Kellogg v. Rhodes

• Decision Date: 16 June 1942
• Docket Number: 45972.
• Citation: Kellogg v. Rhodes, 231 Iowa 1340, 4 N.W.2d 412 (Iowa 1942)
• Parties: KELLOGG v. RHODES.
• Court: Iowa Supreme Court

4 N.W.2d 412

231 Iowa 1340

KELLOGG v. RHODES.

No. 45972.

Supreme Court of Iowa

June 16, 1942

O. H. Allbee, of Marshalltown, for appellant.

Joe B. Tye, of Marshalltown, for appellee.

GARFIELD Justice.

The petition alleged that defendant orally agreed to pay V. C. Peterson Company a commission to find a purchaser for his farm, upon terms stated by defendant; that said company secured Milo Edwards as such purchaser and performed all conditions of the oral agreement; that the services are of the reasonable value of $840, the claim for which was assigned to plaintiff.The answer was a general denial.Following trial to the court without a jury, there was a judgment for defendant.Plaintiff's motions for judgment notwithstanding the verdict and for new trial were overruled.Plaintiff-appellant's principal claim to a reversal is in effect, that under the undisputed evidence he was entitled to recover.

The decision of the lower court has the effect of a jury verdict and will not be disturbed by us if supported by substantial evidence.Furthermore, we must consider the evidence in the light most favorable to defendant-appellee.Wormhoudt Lbr. Co. v. Union Bank & Trust Co., 231 Iowa 928, 932, 2 N.W.2d 267, 270;Tilden v. Zanias, 228 Iowa 708, 709, 292 N.W. 835.

The burden of proof rested upon appellant.In the absence of an admission by the opposite party, it is seldom that a party having the burden establishes his claim as a matter of law.Low v. Ford Hopkins Co., 231 Iowa 251, 254, 1 N.W.2d 95, 97.

The evidence shows that V. C. Peterson Co. operates a real estate brokerage in Marshalltown.It employed appellant as a broker and salesman.Appellee is also a real estate broker living in Marshalltown.Early in July, 1940, Milo Edwards, who later bought the farm in question, came to the Peterson office as a prospective purchaser.At that time Peterson Co. did not have the farm in question listed for sale.Appellant testified that about August 1, 1940, he telephoned appellee that he had prospects who were looking for such a farm as appellee's 240 acres in Grundy county and asked if he would like to sell the farm that appellee"said he would consider sale of the farm.He said he wanted $155 an acre.I asked 'Will you pay us a commission?'He said, 'yes'."

One evening about the third week in August, appellant Kellogg, Edwards (the purchaser) and wife, and appellee and wife, talked about the farm at appellee's home for about an hour.On August 26appellee came to the Peterson office and appellant then drove appellee in the former's car to the Edwards farm where they got Edwards and drove him to appellee's farm.The three walked over the land and discussed the farm.On this occasion, Edwards asked if appellee would consider $140 an acre for the farm.Appellee replied, "That isn't enough.It's worth $150."Appellant testified that Edwards made a definite offer of $33,000 or $137.50 per acre.Edwards' testimony was that he said he might consider buying for $33,000.At the conclusion of this talk, appellee agreed to confer with his wife, who had an interest in the farm, as to whether they would accept $140 an acre.

That same evening appellee telephoned appellant: "The deal is off and I will have to have $150 an acre."Appellant testified that he responded, "I'll see what I can do about it," to which appellee replied, "All right."Appellee testified that appellant merely replied: "O.K."

On August 28, appellant wrote Edwards a letter signed by the Peterson Company, sending appellee a copy, in which appellant stated that appellee would not consider a sale at less than $150 (per acre); that "the best thing to do would be to drop the negotiation at once" and let appellant find Edwards another suitable farm that would be less expensive.The letter also stated: "However, should you and Mr. Rhodes resume negotiations for sale at any future time on this or any other basis it is understood by all parties that it will be done through the V. C. Peterson Company."The letter assured Edwards appellant would aid him in finding a suitable farm and described and recommended another farm "which should be purchased at $100"(per acre).

On September 15, 1940, appellee caused to be published the following advertisement in the Des Moines Sunday Register:

"Iowa--80 acres or 240, Grundy Co.--Iowa's Best Soil.All tillable.No Erosion.Tiled. 80 has Good Buildings; Fences; Highways Abundant Soft Water; Elect. Low Taxes.Good imps., low taxes.Good Terms. B. J. Rhodes, owner, Marshalltown, Iowa."

The next evening after Edwards read the ad in the Register, he went to see appellee and agreed to buy the farm for $140 an acre.The sale was completed in an attorney's office later.Aside from the above mentioned letter of August 28, neither appellee, appellant nor any one else for the Peterson Company communicated with Edwards between the talk of August 26 and the talk in which the sale of the farm was agreed upon.Appellee testified more than once, in effect, that he had no idea the Peterson Company would claim a commission if he sold to Edwards.

Appellant cites Tilden v. Zanias, 228 Iowa 708, 292 N.W. 835;Wareham v. Atkinson, 215 Iowa 1096, 247 N.W. 534, and other decisions holding that the agent's duty is performed when he finds and introduces to his principal a person who is ready, willing and able to buy on the terms proposed by or acceptable to his principal.The main decision upon which appellee relies is Donahoe v. Denman, 223 Iowa 1273, 275 N.W. 154.However, none of the cases cited in the briefs quite reaches the situation presented by this record.

The general rule is well settled that if property is listed at a certain price with a broker who is the procuring cause of a sale, he is entitled to his commission, even though the sale is consummated by the principal and at a price lower than that quoted by him to the broker.12 C.J.S., Brokers, p. 197, § 86b;8 Am.Jur.p. 1092, § 176; annotation 43 A.L.R. 1103, 1104, and citations; annotation 47 A.L.R. 855; annotation Ann.Cas. 1913E, 784; annotation Ann.Cas.1914C, 138; annotation 139 Am.St.Rep. 225, 236.SeeFisher v. Skidmore Land Co., 189 Iowa 833, 843, 179 N.W. 152.

There is an exception to the above rule where the agreement between broker and principal provides for the payment of a commission only upon obtaining a certain price for the property and the sale is consummated at a lower price.12 C.J.S., Brokers, p. 197, § 86b;8 Am.Jur.p. 1102, § 190; annotation 43 A.L.R. 1103, 1111, 1112, and citations; annotation, 139 Am.St.Rep. 225, 235;Sanden & Huso v. Ausenhus, 185 Iowa 389, 393, 168 N.W. 801.

It is also well settled that if negotiations between parties brought together by a broker are unproductive and the parties in good faith withdraw therefrom and abandon the proposed sale, a subsequent renewal of negotiations followed by a sale by the principal at a lower price does not entitle the broker to a commission, since it cannot be said that he was the procuring cause of the sale.8 Am.Jur.p. 1102, § 190;12 C.J.S., Brokers, p. 217, § 93a; annotation 43 A.L. R. 1103, 1116, and citations; annotation 47 A.L.R. 855, 857; annotation Ann.Cas.1913E, 784, 788, and citations.SeeJones v. Buck, Iowa, 120 N.W. 112;Id., 147 Iowa 494, 126 N.W. 452.

By reason of the rule last mentioned, we think the judgment for appellee has sufficient support in the evidence.The court could have found that negotiations were terminated and abandoned on the evening of August 26; that appellee then stated, "the deal is off," to which appellant replied, "O.K."; that it was the newspaper ad which led the purchaser to resume negotiations resulting in the consummated sale; that appellant's efforts were not the efficient moving cause of the sale.

Many decisions dealing with similar fact situations emphasize that the good faith of the principal is an important consideration.If the principal acts in bad faith in a fraudulent attempt to avoid paying a commission to the broker who is the moving cause of the sale, the principal is held liable.SeeReynor v. Mackrill, 181 Iowa 210, 216, 164 N.W. 335, 1 A.L.R. 523.It cannot be said as a matter of law, however, that appellee so acted.SeeSanden & Huso v. Ausenhus, 185 Iowa 389, 393, 168 N.W. 801.

Whether a broker is the procuring cause of a sale is ordinarily a fact...