Irons Inv. Co. v. Richardson

• Decision Date: 14 October 1935
• Docket Number: 25527.
• Citation: 50 P.2d 42,184 Wash. 118
• Parties: IRONS INV. CO. v. RICHARDSON.
• Court: Washington Supreme Court

50 P.2d 42

184 Wash. 118

IRONS INV. CO. v. RICHARDSON.

No. 25527.

Supreme Court of Washington, En Banc.

October 14, 1935

Appeal from Superior Court King County; Jas. T. Lawler, Judge.

Action by the Irons Investment Company against Loretta M Richardson. From a judgment of dismissal, the plaintiff appeals.

Affirmed.

C. A Schneider, of Seattle, for appellant.

Green &amp Burnett, of Seattle, for respondent.

STEINERT Justice.

This is an action to recover upon an alleged written agreement to pay for services rendered in effecting a sublease of a storeroom. Demurrer to the complaint as amended having been sustained, and plaintiff having elected not to plead further, judgment of dismissal was entered. Plaintiff has appealed.

The question Before us is whether the amended complaint states a cause of action. The substance of the pleading may be summarized as follows: 'On and prior to February 6, 1934, respondent, Loretta M. Richardson, was, and now is, the owner and holder of a long-term lease covering the Eitel building in the city of Seattle. Within the same period, appellant, Irons Investment Company, was, and still is, a corporation organized and existing under the laws of Washington, having paid the annual fee required of it to do business in this state. On February 16, 1934, appellant, upon application, obtained from the state a license to act as a bonded real estate broker.

Prior to February 6, 1934, appellant had rendered assistance and services to respondent in an attempt to effect a sublease of a portion of the building from respondent to Capitol Hill Pharmacy and Best Drug Stores. The sublease, as ultimately effected, bears date February 6, 1934, and was acknowledged by the sublessees on February 8, 1934. In payment of the services rendered by appellant in connection with procuring the sublease, the respondent, on February 6, 1934, signed and delivered to George B. Baker, for the use and benefit, and on behalf of appellant, a letter reading as follows:

'Seattle, Washington.

'February 6, 1934.

'Mr. Geo. B. Baker, 606 Eitel Building, Seattle.

'Dear Sir:

'In case we consummate the proposed lease between myself as lessor and the Capitol Hill Pharmacy and Best Drug Stores as lessees, it is my intention and you are hereby authorized to state that upon said completion of said lease and payment of rental by lessee there shall be due and owing from me to the Irons Realty Co. [Irons Investment Company] of Seattle, the sum of fifteen hundred dollars which I agree to pay from the first full months rental under said lease.

'Yours very truly,

'[Signed] Loretta M. Richardson.'

The sublease was thereafter assigned to George H. Bartell on February 17, 1934, upon the written consent of the respondent. Bartell went into possession of the premises subleased on March 1, 1934, and the first month's rental thereunder was paid some time in the following April. Appellant thereupon demanded payment of the $1,500 from respondent, but the demand was refused.

As we proceed with the discussion, it is to be remembered that the services rendered by appellant were performed prior to the execution and delivery of the written instrument above set forth and prior to the time that appellant's license to act as a real estate broker was issued to it.

The decision of this case rests largely upon the construction and applicability of certain portions of the Real Estate Brokers' Act, which is contained in Rem. Rev. Stat. §§ 8340-1 to 8340-23.

Rem. Rev. Stat. § 8340-4, so far as it is material here, provides: 'Within the meaning of this act, a real estate broker is a person who, for a compensation or promise thereof, performs one or more acts of selling or offering for sale, buying or offering to buy, negotiating or offering to negotiate, either directly or indirectly, whether as an employee of another or otherwise, the purchase, sale, exchange, lease or rental of real estate or interest therein for another person. The word 'person' as used in this act, shall be construed to mean and include a corporation.'

We have italicized that portion of this section which calls for particular attention.

Section 8340-5 makes it unlawful for any person to engage in the business, or act in the capacity, of real estate broker, within this state, without first obtaining a license therefor. Section 8340-17 makes it a misdemeanor for any person to act as a real estate broker without a license.

Appellant's first contention is that the services rendered by it, and upon which the subsequent agreement was based, involved the leasing of personal property only and not of real estate or any interest therein, and that therefore appellant was not required to have a real estate broker's license. Appellant's argument is that respondent's leasehold was but a chattel interest, and therefore personal property; that the interest created by the sublease was likewise a chattel interest and personal property; and that therefore the sublease was to be regarded in law as a sale of a part of the lease, or, in other words, as a sale of personal property. Upon this line of reasoning, appellant concludes that the transaction was not within the purview of the Real Estate Brokers' Act.

It has frequently been held by this court, and it may, therefore, be conceded, that a leasehold interest in real estate is personal property, transferable as such. Taylor v. Basye, 119 Wash. 263, 205 P. 16; Myers v. Arthur, 135 Wash. 583, 238 P. 899; Salisbury v. Alskog, 144 Wash. 88, 256 P. 1030; Sakris v. Eagle Indemnity Co., 176 Wash. 73, 28 P.2d 316. It would naturally follow, and may likewise be conceded, that the interest created by the sublease and passing to the sublessees was also, in law, personal property. But it does not follow from these premises that the negotiations conducted by appellant did not involve real estate or an interest therein, nor does it follow that such negotiations are not within the purview of the Real Estate Brokers' Act.

The objective sought by the Legislature in passing the Real Estate Brokers' Act was not to define or classify the nature of property interest for purposes of conveyancing or of providing for levy under execution. Its obvious purpose was to forbid and prevent persons from performing, for compensation, any act of selling or buying real estate or any interest therein for any other person, or of negotiating the purchase, sale, exchange, lease or rental of real estate or any interest therein for another person.

Construing section 8340-4 we held, in the case of Salisbury v. Alskog, 144 Wash. 88, 256 P. 1030, that the words 'lease or rental,' as used in the statute, mean but one thing; that is, the procuring of a tenant. What the appellant in this case did when it negotiated the sublease was to procure a tenant of real estate for respondent. It was immaterial whether respondent owned the real estate itself, or whether her interest therein was, in law, only personal property. During the term of her lease, respondent possessed all the rights which the owner of the freehold formerly had with respect to subleasing or renting the property. Regardless of the fact that respondent's lease was, in law, only personal property, the sublease itself operated upon, and was a lease of, real estate, and was negotiated by appellant for another person; namely, the respondent. We are satisfied that the statute in question was applicable to the transaction.

In this connection appellant further contends that the Real Estate Brokers' Act does not apply to this case, for the reason that it does not appear from the complaint that appellant's services were performed for compensation or promise thereof. The appellant was engaged generally, in the business of handling and dealing in real estate and leasing properties. Its activities would ordinarily be exerted for compensation or gain, and not expended gratuitously. However, for the purposes of this case, we shall adopt appellant's supposition and assume, violent as the assumption may be, that in this instance appellant performed its services without any promise of compensation, but simply as a favor. We have, then, a subsequent written agreement to pay for services rendered gratuitously. But there was no consideration for such agreement. It could not be contended that there was any legal obligation resting on respondent to pay for the services, in the absence of any promise, express or implied, to pay for them. Nor, under the circumstances, was there any moral obligation to pay therefor. A past consideration, even though of benefit to the promisor, is insufficient when the services rendered are intended and expected to be gratuious. Allen v. Bryson, 67 Iowa, 591, 25 N.W. 820, 56 Am. Rep. 358; Gooch v. Gooch, 70 W.Va. 38, 73 S.E. 56, 37 L. R. A. (N. S.) 930; Williams v. Moss, 114 W.Va. 488, 172 S.E. 529; Shepherd v. Young, 8 Gray (Mass.) 152, 69 Am. Dec. 242; Moore v. Elmer, 180 Mass. 15, 61 N.E. 259; Blanshan v. Russell, 32 A.D. 103, 52 N.Y.S. 963; In re Van Vranken's Estate, 120 Misc. 280, 198 N.Y.S. 445; Kilborn v. Pyne (C. C. A. 3) 279 F. 864; 1 Page...