Don Drum Real Estate Co. v. Hudson

• Decision Date: 12 March 1971
• Docket Number: No. 17587,17587
• Citation: 465 S.W.2d 409
• Parties: DON DRUM REAL ESTATE COMPANY, Appellant, v. John W. HUDSON, Appellee.
• Court: Texas Court of Appeals

Page 409

465 S.W.2d 409

DON DRUM REAL ESTATE COMPANY, Appellant, v. John W. HUDSON, Appellee.

No. 17587.

Court of Civil Appeals of Texas,

Dallas.

March 12, 1971.

Rehearing Denied April 9, 1971.

Bruce W. Bowman, Jr., Turner, Rodgers, Winn, Scurlock & Sailers, Dallas, for appellant.

Paul K. Hyde, Martin T. Burnham, Hyde, Tucker, Gano, Alexander & Brown, Dallas, for appellee.

GUITTARD, Justice.

This is a suit by a real estate broker against the owner of a residence to recover a commission for negotiating a sale which was not completed. Summary judgment was rendered for the defendant and the plaintiff broker has appealed. The principal question is whether the rule permitting extrinsic evidence to interpret a written contract extends to proof of a contemporaneous oral promise concerning a matter not covered by the language of the contract.

Plaintiff alleges that defendant signed a written listing agreement authorizing plaintiff to sell defendant's home. The listing contract is not before us. The record does contain a written contract of sale from defendant John W. Hudson and wife to Floyd Brown and wife, signed also by the broker, and providing for a commission of six per cent of the sale price. The price is $10,500, of which $350 is recited as paid, and the contract further recites: '* * * the balance to be paid as follows: Purchaser to obtain an F.H .A. insured loan in the amount of $10,150.' The contract further provides: 'There are no agreements, conditions, stipulations or representations verbal or otherwise, other than those contained herein.'

In his affidavit in support of the motion for summary judgment, defendant admits that he signed the contract, but says: '(S)ubsequently an Inspector from the F.H.A. came to my home, inspected it and later advised me that it would be necessary that I replace the carpets, repaper the kitchen and paint the woodwork and repair the bathroom ceiling and repaint the bathroom. When I learned that it would be necessary for me to spend all of that money just to sell the house, I refused to sell the house and I never did nor have I ever agreed to prepare my house for sale under an F.H.A. contract.'

In response to the motion, plaintiff filed an affidavit by Irene Dossche, the salesman who negotiated the deal and drew the contract, stating: '(B)oth Mr. and Mrs. Hudson promised unequivocally before signing the sales authorization contract with Don Drum Real Estate Company, before signing the contract of purchase on their house (dated May 14, 1969), and after having signed the contract of purchase on their house (dated May 14, 1969) to make repairs to their home that were required to be made by the FHA appraisal report.'

Plaintiff's first point is that the commission was due upon signing the contract of sale, regardless of whether defendant completed the sale. Cases are cited to the effect that where the broker produces a purchaser whom the owner accepts by signing a binding contract with him, the broker has earned his commission and the owner assumes the risk of the purchaser's nonperformance. Frances v. Foster, 113 Tex. 521, 260 S.W. 1023 (1924); McNeil v. McLain, 272 S.W.2d 573 (Tex.Civ.App., Fort Worth 1954, no writ). These cases did not involve sales upon condition. Where the contract is subject to a condition, the broker who negotiated the contract is not entitled to a commission unless the condition is met, because he has not performed his agreement to produce a purchaser willing and able to buy on the owner's terms. Warren v. Russell, 206 S.W.2d 132 (Tex.Civ.App., Austin 1947, no writ); Roquemore v. Talley, 451 S.W.2d 319 (Tex.Civ.App., Dallas 1970, writ ref'd n.r.e.). The present contract does not expressly provide that it is conditioned upon obtaining an FHA insured loan for $10,150 or even that it is 'subject to' obtaining such a loan. However, all parties, including the broker, apparently understood that the contract was not binding unless such a loan was obtained, and no contention is made that the purchaser was unconditionally bound to complete the purchase any pay the purchase price regardless of whether he was able to obtain an FHA insured loan. Consequently, we treat the contract as conditional in that respect.

The main thrust of plaintiff's argument is that the summary judgment was improper because there is a fact issue as to whether defendant prevented completion of the sale by refusing to carry out his oral promise to make the repairs required by the FHA. We recognize the rule that a broker who performs his contract of employment by producing a purchaser able and willing to buy on the owner's terms is entitled to his commission if completion of the sale is prevented by fault of the owner, as by the owner's failure or inability to comply with the contract of sale, or by mutual rescission by the owner and purchaser. West Realty & Investment Co. v. Hite, 283 S.W. 481 (Tex.Com.App.1926); Miller v. Carlson, 390 S.W .2d 64 (Tex.Civ.App., Texarkana 1965, writ ref'd n.r.e.); Caneer v. Martin, 238 S.W.2d 828 (Tex.Civ.App., Waco 1951, writ dism'd). In reviewing the summary judgment for defendant, we assume that defendant did promise orally to make the repairs required by the FHA . If that promise was legally binding on him and he prevented the sale by failure to perform it, he is liable for the commission.

In this connection plaintiff says that defendant is liable for the commission even though the contract of sale may not have been binding as between him and the purchaser, citing Mason v. Abel, 215 S.W.2d 377 (Tex.Civ.App., Dallas, 1948, writ ref'd n.r.e.), in which this court held that a broker is entitled to his commission, even though the contract of sale may be unenforceable under the Statute of Frauds because not in writing. We do not regard that decision as applicable here, since it held that an oral contract for sale of land is valid as between seller and purchaser in the absence of a pleading of the Statute of Frauds, and that where the broker has procured a purchaser able and willing to buy on the owner's terms the owner cannot avoid liability for the commission by refusing to complete the sale, even though no written contract of sale had been signed. In the present case we do not have an oral contract of sale, but a written contract signed by the broker as well as by the owner and the purchaser. The petition alleges no separate contract between broker and owner whereby the owner agreed to make whatever repairs might be required to enable the purchaser to obtain a loan. Our question then, is whether the owner is bound by an oral promise not contained in the sale contract .

Plaintiff seeks to avoid application of the parol evidence rule by contending that the written contract contains an ambiguity which, if not apparent on the face of the contract, at least appears when an attempt is made to apply the contract to the particular circumstances of this case, and that the oral promise is admissible to explain this ambiguity. Since there is no language in the contract expressly dealing with repairs, we must decide whether the absence of any provision in the written contract on this point creates an ambiguity explainable by oral testimony.

The basic question is, what is an ambiguity? Mere uncertainty as to the parties' intention does not necessarily establish an ambiguity of the kind that is subject to explanation by extrinsic evidence. A legal ambiguity exists in a written contract only when it contains language susceptible of more than one meaning, considered in the light of all the provisions of the document. It is well settled that where language of a written contract is ambiguous in the sense that it is reasonably susceptible of more than one meaning, the intention of the parties may be determined from extrinsic evidence. Trinity Universal Ins. Co. v. Pronsford Brothers, 423 S.W.2d 571 (Tex.Sup.1968); Neece v. A.A.A. Realty Co., 159 Tex. 403, 322 S.W.2d 597 (1959); Lone Star Gas Co. v. X-Ray Gas Co., 139 Tex. 546, 164 S.W.2d 504 (1942); McCormick & Ray, Texas Law of Evidence, § 1685, p. 530. The Supreme Court of Texas has adopted the view that a contract is not ambiguous if it is so worded that it can be given a certain or definite meaning or interpretation, and may be considered ambiguous only when the application of pertinent rules of construction to the face of the instrument leave it genuinely uncertain as to which of two meanings is the proper meaning. Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951); Lewis v. East Texas Finance Co., 136 Tex. 149, 146 S.W.2d 977 (1941).

However, the Supreme Court has recognized that even where a written contract seems to be plain and unambiguous on its face, extrinsic evidence of surrounding circumstances may be admitted for the purpose of applying the contract to the subject with which it deals, and if the meaning of...