Bean v. Bickley, 31619

CourtUnited States State Supreme Court of Iowa
Writing for the CourtSALINGER, J.
Citation174 N.W. 675,187 Iowa 689
PartiesF. A. BEAN, Appellant, v. S. B. BICKLEY et al., Appellees
Docket Number31619
Decision Date11 November 1919

174 N.W. 675

187 Iowa 689

F. A. BEAN, Appellant,

S. B. BICKLEY et al., Appellees

No. 31619

Supreme Court of Iowa, Des Moines

November 11, 1919

[174 N.W. 676]

Appeal from Black Hawk District Court.--H. B. BOIES, Judge.

SUIT to recover on a promissory note. Execution admitted. Counterclaim for damages alleged to have resulted from fraud practiced in a land sale, for the purchase price of which said note was given. There was a judgment on the counterclaim which canceled the note and mortgage. Plaintiff appeals.


Einar Hoidale, F. S. Merriau, and Sullivan & Sullivan, for appellant.

Pickett, Swisher & Farwell, for appellees.


OPINION [174 N.W. 677]

[187 Iowa 691] SALINGER, J.


Appellant asks us to hold, as matter of law, that he was not the owner of the lands bought by defendant Bickley. If we may do this, it would become immaterial what fraud was practiced in the sale of land to defendant; for, if plaintiff had no interest in that land, he would, in this case, not be responsible for whatever was done to sell the land. The question whether a disposition of lands by a writing constitutes a sale or creates an agency has had full consideration in the case of Mahnke v. Marken Acres Co., 187 Iowa 762, 174 N.W. 669. There, many, if not all, the cases relied on by appellant have full consideration, as have many other cases. This makes it unnecessary to lengthen this opinion with a re-analysis. In Mahnke's case, we hold that there was a sale, rather than the creation of an agency. But we do this as the trier of the facts. It is the fact that the contract in the Mahnke case and in the [187 Iowa 692] one at bar are quite unlike, and that, in this case, there is evidence upon the true intent of the contract which is not present in the Mahnke case. But it is to be said that, if the evidence in the two cases were substantially alike, it would not follow that the same result must be reached in the respective appeals in them. The essential test is not the name given to the contract, but the real purpose and object of the contract. It follows that, though we, as trier of the facts, reached the conclusion that the contract was one of sale, that would not necessarily authorize us, even on like evidence, to interfere with a verdict finding the contrary. The question in this case is whether a finding by verdict that, notwithstanding a written contract, plaintiff had not parted with sale and control, is so lacking in support as that we may set such verdict aside.

The contract in question is entitled "Agency Contract." But we have pointed out in Mahnke's case that nomenclature and designation are not at all controlling. What we deem material in the contract is this: The contract recites that Bean desires to dispose of described lands; that the Canadian Company is in the business of retailing lands, both on its own account and for others, and desires to acquire the exclusive right to sell said described lands. It is agreed that it shall have such exclusive sale to January 1, 1913, except as is otherwise provided, and it agrees to sell all the land before then. The "otherwise" provision is that nothing in the contract shall preclude the "owner" from personally trading or selling any of the land to other parties. Throughout, Bean is referred to as "owner," and the company as "seller." The seller is to give all its time and attention to selling, and make all reasonable effort to sell, and is to use all reasonable aids to that end. Failure of the company to observe and carry out the provisions of the contract shall, at the election of the owner, terminate the agreement and any and all rights of the company thereunder. [187 Iowa 693] If the company fails to sell and dispose of all of said lands before January 1, 1913, the owner may have and retain, or recover from the company, if the amount standing to its credit in money, or money due or to become due, is sufficient, a gross sum equal to $ 6.00 per acre for each and every acre remaining unsold, which is agreed to be stipulated damages, recoverable by the owner. The company [174 N.W. 678] shall, from time to time, make such full, fair, and complete report as to its transactions in dealings pertaining to the properties of the owner as he may prescribe and require. The seller company may sell at prices fixed by it, but may not sell at less than $ 19.50 an acre, unless the owner authorizes a lower price in writing, and this, though all he is entitled to for himself is $ 17.75 per acre. All contracts with purchasers are to be signed by the owner, who shall not be required to sign unless he shall receive at least a cash payment of $ 2.50 an acre, and unless the unpaid portion of the price due under the contract, together with the $ 2.50 an acre paid to the owner, shall aggregate a sum equal to $ 17.75 for each and every acre. Subject only to the limitation that his acts shall not violate reason, in all sales on credit or on crop payments the contract must be in the form and on conditions approved by the owner in writing. The details of purchasers entering into contract with the seller are prescribed. Within the limits of reason, the owner has the right to prescribe and determine the forms of all contracts to be used, and to pass upon the desirability of any application for a contract from a financially responsible standpoint, and the right to reject any applications found to be undesirable. He is constituted exclusive judge of the question as to what effort shall be made and what expense shall be incurred in attempts to enforce payment due under contracts. There is a provision which contemplates expense incurred for the owner, and stipulates that he must first approve. If a contract with a purchaser [187 Iowa 694] be canceled, the seller is obliged to resell, as originally bound to sell. The initial payment of $ 2.50 an acre to the owner includes 50 cents which is to be retained until all the land is sold, as a pledge for the performance of the contract, and to be usable as an indemnity if the lands be "culled" to the damage of the owner. It is agreed that the amounts that would otherwise, and in the event of the sale of all of the lands under this contract, be due and payable to the company as collections upon contracts are made, shall not be considered earned by the company, and shall not be due from the owner to it, except in the event that all the lands are sold within the time limit fixed by this contract. But in the event that more than $ 10,000 is accumulated to the credit of the seller, after computing interest accrued in favor of the owner, under provisions of this contract, and deducting the amount thereof to date of the computation from said credit, such excess shall be considered earned, and be payable to the company upon demand. The compensation of the seller is to be what it gets in excess of $ 17.50 per acre. It is agreed and understood that a deferred commissions account shall be carried and kept by the party, to which shall be credited, at the time each contract is closed, the amount of commissions which will become due to the seller, from time to time, as payments upon such contracts are made, and that no deferred commissions shall be considered earned until they have been paid in and transferred to said account. There are provisions as to sales or trades by the company for the owner of lands not covered by the description attached to this contract. And in the event the company chooses to purchase on its own account the lands otherwise remaining unsold on the first day of January, 1913, it shall have all amounts standing to its credit applied upon the purchase price of said lands, and its interest in deferred payments upon contracts covering lands sold to others shall, as the same accrue, be applied [187 Iowa 695] upon the contracts for lands so purchased by the company on its own account.

If it were necessary, we would be prepared to hold that, as matter of law, this contract does not evidence a sale, but creates an agency. Its fair ultimate analysis is that the company is a selling agent of the owner; that full control by the owner is retained as to selling every foot of the land; that he retained the power to discharge any person whom the company employed to sell these lands,--the power to deal or refuse to deal with anyone who proposed to buy through the owner's selling agency. The company was bound to account as the owner directed. The point stressed by appellant is that he created an exclusive selling agency. He contends that Robinson v. Easton, 93 Cal. 80 (28 P. 796), rules that, if the contract should be construed as one conferring an exclusive authority to sell (and it is, in any event, nothing less than that) at a net price to plaintiff, the law is that no fraud on the part of the agent can be the basis of damages against the principal. We do not so read the case. But assume it holds all that is claimed for it. The answer is that no exclusive agency was here created, because appellant expressly retained the right to sell personally.

The contract distinctly negatives that title has passed; it provides for accountings as to profits; gives the "owner" power to fix terms for compensation, in the form of commissions. It disproves any present intent to pass title by expressly providing on what terms the company may later buy. As said, it would not be straining to hold that, as matter of law, this left the owner responsible for any fraud committed by the company through anyone the company employed in selling any of this land. It suffices to say, however, that our interpretation of this contract is fortified by an abundance of evidence showing that the powers reserved to the owner were actually exercised; that the [187 Iowa 696] very money paid by this defendant seems to have gone to this owner; and that, if the reading of the contract plus this...

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