Charles B. Webster Real Estate v. Rickard

• Citation: 21 Cal.App.3d 612,98 Cal.Rptr. 559
• Court: California Court of Appeals
• Decision Date: 29 November 1971
• Parties: CHARLES V. WEBSTER REAL ESTATE, Plaintiff and Respondent, v. H. E. RICKARD, etc., Defendant and Appellant. Civ. 1393.

Page 559

98 Cal.Rptr. 559

21 Cal.App.3d 612

CHARLES V. WEBSTER REAL ESTATE, Plaintiff and Respondent, v. H. E. RICKARD, etc., Defendant and Appellant.

Civ. 1393.

Court of Appeal, Fifth District, California.

Nov. 29, 1971.

Hearing Denied Jan. 26, 1972.

Kimble, MacMichael & Jackson, Edmond A. Kavounas, Jr. and Thomas MacMichael, Fresno, for defendant and appellant.

DiGiorgio, Davis, Hastin & Klein, and Thomas R. Davis, Bakersfield, for plaintiff and respondent.

FRANSON, Judge ^*.

On May 26, 1967, Dr. Moore and his wife executed an 'exclusive authorization and right to sell' listing with the Warde D. Watson Realty Co., giving the broker an exclusive and irrevocable right to sell a 156-acre vineyard at a stated price of $234,000, for a term ending on December 31, 1968. The agreement was on the standard form of the California Real Estate Association. The agreed commission was to be 5 percent of the selling price, to be paid to the broker if the property were sold during the term of the listing, or any extension thereof, by the broker, by the owner, by any other broker or through any other source. The agreement also provided that if the owner withdrew the property from sale or if it were transferred or leased during the term, he would pay the specified commission to the broker. In consideration of the exclusive right to sell, the broker agreed to use diligence in procuring a buyer.

On March 18, 1968, the listing was transferred from the Warde D. Watson Realty Co. to respondent. Dr. Moore and his wife consented in writing to the transfer; the stated price was reduced to $187,200.

Dr. Moore died on June 19, 1968, and thereafter appellant was appointed executor of decedent's will. In November 1968, appellant sold the vineyard for $152,000 independently of any efforts by respondent. Appellant's sale was confirmed by the probate court on December 10, 1968.

Upon learning of the sale respondent demanded a 5 percent commission on the sales price of $152,000, which appellant refused to pay. On December 6, 1968, respondent filed a claim against the estate in the sum of $7,600, and the claim was rejected by appellant. On January 21, 1969, respondent filed this action against appellant and Mrs. Moore, alleging the exclusive right to sell agreement, the sale of the property during the term of the agreement, and the refusal by appellant to pay the commission as therein provided. On March 3, 1970, after trial before the court without a jury, a judgment was entered in favor of respondent and against appellant for $7,600. The court also entered judgment in favor of Mrs. Moore and against respondent. No appeal is taken from that part of the judgment.

Appellant contends that the exclusive right to sell listing terminated, by operation of law, upon Dr. Moore's death, with no contractual liability under the agreement devolving upon appellant. We agree.

A real estate listing creates an agency between the broker and the owner. (Bus. & Prof.Code § 10131; Civ.Code § 2295; Walter v. Libby, 72 Cal.App.2d 138, 164 P.2d 21; Rhode v. Bartholomew, 94 Cal.App.2d 272, 210 P.2d 768; Grand v. Griesinger, 160 Cal.App.2d 397, 406, 325 P.2d 475; Spielberg v. Granz, 185 Cal.App.2d 283, 291, 8 Cal.Rptr. 190; 1 Miller & Starr, Current Law of Cal. Real Est., pp. 142--146.) The broker's authority is fixed by the terms of the listing and is to negotiate with third parties for the sale of the property on behalf of the owner. (Bus. & Prof.Code § 10131; Lyne v. Bonner, 129 Cal.App.2d 743, 746, 277 P.2d 941.)

Because of its personal and fiduciary character, the agency is terminated by the death of or renunciation by the agent (Civ.Code § 2355) or by the death of or revocation by the principal, unless the agent has an interest in the subject of the agency (Civ.Code § 2356; Rest.2d Agency, §§ 118, 120). Respondent concedes that under the listing he was not vested with an interest in the agency. (See Peterson v. Montgomery Holding Co., 89 Cal.App.2d 890, 897, 202 P.2d 365.) Upon termination of the agency, the authority of the agent ceases except as to bona fide transactions entered into with third parties prior to actual notice of termination (Civ.Code § 2356; Rest.2d Agency, §§ 118, 120).

Apart from the agency relationship, the exclusive right to sell listing was a contract of employment. (Lab.Code § 2750; Sumner v. Nevin, 4 Cal.App. 347, 87 P. 1105; Cal. Real Estate Sales Transaction (Cont.Ed.Bar.) § 5.5, p. 129.) It provided that in consideration of the services of the broker and his promise to use diligence in procuring a buyer, the owner employed the broker, for a specified term, to sell the property at a stated price. The covenants of an owner in this type of listing have been enforced over the years by the California courts with little contractual analysis. (Mandel, The Right of a Real Estate Broker to a Commission in California, 8 U.C.L.A.L.Rev. 152--153.) The exclusive right to sell listing as contrasted with an 'open' listing has been characterized as a bilateral contract consisting of an exchange of mutual promises rather than an offer for a unilateral contract. (Herz v. Clarks Market, 179 Cal.App.2d 471, 472--473, 3 Cal.Rptr. 844; Coleman v. Mora, 263 Cal.App.2d 137, 148--149, 69 Cal.Rptr. 166; Baumgartner v. Meek, 126 Cal.App.2d 505, 509--510, 272 P.2d 552; 1 Miller & Starr, Current Law of Cal.Real Est., p. 246.)

In Kimmell v. Skelly, 130 Cal. 555, 559, 62 P. 1067, it is held that the consideration for the covenant of the owner to pay a commission upon her own sale during the existence of the listing was the performance of services by the broker in attempting to find a buyer. Where the broker has used diligence, he is entitled to compensation even though he was not the procuring cause of the sale. (Fleming v. Dolfin, 214 Cal. 269, 4 P.2d 776; Wright v. Vernon, 81 Cal.App.2d 346, 183 P.2d 908; Walter v. Libby, Supra,72 Cal.App.2d 138, 142, 164 P.2d 21; Lowe v. Loyd, 93 Cal.App.2d 684, 209 P.2d 851; Baumgartner v. Meek, Supra, 126 Cal.App.2d 505, 272 P.2d 552.)

The principles upon which the owner has been held liable for a commission, even though no buyer was procured by the broker, are summarized in Coleman v. Mora, Supra, 263 Cal.App.2d 137, 145--146, 69 Cal.Rptr. 166, 170, where the court stated that the broker is entitled to a commission when the owner 'in derogation of the broker's rights, takes the property off the market * * * or otherwise Wrongfully deprives the broker of the opportunity to make a sale at any time during the term of the agreement, as by giving a lease with an option to purchase * * * or by exchanging the property * * * or by entering into a contract to sell * * *.' (Emphasis added.) The essence of the breach is the owner's Wrongful deprivation of the broker's opportunity to make a sale during the contract term. The owner, having covenanted to give the broker an exclusive and irrevocable right to sell, by implication has covenanted not to interfere in any way with his opportunity to make a sale, and if he does interfere he will be held liable in damages. The rationale for enforcing the owner's covenant in the face of the clear revocation of the broker's authority is that although the owner has the power to terminate the agency at any time, he does not have the right to do so in violation of the terms of the contract. (Blumenthal v. Goodall, 89 Cal. 251, 26 P. 906; Baumgartner v. Meek, Supra, 126 Cal.App.2d 505, 272 P.2d 552; Coleman v. Mora, Supra, 263 Cal.App.2d 137, 145--146, 69 Cal.Rptr. 166; Rest.2d Agency, § 450.) It is the wrongful termination of the listing by the owner that gives rise to a liability for damages.

The death of the owner presents an entirely different situation. Death is a fortuitous event beyond the control of the decedent. It cannot be deemed to be a wrongful act and ordinarily is not even a breach of contract by the deceased. Rest.2d Agency, § 450, comment b.) Death terminates the agency by operation of law, and the authority of the broker to represent the owner in seeking a buyer for the property is ended. (Civ.Code § 2356; Duin v. Security First Nat. Bank, 132 Cal.App.2d Supp. 904, 283 P.2d 790, Rest.2d Agency, § 120, 3 Am.Jur.2d, Agency, § 51, pp. 453--454; Seavey (1964) Handbook of Law of Agency, § 48, p. 88.) As a consequence of this termination of authority, the broker must be deemed to be relieved of his obligation to perform his covenant of diligence. Absent authority to perform, he cannot be compelled to perform, nor can he be held liable for failure to perform. (Civ.Code § 1511, subd. 1, 2.) Mutuality of obligation, which may have existed prior to death, is gone. Stated another way, the death of the owner, by operation of law effects a prospective failure of consideration on the part of the broker which discharges all executory obligations under the contract. (5A Corbin on Contracts, § 1229, p. 508; 6 Corbin on Contracts, § 1255, p. 21; Rest. of Contracts, §§ 280, 288; 1 Witkin, Summary of Cal.Law, Contracts, § 246, p. 277.)

In the Restatement Second of Agency, section 120, 'Death of Principal,' Comment a, the following is stated:

'Rationale. Agency is a personal relation, necessarily ending with the death of the principal; the former principal is no longer a legal person with whom there can be legal relations. One cannot act on behalf of a non-existent person. Further, to the extent that agency is a consensual relation, it cannot exist after the death or incapacity of the principal or the agent. * * * an agreement that an agency should continue after death is a legal impossibility.'

The Restatement gives the following example: P employs A as a salesman at a specified commission, the agreement stating that the employment is to continue for one year and is not to terminate if P dies. P dies--the authority ends. (Illustration No. 3, to Comment a of Rest.2d Agency, § 120.)

In Seavey, Handbook of the Law of Agency, section 48, at page 88, it is stated:

'Theoretically,...