Wilson v. Stearns

Decision Date25 February 1954
CourtCalifornia Court of Appeals Court of Appeals
PartiesWILSON v. STEARNS et al. Civ. 19711.

Raymond C. Simpson and George E. Wise, Long Beach, for appellant.

Feeley & Saevig, Donald E. Feeley and Roger A. Saevig, Whittier, for respondents.

WHITE, Presiding Justice.

This is an appeal by plaintiff, a licensed real estate broker, from an adverse judgment in an action to recover commissions from defendants.

The record reveals that defendant George Stearns was a subdivider of tract properties. On January 13, 1947, plaintiff prepared and submitted to defendant Stearns a written contract, the pertinent portions of which read as follows:

'For and in consideration of services to be performed by Roscoe J. Wilson, hereinafter called Agent, I (we) hereby employ said Agent as my (our) sole and exclusive agent to sell or exchange for me (us) that said real property situated in the County of Orange, State of California, to-wit:

'N 1/2 of N.E. 1/4 of Secc. 29, Twsp. 4 S. and R. 11 West of S. B. B. & M. and for buildings to be constructed thereon, and I (we) hereby grant said agent the exclusive right to sell or exchange the same at a price (or prices) and terms to be later determined. This employment and authority shall continue irrevocably until completion of subdivision project now contemplated; but in the event the subdivision promotion is discarded and the seller decides to sell or exchange the raw or unimproved land, then this exclusive employment and authority shall be for a ninety (90) day period only, the specific dates of which shall be conveyed in a letter of notice to the agent and acknowledged by him.

'As and for the compensation of said Agent hereunder, I (we) agree to pay said Agent five (5%) percent of the selling price in the event that sale or exchange of property is made as sale or exchange of raw or unimproved land or acres, regardless of size of plot or parcel, but in the event sale is made after completion of home or homes on the land, I (we) agree to pay two and one-half (2 1/2%) percent of the selling price of each such home so sold.

'In case a deposit is forfeited, one-half of same shall be retained by or paid to said Agent and one-half to me (us), provided, however, that Agent's portion of such forfeiture shall in no case exceed the amount of the specified commission.

'I hereby acknowledge receipt of a copy of this listing.

'Owner (SGD) George Stearns

'In consideration of the above employment, the undersigned Agent agrees that in the event the sales campaign fails to keep pace with the process of construction that the principals hereto shall, in conference, decide upon a method or methods to be employed in correcting such unfavorable situation.

'Agent (SGD) Wilson J. Wilson'

At the time the contract in question was entered into, defendant George Stearns held title to the property therein mentioned. Said property was located near the Los Alamitos Naval Air Station in Orange County, and was called Alamo Ranchos.

On April 9, 1947, the Alamo Development Company, a California corporation, was organized to engage in the general contracting and construction business in this state, including the development of the tract property referred to in the aforesaid contract.

About May 5, 1947, ninety shares of stock in Alamo Development Company were issued to defendant George Stearns, and Etta Mae Stearns, his wife, as consideration for certain real property located in San Pedro, California, which land was then subdivided by the corporation.

On June 14, 1947, Alamo Development Company sold to defendant George Stearns and his wife, 306 shares of its capital stock for $30,000 cash, and an additional 94 shares in return for the land at Alamo Ranchos, which is described in the contract here at issue. Thereafter, Alamo Development Company subdivided the Alamo Ranchos property.

While all shares of the corporation's stock were issued to defendant Stearns and his wife, the former testified he had an oral agreement with defendant Franklin Hall, a general contractor who supervised the construction of the tract homes thereafter erected, that one-half of the issued stock was held in trust for the benefit of defendant Hall.

Defendant George Stearns was president and treasurer of the aforesaid corporation, and his wife was vice-president and secretary.

When subdivision of the land involved was commenced, defendant George Stearns built a building on the tract in which he maintained an office for himself, his secretary and attorney, and in which plaintiff Wilson and his sales staff were provided with office space as the sales office for the tract. After the preliminary work of making contracts and the necessary preparations for the sale of the subdivision houses, plaintiff Wilson and his employees started making sales of the tract houses in January, 1948. Wilson had three salesmen working under him, Whitlock, the sales manager, Mrs. Whitlock, his wife and a Nellie White. All of the sales of houses in the tract were accomplished as a result of the efforts of plaintiff and his three employees.

All of the houses in the tract, 85 in number, were sold by plaintiff, the last sale being made in July, 1948. The total value of these sales made by plaintiff was $671,900.

It was stipulated at the trial that the reasonable value of plaintiff's services was that provided by the contract, to wit, $17,089.06, and that if defendants are liable for said sum, they are entitled to a credit of $5,278.34, representing a credit given by defendant Stearns to Mr. Whitlock, one of plaintiff's employees, toward the purchase by Whitlock of one of the tract houses, defendants treating said credit as an advance against commissions.

There was testimony that during the period he was engaged in selling the tract houses, plaintiff inquired of defendant Stearns about the commissions and was promised he would be paid later. That at no time did defendant Stearns say he would not pay the commissions. Plaintiff did not have any previous experience in tract selling. There was testimony that when plaintiff asked defendants Stearns and Hall about payment of commissions they would say, 'They didn't have the money to pay the commissions.', '* * * just as quickly as they could get some more money--get some of the creditors taken care of, then probably there was going to be some money for the sales commissions'. It appears that no written contract, memorandum or agreement was made by Alamo Development Company, Inc., to pay commissions to plaintiff for the sales made by him.

Following a trial before the court sitting without a jury, findings of fact were made, and insofar as here material, include the following:

'That the allegations of paragraph IV are true, except that defendant, George Stearns, was the sole owner of said real property; that it is true that defendant, George Stearns, conveyed said real property to defendant, Alamo Development Company, a corporation, which was the alter ego of said defendant, George Stearns.'

The court further found that while title to the houses sold was vested in Alamo Development Company, such corporation, '* * * was owned solely by defendant, George Stearns, and which was the alter ego of said defendant, George Stearns.'

It was also found by the court as follows:

'The Court finds that the contract between plaintiff and defendant, George Stearns (Exhibit A) has been fully performed by Plaintiff; that the land described in the agreement was transferred on June 23, 1947, to defendant, Alamo Development Company, a corporation; that said corporation was solely and wholly owned by defendant, George Stearns, and was his alter ego; that records were kept by said Defendants of plaintiff's sales as a broker and the amount of commissions earned; that plaintiff has fully performed every service required by said contract on his part, and that defendants, George Stearns and Alamo Development Company, a corporation, have received full benefit therefrom, which benefit, amounting to sales of their properties in excess of $671,000.00, they have received and retained; that no part of said contract between plaintiff and said defendants is executory, insofar as plaintiff is concerned; that according to the terms of said contract, the commissions to be paid to plaintiff by said defendant, George Stearns, for said services is the sum of $17,089.06; that the sum of $5,278.34 has been paid to plaintiff on account thereof; that plaintiff has never made a practice of procuring exclusive brokerage contracts wherein there was no specified termination date.'

Notwithstanding the foregoing findings of fact, the court, in its conclusions of law, held:

'That the contract alleged and introduced in evidence by Plaintiff contravenes Section 10176(f) of the Business and Professions Code of the State of California, and is therefore illegal and void ab initio, and no recovery can be permitted thereon.'

Judgment was accordingly entered for defendants.

As his first ground for reversal appellant earnestly contends that in view of the findings of the court that he performed every service required of him by the contract in question; that defendant George Stearns and his alter ego, defendant Alamo Development Company, have received full benefit therefrom which they have retained, the conclusions arrived at by the court that appellant was not entitled to recover because of the provisions of section 10176(f) of the Business and Professions Code was erroneous.

Insofar as here material, the code section in question provides:

' § 10176. Investigation of actions of licensees: Grounds for suspension or revocation of licenses. The commissioner may, upon his own motion, and shall upon the verified complaint in writing of any person, investigate the actions of any person engaged in the business or acting in the capacity of a real...

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