Russell v. Combs

• Decision Date: 12 February 1921
• Docket Number: 23,007
• Citation: Russell v. Combs, 108 Kan. 411, 195 P. 605 (Kan. 1921)
• Parties: MARY CASEY RUSSELL and J. M. RUSSELL, Appellants, v. GEORGE COMBS, Appellee
• Court: Kansas Supreme Court

195 P. 605

108 Kan. 411

MARY CASEY RUSSELL and J. M. RUSSELL, Appellants, v. GEORGE COMBS, Appellee

No. 23,007

Supreme Court of Kansas

February 12, 1921

Decided January, 1921.

Appeal from Reno district court; FRANK F. PRIGG, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. VENDOR AND PURCHASER--Option to Purchase Real Estate--Rights of Vendor to Cancel Executory Contract. Where the owner of real estate, for a sufficient and valid consideration, grants a written option to purchase such property, which option is to endure for a year, and the grantee exercises the right to purchase within that time, the contract granting such option is not revocable by the grantors and they are not entitled to a decree in equity cancelling such contract.

2. AGENCY--Valid Contract of Agency--When Principal May Not Cancel Agency. Equity will not intrude to cancel a valid contract of exclusive agency to sell real estate, when within the time such exclusive agency was to endure, the agent has devoted time and effort to find a purchaser and has incurred a possible liability to a third party in reliance upon the contract of agency thus accorded to him.

F. Dumont Smith, Eustace Smith, C. M. Williams, and D. C. Martindell, all of Hutchinson, for the appellants.

F. L. Martin, John M. Martin, and Walter F. Jones, all of Hutchinson, for the appellee.

OPINION

DAWSON, J.:

This was a suit to cancel a written contract granting an exclusive agency to sell a hotel at a net price to the owner, and included therewith was a grant of an option to purchase the property.

The plaintiffs owned a hotel property in Hutchinson. It was covered by two mortgages, one for $ 16,000 and a second mortgage for $ 4,000. The defendant was the trusted agent of the plaintiffs and had faithfully attended to their business for a number of years. By the contract in question plaintiffs gave the defendant an exclusive agency for one year, beginning January 8, 1919, to sell the property for whatever sum he pleased so long as it produced $ 50,000 net to plaintiffs less the mortgage indebtedness. It also provided that the defendant should have the option to contract "said lots to purchasers in his own name or name of second party."

About five months after the execution of the contract, this suit was begun by plaintiffs to cancel it on the ground of fraud, which alleged fraud was the false representation of defendant that the holder of the second mortgage would not carry that loan but would foreclose such mortgage unless plaintiffs gave defendant an option on the hotel property at $ 50,000, which false representation was relied upon by plaintiffs, and that the junior mortgagee did not contemplate a foreclosure; and that the contract was without consideration.

Plaintiffs further alleged that defendant had wholly failed to advertise the property, and had wholly failed to effect a sale of it; and that the contract was a cloud on their title and prevented them from securing a renewal of either the first or second mortgages. They prayed that the contract be declared void and that it be removed as a cloud on their title.

Defendant's answer was a general denial except an admission as to the execution of the contract, and that pursuant to its terms he had immediately made efforts to sell the property. The answer further alleged that his efforts to find a purchaser had culminated, on November 3, 1919 (five months after this action was begun), in a contract for the sale of the property for $ 60,000 to one Walter Grundy.

Accompanying defendant's answer was a cross petition reciting the facts of defendant's contract with Grundy, and he prayed that the plaintiffs be required to furnish abstract and deed to Grundy in accordance with the contract of agency. Later, defendant dismissed his cross petition, and moved for judgment on the pleadings. The motion was denied.

A jury was waived, and the cause was tried by the court. Special findings of fact were made by the court. That feature of the contract which gave the defendant an option to purchase was cancelled, but the agency feature of the contract was upheld.

The findings, in part, read:

"1. That the defendant Combs told the plaintiff at the time the contract exhibit 'A' was signed that the bank would not renew the $ 4,000 second mortgage unless she would give Combs an option on said property at $ 50,000, and that said statement was false. Combs did not say that said mortgage would not be renewed if plaintiff did not give him the agency to sell said property.

"2. That Combs did not at any time exercise or attempt to exercise his option to purchase, and the option to purchase was withdrawn by the plaintiff.

"3. That the plaintiff was able to pay said second mortgage and did pay it in June, 1919, and plaintiff was not injured by said statement; that the bank was willing to carry the mortgages.

. . . .

"8. That Combs' services for seven years as agent for plaintiff and the satisfactory manner in which he had attended to plaintiff's business, and her confidence in Combs, and her willingness to sell said property for $ 50,000, net to her, were the causes that induced plaintiff to execute said contract and Combs' statement as to renewal of mortgage was not what induced plaintiff to sign the contract.

"9. That in February, 1919, the defendant, George Combs, told Ed McNaghten he, Combs, would give McNaghten $ 2,000 if he would sell the property in question for $ 60,000. McNaghten, in April, 1919, began trying to sell said property to Walter Grundy and continued his efforts until November 3, 1919, at which time he did sell said property to Walter Grundy and others for $ 60,000. . . .

"10. That the plaintiff did not make any attempt to rescind the contract in evidence as exhibit 'A' until after Combs had made the said arrangement to pay $ 2,000 to sell said property for $ 60,000 and until after McNaghten had begun to try to sell to Grundy.

"CONCLUSIONS OF LAW.

. . . .

"2. That as the false statement made by Combs was not the inducing cause of the execution of said contract by plaintiff, and as plaintiff was able to pay said mortgage and did pay it, and...