Never v. King

• Decision Date: 29 September 1969
• Court: California Court of Appeals Court of Appeals
• Parties: Otto E. NEVER, Plaintiff and Appellant, v. Ben R. KING, M.D., Gardiner Pier, M.D., Douglas Brodie, M.D., James P. Gillman, M.D., all individually and as co-partners dba Truckee-Tahoe Medical Group, Defendants and Respondents. Civ. 25135.

Page 161

81 Cal.Rptr. 161

276 Cal.App.2d 461

Otto E. NEVER, Plaintiff and Appellant, v. Ben R. KING, M.D., Gardiner Pier, M.D., Douglas Brodie, M.D., James P. Gillman, M.D., all individually and as co-partners dba Truckee-Tahoe Medical Group, Defendants and Respondents.

Civ. 25135.

Court of Appeal, First District, Division 1, California.

Sept. 29, 1969.

Severson, Werson, Berke & Bull, Kurt W. Melchior, San Francisco, for appellant.

Owen, Melbye & Rohlff, Redwood City, for respondents; Cyril Viadro, San Francisco, of counsel.

SIMS, Associate Justice.

Plaintiff, licensed under the laws of this state and engaged in business as a real estate and mortgage loan broker, has appealed from a judgment entered on a directed verdict which denied him any compensation or damages from defendants who had given him the exclusive right to negotiate for a loan on their behalf in order to finance the construction of a medical-dental building. The record fails to show that any loan or other method of financing was consummated during the term of the agency agreement, or, for that matter, thereafter. ¹ The controversy revolves about the broker's contentions that he substantially performed his undertaking by making arrangements, which were thwarted by defendants' repudiation, for funds sufficient to carry out the project contemplated by defendants, and that, in any event, he is entitled to the commission set forth in the agreement because the defendants expressly and unequivocably repudiated and revoked their contract with him before it expired.

At the conclusion of the trial each side moved for a directed verdict. The broker now contends that it was error to deny his motion, and that he is entitled to judgment as a matter of law. In the alternative, he claims a right to a new trial because the court erred in directing a verdict for his adversaries. The latter claim is first reviewed. Since it appears that the court correctly directed a verdict for the defendants because of a lack of substantial evidence to sustain plaintiff's claim, there was, a fortiori, no error in denying plaintiff's motion.

Review in this case is governed by oftenunciated principles recently set forth in Taylor v. Centennial Bowl, Inc. (1966) 65 Cal.2d 114, 52 Cal.Rptr. 561, 416 P.2d 793, as follows: 'Such a verdict may be properly granted if and only if, after disregarding conflicting evidence, and indulging every legitimate inference which may be drawn from the evidence in plaintiff's favor, it can be said that there is no evidence of sufficient substantiality to support a jury verdict in her favor. (Citations.)' (65 Cal.2d at pp. 120--121, 52 Cal.Rptr. at p. 565, 416 P.2d at p. 797.) The evidence as set forth below must be evaluated accordingly.

Statement of Facts

In February or March 1964, plaintiff contracted defendant Dr. Ben R. King, representing those defendants doing business as 'Truckee-Tahoe Medical Group,' in reference to financing desired by the doctors for a proposed medical-dental building and other improvements to be erected upon property owned by the defendants. Pursuant to the conversation, a meeting was arranged to discuss plans for construction, and financing needs. Plaintiff had been referred to Dr. King by Lloyd Johnson, an insurance agent who specialized in writing life insurance for people in the medical profession. Johnson often provided unsecured loans for doctors in order to sell large life insurance policies. ²

In March 1964 the parties met for the first time. Dr. King and defendant Dr. Brodie attended the meeting. Although the doctors were vague as to what construction would cost, they definitely indicated 'that had to have a hundred percent loan, and they did not have any liquid cash.' Plaintiff explained that he could probably get an unsecured loan to pay for the lot, 'and we'd have to get an estimate of the cost of the building.' In July 1964 plaintiff met with Dr. King at Truckee. Plaintiff brought with him an unlicensed builder named Combs, with whom plaintiff had dealt. Combs gave the doctor an oral estimate of construction costs of $116,000. All other bids submitted were higher. Combs' bid was not acceptable to defendants' architect.

On February 18, 1965, plaintiff submitted a loan offer to Dr. King of $110,000. This offer was rejected by the doctor. Some time in March 1965, plaintiff testified he told Dr. King, 'Now, I feel that it is time to sign an agreement so I can represent you and get the loan that we have talked about. * * * I will try and get you a hundred and fifty thousand, But I can't because that is unreasonable, but I have got enough for you now so that you can go ahead and build your building and pay the lot.' (Emphasis added.)

Plaintiff felt he had enough money for the doctors because he thought he could get a secured loan of $130,000 and an unsecured loan, from Johnson, for $39,000. Since plaintiff estimated that building costs would be $116,000 to $120,000, he felt this amount left the doctors with $10,000 over their needs. Plaintiff conceded at trial that when the $39,000 loan was discussed, it was not considered within the terms of the proposed agreement for $150,000. ³

On March 20, 1965, Dr. King signed the following loan brokerage contract with plaintiff on behalf of the group: 'The undersigned hereby applies to OTTO E. NEVER, for financing in the amount of One Hundred Fifty Thousand and no/100 Dollars ($150,000.00), or such amount as may be later mutually agreed upon, for a term of 15 years, with interest at the rate of 6 3/4% Per annum, payable monthly, to be secured by a Deed of Trust on the following described property * * * (description omitted) * * * The undersigned agrees to pay OTTO E. NEVER, a loan fee of 5% of the loan amount agreed upon, for negotiating said loan and preparing and filing of papers, and hereby authorizes the title company to deduct said loan fee from the proceeds of the loan. It is further agreed that if OTTO E. NEVER is unable to complete said financing through failure of the undersigned to properly execute the necessary papers, that the undersigned will pay said OTTO E. NEVER, on demand, the above fee and all expenses incurred by him as above provided.

'OTTO E. NEVER is hereby authorized the exclusive right to negotiate the abovementioned loan until May 30, 1965. * * *'

Dr. King testified that between March 20th and the end of April 1965, he spoke with plaintiff twice. The first conversation occurred about two weeks after the agreement was signed. Plaintiff called Dr. King with a loan proposition of $110,000. Dr. King testified he told plaintiff he could not accept that amount 'that that was not enough money; it wouldn't do me any good; that I had to have a hundred and fifty thousand dollars. He told me he could not get me a hundred and fifty thousand dollars and I shouldn't expect it, and I told him that I had to have it.' Subsequently, Dr. King called plaintiff and asked about the possibility of plaintiff's working out a lease and buy-back arrangement. Dr. King told plaintiff that he was then looking into the possibility of financing through a group in Sacramento. ⁴

On May 11, 1965, King and defendants Pier and Brodie signed a brokerage agreement with Hicok & Company. Hicok was to have 30 days within which to sell and arrange for the lease and buy-back of defendants' property for a 6 percent commission. Dr. King testified that it was 'understood that I still had--that Mr. Never still was attempting to get the hundred fifty thousand dollar(s), though virtually, he felt that it was impossible for him to get it. It thought it was impossible for him to get it because he said so.'

Dr. King testified further that on May 14, 1965, plaintiff phoned him and told him he had a $130,000 loan from an insurance company for him. Dr. King told him that $130,000 was not enough 'that I had to have a hundred and fifty thousand dollars, and that since it was obvious I wasn't going to get the hundred and fifty thousand dollars, I decided to attempt to establish this lease and buy-back arrangement of financing because I couldn't get along with less than a hundred fifty thousand dollars.'

Plaintiff testified that the first time he called Dr. King after the agreement was signed was on May 14th. Plaintiff related the conversation as follows: 'I told him that I had this application (for $130,000 for 17 years at 6 1/2 percent) and that I would ask him to sign it and to pay approximately one point earnest money to the insurance company to assure them that when the commitment was given for the loan that he would take the loan, which is customary. He said * * * 'I don't want to go ahead with it.' I explained to him then that I had worked on this loan for almost a year and a half and the companies that I had contacted, the expenses I have been to, and I said, 'Doctor I have your loan; I can build your building for you and pay for your lot. What more do you want?' He said 'Well, I have a company that's been to me from Sacramento that will make me a leased-backed building'; that is able to lease a building and he won't have so much expense and trouble as if I would if I build my own building. I said, 'Doctor, you entered into an agreement with me and I lived up to it.' He said, 'Well, I am not going to go ahead with it.''

Plaintiff stated there was no conversation in which Dr. King said he had to have $150,000 and could not get along with less. Rather, he felt the conversation was that Dr. King 'had to build a building and he wanted sufficient funds to build the building and I showed him what the cost would be, and the hundred and thirty thousand dollars was ample for the building.' Plaintiff indicated he knew that bids had come in on the building for in excess of $150,000, but that actual figures worked out with Combs indicated the building would cost about $30,000 less.

After the conversation on May 14th, King addressed the following letter to plaintiff: 'In view of the...