Weber v. Jorgensen

• Decision Date: 17 March 1971
• Citation: 16 Cal.App.3d 74,93 Cal.Rptr. 668
• Court: California Court of Appeals Court of Appeals
• Parties: O. J. WEBER, Plaintiff and Appellant, v. Havener JORGENSEN, Defendant and Respondent. Civ. 11842.

Page 668

93 Cal.Rptr. 668

16 Cal.App.3d 74

O. J. WEBER, Plaintiff and Appellant, v. Havener JORGENSEN, Defendant and Respondent.

Civ. 11842.

Court of Appeal, Third District, California.

March 17, 1971.

[16 Cal.App.3d 76] Lynn Carman, San Francisco, for plaintiff-appellant.

Havener W. Jorgensen, Echo Lake, for defendant-respondent.

JANES, Associate Justice.

Plaintiff appeals from a judgment of dismissal entered in favor of defendant after a demurrer to plaintiff's complaint for a real estate broker's commission was sustained. Leave to amend was granted, but plaintiff elected not to plead further.

ALLEGATIONS OF THE COMPLAINT

Plaintiff was at all relevant times a licensed real estate broker whose services were retained in writing by defendant for the purpose of locating a buyer for certain enumerated resort properties operated as Echo Chalet, Inc. The writing by terms of which plaintiff was retained was executed on August 19, 1965, in the form of an exclusive 'Authorization to Sell' (a standard form of real estate broker's listing agreement) and was signed by plaintiff as broker and by defendant, in his individual capacity, as owner.

The principal terms of the written listing agreement were that defendant employed plaintiff from August 18, 1965, through November 1, 1965, to find a purchaser for the Echo Chalet resort and marina business, consisting of a lease, a special use permit, a license, improvements and personal property thereon including but not limited to the personal property set forth in the listing agreement, all for a sales price of $165,000, one-fourth down and the balance by payments of $10,000 in October annually with interest at 6 percent per annum. The written listing also contained plaintiff's agreement to use diligence in procuring a purchaser; and defendant promised therein to pay plaintiff a commission of 10 percent whether said property was sold by plaintiff, by defendant, by another agent or through any other source, or whether said property was transferred or conveyed or withdrawn In fact (the complaint continues) defendant 'was and is the sole and majority and controlling shareholder of ECHO CHALET, the lessee, permittees (sic) under a special use permit, and licensee under a license, from the United States Government, Department of Interior, Forest Service, of real property with the improvements thereon, located in the County of El Dorado, California and Described in the said lease, special use permit and license of ECHO CHALET, INC., which was for 20 year period with three years expired thereof. ECHO CHALET, INC. was the owner of the personal property located thereon. At all times, defendant by and through his said corporation operated a resort and marina business thereon, using said realty, lease, special use permit, license, improvements, personal property thereon and good-will thereof, known as the Echo Chalet Resort and Marina.'

from sale during the time set forth in the listing agreement.

The listing agreement was silent on the subject of the sale of any corporate property in which defendant held an interest, or the shares thereof. At the time the listing was given to plaintiff, however, defendant told plaintiff that defendant would transfer title to the property by transferring all the stock of the corporation to a buyer of the property, as an incident to the sale of the property, and that the stock transfer agreement would be prepared and handled by an attorney and not by plaintiff.

The complaint further alleges that on or about August 19, 1965 (the date of the listing agreement), and on or about August 30, 1965, 'and thereafter' during the period of the listing agreement, 'plaintiff and defendant orally represented one to the other, and plaintiff and defendant orally modified said listing agreement * * * as follows: plaintiff would receive only $15,000 commission (waiving his right to commission of 10 percent of $165,000), and defendant would accept an offer containing a $37,000 down payment clause (* * * waiving the terms of said listing agreement * * * calling for a down payment of one-fourth of $165,000).'

Thereafter, within the time fixed by the listing agreement, plaintiff (allegedly 'acting in reasonable reliance' on defendant's representations) obtained and communicated to defendant a 10-day offer which conformed to the terms of the listing agreement, as orally modified in the respects above mentioned. The offer, upon which plaintiff bases his claim to a commission, was in the form of a standard deposit receipt, executed by the buyers and signed by plaintiff as broker, and provided for a sales price of $165,000, a down payment of $37,000 in cash, and payment of a $15,000 commission to plaintiff. The offer stated on its face that the buyers were to receive title to the resort '(b)y transfer of all stock in Echo Chalet, Inc.', and that they were to be substituted by election in the place of the existing corporate officers and directors. ¹

Defendant made no objection to any of the terms of the $165,000 offer and did not reject it, but allowed it to expire. Based on the foregoing averments, the complaint alleges that plaintiff fully performed under the listing agreement as orally modified; that he 'changed his position in reasonable reliance upon said oral representations of defendant'; that he 'refrained from soliciting any offers calling for more than $37,000 down payment' and refrained 'from altering the cash payment terms of his commission so as to enable the defendant to obtain the same net cash out of the transaction'; and that he 'obtained the offer * * * set forth.' By reason of the foregoing alleged facts, plaintiff claims that Lastly, it is alleged that from and after August 30, 1965, and during the remainder of the period of the listing agreement, 'the defendant orally represented to plaintiff at all times that * * * (the $165,000 offer) was accepted by (defendant). * * *' Thereby, 'defendant prevented plaintiff from obtaining other purchase offers during the said listing period, and as a proximate result thereof, defendant withdrew thereby the property from sale, and by the terms of the said listing agreement * * *, by such withdrawal of the property from sale the defendant became obligated to pay plaintiff his commission of at least $15,000, no part whereof has been paid, and therein defendant has materially breached the said exclusive-right-to-sell listing agreement * * *, and plaintiff has been damaged by the sum of $15,000 with interest at the rate of seven percent from August 30, 1965.' ²

defendant is estopped to deny due performance.

THE DEMURRER

The demurrer was both general and special. The general demurrer attacked the complaint on the grounds that:

'(a) Its general charging allegations (when read together with the exhibits (the listing agreement and deposit receipt) incorporated therein) fail to state a cause of action;

'(b) It fails to allege that Plaintiff has standing to sue;

'(c) It purports to allege a cause of action arising out of a contract which is void; and

'(c) (sic) It fails because the contract sued upon is void as a matter of law.'

The special demurrer was grounded on plaintiff's failure to allege facts establishing that he possessed the requisite capacity to sue. ³

I.

The first issue to be considered is defendant's contention that there was no effective modification of the listing agreement executed by the parties. If defendant's argument is sound, it would follow that the complaint did not state a cause of action, because the performance alleged by plaintiff would not be the same as that contemplated by the listing agreement.

Defendant points out that by the terms of the listing agreement plaintiff was retained by defendant to obtain a buyer for specifically described real and personal properties upon one set of terms, whereas the complaint alleges that plaintiff obtained, by deposit receipt, a buyer for corporate securities ⁴ upon another and dissimilar set of terms. Patently, the complaint discloses the inconsistent allegations noted, i.e., defendant's initial handling of the assets as his individual property and the alterations in the monetary terms of the contract (e.g., reduction of the down payment from $41,250 to $37,000 and of plaintiff's agreed commission from $16,000 to $15,000).

Civil Code, section 1698 ⁵ permits the alteration of a written contract by an 'executed' oral agreement. The position taken by plaintiff's complaint is that an oral modification of a written contract is 'executed' if consideration is given for it and if it is fully performed by one party; defendant's contention (citing Pearsall v. Henry (1908) 153 Cal. 314, 95 P. 154) is that 'executed' means 'fully performed by both parties.'

Supporting defendant's position, there is dictum in Pearsall which states, 'An oral agreement altering a written agreement is not executed unless its terms have been fully performed. Performance on the one side is not sufficient. There must be a complete execution of the obligations of both parties in order to bring the modification within the terms of the statute (Civ.Code, § 1698).' (153 Cal. at p. 325, 95 P. at p. 157.) Pearsall actually held, however, that the agreement there sought to be established as a modifying agreement 'was not a modification or alteration of the written agreements, but was a new agreement superseding those then existing * * *'; the court added that '(t)o such new agreement, substituted for an existing written agreement, section 1698 of the Civil Code has no application.' (Id. at p. 325, 95 P. at p. 157.)

In the later case of D. L. Godbey & Sons Const. Co. v. Deane (1952) 39 Cal.2d 429, 246 P.2d 946 (also a pleading case), the court, noting the existence of a conflict on the issue of 'execution' of an oral agreement within the meaning of Civil Code, section 1698, held that an oral modification of a written contract is executed within the meaning of that section when...