Lathrop v. Gauger

• Decision Date: 05 October 1954
• Citation: 274 P.2d 730,127 Cal.App.2d 754
• Parties: G. H. LATHROP, Plaintiff and Respondent, v. Mrs. Eben GAUGER, Defendant and Appellant. Civ. 20242.
• Court: California Court of Appeals Court of Appeals

Page 730

274 P.2d 730

127 Cal.App.2d 754

G. H. LATHROP, Plaintiff and Respondent, v. Mrs. Eben GAUGER, Defendant and Appellant.

Civ. 20242.

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

Oct. 5, 1954.

As Modified Nov. 1, 1954.

E. O. Leake and J. J. Leake, San Gabriel, for appellant.

LeSage & Bowman, Pasadena, for respondent.

FOX, Justice.

In this action for recovery of a real estate broker's commission, with a cross-complaint raising issues of fraud and misrepresentation and praying for a rescission of the listing, defendant appeals from a judgment in favor of plaintiff broker.

Mrs. Eben Gauger, defendant herein, was the owner of real property located at 25 Westmont Drive, in the city of Alhambra, improved with an apartment building comprising 20 units. Defendant owned the furniture in 18 of the units. These units were rented as furnished, and had been so rented for many years. Defendant had purchased the property in 1934 through the agency of Mr. Lathrop, the plaintiff. At the time of defendant's acquisition, the units were also rented as furnished apartments.

On April 17, 1952, defendant engaged the services of plaintiff to negotiate a sale of the property for $85,000. Plaintiff was given an exclusive agency for 90 days, and was to receive five percent of the selling price as compensation for his services. The agency transaction was memorialized by an instrument in writing bearing the caption 'Improved Property Listing' and was signed by defendant. The pertinent part of this document, a printed form with spaces for the entry of information descriptive of the listed property and the terms of sale, reads as follows: (Italicized words represent written entries.)

'Improved Property Listing

Alhambra Calif. 4/17/1952

                Location 25-Westmont Dr. Alhambra Calif                                 Price
                2 Story 20 unit         Lot 173.90 139/180                              $85000
                Construction  Stucco        Roof Tile         Age 21 yrs                Down
                Entry         _____     Living    Yes      Dining     Nook  Den   _____ $
                Bed Rooms     13 units single     7 units double
                                                                                        Monthly
                Baths 1-each              Showers over           Tubs 1     Tile  Yes   $
                Kitchen       Tile Sink      Brk. Nook         Floors _____
                                                                                        Bonds
                Basement      No        Heat      Wall     Fireplace  No                $ No
                Porches       Balcony   Patio     _____    Barbecue   _____
                                                                                        Taxes
                Garage        16--      Driveway off alley     Fenced Walled
                                                                                        $
                Fronts        East      Lawn      Yes      Sprinklers Yes
                Trees         Yes       Shrubs    Yes      Sewers     Yes
                St. Paved     Yes       C. & W.   Yes      Lights     Yes   Alley Yes
                1st Loan Bal. $ Clear   at $_____ Mo. at _____% Int
                By_____
                Occupied by Tenants                  Phone Laguna 44407"
                

It will be observed that no entries were placed in the blanks relating to terms of payment. The listing is also silent on the subject of whether the furnishings in the apartments were included or excluded from the listed property.

Much of the evidence hereafter recited was admitted over defendant's objections, the invalidity of which will be discussed later in this opinion. Also, some of it was in sharp dispute, but, under elementary principles, we are bound to view it in the aspect most favorable to the prevailing party. When so viewed, the record discloses that at the time defendant authorized plaintiff to list the property for $85,000 the matter of the furniture in the property was discussed by the parties. Defendant informed plaintiff he could get an exact record of the furniture from the resident manager, Mrs. Butler. Plaintiff subsequently procured from Mrs. Butler a list of the furniture contained in every unit. Defendant also informed plaintiff of the overall income derived from the property rented as furnished units. At defendant's suggestion plaintiff contacted Mrs. Butler and received from her a list of the income obtained from each separate unit. This data was incorporated into the 'set-up sheet' which plaintiff prepared covering the essentials about the property of interest to a prospective purchaser. Plaintiff then set to work to find a buyer.

Having obtained an offer of purchase from a couple named Glasser for the sum of $82,500 plaintiff arranged for a meeting between defendant and the Glassers. Defendant objected to this offer, but during the conversation she stated that because of income tax considerations 'she would sell at $85,000 if they would give her 25 or 30 percent down and six percent money on the balance.' Plaintiff subsequently secured an offer of $85,000 from the Glassers and orally notified defendant thereof. Defendant declared she would communicate with plaintiff after she discussed the matter with her banker, but failed to do so. Having received no word from defendant, plaintiff wrote her a letter in which he gave formal notice of the Glasser offer.

Some time after receiving plaintiff's letter referring to the Glasser offer, defendant consulted her attorney, Leroy P. Anderson, and discussed with him the listing given plaintiff. As a result of this conference, Anderson dispatched a letter to plaintiff dated June 5, 1952, which reads in part as follows:

'Dear Mr. Lathrop:

'Mrs. Eben Gauger, of 1875 Ocean Way, Laguna Beach, California, has shown me a listing which she made with you on the 17th day of April, 1952, listing the Apartment House at 25 Westmont Drive, Alhambra, California, for $85,000.00.

'In making her listing she states that she explained to you that she wanted to sell the property so that it would be on an installment basis for Federal Income tax purposes. In other words, she listed the property at less than thirty per cent down payment for the first year. In the listing that you made you did not put down any terms.

'Due to the fact that you have failed to show any terms in the listing, it is necessary that the listing be amended to comply with Mrs. Gauger's wish. Her terms are that she is to receive $25,000.00 down payment and not over $6,000.00 per year thereafter including interest on the deferred payments at six per cent * * *.'

Anderson's name was signed by his wife, who served as his secretary and to whom he dictated the letter. Anderson testified that it was to his recollection that this letter was dictated in defendant's presence during their conference. Defendant testified she was not present when the letter was dictated, that she was unaware of its contents, and that she never told Anderson that she would sell the property on the terms therein indicated.

Following his receipt of this letter, plaintiff obtained a written offer to purchase executed by Martha Mannion and R. R. Mannion, her husband. This signed offer was embodied in the form of a Deposit Receipt, the material language of which reads as follows:

'Deposit Receipt

'San Marino California

June 7, 1952.

'Received from Martha Mannion check $2500.00 as a deposit account purchase price of [property location] * * * being a 20 unit apt. bldg. 18 units are Furnished----

Furniture to be Included in this offer * * * at the full purchase price of $85,000 * * * balance of purchase price and all necessary instruments to be placed in Escrow * * * with 30 days from date, as follows, to wit: Cash $22,500.00; Execute Trust Deed and Note for $60,000 payable $500.00 including 6% interest per mo.

'Seller to Furnish Termite Clearance * * *

'If buyer fails to deposit the money and his instruments and complete the purchase as provided herein, then the amount paid shall be forfeited, one-half to the real estate broker, but not to exceed the full amount of his commission, and the balance to the seller * * *' (Emphasis added.)

Plaintiff arranged for a meeting with defendant at Anderson's office on June 9, 1952, and at that time and place he submitted the Mannion offer, together with the $2,500 deposit check to defendant for her acceptance. However, defendant, while expressing no specific objection to any of the other terms or conditions of the offer, categorically rejected it. She stated she refused to sell the property for $85,000 and desired to withdraw it from the market. The following day plaintiff sent a letter to defendant requesting that the Mannion offer, a copy of which was enclosed, he accepted. No response was forthcoming until approximately two months later (during which time plaintiff had filed the instant action for recovery of his broker's commission), when defendant caused a Notice of Rescission of the listing to be served on plaintiff. This notice was dated August 11, 1952, and was based upon the alleged grounds of plaintiff's fraud and misrepresentation in securing the listing.

Plaintiff's complaint is couched in the conventional form of a pleading for recovery of a broker's commission. It alleges, in substance, that plaintiff was authorized to sell defendant's apartment house building for the sum of $85,000 upon a 5 percent commission; that the terms of payment were stated in a writing from defendant's attorney to plaintiff; that plaintiff obtained an offer for the described property from a purchaser ready, willing, and able to complete the purchase upon the terms and conditions prescribed; that defendant refused to consummate the transaction; and that having performed the services called for by the agreement, plaintiff is entitled to his commission. Defendant's answer denying the claim included, as an affirmative defense, allegations that she was induced to list the property with plaintiff as a result of fraudulent representations made to her; that among such representations were the statements that her property was not worth more than $80,000 and that if defendant...