal.Rptr. 195 (Cal. App. 1967)
• Decision Date: 12 May 1967
• Parties: Alpha I. BATSON as Executrix of the estate of James Emery Porter, Deceased, Plaintiff and Respondent, v. Robert R. STREHLOW, also known as R. R. Strehlow, Defendant and Appellant. Civ. 29172.

Page 195

59 Cal.Rptr. 195

Alpha I. BATSON as Executrix of the estate of James Emery Porter, Deceased, Plaintiff and Respondent, v. Robert R. STREHLOW, also known as R. R. Strehlow, Defendant and Appellant.

Civ. 29172.

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

May 12, 1967.

For Opinion on Hearing, see 68 Cal. Rptr. 589, 441 P.24 101.

Bear, Ruby & Grant, Lynwood, and Nossaman, Thompson, Waters & Moss, William L. Scott, Alvin S. Kaufer, Los Angeles, for appellant.

Turpit, Thompson & Miller by G. Scott Miller, Whittier, for respondent.

ROTH, Presiding Justice.

On December 14, 1959, Union Bank as Guardian for James Emery Porter, with the consent of his wife Lucille, mailed a brochure to 500 licensed real estate brokers in which Bank offered to sell the community real property of the Porters for $150,000 cash and asked for submission of bids.

The brochure listed the terms of sale and stated that a five per cent commission would be paid to the broker who produced a successful buyer. Appellant Robert R. Strehlow, a licensed real estate broker, received one of the brochures. He conferred with two associates and thereafter ostensibly on behalf of himself and his associates, was authorized to submit a bid in the name of San Antonio Development Co., Inc. (Company). Appellant and his wife owned 100% of the stock of Company.

On January 4, 1960, a letter from Company was received by Bank. It recited in pertinent part:

'We hereby offer to purchase the Porter Property under the proposal submitted to our Broker, R. R. Strehlow * * *.

'We will pay $153,750 * * * $15,375.00 cash herewith * * * balance * * * when sale is confirmed.

'SAN ANTONIO DEVELOPMENT CO., INC.

'By R. R. Strehlow, President.' (Emphasis added.)

There were no negotiations of any kind required by Bank's letter or indicated in that of the Company and none were required after the bid was deposited and accepted by Bank.

The bid of Company was the highest received, and on January 13, 1960, Bank filed its return of sale of real property to Company and petition for confirmation for the sum of $153,750. The superior court confirmed on February 11, 1960 and directed Bank, as guardian, to pay a real estate broker's commission to Robert R. Strehlow, in the amount of $7,687.50 '* * * for his services as agent in effecting the sale * * *.' James Emery Porter died on February 10, 1960, the day prior to the order.

Following the death of James on March 30, 1960, respondent was appointed executrix of the Estate of James.

On July 18, 1960 Lucille (Lily) Porter, the surviving spouse of James, died and Pollyanna Phillips White (one of the defendants in this action) was appointed executrix of her estate on December 22, 1960. On January 26, 1961, on petition of respondent for an order authorizing and directing sale of the Porter property to Company, a hearing was had and an order was made directing the sale to Company for $153,750 and further directing that a real estate broker's commission be paid to appellant Robert R. Strehlow, in the sum of $7,687.50 '* * * for his services as agent in effecting the sale'. On March 31, 1961, the sale was consummated. Appellant was paid a real estate broker's commission of $7,687.50.

On September 12, 1961, after the consummation of the probate sale referred to in the preceding paragraph, respondent, as executrix of James' estate, pursuant to authorization of the probate court, brought this action for a return of the commission allowed and paid to appellant.

Respondent asserts that the commission was wrongfully paid by reason of the fraud of appellant and should be returned.

Her action proceeds on two theories: (1) that appellant, although pretending to act as a broker, was in fact a principal; and (2) that appellant, if he was in reality a broker, did not make a full and fair disclosure of his interests in the purchase of the property.

There is no contention that the price paid for the Porter property was unfair or unreasonable. There is no contention and no evidence that a larger price could have been received.

The trial court found:

'It is true that at said time [i. e., the time the original bid was submitted] defendant Robert R. Strehlow disclosed to one Storms, an employee of defendant Union Bank, that he, Strehlow, was the President of San Antonio Development Co., and that the commission which he, Strehlow, was claiming would be thrown back into the deal.

'* * *.

'It is true that an employee of the defendant Union Bank and the attorneys for the plaintiff acquired knowledge that defendant Strehlow was an officer of San Antonio Development Co. prior to the completion of the sale on March 31, 1961.'

The evidence shows that Bank did have actual as well as the written notice contained in the original letter from Company signed by appellant which refers to appellant as 'our Broker,' of the fact that appellant, a broker, was acting for Company and not for Bank and was claiming a commission. Mr. Allan Storms, who was handling the Porter property for Bank, testified that in the latter part of December or the first part of January 1960, prior to the receipt of the written bid of Company, appellant said to him:

'He was explaining to me a little bit about what his plans were for the property. He was, if my recollection serves me, a developer who looked for property of this type, and if he found something he would interest other persons in putting money into the corporation for the purpose of development. One of his means of getting an interest in the corporation, * * * was the throwing of his sales commission into the deal.

'Mr. Storms, did you ascertain at any time prior to the time you left the bank [February, 1960] that Mr. Strehlow was financially interested in San Antonio Development Company? A Yes, sir.'

Bank admitted in the pretrial statement '* * * prior to the first confirmation of sale by the court and during the time it acted as guardian, one of its employees in its property management department was advised that Defendant Strehlow the broker had a financial interest in Defendant San Antonio Development Co.'

The record also shows that after the respective deaths of Mr. and Mrs. Porter, Mr. Thompson, an attorney for respondent, did long prior to the probate sale, know the complete background of how the property was placed on the market for bids by Bank and did have sufficient facts in his possession to put him on notice that appellant was interested in the purchase of the Porter property and was collecting a broker's commission. He testified:

'A I believe the first time I was aware of it was when I received the photostatic copy of the original bid.

'* * *.

'Q As a matter of fact it was approximately July of 1960, wasn't it? A Well, I believe it was approximately April of 1960. It was transmitted to me by Union Bank on April 26. I assume I received it a day or two thereafter.

'Q All right. Now, would you tell us approximately when you learned that a man by the name of Strehlow also purported to act as broker in connection with the sale of real property to San Antonio Development Company? A I learned that a man by the name of Strehlow was claiming a broker's commission in this when I received a copy of the return of sale and petition for confirmation of the guardianship proceeding.

'* * *.

'Q So that it is fair to say that at least by July of 1960 you personally knew that a man by the name of Strehlow was president of San Antonio Development Company and that a man by the name of Strehlow also purported to act as broker in the transaction for the sale of the property to San Antonio Development Company? A Yes. I knew that when I received this bid, the photostatic copy of the bid.

'* * *.

'Q Didn't your client ever tell you that she thought the terms of the sale were fair? A I think we were satisfied with the purchase price. We had no better offers.'

The trial court found '[t]hat defendant Robert R. Strehlow was not acting as a broker or real estate agent at any time during the negotiation and sale of the property hereinabove described, but was in fact a principal in the transaction, and as such, was not entitled to receive a commission as a real estate broker from plaintiff.'

On the undisputed facts, it would appear that the designation of appellant as a broker is immaterial since it clearly appears that appellant was in fact a finder or a middle man. Whether a person is a finder is a question of fact. (McConnell v. Cowan, 44 Cal.2d 805, 812, 285 P.2d 261; Clark v. Allen, 125 Cal. 276, 57 P. 985.)

California recognizes and accepts the difference between a 'broker' and a 'finder' or a 'middleman'. (Shaffer v. Beinhorn, 190 Cal. 569, 213 P. 960; Crofoot v. Spivack, 113 Cal.App.2d 146, 248 P.2d 45; McKenna v. Edwards, 19 Cal.App.2d 327, 65 P.2d 810.) At bench, appellant's only function was to submit a bid. He did and it was accepted. In Shaffer, supra, the court said 190 Cal. at page 573, 213 P. at page 962:

'In order to come within the definition of real estate broker or real estate salesman, a party must 'sell or offer to sell, buy or offer to buy, or negotiate the purchase or sale or exchange of real estate. * * *' By the terms of their contract as pleaded the plaintiffs were only required 'to find' or 'to introduce' to defendant a person 'interested' in purchasing and who subsequently did purchase, in order to recover the sum agreed by defendant to be paid to them. By the terms of the contract, as set forth in the complaint, the 'negotiation' of the sale was to be left entirely to defendant. Plaintiffs' only duty was to produce a prospective purchaser. This, the complaint alleges, they did.'

In Clark, the court says 125 Cal. at page 278, 57 P. at page 985:

'As a general principle, this contention is sound, but there are circumstances where a party may act for two persons and charge compensation from both for his services. If the duty of the broker is simply to bring together two...