Warshauer v. Bauer Const. Co.

• Decision Date: 21 March 1960
• Docket Number: No. 18755,18755
• Citation: 179 Cal.App.2d 44,3 Cal.Rptr. 570
• Court: California Court of Appeals Court of Appeals
• Parties: Bernard L. WARSHAUER and Cecelia Warshauer, his wife, Plaintiffs and Appellants, v. BAUER CONSTRUCTION CO., Inc., a corporation, and Louis Lesser Enterprises, Ltd., a limited copartnership, doing business under the fictitious name and style of Bauer-Lesser; Wilson Dills Realty Co., a corporation, Defendants and Respondents.

Page 570

3 Cal.Rptr. 570

179 Cal.App.2d 44

Bernard L. WARSHAUER and Cecelia Warshauer, his wife, Plaintiffs and Appellants, v. BAUER CONSTRUCTION CO., Inc., a corporation, and Louis Lesser Enterprises, Ltd., a limited copartnership, doing business under the fictitious name and style of Bauer-Lesser; Wilson Dills Realty Co., a corporation, Defendants and Respondents.

No. 18755.

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

March 21, 1960.

Hearing Denied May 18, 1960.

Charles M. Stark, Paul W. McComish, San Francisco, for appellants.

Charles J. Katz, Herbert Resner, Los Angeles, W. L. A. Calder, San Francisco, Carr, McClellan, Ingersoll & Thompson, Burlingame, and Richard E. Hawk, Burlingame, of counsel, for respondents.

TAYLOR, Justice pro tem.

This is an appeal from a judgment after trial by the court denying plaintiffs a recovery from defendant Bauer-Lesser of a $4,070 down payment on a house collected by Bauer-Lesser's sales agent, defendant Wilson Dills Realty Co.

The material facts are not in dispute. On July 7, 1955, the defendant Bauer-Lesser and defendant Wilson Dills Realty, hereafter referred to as defendant Dills, executed an exclusive sales agency agreement which provided that defendant Dills was to pursue the sale of homes in defendant Bauer-Lesser's subdivision, handle financing arrangements for the prospective purchaser, prepare and complete loan papers, and do other ordinary work of a real estate agent. It also provided that defendant Dills was to deliver to defendant Bauer-Lesser for deposit in a trust account all deposits received from purchasers in the form received, with checks endorsed by Dills if necessary for collection, and Dills was to hold all deposits in trust in the form received until so delivered.

On November 1, 1956, the defendant Dills sold a home to the plaintiffs. Plaintiffs gave a deposit check of $100 to Dills and executed a 'Purchase Agreement and Deposit Receipt.'

The purchase agreement and deposit receipt was a printed form containing, among others, the following clauses:

'First The full purchase price shall be $18,150.00 lawful money of the United States. Said purchase price is to be obtained from the proceeds of a FHA mortgage loan in the amount of $14,200.00 for a term of 20 years and the balance of $3950.00 to be paid from the purchaser's cash assets at the time of the close of the beforementioned loan. * * *

'Third It is estimated that the purchaser's share of the closing expenses in connection with this transaction will be approximately $550.00, payable on demand upon notification by the Wilson Dills Realty Co., in whose offices this transaction will be consummated.

'Fourth Receipt of $100.00 paid by the purchaser in part payment of the above is herein acknowledged by the seller or his authorized agent.

'Fifth It is further agreed that in the event the purchaser is unable to obtain the mortgage loan referred to in Paragraph One, his cash deposit, as set forth in Paragraph Four, shall be refunded by the seller upon notification by the lender of the rejection of the loan application.' (Emphasis added.)

This agreement was accepted and signed by the principal defendant Bauer-Lesser on November 12, 1956, and the $100 deposit check was delivered to them by their agent Dills.

The plaintiffs wanted to move into the house pending the FHA financing. On November 15, 1956, plaintiffs entered into a written agreement with Dills, as 'Agent for Owner,' (Emphasis added) permitting plaintiffs possession of the home until recordation of the deed, at $2 per day rental. Plaintiffs agreed to pay attorney's fees and costs in the event of eviction, and also the cost of replacement of any damaged property. Before executing this agreement, the defendant Dills demanded and received plaintiffs' check made out to 'Wilson Dills, Trustee' in the amount of $3,970, 'Down Payment & 2 months rent * * *'. This check was never delivered by Dills to Bauer-Lesser. Plaintiffs moved into the premises and paid additional rent pursuant to this agreement.

The plaintiffs inquired of defendant Dills several times about the status of the FHA loan and delivery of the deed and were given evasive answers. On April 16, 1957, plaintiffs received written notice from defendant Bauer-Lesser that Dills was no longer agent for collection of rents. Subsequently the plaintiffs called Bauer-Lesser demanding the deed to their property or return of their money. On June 27, 1957, defendant Bauer-Lesser demanded in writing that plaintiffs vacate the premises, and after receiving a notice to quit, dated July 9, 1957, plaintiffs relinquished possession.

The defendant Dills absconded with the $3,970 paid him by the plaintiffs, and they filed an action against both the agent Dills and principal Bauer-Lesser to recover the money. The defendant Bauer-Lesser counterclaimed against the plaintiffs for unpaid rentals, and it was stipulated at the trial that the amount thereof was $52. The trial court gave judgment to the plaintiffs against agent Dills in the amount of $4,070 plus costs and interest, but found for the defendant Bauer-Lesser on the complaint and awarded $52 against the plaintiffs on the counterclaim for rental. The plaintiffs appeal from that part of the judgment denying them recovery of $4,070 from defendant Bauer-Lesser.

The plaintiffs contend that defendant Dills in accepting the deposit and down payment, was acting within the scope of his authority as agent and that the defendant Bauer-Lesser as principal is therefore liable for the loss to plaintiffs due to Dill's misconduct.

Section 2338 of the Civil Code provides: 'Principal's responsibility for agent's negligence or omission. Unless required by or under the authority of law to employ that particular agent, a principal is responsible to third persons for the negligence of his agent in the transaction of the business of the agency, including wrongful acts committed by such agent in and as a part of the transaction action of such business, and for his willful omission to fulfill the obligations of the principal.'

The express or implied scope of authority actually conferred upon an agent may be determined either by written or oral authorization or by the conduct of the principal and agent in their business relationships. Smith v. Schuttpelz, 1 Cal.2d 158, 33 P.2d 836.

The agent Dills was acting within the scope of his authority in accepting the $3,970. The exclusive agency contract provides that defendant Dills is 'to deliver to Bauer-Lesser for deposit in a trust account, all deposits received from purchasers in the form received,' (Emphasis added) and provides for his endorsement thereon where necessary. The agreement sets no limitation as to the size of deposits. This agreement, then, clearly implies actual authority in the agent Dills to receive as payee deposit checks of unlimited amounts from the purchasers of homes.

The purchase agreement and deposit receipt which was filled in and submitted by the agent Dills for plaintiffs' signatures at the time the $100 deposit was collected and before the agreement was executed by the principal Bauer-Lesser gives further evidence of the agent's authority to accept unlimited deposits from the purchasers. The form of this agreement approved by the principal,...