Lane v. Davis

• Decision Date: 24 July 1959
• Court: California Court of Appeals Court of Appeals
• Parties: David LANE, Plaintiff and Appellant, v. Harmon B. DAVIS and Ruby A. Davis, Defendants and Respondents. Civ. 23591.

Page 267

342 P.2d 267

172 Cal.App.2d 302

David LANE, Plaintiff and Appellant, v. Harmon B. DAVIS and Ruby A. Davis, Defendants and Respondents.

Civ. 23591.

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

July 24, 1959.

R. H. Aarons and Robert J. Johnston, Pasadena, for appellant.

Gepner & Fox, Philip N. Gepner, Los Angeles, for respondents.

FOX, Presiding Justice.

Plaintiff appeals from a judgment of dismissal entered after defendants' demurrer to his second amended complaint, which seeks to recover a real estate brokerage commission, was sustained without leave to amend.

The defendants were owners of a certain theatre building in Pasadena. The plaintiff, a licensed real estate broker, was orally engaged to secure a purchaser for this property; if successful, he was to receive a 5 per cent commission. The oral agreement was entered into during December of 1955. Subsequently, through plaintiff's efforts, the Salvation Army Corporation became interested in the property. Thereafter, on August 23, 1956, the plaintiff and defendant H. B. Davis executed the following written agreement:

'Agreement of Commission.

August 23, 1956.

'It is hereby mutually agreed upon by both of the undersigned that in the event of a sale of the Pasadena Theatre Building to the Salvation Army at any time within one year from date, that the agent herein will accept 2 1/2% of the total selling price or the amount of 1/2 of the customary 5% commission; and in the event of a lease the same ruling will apply, 1/2 of the customary paid real estate commission.

'David Lane

'H. B. Davis.'

The escrow instructions entered into by defendants and the buyer, the Salvation Army Corporation, provided that a full 5 per cent commission was to be paid through escrow, one half of which was to be paid to Richard Divis and the other one half to plaintiff. Richard Davis, who is defendant H. B. Davis' brother, was not a licensed real estate broker or salesman.

Plaintiff apparently has been paid a 2 1/2 per cent commission and is seeking in this action to recover an additional 2 1/2 per cent. His second amended complaint attempts to state two causes of action. The first is that he entered into the above written agreement providing for only a 2 1/2 per cent commission as a result of the defendants' false and fraudulent representations that they were going to suffer a loss on the sale of the property. Plaintiff alleged in this regard 'That in truth and in fact said building had cost the defendants only $65,000.00 and at the time of the making of said agreement, the said defendants, without the knowledge of the plaintiff, had already sold the property to the said Salvation Army for the price of $135,000.00, and had in their possession an earnest money deposit in the amount of $10,000.00.'

In his second cause of action, plaintiff alleges that he is a third party beneficiary under the escrow instructions providing for payment of a brokerage commission; that the buyer intended to provide in said instructions that a full 5 per cent commission be paid to a broker and salesman; that Richard Davis had rendered no services and held no license and was in fact a 'nominee or dummy' used by the defendants to avoid paying a full 5 per cent commission; and that buyers would not have consummated the agreement had they known of the defendants' scheme to defraud the plaintiff. Plaintiff prays for damages and for a reformation of the above agreements. A general demurrer to each cause of action alleged in the second amended complaint was sustained without leave to amend, following which a judgment was entered that plaintiff take nothing by his complaint. Plaintiff appeals from this judgment.

As to the first cause of action, the demurrer was properly sustained without leave to amend. The second amended complaint shows that the only agreement by which defendants promised to pay a 5 per cent commission to plaintiff was oral. Such an agreement is invalid and unenforceable. Civ.Code, § 1624, subd. 5; Augustine v. Trucco, 124 Cal.App.2d 229, 237-238, 268 P.2d 780. As to the written instrument of August, 1956, the complaint alleges that it was executed after an agreement had been reached with and a deposit received from the purchaser. Under such circumstances, even granting the defendants made false and fraudulent representations to the plaintiff, it would have been impossible for plaintiff to have relied on such representations to his detriment for the obvious reason that he had already rendered his services in procuring a purchaser. Plaintiff suffered no injury as a result of the defendants' fraud for at the time the representations material to this action were made, plaintiff had no enforceable claim to any compensation relative to the sale of the defendants' property. It is axiomatic that a cause of action for fraud will not lie unless detriment has been occasioned by the alleged fraud. As stated in Barron Estate Co. v. Woodruff Co., 163 Cal. 561, 571, 126 P. 351, 355, 42 L.R.A.,N.S., 125, 'It is fundamental, of course, that, no matter what the nature of the fraud or deceit, unless detriment has been occasioned thereby, plaintiff has no cause of action.' See also Hill v. Wrather, 158 Cal.App.2d 818, 824, 323 P.2d 567; Baker v. Littman, 138 Cal.App.2d 510, 516, 292 P.2d 595; Abbot v. Stevens, 133 Cal.App.2d 242, 247, 284 P.2d 159. Therefore, as it affirmatively appears on the face of plaintiff's second amended complaint that he suffered no detriment in reliance upon defendants' misrepresentations, the sustaining of the demurrer without leave to amend the first cause of action must be affirmed. Any rights to compensation for managerial or related services rendered by plaintiff do not appear embraced within the terms of the August, 1956, agreement and therefore are not herein involved. Furthermore, counsel for plaintiff during oral argument made it clear that in this action plaintiff was not attempting to collect for any such services.

If plaintiff's first cause of action be deemed one for reformation, it also fails to state sufficient facts. The only ground for reformation alleged or suggested by the averments is that of fraud. 'The fraud which constitutes a ground for reformation consists of the representation that the writing is in conformity with the intended agreement, or that a writing to be made will be in conformity therewith.' (2 Witkin, California Procedure, p. 1397.) The fraud alleged in the instant complaint went only to the inducement to enter into the contract and fraud of this character will not warrant reformation for the obvious reason that there is no common intention or understanding between the parties that may be utilized as a standard to which the writing could be reformed. See Lemoge Electric v. County of San Mateo, 46 Cal.2d 659, 663, 297 P.2d 638. As succinctly stated in Professor Williston's treatise on the law of contracts (5 Williston, Contracts, § 1525, pp. 4272-4273 (1937 ed.)), '* * * if the contract agreed upon is embodied in the writing, the fact that the agreement was induced by fraud is not ground for reformation.' See Harding v. Robinson, 175 Cal. 534, 541, 166 P. 808.

With respect to plaintiff's second cause of action, wherein he is seeking to have the escrow instruction reformed to provide for the payment of a commission to him of 5 per cent rather than 2 1/2 per cent, we are of the opinion that he failed to state a cause of action, but that he should have...