Setser v. Commonwealth, Inc.

• Decision Date: 09 September 1970
• Citation: 470 P.2d 142,256 Or. 11
• Parties: Bill SETSER, Appellant, v. COMMONWEALTH, INC., a corporation, Respondent.
• Court: Oregon Supreme Court

Page 142

470 P.2d 142

256 Or. 11

Bill SETSER, Appellant, v. COMMONWEALTH, INC., a corporation, Respondent.

Supreme Court of Oregon.

Argued and Submitted Dec. 11, 1969.

Decided June 10, 1970.

Rehearing Denied Sept. 9, 1970.

Donald C. Walker, Portland, argued the cause and filed briefs for appellant.

Howard M. Feuerstein, Portland, argued the cause for respondent. With him on the brief were George H. Fraser, Cleveland C. Cory, and Davies, Biggs, Strayer, Stoel & Boley, and Herbert H. Anderson and McColloch, Dezendorf, Spears & Lubersky, Portland.

Before PERRY, ^* C.J., and SLOAN, O'CONNELL, DENECKE and HOLMAN, JJ.

O'CONNELL, Justice.

Plaintiff brings this action to recover a broker's commission alleged to have been earned as a result of producing a purchaser for the sale of property owned by defendant. The jury returned a verdict in favor of plaintiff. Upon defendant's motion, the trial court entered a judgment for defendant notwithstanding the verdict. Plaintiff appeals.

Martin Manor, Inc. owned Cedar Hills Manor, a 100-unit apartment house. The property was subject to a mortgage for $580,000 held by New York Life Insurance Company. Commonwealth, Inc., the defendant, owned all of the common stock of Martin Manor, Inc.

In the latter part of 1964, plaintiff and his saleswoman, Mrs. Abbott, sought out Mr. Jeffrey Holbrook, then executive vice president of defendant. Plaintiff testified at trial that when plaintiff inquired whether Cedar Hills Manor was for sale, Holbrook stated that it was and that Commonwealth wanted $750,000 for the property.

Plaintiff told Holbrook that he would expect a commission of $28,000. Holbrook declined to give plaintiff a written listing but, according to plaintiff's testimony, Holbrook indicated that if plaintiff 'got a purchaser that would pay the price that he (Holbrook) wanted, net, plus our commission, $778,000, that he would make sure that we got our commission.' Commonwealth agreed to protect plaintiff by quoting $778,000 as the price to other prospective purchasers.

The sale of Cedar Hills Manor was to be by the sale of the common stock of Martin Manor, Inc. Plaintiff, however, computed the amount of his commission as though the transaction were a sale of real estate, using realty board rates.

After showing the property to three other prospective purchasers, Mrs. Abbott showed the property to Mr. and Mrs. Glenn Allen and soon thereafter Mrs. Abbott drew up a Stock Purchase Agreement, the pertinent parts of which are set out in the margin. ¹ The Allens signed the agreement. A few days later plaintiff, Mrs. Abbott and Mr. Allen met with Mr. Holbrook at the Commonwealth office. Mr. Holbrook was then handed the Stock Purchase Agreement, which he read.

On direct examination plaintiff testified that after Holbrook read the Stock Purchase Agreement, Holbrook said, "This is a deal. This is a sale.' * * * 'There's no problems here.' * * * 'We'll go ahead and close the sale." As plaintiff was leaving, Holbrook said to plaintiff, "You don't look like a broker who has just earned $28,000.00."

On cross-examination, however, plaintiff testified that Holbrook's full statement was: "There are no problems here that we can't work out."

Plaintiff further testified:

'* * * (A)fter he (Holbrook) had accepted the sale, * * * he says, 'There are no problems here.' He says, 'This is a sale.' He says, 'Now, there may be some details that we can work out later,' but he says, 'There are no problems here. This is a deal.'

'Q. Didn't you say a while ago that he said, 'There are no problems here that we can't solve'?

'A. Right. He said, 'There are no problems here that cannot be handled,' and this was mentioned a little latter, and he mentioned this to Allen that there might have to be a servicing fee."

Mrs. Abbott testified that:

'* * * Mr. Holbrook went over the complete agreement, which takes perhaps 10 minutes, and said this was fine, this was a sale, this was a transaction, That there would be details to work out but there would be nothing to it; then he looked at Mr. Allen and said he was very happy to have him as a purchaser.' (Emphasis added.)

She further testified that Holbrook stated that Commonwealth would close the transaction upon the execution of a contract written by its attorneys rather than upon the basis of the Stock Purchase Agreement.

'Q. All right. Now, what, if anything was mentioned there about Commonwealth's signing (the Stock Purchase Agreement)?

'A. Mr. Holbrook said that he would not sign it on that day but he had no doubt that it would be worked out. He said, 'Our attorneys will write the contract,' and Mr. Boley was an attorney for Commonwealth, and, he said, 'We'll write up the contract and we'll close on the contract. '' (Emphasis added.)

Mr. Allen testified as follows:

'* * * (F)irst of all he (Holbrook) mentioned that it was strictly a stock purchase and that as such was a very complicated transaction and at that time he inferred that the offer was not acceptable in its present form but he did concur on the fact that they were willing to continue negotiations and we had something to talk about.'

Plaintiff testified that on several occasions he had requested Mr. Holbrook to sign the Stock Purchase Agreement:

'* * * and he (Holbrook) says, 'There's no need of that.' He says, 'We're closing it out. It will be closed in just a few days.''

Mr. Holbrook testified that he had stated that the Stock Purchase Agreement 'obviously was not acceptable and it could provide a basis for consideration but would require a great deal of consideration and some very definitive changes,' and that the preparation of a counter-proposal would have to be through Commonwealth's attorneys.

Shortly after the conference, Holbrook wrote a letter to Commonwealth's attorney asking him to draft a formal agreement based upon the Stock Purchase Agreement, but with five specific changes.

The draft contract of sale prepared by Commonwealth differed from the Stock Purchase Agreement in a number of respects. The draft contract provided for cancellation of a $106,000 debt which Martin Manor, Inc. owed Commonwealth and which was not mentioned in the Stock Purchase Agreement. The draft provided for a monthly payment of principal and interest of $2,359, the balance to become due at the end of three years; the Stock Purchase Agreement was silent as to the nature of the installments. The draft called for an override on the existing mortgage. It provided that Commonwealth was to have voting rights in the event of default. In the draft, Commonwealth disclaimed any warranty other than good title to the stock. The draft also moved up the date of possession.

The Allens refused to sign the contract submitted by defendant, principally because they finally decided that the property was overpriced.

The trial court held that the evidence was not sufficient to support a finding that defendant accepted the offer contained in the Stock Purchase Agreement.

We concur in the trial court's conclusion that the evidence was insufficient to establish defendant's acceptance of the buyers' offer.

Holbrook's statements: 'This is a deal, this is a sale' and the other comments made by him tending to show that he considered the offer a favorable one were accompanied by other statements indicating that there were problems yet to be resolved before a contract would be created. Holbrook's statements that 'there may be some details that we can work out later' and that 'there are no problems here that cannot be handled,' although expressing Holbrook's optimism that the deal would go through, nevertheless indicated that something more had to be worked out before the contract was complete. This is fortified by the fact that Holbrook refused to sign the Stock Purchase Agreement. He made it clear that the transaction was to close upon the execution of a written contract to be prepared by Commonwealth's attorneys. He said, 'We'll write up the contract and we'll close on the contract.'

No definite test can be laid down to determine whether an offer is accepted. As Mr. Justice Lusk observed in Wagner v. Rainier Mfg. Co., 230 Or. 531, 371 P.2d 74 (1962): 'The cases are legion and * * * no case has a brother.' (230 Or. at 542, 371 P.2d at 79.) The Wagner case does, however, offer some enlightenment for us here. In that case the plaintiff, a contract logger, made an offer to the defendant company. It was contended that the following response by the company constituted an acceptance of the offer:

'Dear Sir:

'In regard to logging the timber on Section 18--T3S--R7W and Section 13--T3S--R8W, which we have discussed with you, we wish to state that we consider your logging bid favorable. We will have our attorney draw up a contract covering points generally outlined in your Plywood Products Timber Company contract.

'We shall need a performance bond, and no doubt a financial statement. However, we can discuss these points later.

'This memo will give you an assurance that we will work out this matter with you subject to such points as our attorney brings up.

'Yours very truly,

'RAINIER MANUFACTURING CO.'

(230 Or. at 535--536, 371 P.2d at 76.)

The court held that the letter did not constitute an acceptance. In comment on the company's response, the court said: 'The language 'we consider your logging bid favorable' is equivocal and, although possibly susceptible to the interpretation that it was intended to be an acceptance, does not necessarily bear that meaning.' (230 Or. at 540, 371 P.2d at 78.)

We think that Holbrook's statements set out above were of the same equivocal character and did not constitute an acceptance of the offer submitted by the Allens.

Although we rest our opinion on the ground that the prospective buyers' offer was not accepted, we wish to take note at this time of another theory upon which the present case could have been decided and although we do not now adopt that theory we think that it is worthy of...