Best v. Kelley

• Decision Date: 31 January 1945
• Docket Number: 29393.
• Citation: 155 P.2d 794,22 Wn.2d 257
• Parties: BEST v. KELLEY et ux.
• Court: Washington Supreme Court

155 P.2d 794

22 Wn.2d 257

BEST v. KELLEY et ux.

No. 29393.

Supreme Court of Washington, En Banc.

January 31, 1945

Rehearing Denied April 10, 1945.

Action by Erle C. Best against A. F. Kelley and wife for broker's commission. Judgment for plaintiff, and defendants appeal.

Reversed with instructions.

MALLERY SIMPSON, and MILLARD, JJ., dissenting.

Appeal from Superior Court, King County; Hugh Todd, Judge.

Padden & Moriarty, Weter, Roberts & Shefelman, and James Gay, all of Seattle, for appellants.

Rummens and Griffin, of Seattle, for respondent.

BEALS Chief Justice.

Defendants A. F. and L. Pearl Kelley, husband and wife, during the year 1943 were the owners of a lease from Harry W. Crosby covering the St. Regis hotel property in the city of Seattle. Defendants owned the furniture in the hotel, and had been operating the business for some time. The St. Regis is a seven story hotel, advantageously located, and well patronized.

Plaintiff, Erle C. Best, was a licensed real estate and business chance broker, and was acquainted with defendants.

April 21, 1943, plaintiff suggested to defendant A. F. Kelley that the latter give him a listing of the hotel property. A rather brief typed listing form was accordingly partially filled out, and on the same paper was typed the following, which Mr. Kelley signed:

'Seattle, Washington

'April 21, 1943.

'Mr. Erle C. Best,

'409 Lloyd Bldg.,

'Seattle, Washington.

'Dear Sir:

'I hereby authorize you to sell my above described business for $45,000.00 as follows $20,000.00 down payment and the balance at the rate of $1,000.00 a month, plus interest on the unpaid balance at the rate of six per cent per annum and agree to pay you a ten per cent commission for your efforts in negotiating the deal.

'Yours very truly,

'A. F. Kelley.'

After delivery of the foregoing, Mr. Best contacted Messrs. C. R. and J. R. Shipley, who agreed to purchase the lease and furniture at the price specified in the listing. April 23rd, the purchasers signed an earnest money receipt prepared by plaintiff, tendering therewith a check for $1,000 as earnest money. Plaintiff presented the document and check to defendant A. F. Kelley for his approval, whereupon defendant refused to sign it, saying that by the terms of his lease he could not assign the same without the consent of the lessor, and that Mr. Crosby had refused to consent to the sale to the Messrs. Shipley.

The sale was never completed, and plaintiff instituted this action against defendants for the recovery of $4,500 by way of a commission which he alleged he had earned pursuant to the agreement above quoted.

The action was tried to the court sitting without a jury, and resulted in a judgment in plaintiff's favor, from which defendants have appealed.

Error is assigned upon the court's ruling that respondent had proved by the preponderance of the evidence that he had produced purchasers who were ready, able and willing to purchase the hotel business upon the terms offered by appellants, in that, (1) the proposed purchasers offered to buy the property on terms and conditions different from those prescribed by appellants, which terms were never accepted, approved or ratified by appellants, and (2) because the failure to consummate the purchase was due to the existence of a defect in the title of appellants (the lessor's refusal to consent to the assignment of the lease), of which defect respondent had actual or constructive notice.

Appellant A. F. Kelley (who will be herein referred to as though he were sole appellant) signed nothing in connection with the deal save the authorization hereinabove set forth, which following the 'listing,' and consisted merely of a rather brief and incomplete description of the lease, the property covered thereby, the estimated income, and a reservation of title to some furniture and tools. The authorization makes no reference to certain details in connection with the contemplated sale which concern matters that, particularly in view of the value of the property, might well be deemed essential to a completed transaction.

The earnest money receipt prepared by respondent, signed by the Messrs. Shipley, and submitted to appellant, indicates that respondent realized that certain important matters connected with the transaction were not referred to in the authorization. After describing the property, the price to be paid as stated in the authorization, reservation of title to certain property in appellant, the document provides that the deferred payments shall 'be secured by the furniture and equipment now in the building on said property.' The earnest money receipt also contains the following paragraph:

'The purchaser shall be given possession of said property within ten days, and then given a bill of sale showing good and sufficient title to said property and lawful right to convey the same, and shall be furnished an affidavit under the Sales in Bulk Law at purchaser's option. Whereupon the purchaser agrees to complete the purchase in the manner and upon the terms herein, and in case of his failure so to do the said sum herein receipted for shall, at the option of the seller, be forfeited as liquidated damages. If the title is not good and cannot be made good within [155 P.2d 796] _____ days after receipt of notice of any defects this agreement is void and the earnest money shall be refunded.'

In many particulars the testimony is in sharp conflict. After certain formal findings of undisputed facts, the court made finding V, which reads as follows:

'That within said ten day period, and on the 23rd day of April, 1943, plaintiff, pursuant said listing, obtained a purchaser ready, able and willing to buy said property from defendants for the agreed consideration of $45,000.00 upon the precise terms and conditions specified in said listing, and defendants have failed, refused and neglected to consummate said deal. That plaintiff fully performed his obligations under said listing contract. That defendants did breach said contract and are indebted to plaintiff in the sum of Four Thousand Five Hundred and 00/100 ($4,500.00) Dollars.' (Italics ours).

The court entered its conclusion of law in respondent's favor, followed by the judgment appealed from.

The proposed earnest money receipt presented to appellant by respondent, purporting to embody the terms of the contemplated sale, provided that the deferred payments should 'be secured by the furniture and equipment now in said property.' The manner of securing the deferred payments was not touched upon by the authorization upon which respondent relies. Respondent, then, recognized that something further was necessary to a completion of the deal, but made no provision in the earnest money receipt that the deferred payments be secured by the most valuable portion of the property, namely, the lease. It would seem that the furniture, if separated from the lease, could not be adequate security for the balance due. It is not to be imagined that appellant intended to leave $25,000 in deferred payments absolutely unsecured. Respondent evidently realized this, but in preparing the earnest money receipt, provided only for what any reasonable vendor or broker would say was inadequate security.

The earnest money receipt also provided for turning over possession of the property to the purchasers within ten days, a matter concerning which the authorization was silent.

The general rule applicable to such a situation as is above stated is found in 8 Am.Jur., title 'Brokers,' p. 1092, § 176:

'Where a broker instead of procuring a person who is ready, able, and willing to accept the terms his principal authorized him to offer at the time of his employment, procures one who makes a counter offer more or less at variance with that of his employer, the latter is at liberty either to accept the proposed party upon the altered terms or to decline to do so. If he accepts he is legally obligated to compensate the broker for the services rendered, but if he refuses he incurs no liability therefor. * * * This is true even though there is but a slight variance between the contract tendered by the broker and that authorized by his employer.'

This rule was followed by the court of civil appeals of Texas in the case of Gough v. Coffin, 55 Tex.Civ.App. 550, 120 S.W. 210, 211. The facts are summarized by the court as follows:

'They [the brokers] were authorized to sell 2,424 acres of land at $5 per acre, one-half cash, balance payable in one, two, three, four, and five years. The entire purchase price amounts to $12,120. They relied upon the written contract made by them with the alleged purchaser, Shirley. This contract is dated February 23, 1906, and stipulates, not that the sale shall be closed at once, but on or Before April 1, 1906. It purports to bind Coffin, the principal, to convey the land to Shirley, and acknowledges the receipt by the agents of $1,000 cash. It stipulates that said sum shall not only be held and considered as a forfeit to said principal in the event Shirley shall fail to comply with his contract, but shall be considered as a part of the cash payment on the purchase of said land, 'and shall be held and binding on the said J. M. Coffin to make and execute his deeds of conveyance to said Shirley.' This was not a compliance with the terms authorized by the principal, Coffin.'

In holding that the broker was not entitled to recover a commission, the court said:

'The law is well settled that the broker, in order to earn his commission must find a purchaser not only ready, able, and willing to buy his principal's property, but also upon the very terms authorized by the principal. * * * The agent or broker authorized to sell must keep within...