Pederson v. Johnson

• Decision Date: 27 May 1919
• Citation: 172 N.W. 723,169 Wis. 320
• Parties: PEDERSON v. JOHNSON.
• Court: Wisconsin Supreme Court

169 Wis. 320

172 N.W. 723

PEDERSON

v.JOHNSON.

Supreme Court of Wisconsin.

May 27, 1919.

Appeal from Circuit Court, Polk County; Frank A. Ross, Judge.

Action by Jens P. Pederson against Henry Johnson. Judgment for plaintiff, and defendant appeals. Affirmed.

The plaintiff is a farmer, and entered into a contract of agency with the defendant, a real estate broker, which contract, after describing the property, the amount of incumbrance thereon, recited:

“Lowest price and terms of sale, $20,500. This is to certify that I have listed the above-described land with Henry Johnson for sale or trade for a period of twelve months, and I agree to pay five per cent. commission, out of first money received on sale.

Dated November 23, 1915.

Jens P. Pederson.”

On February 10, 1916, the defendant, in the name of his principal, entered into a so-called earnest money contract of sale, which acknowledged the receipt from one A. R. Mudge of $1,000 “as earnest money and in part payment for the payment of the following described property,” describing the same property described in the option, “which I have this day sold and agreed to convey to the said A. R. Mudge for the sum of $20,500 on terms as follows, viz.: $1,000 in hand paid as above and $8,000 or more on or before March 1, 1916; $3,000 to be settled by mortgage on above-described land, $8,500 now a first mortgage to be assumed by purchaser, with interest,” etc. The option then recited other agreements, and continued:

“And it is agreed that, if the title to said premises is not good and cannot be made good within thirty days from date when first payment shall become due, this agreement shall be void, and the above-mentioned thousand dollars ($1,000) refunded. But if the title to said premises is then good, in the name of grantor, and said purchaser refuses to accept the said same, thousand dollars ($1,000) shall be forfeited to Henry Johnson as liquidated damages. Jens P. Pederson, by Henry Johnson, Agent.”

A few days later the defendant secured the plaintiff's signature to a copy of the contract of sale under circumstances found by the trial court as follows:

“I further find that said plaintiff was not either at the time of signing said Exhibit 4 [copy of earnest money contract] nor at any time prior thereto able to write and read the English language, and that the said defendant did not in any manner read or explain the terms of said Exhibit 4 to said plaintiff, but, on the contrary, told said plaintiff that the paper which defendant then signed and there requested said plaintiff to sign was a paper which was necessary to be signed to close the deal and which paper was to be sent to said Mudge to effect that purpose, and that said plaintiff, relying upon the statements thus made to him by said defendant, signed said paper, and not otherwise.”

This finding is not assailed. The $1,000 was paid to the defendant by means of a draft, which was deposited for collection and thereafter protested. The draft was indorsed by one Peltier, a subagent of the defendant, who then went to Minnesota, the home of the purchaser, procured the payment of the $1,000, returned with the money, paid $600 of it to the defendant, and retained the $400 for himself as claimed compensation for his services as subagent. The purchaser forfeited the earnest money and was released from the contract. Some time afterwards the plaintiff discovered the fact that $1,000 had been paid on account of the contract, and made demand for payment thereof to him, and, upon the defendant's refusal to pay, brought this action to recover the $1,000. The case was tried by the court without a jury. The court found the material facts as stated and other facts, and upon such findings the plaintiff had judgment for $1,000, from which judgment the defendant appeals.Kennedy & Yates, of Amery, for appellant.

McNally & Doar, of New Richmond, for respondent.

ROSENBERRY, J. (after stating the facts as above).

[1] The defendant contends that the court erred in finding that he was to receive $1,000 for his services as agent, and contends that the court should have found that he was to receive 5 per cent. commission on the sale price of $20,500. This finding we consider wholly immaterial in any aspect of the case. The defendant never sold the premises and never became entitled to any commission.

[2] Defendant's next contention is that the court erred in finding that the draft was paid. This is purely technical and has no merit. Whether the draft itself was in fact taken up and canceled is immaterial. The purchaser under the earnest money contract of sale paid the $1,000 to Peltier on account and in discharge of his liability under the earnest money contract. That fact is undisputed.

[3] The third contention of the defendant is stated by counsel as follows:

“The particular clause in the contract relating to the forfeiture of the $1,000 to Henry Johnson as liquidated damages the plaintiff testifies that he knew nothing about, had never authorized, and never agreed to. If this is true, then the plaintiff was not bound by Exhibit 3 [earnest money contract], neither would he have any interest whatever in the $1,000, and the disposition of the $1,000 would be wholly a matter between the defendant and purchaser, unless the plaintiff thereafter ratified and agreed to this contract. On the other hand, if the plaintiff had ratified and agreed to this contract, then the plaintiff agreed that the $1,000 should be forfeited to Henry Johnson as liquidated damages.”

This argument sounds remarkably like the ancient maxim of “Heads I win, tails you lose.” If the principal ratifies the contract, the earnest money, if forfeited, belongs to the agent by the terms of the contract; if he does not ratify, he has no interest in it. The argument ignores the fact that an agent must be loyal to his principal and act with the utmost good faith. No question as to...