Tyrone v. Kelley, S.F. 22892

CourtUnited States State Supreme Court (California)
Citation507 P.2d 65,9 Cal.3d 1,106 Cal.Rptr. 761
Decision Date09 March 1973
Docket NumberS.F. 22892
Parties, 507 P.2d 65 Norman TYRONE, Plaintiff and Respondent, v. William K. KELLEY et al., Defendants and Appellants. In Bank

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

Evelle J. Younger, Atty. Gen., Herbert E. Wenig, Asst. Atty. Gen., and Richard I. Gilbert, Deputy Atty. Gen., amici curiae on behalf of defendants and appellants.

Thorne, Clopton, Herz & Stanek, John E. Thorne and Elizabeth Cobey, San Jose, for plaintiff and respondent.

Bernard Reich, Beverly Hills, amicus curiae on behalf of plaintiff and respondent.


Defendants appeal from a judgment for plaintiff Norman Tyrone in this action to recover a fee for finding a lender which committed itself to loan defendants up to $7,000,000 for a construction project.

In 1963, defendant Hare, Brewer & Kelley, Inc., a corporation, initiated plans to develop a shopping center and office building in Palo Alto, with construction to be undertaken by defendant Triad, a limited partnership. 1 The construction project was widely publicized.

In May of 1963, after a telephone conversation between William K. Kelley and Norman Tyrone, a letter subscribed 'Financial Services, Ltd., Norman Tyrone, President' was sent to Kelley from Tyrone's office in Atlanta, Georgia, offering help in securing a loan for the construction of the planned buildings. There was apparently no immediate follow-up on the letter, and neither Kelley nor Tyrone remember either the telephone conversation or the letter, characterized by Tyrone as a general flier and by Kelley as similar to many letters he received as a result of the publicity on the project.

In the summer of 1963, William Hammond visited Ryland Kelley to interest him in a plan for financing residences. On this visit, Kelley told Hammond about Triad's desire for a $14,000,000 loan to finance the construction of the office building and shopping center. Hammond, who was affiliated with Financial Services and Norman Tyrone through his partner William Sockle, stated that he had a contact who might be interested in a loan of that size and mentioned Tyrone.

After this conversation, Hammond telephoned Tyrone and wrote to him concerning the Kelleys' loan. Tyrone sent Hammond a loan information form bearing the legend 'Financial Services, Ltd. Mortgage Bankers' which was used by Tyrone to evaluate prospective customers. He asked Hammond to have the Kelleys fill out the form.

In November of 1963, the loan form and an additional 11 pages of information on the planned buildings were completed by Ryland Kelley. The data were sent to Tyrone in Atlanta, Georgia, by Hammond.

According to Tyrone, he immediately called Kelley, and discussed a fee for his assistance in procuring a loan. Neither of the Kelleys remember this conversation. Tyrone testified that there had been a specific agreement between him and Triad for a 3 percent fee, while the defendants testified that there had been no such agreement. They insisted that the only agreement was one between them and Hammond for a reasonable fee made at the time of Hammond's first conversation with Ryland Kelley.

Tyrone immediately contacted The Sixty Trust, a lender located in Rhode Island, to interest it in loaning the Kelleys the money they needed. Tyrone learned that a representative of The Sixty Trust, Mr. Cervieri, was In San Francisco on business. He telephoned Cervieri in San Francisco, asking him to visit the Kelleys while he was in California and informing him that he had forwarded Triad's financial data to The Sixty Trust's Rhode Island office.

In December of 1963, Cervieri and the defendants met to discuss financing of the buildings. There is no claim that Cervieri and the defendants would have met without Tyrone's introduction. No agreement was reached between the defendants and The Sixty Trust at this time.

Tyrone, upon learning that there was no agreement for a loan between The Sixty Trust and Triad, sent a letter to Triad suggesting alternative methods of financing. Tyrone also visited the defendants in Palo Alto, discussing their plans and urging them to finance the office building and shopping center separately. His visit was followed by a visit to the defendants by the vice president of Financial Services, who again urged separate financing. The Kelleys found all of the financing methods suggested by Financial Services unsatisfactory.

Both Tyrone and the Kelleys continued to search for a lender who would agree to Triad's terms. In the summer of 1964, after the failure of all attempts to find a lender, the Kelleys reopened negotiations with The Sixty Trust, agreeing to the separate financing initially suggested by The Sixty Trust and by Financial Services.

The Kelleys did not inform Tyrone of the reopened negotiations or of the agreement. Tyrone first learned from Cervieri that negotiations had reopened and later when agreement was near, heard about the negotiations from Sockle and Hammond who had been informed of the negotiations by the Kelleys at the insistence of The Sixty Trust.

In August of 1964, when The Sixty Trust committed itself to lend Triad up to $7,000,000, The Sixty Trust wrote to Triad concerning Triad's payment of fees to Financial Services for introducing it to Triad. The Kelleys then wrote Hammond with respect to the payment of a fee and met with Hammond, offering him $10,000.

Hammond indicated that he had no authority to accept a fee without the approval of Tyrone. He and Tyrone then met with the Kelleys in California to discuss a fee arrangement. No agreement on a fee was reached, and Tyrone filed suit against Triad and all of its general partners.

When the complaint was initially filed on October 5, 1965, the plaintiffs were William Hammond, William Sockle and Financial Services, Ltd., listed as a corporation. The defendants 2 answered the complaint on July 13, 1966, denying all the material allegations of the complaint and alleging as special defenses that Tyrone was not a licensed real estate broker and thus the action was barred by sections 10130, 10131, and 10136 of the Business and Professions Code, which require all real estate brokers operating in California to be licensed in the State of California, and that Financial Services had not registered as a foreign corporation and thus the action was barred by section 6801 of the Corporations Code, which requires all foreign corporations transacting business in California to register in California.

At the beginning of the trial in February of 1969, over the objections of the defendants, the complaint was amended and Norman Tyrone, doing business as Financial Services, Ltd., was substituted as plaintiff.

On the fourth day of the trial, over the objections of the plaintiff, the defendants moved to amend their answer to raise a third affirmative defense, the failure of Tyrone to file a certificate that he was doing business under a fictitious name pursuant to former section 2466 of the Civil Code. 3 The court reserved ruling on this motion but on the last day of trial, it denied a motion for a nonsuit made by the defendants on this ground, ruling that the plaintiff's failure to file a certificate that he was doing business under a fictitious name was a mere matter of abatement and not a jurisdictional defect.

The court found that defendants had requested Tyrone's services; that the defendants had agreed to pay Tyrone a fee of 3 percent of the loan desired or approximately $200,000, if Tyrone could find a lender, but refused either to acknowledge their debt when Tyrone performed his part of the agreement or to negotiate a fee with him in good faith; that the defendants made no agreement for a fee with Hammond; that neither Tyrone nor Hammond nor Sockle participated in any negotiations between The Sixty Trust and Triad, and, in fact, none of them even knew of the negotiations until the agreement was reached; that none of the plaintiffs were licensed real estate brokers in California and that defendants were not prejudiced by the amendment of the complaint to substitute Norman Tyrone as plaintiff.

The court concluded that there was a contract fully performed by Tyrone for $200,000 or a 3 percent fee; that Tyrone acted as a finder and not a real estate broker and was not required to be licensed; that Tyrone was not required to file a certificate of doing business under a fictitious name; that Tyrone was entitled to a judgment for $200,000; and that neither Hammond nor Sockle was entitled to a judgment.

The trial court's finding that there was a contract between the parties for a 3 percent or $200,000 fee is supported by the evidence and cannot be disturbed on appeal.

Where, as in the instant case, there is conflicting evidence, all doubts shall be resolved in favor of the trial court's decision. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429, 45 P.2d 183, 6 Witkin, Cal.Procedure (1971) Appeal, § 245, pp. 4236--4237.) The trial court's decision will be overturned only where there is no substantial evidence in support of the trial court's decision and thus there can be no doubt of its erroneous nature. (Estate of Teel (1944) 25 Cal.2d 520, 527, 154 P.2d 384; 6 Witkin, Cal.Procedure (1971) Appeal, § 249, p. 4241.) There was sufficient evidence of the agreement, and the court was not required to accept defendants' contrary evidence. Tyrone presented ample evidence of an agreement between him and Triad and it must be assumed that the defendants' contrary evidence was not believed.

Defendants urge that Tyrone is not entitled to a judgment against them on the agreement since he performed the services of a real estate broker in California, but was not licensed as a broker in California. They maintain that his recovery is barred under the provisions of section 10136 of the Business and...

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