Tyrone v. Kelley

• Decision Date: 06 December 1971
• Citation: 21 Cal.App.3d 817,99 Cal.Rptr. 290
• Parties: Norman TYRONE, d. b. a. Financial Services, Ltd., a corporation, Plaintiff and Respondent, v. William E. KELLEY et al., Defendants and Appellants. Civ. 28529.
• Court: California Court of Appeals Court of Appeals

Page 290

99 Cal.Rptr. 290

21 Cal.App.3d 817

Norman TYRONE, d. b. a. Financial Services, Ltd., a corporation, Plaintiff and Respondent, v. William E. KELLEY et al., Defendants and Appellants.

Civ. 28529.

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

Dec. 6, 1971.

For Opinion on Hearing, see 106 Cal.Rptr. 761, 507 P.2d 65.

John E. Thorne, representing Thorne, Stanton, Cloptin, Herz, Stanek & Steinberg, San Jose, for plaintiff and respondent.

David W. Lennihan, representing Brobeck, Phleger & Harrison, San Francisco, for defendants and appellants.

SIMS, Associate Justice.

Defendants, the general partners in Triad, a limited partnership, and Triad itself, have appealed from a judgment which awarded the respondent Tyrone, who was made a party plaintiff by amendment of the complaint at the commencement of the trial, the sum of $200,000 with interest from April 9, 1965 as an agreed fee for finding a lender which committed itself to lend Triad the moneys it sought to finance construction of an office building.

The defendants contend that the evidence does not support the finding that there was an agreement to pay a fee in the amount of $200,000 or roughly equivalent to 3 percent of the amount of the loan commitment, nor the finding that there was an agreement to pay any fee to Tyrone, individually, doing business as Financial Services, Ltd., nor the finding that the defendants, individually, as distinguished from Triad, the limited partnership, had any dealings with Financial Services, Ltd. They also assert that neither Financial Services, Ltd., the partnership, with which Triad Allegedly did deal, nor Tyrone, doing business under that name, can recover in this action because the business was not licensed under the laws of this state as a real estate broker, and because the business did not comply with the fictitious name statute.

It is concluded that the evidence was sufficient to sustain the court's finding that there was an agreement to pay a fee of $200,000; that the court erred in determining that the agreement was with Tyrone, individually, as distinguished from with Financial Services, Ltd., a partnership; that the court erred, but not prejudicially, in finding that two of the general partners in Triad contracted individually for the fee; that on the record neither Tyrone nor Financial Services, Ltd. can recover because of a failure to comply with the provisions of section 10136 of the Business and Profession Code; and that the court on the record properly overruled defendants' plea predicated on lack of compliance with the fictitious name statute. For reasons set forth below the judgment is reversed and remanded for further proceedings.

In 1963 defendant Hare, Brewer & Kelley, Inc., a corporation involved in the real property development business, was engaged in developing a shopping center-office tower combination development. The construction of the office building, which involved the financial commitment which gave rise to this controversy, was undertaken by the defendant Triad, a limited partnership. William K. Kelley, Ryland Kelley, Alma Developments, a limited partnership, Hare, Brewer & Kelley, Inc., a corporation, and Portola Development Company, a corporation, as general partners, and ten limited partners made up the partnership when the loan commitment was secured. All of the general partners were made defendants in this suit. ¹ General partners William K. Kelley and Ryland Kelley represented Triad in all matters involved in this action.

William Hammond, one of the original plaintiffs in this action was engaged in the business of securing F.H.A., G.I. and conventional home loans for savings and loan and insurance companies. Prior to the events giving rise to this controversy he had formed a partnership with the plaintiff William Sockle and had built some houses and some apartments in Las Vegas. At some time in the spring or early summer of 1963, Sockle made arrangements with Financial Services, Ltd. whereby Sockle became the latter's western states' representative. Hammond, through Sockle, became associated with Financial Services, Ltd. and subsequently carried its card.

The original complaint named 'Financial Services, Ltd., a corporation' as the third plaintiff. In their answer the defendants alleged as a second affirmative defense that Financial Services, Ltd., as a foreign corporation transacting intrastate business in California, had not qualified to do business and lacked capacity to sue under the provisions of section 6801 of the Corporations Code. ² At the outset of the trial, on the motion of the attorney for three named plaintiffs and his representation that Financial Services, Ltd. was not a corporation, the court ruled, over the defendants' objection, that the complaint could be amended on its face to show that Norman Tyrone and Financial Services, Ltd. are one and the same. The plaintiff and respondent, Tyrone, testified that Financial Services, Ltd. was a partnership consisting of himself, who signed as president, his wife, his brother and Richard N. Robinson, who signed for the enterprise as vice-president. According to its letterhead, Financial Services, Ltd. was engaged in business as 'Financial Consultants-Mortgage Bankers-Appraiser-Real Estate Brokers' with offices in Atlanta, New York and Miami, and representatives throughout the world. By August 1964, when the loan commitment was negotiated by Triad, it had established a fourth office in Santa Monica, California.

In May 1963, apparently as a result of nationwide publicity about the shopping center project, there was a telephone conversation between Tyrone and W. K. Kelley, which was followed up by a letter subscribed 'Financial Services, Ltd., Norman Tyrone President' offering to help in securing financing for the shopping center. A copy of this letter was sent to Sockle.

In the late summer of 1963, Hammond, as correspondent of a large mortgage banking company, came to the real estate office of Hare, Brewer & Kelley, to discuss G.I. and F.H.A. home loans. He was advised that the firm had their own correspondent. Ryland Kelley told him about their office complex and their desire to finance it and a shopping center with a construction loan of $14,000,000. Hammond told Kelley, with Sockle and Financial Services, Ltd. in mind, that he had contacts who were interested in loans of the magnitude required. According to Ryland Kelley, he committed Triad to pay a fee of from 5 to 10 percent of one percent of the amount of the loan. Hammond denied that there was any discussion of a fee for securing a loan. The trial court apparently accepted Hammond's version.

Thereafter Hammond furnished a three page application form bearing the legend at the end, 'Financial Services, Ltd. Mortgage Bankers.' This form and 11 additional pages were filled out and signed by Ryland Kelley on behalf of 'Kelley et al.' as the prospective mortgagor. The data sheets for both the office tower, and the shopping center each included under 'Other Costs,' 'Misc. Fees & Commissions $200,000.00.' Although the application is undated, it includes and architect's statement of the areas contained in the tower, dated October 31, 1963, and a general statement of the nature of the two developments, dated November 4, 1963.

Hammond sent the application to Sockle who forwarded it on to Financial Services, Ltd in Atlanta. Tyrone testified that on the receipt of the application, about the middle of November 1963, he telephoned W. K. Kelley to verify that the Kelleys were seeking the loan and had executed the application form. It was in this conversation, which is reviewed below, that Kelley allegedly agreed to a fee of $200,000, being a rounded off 3 percent of $7,000,000.

The court found that following the conversation with Kelley, '. . . Tyrone, phoned a lender, The Sixty Trust, in Rhode Island and found that their representative, Mr. John Cervieri was in San Francisco on business . . .. Tyrone, then phoned from Atlanta, Georgia, to Mr. Cervieri in San Francisco and asked him to call upon the Defendants at Defendant's office in Palo Alto, as The Sixty Trust was a lender of money. This representative of The Sixty Trust called upon the Defendants, but after talking with them for some time concerning the possible basis for The Sixty Trust to finance Defendant's building, the Defendants advised the representative that the costs would be too high and they would not pursue the matter further.'

After the meeting between the representative of The Sixty Trust and the defendants (the Kelleys), Tyrone visited their office in Palo Alto, and suggested that they revise their request by treating the financing for the office building and that for the shopping center separately. Although there is some confusion as to whether this meeting occurred before or after the meeting with Cervieri the evidence sustains the court's finding that it was later.

On December 10, 1963 vice-president Robinson wrote Ryland Kelley suggesting two methods of accomplishing the financing plan for the proposed shopping center and office building. At that time the Kelleys considered the proposals as unsatisfactory.

Both Tyrone and the Kelleys continued to endeavor to find a lender to lend funds for the construction of the office building. In July or August 1964 the Kelleys reopened negotiations with The Sixty Trust. These negotiations resulted in a final commitment April 9, 1965 for a loan in a maximum sum of $7,000,000. On August 7, 1964, W. K. Kelley wrote Hammond that they were getting together with the representative of The Sixty Trust and should be negotiating a fee. On the same day Tyrone, in writing Hammond about another matter which had been referred to financial Services, Ltd., stated 'Bill [presumably Sockle] undoubtedly has posted you on Bill Kelley's deal which we hope we are going to wrap up in very short order.' On August 12, Cervieri, the representative of The Sixty...