Ikeoka v. Kong

• Decision Date: 24 October 1963
• Docket Number: No. 4269,4269
• Parties: , 47 Haw. 296 Katsunori IKEOKA and Onami Ikeoka v. John H. KONG and Bank of Hawaii and First National Bank of Hawaii.
• Court: Hawaii Supreme Court

Page 855

386 P.2d 855

47 Haw. 220, 47 Haw. 296

Katsunori IKEOKA and Onami Ikeoka v. John H. KONG and Bank of Hawaii and First National Bank of Hawaii.

No. 4269.

Supreme Court of Hawai'i.

Oct. 24, 1963.

Rehearing Denied Nov. 18, 1963.

Syllabus by the Court

1. Under H.R.C.P., Rule 52(a), which provides that findings of fact will not be set aside unless clearly erroneous, this court will not set aside such findings unless it is left with a definite and firm conviction that a mistake has been committed by the trial judge.

2. A broker's right to commission will depend upon the terms of the contract where there has been a failure to consummate a sale.

3. Where a broker is employed to sell or contract for the sale of real estate, rather than merely find a purchaser, under the terms of the employment agreement the broker is entitled to compensation only after he has found a purchaser who is ready, able and willing to buy upon the terms fixed by the seller and has effected a sale or procured from the prospective purchaser a binding contract of purchase on the terms and conditions specified in the contract of employment.

4. Strict performance of the terms of an employment contract to sell or contract for the sale of real estate may be waived by the seller who is entitled to performance.

5. Where a broker employed to sell or contract for the sale of real estate, produces a purchaser who has executed an Agreement of Sale upon terms fixed and agreed upon by the seller, the broker is entitled to his commissions, where the seller arbitrarily and unreasonably refuses to sign the Agreement of Sale.

Walter G. Chuck & Albert W. Evensen, Honolulu, for appellants.

Ushijima & Nakamoto and John T. Ushijima, Hilo, for respondents.

Before TSUKIYAMA, C. J., and CASSIDY, WIRTZ, LEWIS and MIZUHA, JJ.

MIZUHA, Justice.

Plaintiffs-appellants, Katsunori Ikeoka and his mother, Onami Ikeoka, residents of Honolulu, instituted this suit, alleging in their complaint that defendant-appellee, John H. Kong of Hilo, a real estate broker, was indebted to them in the sum of $2,500 for monies paid to him. Defendant entered a general denial and by way of counter-claim, alleged that the plaintiffs were indebted to him for the unpaid balance of broker's commissions in the amount of $3,900. Trial was had without a jury and judgment rendered in favor of defendant in the sum of $3,900.

Plaintiff Katsunori Ikeoka, acting for himself and his mother, Onami Ikeoka, authorized defendant, under an 'Exclusive Authorization to Sell' contract dated June 27, 1960, to sell within 180 days, certain properties situated in Hilo, Hawaii, for the sum of $64,000 to be paid in the following manner: '25% Down Payment, Balance on agreement of sale. Balance payable in 5 years.'

Under the terms of said 'Exclusive Authorization to Sell' the plaintiffs promised 'to pay' defendant 'upon any such sale being effected or contracted for, * * * for services in securing such purchaser, a commission of Ten per cent (10%) of the selling price; * * *.'

On November 28, 1960 plaintiff Ikeoka went to Hilo to negotiate for the sale of the property in question. Defendant had two prospective buyers. Agreement on the total price could not be reached between plaintiff and the first prospective buyer. On December 2, 1960, plaintiff was introduced to Dr. Chock, treasurer and stockholder of Kauwe's Land & Research Development, Inc., hereinafter referred to as 'corporation,' the second prospective buyer.

Acting in behalf of the corporation Dr. Chock agreed with plaintiff as to the price, the schedule of payments and other terms that were to be incorporated in an Agreement of Sale. ¹ Dr. Chock then handed to plaintiff a check, dated December 2, 1960, for $5,000 as earnest money, to be applied to the purchase price. Immediately thereafter an Agreement of Sale was drafted by an attorney, according to the terms and conditions agreed upon by plaintiff and the purchaser. The written Agreement of Sale was then presented to Dr. Chock. After execution of the agreement by the officers of the corporation, the Agreement of Sale was accepted by the plaintiff, who then cashed the check which was deposited as earnest money, and paid defendant one-half or $2,500 on account of his commission. At the time plaintiff Ikeoka accepted the Agreement of Sale, he did not object to any of the terms and conditions contained therein as being contrary to what he had previously orally agreed, but claims he accepted the document subject to the approval of his attorney. Plaintiff informed defendant that he was taking the document with him to Honolulu where he and his mother were to sign it and send it back no later than Wednesday (next). It was never executed by the plaintiffs.

Upon his return to Honolulu plaintiff was advised by his attorney that the Agreement of Sale was not satisfactory because it favored the buyer and not the seller; that the officers of the corporation should be included in their individual capacities in the Agreement of Sale as guarantors because if the corporation became bankrupt, he (appellant) 'may not get his money back.' A modified Agreement of Sale was drafted by appellant's attorney wherein it provided, among other provisions, for the officers to sign as officers of the corporation, as well as in their individual capacities as guarantors, and for the consent to any assignment of the Agreement of Sale. This Agreement of Sale was rejected by the corporation and its officers. Since the parties were not advancing in their negotiations, the corporation submitted to plaintiff an Agreement of Sale drafted by its own attorney, which plaintiff categorically rejected. Thereafter, upon the advice of his attorney, appellant returned the $5,000 to the corporation and demanded the return of $2,500 from defendant, paid him as part payment on account of his commission.

The basic question involved in this case is whether the defendant, a real estate broker by profession, has earned and therefore is entitled to his commission pursuant to his employment contract.

Plaintiffs contend that the original Agreement of Sale was never signed by them, therefore the commission was not earned, for 'no sale of the property in question was effected' and 'no contract of sale was entered into' according to the 'Exclusive Authorization to Sell.'

Plaintiff Ikeoka testified that he had orally agreed to the terms and conditions of the sale, but that he informed both defendant and Dr. Chock that the Agreement of Sale was accepted by him, subject to the approval of his attorney. Both Dr. Chock and appellee denied that appellant made such a statement to them. Plaintiffs argue that this disputed fact 'can only be resolved on the basis of credibility of witnesses,' and that the testimony of plaintiff Ikeoka should be believed, and if there is any conflict, then it should be resolved in favor of plaintiffs.

The trial judge found that plaintiff Ikeoka did not make his acceptance of the Agreement of Sale subject to the condition that his attorney must approve the agreement.

'* * * Mr. Ikeoka dealt directly with the purchaser and did not object to or inquire about the purchaser's financial responsibility; * * *.

* * *

* * *

'No objection was made that the purchaser was not ready, able, and willing to purchase. Mr. Kong [defendant] and Mr. Ikeoka [plaintiff] were satisfied at the time of the negotiation as to the ability of the Corporation to perform the contract, and the seller agreed to sell it to the Corporation. The terms of sale, down payment, deferred payments, and interest were all discussed by Mr. Kong, Ikeoka, Kauwe and Dr. Chock before the contract was drafted, and * * * the terms and conditions, especially payments therein, were fixed by the seller, * * *.'

The trial judge also found that the plaintiff accepted the check for $5,000 as earnest money, cashed the same, and paid one-half of it, the sum of $2,500, to defendant as partial payment for his services.

H.R.C.P., Rule 52(a) provides that 'Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses. * * *' After a careful review of the evidence, we cannot say that we are left with a definite and firm conviction that a mistake has been committed by the trial court and that these findings are 'clearly erroneous.' Filipino Federation of America, Inc. v. Cubico, 46 Haw. 353, 380 P.2d 488; Peine v. Murphy, 46 Haw. 233, 377 P.2d 708; Miller v. Loo, 43 Haw. 76; Lima v. Tomasa, 42 Haw. 478; Lum v. Stevens, 42 Haw. 286; Hawaii Builders Supply Co. v. Kaneta, 42 Haw. 111.

It is elementary that a real estate broker's right to his commissions depends primarily upon the terms of the employment contract where there has been a failure to consummate a sale. Barnard v. Monnot, 3 Keyes (N.Y.) 203, 33 How.Pr. 440; Staula v. Carrol, 312 Mass. 693, 45 N.E.2d 822, 144 A.L.R. 919; 4 Williston, Contracts, § 1030A (Rev. ed.); 8 Am.Jur., Brokers, § 179.

There is a distinction between the employment of a broker to find or procure a purchaser of property, and the employment of a broker to effect or contract for the sale of such property. Under the first type of employment contract, a broker is required only to produce a purchaser ready, able and willing to perform upon the terms fixed, in order to be entitled to his commissions. We have before us the second type of employment contract where the broker claims his commissions not only after he has found a purchaser who is ready, able and willing to buy upon the terms fixed by the seller, but also after he has effected a sale or procured from the prospective purchaser a binding contract of purchase on the terms and conditions specified in the contract of employment. In order to effect a sale or contract for a sale under this type of employment contract, something more than a mere verbal agreement coupled with...