Heard v. Miles

• Decision Date: 21 January 1949
• Citation: 222 S.W.2d 848,32 Tenn.App. 410
• Parties: HEARD et al. v. MILES.
• Court: Tennessee Court of Appeals

222 S.W.2d 848

32 Tenn.App. 410

HEARD et al. v. MILES.

Court of Appeals of Tennessee, Western Section.

January 21, 1949

Certiorari Denied by Supreme Court Juen 18, 1949.

A bill of interpleader by Amy Brown Miles against Robert G. Heard and the Joyner-Heard Realty Company and Marx & Bensdorf Inc., in which the latter party filed a cross-bill, presented the question as to which of the defendants was entitled to broker's commission for the sale of certain real estate.

The Chancery Court, Shelby County, L. D. Bejach, Chancellor decreed that plaintiff was correct in paying broker's commission to the Joyner-Heard Realty Company. Marx & Bensdorf, Inc., appealed and assigned error.

The Court of Appeals, Moss, Special Judge, sustained the decree fo the chancellor on the ground that an addition to a leasing contract made by Marx & Bensdorf which was for its benefit as agent of the plaintiff, but which was not called to plaintiff's attention was voidable at her option.

McDonald, McDonald & Kuhn, Memphis, George S Miles, Memphis, John O. Osoinach, Memphis, for appellant.

Evans Exby & Moriarty, Memphis, Bertrand W. Cohn, Memphis, for appellee.

MOSS Special Judge.

Mrs. Amy Brown Miles instituted this suit in the Chancery Court of Shelby County by filing a bill of inter-pleader against defendants, Marx & Bensdorf, Inc., Joyner-Heard Realty Company, and others, alleging that she had sold a certain parcel of real estate in Memphis for $135,000, and that both Marx & Bensdorf, Inc., and Joyner-Heard Realty Company were claiming a broker's commission of $4,550 on the sale. She offered to pay one such commission, and to pay the fund into the registry of the Court for the benefit of the broker entitled to it. After several pleadings were filed, the complainant was permitted to file an amended and supplemental bill in which she averred the defendant, Joyner-Heard Realty Company, was entitled to the broker's commission for effecting the sale; she denied owing any commission to Marx & Bensdorf, Inc., and prayed a declaratory judgment as to whether or not she must also pay the commission to that Company. The amount of the fund involved was agreed to and was paid into the registry of the Court. Marx & Bensdorf, Inc., filed an answer and cross bill, making its claim for the commission because of facts and circumstances hereinafter detailed. The Chancellor decreed in favor of Mrs. Miles, and Marx & Bensdorf, Inc., has appealed and assigned error.

The material facts are not in dispute. Mrs. Miles was the owner of an improved parcel of real estate located on South Second Street in Memphis, which she had acquired by purchase at a foreclosure sale in March, 1937. Her father, R. L. Brown, had owned the property, a second mortgage was foreclosed, and she bought in the property at this foreclosure sale, taking title subject to the first mortgage securing an indebtedness of $115,000 evidenced by 115 bonds in the denomination of $1,000 each. These bonds had been sold by the defendant, Marx & Bensdorf, Inc., to its customers. Mr. Brown had defaulted in the payment of the first mortgage bonds in 1935, and Marx & Bensdorf, Inc., had arranged an extension of time at a meeting of bondholders, and a forbearance agreement had been executed in May, 1935, by Mr. Brown, the bondholders and Marx & Bensdorf, Inc., pursuant to which the management of the property was turned over to Marx & Bensdorf, Inc., and the property was leased to Jolly's Motor Livery Corporation for a five-year term, beginning January 1, 1936. Mrs. Miles took title to the property subject to this forbearance agreement, the lease contract, and the first mortgage security the bonded indebtedness of $115,000.

In 1940, a new forbearance agreement was executed between Mrs. Miles, the bondholders and Marx & Bensdorf, and a new lease made with Jolly's Motor Livery Corporation. This forbearance agreement ran until January 1, 1945, and the lease until January 1, 1946. Marx & Bensdorf, Inc., negotiated or arranged for the forbearance agreements mentioned, also the leases with Jolly's Motor Livery Corporation, and the lease contracts were on printed forms prepared and used regularly by Marx & Bensdorf. Marx & Bensdorf continued to manage the property, collect rents, pay taxes, insurance premiums, etc., and make all disbursements. For that, they received the customary commission.

The second forbearance agreement expired January 1, 1945. At that time, Mrs. Miles was on duty with the U.S. Navy, the Soldiers' and Sailors' Civil Relief Act of 1940, 50 U.S.C.A.Appendix, § 501 et seq. was in force, and no foreclosure of the first mortgage was attempted. Mrs. Miles left the service in December, 1945, but in the meantime, a third forbearance agreement had been executed, extending the time of foreclosure of the first mortgage to January 1, 1948, and a new lease with Jolly's Motor Livery Corporation had been executed, to run until December 31, 1948. The lease was dated March 12, 1945, and the third forbearance agreement was executed on July 30, 1945. Mrs. Miles was out of the city during the period of negotiation and execution of these documents, and a Memphis lawyer, who was an old friend of her family assisted in the negotiations for her, and sent her the lease contract for her signature. He was not employed as her attorney, was not compensated for the service, and the record discloses that he was merely acting for Mrs. Miles as a friend and in a business capacity during her absence from the city when she was not in position to give personal attention to her business affairs. The last forbearance agreement provided that if the property was not sold by January 1, 1948, and if the first mortgage bonds were still unpaid, Mrs. Miles would deed the property to the holders of the bonds secured by the first mortgage, or their nominee.

The three lease contracts between Mrs. Miles and Jolly's Motor Livery Corporation were introduced in evidence, and these exhibits are in the transcript of the record in this Court in their original form. They appear to be very similar, if not identical, except as hereinafter mentioned. The forms are printed, with thirty-five numbered paragraphs or sections, and with names, dates, description of the property, and specific terms typewritten in spaces left for that purpose. Section or paragraph numbered 30 of the third lease, which is responsible for this suit, is as follows: 'This lease was negotiated by Marx & Bensdorf, Inc., acting as Agent for the Lessor, and Lessor agrees to pay Marx & Bensdorf, Inc., the usual commission (in accordance with the rules of the Real Estate Board of Memphis) for services in negotiating this lease; also to pay Marx & Bensdorf, Inc., the usual commission for any subsequent lease that may be entered into by Lessor with the Lessee, covering the within leased premises; also a commission on any subsequent agreement to sell or exchange made with or through Lessee.'

This section or paragraph is exactly like section or paragraph numbered 30 in the first two leases, except that in the first two the paragraph ended with the word 'premises' at the end of the fourth printed line. In the third lease, the period following the word 'premises' is changed to a semicolon, and the following words: 'also a commission on any subsequent agreement to sell or exchange made with or through Lessee' were printed, in the same type as the remainder of the lease form, in the space of one line, between the paragraph in question and paragraph 31 following. Marx & Bensdorf had changed their lease form so as to include the words quoted above shortly before the execution of this particualr lease, and had had these words overprinted on all their lease forms then in stock.

There is no dispute about the fact that no one ever called Mrs. Miles' attention to this provision in the lease in reference to a commission on a sale of the property to the lessee, before she signed the contract dated March 12, 1945. Mrs. Miles testified that she was in Washington, serving in the Navy, when the lease was sent to her for execution; that she did not notice any difference in the general appearance of it from the one she had previously executed, and that she read no part of the lease contract except the typed portions. She did not read the fine print, did not notice or read the provision in reference to paying a commission on a sale to the tenant, and did not know such a provision was in the contract until several years later, when Marx & Bensdorf made claim for commission after she had arranged with Joyner-Heard Company to sell the property. Mr. Eaton M. Elder, Vice President of Marx & Bensdorf, who was in charge of the leasing department, testified as to the long experience of Marx & Bensdorf with this property, arranging for the leases, forbearance agreements, etc., and said that the lease in question was prepared by Marx & Bensdorf and sent to the family lawyer to be forwarded to her for her signature, and that it was in due course returned to Marx & Bensdorf with Mrs. Miles' signature thereto. He had not communicated with Mrs. Miles in the matter, and had not called any one's attention to the new matter inserted in the lease.

Mr Charles J. Haase, President of Marx & Bensdorf, also testified in detail regarding the history of the forbearance agreements and the leases. He said that Mrs. Miles' attorney prepared the last forbearance agreement, and that Marx & Bensdorf prepared the lease and submitted it to the attorney for execution by Mrs. Miles. Neither he nor any one else testified that Marx & Bensdorf, or nay of its officers, employees or agents, notified Mrs. Miles or her attorney of the insertion in the third lease form of the printed words in reference to paying a commission if the...