Iusi v. Chase

• Decision Date: 25 March 1959
• Parties: Frank IUSI, Plaintiff and Respondent, v. Neil CHASE, Defendant and Appellant. Edward L. THOMPSON, Plaintiff and Appellant, v. Neil CHASE, Defendant and Respondent. Civ. 17865, 17866.
• Court: California Court of Appeals Court of Appeals

Page 79

337 P.2d 79

169 Cal.App.2d 83

Frank IUSI, Plaintiff and Respondent, v. Neil CHASE, Defendant and Appellant.

Edward L. THOMPSON, Plaintiff and Appellant, v. Neil CHASE, Defendant and Respondent.

Civ. 17865, 17866.

District Court of Appeal, First District, Division 2, California.

March 25, 1959.

Johnson, Thorne, Speed & Bamford, San Jose, for Edward L. Thompson and Frank Iusi.

Walter E. Rankin, San Jose, for Neil Chase.

DRAPER, Justice.

A claimed agreement of real estate brokers for a 'three-way split' of commissions has led to this tripartite litigation. Iusi, the listing broker, and Thompson, the middleman or broker's broker, brought separate actions against defendant Chase, the procuring broker. The actions were consolidated and tried to the court without a jury. Judgment was entered in favor of Iusi against Chase for 50% of the commission already paid to Chase, and declaring that half of the remaining commissions, as paid to Chase, should belong to Iusi. In Thompson's action judgment was in favor of defendant Chase, on the theory that Thompson must look only to Iusi for a commission. Defendant Chase appeals from the judgment in favor of Iusi, and plaintiff Thompson appeals from the judgment denying him recovery.

Each plaintiff's original complaint was on a common count for money had and received. By amended complaint filed to conform to proof, Iusi alleged an oral agreement to pay him 60% of any commission received by Chase, alleging also that he 'has * * * reduced his claim * * * to 50%.' The amended complaint sought half the commissions already paid, as well as declaratory judgment awarding a like share of commissions later paid. The evidence shows that the owner of a tract of land orally granted Iusi the exclusive right to act as broker in its sale. Iusi asked Thompson to interest other brokers, telling him that the commission would be divided 60% to Iusi and 40% to the broker who procured a sale, with that broker to pay Thompson whatever share Thompson was to receive.

Thompson told Chase of the availability of this property. The evidence conflicts as to what was said about division of commissions. Thompson testified several times that the agreement was for a 'three-way split,' but also testified that he told Chase of the 60%-40% provision. Chase testified that Thompson asked for a three-way split, without specification of the shares. Under these circumstances, the court could justifiably determine that Chase agreed to divide the commission, but that no percentages were agreed upon. The court could look to custom to fill this gap in the oral agreement. There was evidence that custom of the business calls for equal division between listing and procuring brokers, with the former responsible for satisfying the claim of the middleman. Chase defended upon the ground that custom required no division, unless the listing broker had a written exclusive agreement. Other evidence of the custom contradicted this view, and the conflict was for the trial court to resolve.

Appellant Chase first contends that recovery is barred by the statute of frauds. Of course, an agreement 'authorizing or employing an agent or broker to purchase or sell real estate' is invalid unless written. Civ.Code, § 1624, subd. 5. However, the long-established rule is that this provision does not extend to agreements between brokers. Gorham v. Heiman, 90 Cal. 346, 358, 27 P. 289. In general, this rule does not apply unless one of the brokers has a binding written contract with the principal. Aldis v. Schleicher, 9 Cal.App.2d 372, 99 P. 526. But where the commission has in fact been paid by the owner to one broker, even though there was no written contract between them, the second broker can recover upon his oral contract with the first broker. Johnston v. Porter, 21 Cal.App. 97, 131 P. 69; Jenkins v. Locke-Paddon Co., 30 Cal.App. 52, 57, 157 P. 537. Chase argues that this rule applies only where the plaintiff is the selling broker, whereas Iusi is the listing broker here. But the rule of Johnston and Jenkins has been applied where the listing broker is plaintiff. Daft v. Enos, 155 Cal.App.2d 315, 318 P.2d 66. This decision also holds that the court may award a share of the commission already received by the defendant broker, and by declaratory judgment order payment of a proportion of further commissions if and when they are paid by the principal to defendant.

Chase also asserts that the agreement between Iusi and the owner was illegal because it did not specify a definite date of termination. When the exclusive oral agreement was made, disciplinary proceedings were authorized against a broker who was guilty of '[t]he practice of claiming, demanding, or receiving a fee, compensation or commission under any exclusive agreement * * * where such agreement does not contain a definite, specified date of final and complete termination.' Bus. & Prof.Code, § 10176[f]. As then worded, the statute applied only to the 'practice' condemned. Where, as here only one isolated instance is shown, the language of the then statute does not apply. Wilson v. Stearns, 123 Cal.App.2d 472, 479, 267 P.2d 59. By amendment (Stats.1955 chap. 1467) adopted before the sale was made, the words 'the...