Jay v. Gen. Realties Co.

• Decision Date: 15 November 1946
• Docket Number: No. 402.,402.
• Citation: 49 A.2d 752
• Parties: JAY et al. v. GENERAL REALTIES CO.
• Court: D.C. Court of Appeals

49 A.2d 752

JAY et al.

v.GENERAL REALTIES CO.

No. 402.

Municipal Court of Appeals for the District of Columbia.

Nov. 15, 1946.

Appeal from the Municipal Court for the District of Columbia, Civil Division.

Action by General Realties Company against Bernice Jay and Fidelity & Deposit Company of Maryland to recover a secret profit allegedly obtained by individual defendant, a licensed real estate broker, on resale of property which plaintiff had turned over to her for sale, in which the corporate defendant was joined as surety on bond furnished by individual defendant. From a judgment for plaintiff for $2,500, the defendants appeal.

Judgment modified so as to make it a judgment for $1,450 in favor of plaintiff and, as modified, affirmed.

HOOD, Associate Judge, dissenting.

P. Michael Cook, of Washington, D. C., for appellant Bernice Jay.

Lowry N. Coe, of Washington, D. C., for appellant Fidelity & Deposit Co. of Maryland.

Louis Rothschild, of Washington, D. C., for appellee.

Before CAYTON, Chief Judge, and HOOD and CLAGETT, Associate Judges.

CAYTON, Chief Judge.

The suit was brought by General Realties Company to recover a secret profit of $2,500 allegedly obtained by defendant Bernice Jay, a licensed real estate broker, on the resale of property which plaintiff had turned over to her for sale. Joined as defendant was Fidelity and Deposit Company of Maryland which was surety on the bond furnished by defendant Jay in accordance with Code 1940, § 45-1405.

Trial was without a jury and on the conclusion of plaintiff's evidence both defendants moved for a dismissal. The motion being overruled, defendants declined to present any evidence and judgment was entered for plaintiff for the full amount claimed. This appeal followed.

The motion for dismissal had been taken under advisement and after briefs were submitted the trial judge, in announcing his ruling, filed a long and carefully prepared memorandum. We now recite in considerably condensed form the facts important to an understanding of this appeal as they were set out by the trial judge in his memorandum.

Defendant Bernice Jay became the agent of plaintiff for the sale of rooming house property at 1338 Vermont Avenue, N. W., and as such agent tendered to plaintiff a purchase contract dated May 5, 1945, signed by Roger N. Browne for $13,500, which contract plaintiff accepted. At the time Browne intended to complete the transaction and to operate a rooming house on the premises. But a short time afterwards Browne and his wife decided that they would be unable to finance the transaction. ¹ Browne told Jay about this and asked her to find someone to take the contract off his hands; Jay agreed to try and later informed him that she had procured a Mr. Harold K. Hampton to take it over. (The record shows that at the time Mr. Hampton's wife was employed in the office of Jay and that later Hampton himself went to work for her.)

Though the purchase contract recited that Browne had put up a deposit of $500, he had in fact not done so but had given Jay his note for that amount and Jay returned the note to him at or about the time she told him Hampton would assume the contract. Before the end of May, Jay deposited with the title company a total of $2,500 covering the $500 Browne was supposed to have paid and the additional $2,000 he was required to deposit in order to comply with the terms of the purchase contract. During the following month Jay ordered repairs made on the property and paid $650 therefor.

Jay told Browne and his wife to come to the title company for settlement on July 5 to sign the first and second trust notes and other documents connected with the sale; that there was nothing wrong in doing this, and that immediately thereafter they should transfer the property to Hampton. She also told the Brownes that she would take care of their notes. Accordingly the Brownes went to the title company and signed notes secured by a first trust of $9,000 and a second trust of $2,000, and other papers connected with the sale. Also present at that time were Mr. Young, president and treasurer of plaintiff company, and Mrs. Hampton, who worked for defendant Jay and represented her in the settlement. To complete the sale Young at that time executed the deed of plaintiff company as seller to Mr. and Mrs. Browne. It was recorded on July 11, 1945. At that meeting Young was not informed of the conversations which had taken place between Jay and the Brownes; nor that the Brownes were not completing the deal as actual purchasers; nor of their private arrangement with Jay under which they were to go to her office later than day and re-deed the property to Hampton.

In his testimony Browne denied that he was acting as straw man but admitted he knew he was not buying the property for himself. Mrs. Browne admitted that ‘she knew she was not the real buyer.’

After the settlement at the title company had been completed the Brownes went to the Jay office and there on the same day executed a deed of the property to Hampton. This deed was acknowledged before Jay in her capacity as notary public. It was not recorded until much later, under circumstances we shall recite.

On August 2, a broker named Lawrence Johnson approached Jay in behalf of John Howard, a client of his who was interested in buying the property. The next day at Jay's office a contract was signed by which Hampton and his wife agreed to sell the property to Howard for $16,000, the purchaser to make a total cash payment of $4,500 and to assume the existing first and second trusts which had been executed by the Brownes in their settlement of July 5. In connection with this transaction Jay conducted the title search, and settlement was made at her office on August 9. On the following day the deed from the Hamptons to Howard was executed; and we shall later describe the circumstances under which it was recorded. In the meantime an error in the settlement figures was discovered in that the second trust payable to plaintiff General Realties Company (which trust Howard was assuming) was set up at $2,500 whereas it actually was $2,000. To take care of this discrepancy Jay requested and Howard gave her his note for $500, payable to her personally. When Johnson, Howard's agent, took Hampton's deed to the recording office he discevered that title to the property was still in the name of Browne and wife. Jay was then out of the city but upon her return this was called to her attention and she had the deed from the Brownes to Hampton recorded. This was on August 23, 1945 at 8:20 in the morning. At 12:54 the same day the deed from Hampton to Howard was placed on record.

In his memorandum the trial judge summarized the situation thus: ‘Neither defendant Jay, nor anyone on her behalf, informed plaintiff, General Realties Company, nor anyone acting on behalf of plaintiff, including Mr. Young, the President and Treasurer of this corporation, of the changes in the situation whereby Brown refused to go through with his contract of May 5, 1945, and had so informed defendant Jay, whereby he was required to purchase said property for the sum of $13,500.00; nor that defendant Jay undertook to represent Brown to obtain another purchaser to take over Brown's contract; nor that defendant Jay had procured the Hamptons to take over said contract; nor that Brown had failed to make the cash deposit of $500.00 required under his contract, but instead had given to defendant Jay his note of $500.00 in lieu of said cash deposit; nor that said note of $500.00 had been returned by defendant Jay to Brown; nor that Brown had never deposited any cash under said contract of May 5, 1945; nor that under dates of May 25, 1945 and May 29, 1945 defendant Jay had deposited with the Title Company a total of $2,500.00 covering the initial deposit of $500.00 and an additional payment of $2,000.00 as part payment of the purchase price of $13,500.00 under said contract of May 5, 1945; nor that defendant Jay had expended the sum of $650.00 covering certain repairs upon said premises, part of which had been paid before July 5, 1945, the date of settlement at the Title Company as aforesaid, and part after said date of settlement at the Title Company; nor that Brown had been informed by defendant Jay that he and his wife should go to the Title Company on July 5, 1945, the date of settlement under said contract of May 5, 1945, and sign the first and second trust notes and the other documents required under said contract of May 5, 1945, and that thereafter the Browns should immediately transfer title to said property to Hampton; nor that defendant Jay had told the Browns that she would take care of their first and second trust notes so that they would not be held on the said notes * * *.’

It was not until early in August, when Young called the Jay office to inquire about an overdue payment on the second trust, that defendant Jay revealed to him that the property had been resold.

All that we have recited were found as facts by the trial judge. Concerning such findings we need only say that we have very carefully examined the lengthy transcript and find that all such findings were supported by ample evidence.

But appellants complain that the judge went further-too far, they say-in drawing inferences from the facts. Principally those inferences or conclusions on which the ultimate finding for plaintiff was based were these: that the Brownes acted as straw parties at the time of the settlement between plaintiff and themselves; that the Brownes also acted as straws in the transfer later that same day from themselves to Hampton; that the Hamptons acted as straws in the later resale to Howard; that defendant Jay was the real party in interest in the acquisition of title from plaintiff and in the ultimate resale to Howard; that she was acting in her own interest and not in the interest of her principal and that she personally realized a profit of $2,500. The judge held...