120 P. 789 | Cal. Ct. App. | 1911
On July 28, 1904, plaintiff entered into a broker's contract with defendants for the sale of certain real property. Plaintiff was authorized to sell the property for $30,000 or any less sum accepted by defendants, and he was to receive a commission of five per cent. This provision was also in the agreement: "We also agree to pay said Edward Dinkelspiel, in the event of the sale of said property by him, or by anyone else, including ourselves, while this agreement is in force five per cent as and for his compensation thereunder." The contract was to continue until withdrawn by defendants in writing, and it was in force during all the time herein mentioned. On April 17, 1905, defendants leased the *593 property to one William Pierce for the term of five years from April 1, 1905. The lease contained the following provision: "It is agreed that at any time during the said term, the said party of the second part (Pierce) may, at his option purchase from the said parties of the first part (defendants) the said premises for the sum of $18,000.00 in gold coin; and the said parties of the first part will, in consideration of the said $18,000.00, convey to the said party of the second part a good, clear and valid title." The complaint is in two counts. In the first it is alleged that: "On or about December 6, 1909, said William Pierce tendered to defendants the sum of $18,000.00 in gold coin. Said defendants and each of them refused to accept the said sum. At said time, the said William Pierce was ready, willing and able to buy the said property in accordance with the terms of said exhibit 'B' (the lease) and so informed the said defendants and each of them, and offered to purchase the said property for the sum of $18,000.00 on the said date."
In the second count it is alleged that "on or about April 2nd, 1910, the real property was sold by defendants for the sum of $18,000.00 to said William Pierce." Hence, the claim for $900 as commissions.
A demurrer, on various grounds, including the statute of limitations, was interposed and the court made the following order: "It is hereby ordered that the demurrer to the complaint of plaintiff, and each cause of action set forth therein is hereby sustained upon the ground that the action is barred by the provisions of subdivision one of section
It is stated by appellant that "It is the theory of defendants, and the one adopted by the court, that the cause of action arose in favor of plaintiff when the option was given to Pierce on April 17, 1905. Our position is that no cause of action arose until the tender or sale was made." The only controverted question then is: When is a broker, under such a contract, entitled to his commission? The agreement provided, in clear and simple language, that plaintiff was to receive the five per cent in the event of a sale by himself or *594
by defendants or by anyone else. It is not disputed that the sale of the premises did not take place until the tenth day of April, 1910. So, if we are to follow the ordinary signification of the terms employed, we would reach the conclusion that plaintiff's cause of action arose on that date. But when it is provided that a broker shall receive a commission for the sale of property, it is universally held that he earns his commission when he has produced a purchaser who is ready, able and willing to purchase upon the terms prescribed. (See Justy
v. Erro,
It seems to be held without conflict that a mere option to purchase does not entitle the broker to his commission. It is not a "sale" as that term is used in his agreement with the owner.
The rule is stated in 19 Cyc. 251 and 252, as follows: "To entitle a broker to a commission the customer produced by him and the principal must come to a final agreement on the terms of the transaction. Consequently the conclusion of a preliminary or tentative agreement which is not binding upon the party, and which is not carried into effect, does not give a right to compensation. Nor is a broker entitled to a commission where he procured a contract between the parties subject to a condition not authorized by the terms of his employment. So if a broker employed to effect a transaction merely secured from a customer a contract by which the latter becomes entitled to enter into the transaction at his option, the broker is not entitled to his commission. Thus a broker, employed to sell property, is not entitled to compensation for procuring a customer who takes an option on the property."
The same doctrine is announced in the well-considered case ofBrown v. Mason,
In Brackenridge v. Claridge,
Other cases to the same effect cited by appellant are:Lawrence v. Rhodes,
On the same principle, manifestly, the broker would not be entitled to the commission in a case like this when the owner, instead of selling the property, had only given an option for its sale.
But respondents contend that, by the execution of the lease to Pierce, the property was withdrawn from sale and therefore the commission became immediately due. In support of this position they cite Rucker v. Hall,
As we view it, the contention of respondents introduces an entirely new element into the broker's agreement. It is equivalent to interpolating into said contract the provision that the broker shall be entitled to his commission if the owner of the property should lease the same with the option of purchase to the lessee. If, immediately after said lease was executed, appellant had brought an action to recover his commissions, the only conceivable grounds for recovery would be as follows:
1. That a "sale" was consummated within the meaning of the broker's contract when a third person had taken "an option to purchase." This position is entirely untenable, as we have already seen.
2. That the property, by the act of the owners, was withdrawn from sale and thereby the broker was prevented from obtaining a purchaser, and hence he should be held entitled to his commission. The answer to this is that there was no agreement to this effect. The parties contracted that the plaintiff should have his commission only in case of a sale. If during the life of the option he had produced a purchaser ready, willing and able to buy, he probably would have earned his commission, notwithstanding the lease, but no such question arises here.
3. That there was an implied covenant when the brokerage contract was executed that the owners would not lease the property with an exclusive option to purchase, or, if they did, that the broker would be entitled to his commission. We are not aware of any principle of law or justice that demands such construction. The contract, as we have construed it, was quite favorable to the broker. He certainly had no right to demand any further indulgence than that he receive his commission when he procured a purchaser or the owners themselves *598 obtained one ready, willing and able to buy during the existence of the brokerage contract.
The other cases cited by respondents are in harmony with the views herein expressed, as will be seen by a brief reference to them.
In Phelan v. Gardner,
Gonzales v. Broad,
Smith v. Schiele,
In Quitzow v. Perrin,
In Coward v. Clanton,
In Hoadley v. Savings Bank of Danbury,
Lunney v. Healey,
Hill v. McCoy,
This is not a case, we may repeat, where the owners, by the execution of their lease and option to purchase, were acting in bad faith or were attempting to avoid their contract *600 with the agent. On the contrary, they were acting entirely within their rights, and, as a matter of fact, the lease with its option to purchase was a step toward the consummation and in contemplation of a sale that would entitle the agent to his compensation. All parties in interest had a right to assume that no claim for commission could be, successfully asserted unless the agent or the owners should secure a purchaser ready and willing to buy the property.
We cannot avoid the conclusion that it was erroneous to hold that the plaintiff was entitled to his commission when said lease was executed. We think, therefore, the action was not barred by the statute of limitations, and the judgment is reversed.
Hart, J., and Chipman, P. J., concurred.