Richanbach v. Ruby

271 P. 600 | Or. | 1928

This is an action by Charles Richanbach, plaintiff, who was doing business under the assumed name of Charles Richanbach Company, to recover commissions upon the alleged employment by the defendant A.C. Ruby to negotiate a lease of certain property in Portland. The complaint, after setting forth the qualifications of Richanbach as a real estate broker and the fact that he is duly licensed as such, continues as follows:

"That heretofore, to wit, in the month of February, 1925, the defendant employed the plaintiff as a real estate broker for the purpose of procuring a lessee to lot six and the north thirty feet of lot seven, block thirty-one, Couch Addition to the city of Portland, Multnomah County, Oregon, for a period of thirty years beginning March 1, 1925; that the defendant agreed to pay the plaintiff a reasonable commission for services as real estate broker in the event a lessee ready, willing and able to lease said real estate upon the terms hereinafter set forth should be procured; that the terms fixed by the defendant required the payment of a monthly rental of $1,000 for the first 10-year period; eleven hundred dollars for the second 10-year period; and $1200 for the last 10-year period, all of said amounts net to the owner; defendant further demanded as a condition of the lease that the lessee should agree therein to pay all taxes and insurance and one-half of all assessments levied subsequent to the date of lease and that the lessee should take over several existing leases to portions of the premises; that the said existing leases and the returns therefrom were described in detail to the plaintiff by the defendant as follows:

"Hotel situated at 286-1/2 Burnside St. — Lease for about 2 years, $450.00 per month.

"Hotel containing 67 rooms.

"Restaurant at 286 Burnside Sts. — Lease for 1 year, $110.00 per month.

"Barber shop situated at 288-1/2 Burnside St. — No lease — paying $65.00 per month.

"Tailor shop situated at 290-1/2 — 292 Burnside St. — No lease — paying $110.00 per mo.

"Theatre situated at 290 Burnside St. — Lease for 6 years — $450.00 per month.

"Fruit stand on the corner — no lease — paying $150.00 per month.

"The defendant further insisted upon the procuring of an agreement on the part of the lessee to deposit with the owners the sum of $10,000 in cash as security for compliance by the lessee with the covenants of the lease, such deposit to bear interest at the rate of six per cent per annum, and the lease to contain a provision for the forfeiture of such deposit as liquidated damages in the event the terms of the lease should be broken.

"That thereafter, to-wit, on February 24, 1925, the plaintiff in pursuance of his employment as real estate broker as hereinbefore set out procured a lessee in the person of Morris Taylor, a person ready, willing and able to execute as lessee a lease of said premises on the terms demanded by the defendant; that the defendant thereupon communicated to the plaintiff his willingness to accept the said Morris Taylor as the lessee upon the conditions named with the exception of a limitation as to option to purchase said property and as to the reservation of a right on the part of the defendant to sell real estate during the term of the lease in the event the lessee failed after a ninety-day notice, to purchase same; that thereupon the plaintiff communicated to the said Morris Taylor the terms of the said exception and reservation and procured the consent of the said Morris Taylor to the incorporation of said additional provision; that thereupon the plaintiff communicated to the defendant the fact that the said Morris Taylor had so accepted said exception and reservation and was prepared to enter into the said lease and plaintiff then and there delivered to the defendant for and on behalf of the said lessee the sum of $1,000 as earnest money and said sum for deposit was received and retained by the said defendant.

"That thereafter it developed that the facts stated by defendant to the plaintiff with reference to the periods of time for which portions of the said premises are under lease at present and the rental returns therefrom were untrue and known by the defendant to be untrue at the time such representations were made notwithstanding that the defendant communicated them to the plaintiff for the purpose and with the intent of having the plaintiff in turn communicate same to the prospective lessee as representations and warranties in said regard; that the said lessee ascertained that the said representations were untrue in material particulars in that portions of said premises were under lease for periods several times as long as those stated by the defendant and that the rents reserved in the existing leases to portions of said premises were and are considerably less than the amounts stated by the defendant as hereinbefore set forth; that accordingly said lessee declined to proceed with the execution of said lease and repudiated liability so to do because of said misrepresentation of fact and that but for said misrepresentations said lease would have been consummated and that this plaintiff duly did perform each and every act required on his part as agent and broker in said regard and that the failure to execute said lease was not caused by any act, neglect or default on the part of the plaintiff."

At all the times mentioned in the answer there was a building upon said property which was rented for business purposes, to wit:

"That part known as 286-1/2 Burnside Street, containing 68 rooms then and now leased for hotel purposes, under a lease which provided for the payment of $450.00 a month rental, said lease having about two years to run.

"A room known as 288 Burnside Street, rented for a restaurant under a lease which provided for $110.00 per month rental, which said lease had about one year to run.

"A room known as 288-1/2 Burnside Street, rented for the purpose of a barber shop and returning a rental of $65.00 per month, which said room was leased until December 31, 1925.

"Rooms known as 291-1/2 and 292 Burnside Street, rented for a tailor shop and returning a rental of $110.00 per month, which said rooms were rented from month to month.

"Theatre at 290 Burnside Street, leased for theatrical purposes under leases extending for a period of approximately eleven years and returning a rental of $400.00 a month for about one year and $450.00 a month thereafter.

"A fruit stand on the corner, which returned a rental of $150.00 a month and was rented from month to month."

The answer then continues as follows:

"The defendant then advised the plaintiff that he had said premises rented as aforesaid, and advised the plaintiff of the leases upon said premises, the time in which said leases had to run, and the rental received therefor, and defendant then told the plaintiff that he was not desirous of leasing the said property to said client of plaintiff.

"That thereafter on or about the 24th day of February, 1925, the plaintiff again approached the defendant and represented to him that his said client was a man by the name of Morris Taylor and that he was authorized by his said client to offer to the defendant a contract between the said Morris Taylor and the defendant, substantially as follows: That the defendant should lease said premises to the said Morris Taylor for a period of thirty (30) years, beginning on March 1, 1925, at a monthly rental of one thousand ($1,000.00) dollars per month for the first ten-year period; eleven hundred ($1,100.00) dollars per month for the next ten-year period; and twelve hundred ($1,200.00) dollars per month for the last ten-year period, said amounts being net to the defendant and that he, the said Morris Taylor, would pay the taxes, insurance and one-half of the assessments levied after the date of said proposed lease and would take over the then existing leases on certain parts of said premises and would deposit with the defendant the sum of ten thousand ($10,000) dollars in cash for the security of the payment of the rental and the several covenants and conditions of the lease, it being part of said proposal that the said Taylor should receive interest at the rate of six per cent per annum payable quarterly, and that provision should be made for a return to the said Taylor of the ten thousand ($10,000.00) dollars upon the termination of the said lease, or upon failure of the said Taylor to carry out the terms of the said lease that deposit should be retained by the defendant as liquidated damages; that said lease should contain a further provision that the said Taylor could at any time within the life of the said lease purchase the said premises for the sum of two hundred thousand ($200,000) dollars, of which said sum fifty thousand ($50,000) dollars was to be paid in cash and the balance in terms to be thereafter agreed upon.

"The plaintiff further advised the defendant that said offer of said Taylor if not accepted by defendant before the hour of noon on Thursday, the 26th day of February, 1925, would be automatically withdrawn and that the same was not subject to acceptance thereafter, whereupon the defendant advised the plaintiff that the offer of the said Morris Taylor was not acceptable to him, but at the urgent request of the plaintiff the defendant agreed to submit a counter proposal to the plaintiff.

"That the defendant, after noon of the said 26th day of February, 1925, and after the said tender of the said Morris Taylor had automatically been withdrawn under the terms thereof, advised the plaintiff that although the said offer was not acceptable to the defendant that the said defendant would accept the said offer with the following modifications, to-wit: That the said proposed lease should contain a provision for an option to purchase the said premises for the sum of two hundred thousand ($200,000) dollars as purchase price any time within the first ten years of the leased term therein contemplated; with a further provision that if at any time during the said first ten years of said leased term the defendant should have a bona fide offer to sell the said property that he, the defendant, was to give the said Morris Taylor written notice, and if the said Taylor did not, within the period of ninety days thereafter, exercise the said option then, in that event, the said option should immediately become canceled and null and void; that upon the defendant communicating his said terms to the plaintiff, the said plaintiff pretended to confer with his said client and thereafter reported to the defendant that the aforesaid terms proposed by the defendant were satisfactory and requested defendant to prepare a lease embodying the said conditions, and the plaintiff delivered to the defendant a check in the sum of one thousand ($1,000) dollars, signed by the said Morris Taylor and payable to the plaintiff, which said check was delivered to and received by the defendant as earnest money.

"That thereafter and on or about the 5th day of March, 1925, the plaintiff came to the defendant and informed the defendant that his said client, Morris Taylor, was unable and unwilling to carry out the terms of the said lease as proposed by the defendant for the reason that he could not arrange to permit the defendant to have and retain the said proposed deposit of ten thousand ($10,000) dollars, and the plaintiff then requested and demanded of the defendant the return of the one thousand ($1,000) dollars theretofore given the defendant as earnest money, and the defendant did on the said 5th day of March, 1925, return to the plaintiff the said one thousand ($1,000) dollars, and the same was by the plaintiff delivered to, received, and retained by the said Morris Taylor.

"Defendant further avers that at all times during the negotiations hereinbefore set forth he communicated to the plaintiff all information concerning the then existing leases upon the before described premises, and the terms thereof both as to the income and length, and both the plaintiff and his said client, the said Morris Taylor, at all times mentioned knew the terms of all of the said then existing leases upon said premises, and the said plaintiff and his client at all times herein mentioned had notice and knowledge thereof.

"That at the time when plaintiff came to the defendant and advised him of the refusal of his said client to lease the said premises as aforesaid, the plaintiff advised the defendant that the said Morris Taylor's only reason for refusing to enter into the said contract was that he could not comply with the terms thereof concerning the deposit of the ten thousand ($10,000) dollars.

"Defendant further avers that his said tender of a lease to the plaintiff's said client, Morris Taylor, was made after the said client's offer to the defendant had automatically expired and been withdrawn; that defendant never accepted the said offer of the said Morris Taylor and that the said Morris Taylor never accepted the defendant's said proposed lease, and that at all times herein mentioned the said plaintiff represented to the defendant that he, the said plaintiff, was acting for and was the agent of said Morris Taylor, and all defendant's said negotiations were with him as such agent of said Taylor.

"That the defendant was induced to return to the plaintiff the said one thousand ($1,000) dollars theretofore given him by plaintiff as earnest money wholly by the representations of plaintiff that his said client was unable to furnish the defendant the ten thousand ($10,000) dollars cash deposit as required in and under the terms of said proposed lease contract, and the plaintiff is and ought to be estopped from claiming any benefits under or because of said proposed contract or from claiming damages, if any, by him suffered at any time or at all, because of the failure of defendant and plaintiff's said client, Morris Taylor, to consummate a binding contract for the lease or sale of defendant's said before described premises."

The defensive matter in the answer having been put at issue by an appropriate reply, the case was tried to the jury, which returned a verdict in favor of plaintiff for $6,040, and from a judgment upon said verdict the defendant appeals. Other matters will be noted in the opinion.

REVERSED. REHEARING DENIED. The defendant raises two important questions in this appeal. The first question, briefly stated, is that the contract for leasing the property, which contained an option to purchase the same, is a contract for the sale of real estate; that under subdivision 8, Section 808, Or. L., such contract must be in writing and, it not being in writing in this case, that therefore the plaintiff cannot recover. It is contended, conceding plaintiff's allegations in the complaint to be true, that the contract is not separate and therefore the plaintiff has no remedy to recover the commission.

The second question is that it is contended that plaintiff never employed Richanbach to procure the lease, but that Richanbach applied to the plaintiff on behalf of Morris Taylor, the alleged intended lessee and optionee; that, if he is entitled to compensation from anybody, it is from Taylor the man who employed him, and that he was the agent of Taylor and not the defendant. The testimony in the case is very contradictory both as to the negotiations and as to the employment of plaintiff.

We will now discuss the main points relied upon by the appellant. Is the alleged contract for the sale of land within the meaning and intent of subdivision 8, Section 808, Or. L.? An option to purchase, whether with or without consideration, conveys no present interest in land, and such a transaction is not a sale of land. If without consideration, it may be withdrawn at any time before acceptance. If supported by a consideration, it becomes an existing contract for the sale of land at and not before acceptance by the optionee: Warville on Vendors (2 ed.), §§ 125, 126; James on Option Contracts, § 607; Ide v. Leiser,10 Mont. 5 (24 P. 695, 24 Am. St. Rep. 17).

It is claimed by the defendant that there is an exception to this rule in the case of leases which permit the right of present possession and the right to purchase within a given time during the leasing period, and that such an option in a lease of the character indicated conveys such a present interest in the leased premises as will constitute a present interest in the land which amounts to a contract of sale. To sustain this contention appellant cites, among other cases, House v. Jackson, 24 Or. 89 (32 P. 1027); Kerr v.Day, 14 Pa. St. 112 (53 Am. Dec. 526); West v. WashingtonRy. Co., 49 Or. 436 (90 P. 666); Willard v. Tayloe, 8 Wall. 557 (19 L. Ed. 505); Frick's Appeal, 101 Pa. St. 485;Telford v. Frost, 76 Wis. 172 (44 N.W. 835); Wall v.Minneapolis, St. Paul, Sault Ste. Marie R. Co., 86 Wis. 48 (56 N.W. 367); Crowley v. Byrne, 71 Wash. 444 (129 P. 113); 39 Cyc. 1247. We will now consider these cases. In House v.Jackson, supra, Jackson leased a farm to Haley. Haley went into possession and paid rent for a year and occupied the premises until for a valuable consideration he assigned all his interest in the leased premises to Pomeroy, and thereafter Pomeroy assigned to Reghitto, who assigned to plaintiff, who went into possession. All the assignors occupied the premises and paid the stipulated rent. There was a clause in the lease which read as follows:

"And the said parties of the first part further agree to sell said tract of land and convey the same by a good and valid deed to the said party of the second part at any time before the expiration of this lease for the sum of twenty-five hundred ($2,500) dollars. And the said party of the second part hereby agrees that in case he fails to purchase said tract of land before the expiration of this lease, for the above stipulated consideration, he shall forfeit to the said parties of the first part all rights and claims to any improvement that he shall have made thereon."

Before the term of the lease expired House, the last assignee of the term, tendered the stipulated purchase money and demanded a deed, and on refusal of the lessor to convey brought suit for specific performance. The defendant, among other defenses, contended, first, that the contract was not mutual; and, second, that the option to purchase was not assignable.

The court held, first, that the covenant to pay rent and the payment of it constituted a sufficient consideration, citingMaughlin v. Perry, 35 Md. 353; second, that the option was assignable and that the assignee could maintain thereon a suit for specific performance, using the following language:

"The option having been given to Haley, could he transfer his right so that his assignee could enforce the same. The ground upon which a court enforces an executory contract for the sale of lands is that equity considers things agreed to be done as actually performed; and when an agreement has been made for the sale of lands, the vendor is deemed the trustee of the purchaser of the estate sold, and the purchaser as trustee of the purchase money for the vendor. The vendee, in equity, is actually seized of the estate, and, as a consequence, may sell the same before a conveyance has been executed, notwithstanding an election to complete the purchase rests entirely with the purchaser: Kerr v. Day, 14 Pa. St. 112 (53 Am. Dec. 526). Haley had an estate in the premises, and was equitably the owner thereof, and could transfer this right, and his assignee can enforce the option to the same extent as his assignor."

In our opinion, the remark above quoted, while fairly germane to the question discussed, gave an inappropriate reason for a just decision for these reasons: First, there was nothing in the lease which prohibited its assignment including all rights under it. Second, that rights under options based upon a consideration are assignable is firmly established by the great weight of authority: James on Option Contracts, § 607, and cases there cited.

The invocation of legal fiction invoked in Kerr v. Day,supra, and in the case of House v. Jackson, supra, was wholly unnecessary to sustain the decision on those cases. Where a lessor solemnly agrees in writing and for a consideration that on the performance of a certain act by a lessee, he will convey land to him, he is equitably bound to convey by virtue of his agreement, not that equity presumes "that to have been done which ought to have been done," but rather that equity "will compel him to do what he ought to have done." It does not necessarily assume that the optionee has a present estate in the land, but rather that upon his seasonable acceptance of the option he has converted it into an executory contract which equity will enforce. In effect, the case of Kerr v. Day, supra, announces the same doctrine, although the court seems to have lost itself in a maze of authorities not one of which sustains the excerpt cited by Justice MOORE. The writer has examined all the available English authorities cited in Kerr v. Day and none of them go further than to hold that an optionee or his successor by compliance with the terms of his option creates such an estate in the land as will justify a decree of specific performance. InElder v. Robinson, 19 Pa. St. 364, the court remarked that the principle relied on by plaintiff in that case "was strained to the utmost in Kerr v. Day," which to say the most seems an exceedingly mild approval of that rather unique decision. It may be here remarked that it has not been the usual practice in Oregon to record options for the purchase of real estate, although Sections 9844 and 9854, Or. L., provide the method in which conveyances of land or any interest in lands shall be executed, and Section 9871, Or. L., provides for their recordation. The custom alluded to is only valuable as indicating a general acquiescence on the part of skillful conveyancers in the idea that such options are not "interests in lands."

Another case is Willard v. Tayloe, 8 Wall. 557 (19 L. Ed. 501), but this case only holds, as the headnote indicates, that —

"A covenant in a lease, giving the right to purchase the premises, is a continuing offer to sell, which, when accepted, constitutes a contract of sale."

Justice FIELD expressly states that "when accepted by the complainant by his notice to the defendant a contract of sale between the parties was completed," thus intimating that until such acceptance, no contract of sale existed, which is precisely the position of counsel for plaintiff in the case at bar.

Crowley v. Byrne, 71 Wash. 444 (129 P. 113), is cited by appellant, but the opinion goes no further than to cite the authorities on both sides of the question now under discussion without indicating which view is adopted by the court, and saying, "at any rate the option vests in the grantee the right or privilege of acquiring an interest in the land and, when accepted, entitled him to call for specific performance." The court further held that such right, when exercised, must necessarily relate back to the time of giving the option so as to cut off the rights of subsequent purchasers with notice of the option. This decision seems to be in harmony with the weight of authorities, but is far from asserting that when a man sells to another an option to purchase property, he thereby sells him land, or an interest in land. The case of Telford v.Frost, 76 Wis. 172 (44 N.W. 835), seems more in point than any other case cited by appellant. At page 174 it is there said:

"The learned counsel for the defendant is undoubtedly right in claiming that the optional written contract held by the plaintiff against Colwell gave to the plaintiff an interest in the land therein described, within the meaning of sec. 2302 R.S. This being so, he strenuously contends that the plaintiff could not surrender the same except by deed or conveyance in writing subscribed by him, and that, as such surrender was a part of the consideration of the promise sued upon, he improperly recovered. The power to surrender such interest, however, is not thus limited by that section."

The question at issue in that case was whether, conceding, as defendant did, that an option to purchase conveyed an interest in lands, such option or right could be transferred except bydeed. The court held that it could. It must be remembered that the court was dealing with the case of an accepted option and it was not necessary to consider, and it probably did not consider, what would have been the status of an option not yet accepted. The plaintiff was employed in that case to procure a person to take up the option and purchase the optioned property and his fee was earned when he did this. The purchaser in effect said this: You have an option to A's property for $3,000. Now you step out and get A to sell it to me for $3,000 and I will give you $1,000, which Telford, the optioner, did. When he demanded his $1,000, Frost said: "You had no right to transfer your option rights to me except by deed; you gave no deed therefore I refuse to pay you." This is a fair dissection of the case and the meat of the contention.

The remark of the court that the option created an interest in land must be taken to be with reference to the conditions existing in the particular case, namely, an option accepted and a deed made in pursuance of it if, indeed, the statement had any relevancy whatever.

The statement in 27 C.J. 217, to the effect that an option to purchase is a contract for the sale of real property, seems to be based upon the case of Granger Real Estate Exch. v. Anderson (Tex.Civ.App.), 145 S.W. 262. In that case the defendant had listed with plaintiffs, real estate brokers, a tract of land for sale at $125 an acre upon such terms as to cash and credit payments as might be agreed upon between the defendant and the purchaser with interest on the deferred payments at the rate of 8 per cent per annum. There was no exclusive agency given to the plaintiffs. On the contrary, they were informed that the land was listed with other agents and that defendant also reserved to himself the right to sell. Plaintiffs induced one Bartosh to examine the land with a view of purchasing and arranged a meeting between Bartosh and wife at defendant's office. Bartosh expressed to defendant a willingness to accept all his terms as to payments except the 8 per cent interest, finally offering to pay 7 per cent, which was refused, and claimed that the defendant had promised to give him until the following Monday to make up his mind whether he would accede to defendant's terms as to interest. During the same day, Saturday, defendant sold the land to another party and notified plaintiffs. Bartosh would have purchased the land at defendant's terms had not defendant sold on Saturday. The facts as to the alleged promise were denied by defendant but the appellate court, for the purposes of its decision, assumed them to be true. Upon the trial, plaintiffs, who sued for a commission, requested the court to instruct the jury in effect that, if they found that the defendant had made the agreement with Bartosh, their verdict should be for the plaintiffs. The trial court refused the instruction and on that account the plaintiffs appealed. The appellate court sustained the ruling of the trial court, saying:

"We hold that said requested charge did not correctly embody the law applicable to this case for two reasons: (1) Such an agreement, if made, was a `contract for the sale of real estate,' and, not being in writing, was void under the statute of frauds. R.S. 1895, art. 2543, § 4. Said agreement, if made, could amount to no more than an option to remain in force until the following Monday. `An option is simply a contract by which the owner of property agrees with another person that he shall have a right to buy the property at a fixed price within a certain time.' Ide v. Leiser, 10 Mont. 5 (24 P. 695, 24 Am. St. Rep. 17). An option is not excepted from the general rule that contracts must be supported by a consideration, and a promise to give a party a certain time within which to buy land, if not supported by a valuable consideration, is nudum pactum, and will not prevent the owner from withdrawing the option whenever he sees fit.Coleman v. Applegarth, 68 Md. 21 (11 A. 284, 6 Am. St. Rep. 417); Williams v. Graves, 7 Tex. Civ. App. 366 (26 S.W. 334);Litz v. Goosling, 93 Ky. 185 (19 S.W. 527, 21 L.R.A. 127). Those who are desirous of pursuing this inquiry further are referred to the note to the case last above cited, and also toWilliams v. Graves, supra, and the authorities referred to in said case.

"The alleged agreement upon the part of the appellee to give Bartosh until the following Monday to decide whether or not he would take the land upon the terms offered being void, as against the statute of frauds, not supported by consideration, unilateral, and therefore subject to withdrawal, and the same having been withdrawn by the sale of the land by appellee before the terms proposed by appellee were accepted by Bartosh, it could form no basis for appellants' recovery herein. Said agreement being without consideration, was not binding as between appellants and appellee, even in morals, as appellants understood, when they accepted the agency of said land, that appellee was anxious to sell the same and would do so to the first purchaser who complied with the terms upon which he was offering the same, and that they could not expect that appellee would refuse to close a deal with a purchaser who was ready and willing to take the land, upon the contingency that another purchaser might take it upon the same terms at a subsequent date; and appellants must have realized that said promise, if made, was made upon the theory that no one else would offer to purchase the land at the price and upon the terms asked before the following Monday."

The meaning of the court is somewhat obscure, but may well be taken as a holding that an option for the purchase of real estate is a "contract for the sale of lands." If so, its holding is opposed by the great weight of authority, and, as the court cites not a single authority for its statement, it may be fairly said that this phase of the controversy was not maturely considered. The court did not hold that in any event it would be such a contract as would convey any present interest in the land, and, as shown in the opinion, it was without consideration, a mere option, a nudum pactum in any event. The statement was wholly unnecessary. We will not consider this subject further than to say that the claim that an option creates an interest in the land has not succeeded in convincing a single text-writer of its cogency, and that Warville, Pomeroy and James take the opposite view. We can only add that the cases of Strong v. Moore, 105 Or. 12 (207 P. 179, 23 A.L.R. 1217), and Strong v. Moore, 118 Or. 649, 654,655 (245 P. 505), are conclusive against the contention of appellant here. These were cases involving an option upon a consideration expressed in writing, and in the first of these this court, speaking by Mr. Justice HARRIS, said:

"An option does not pass to the optionee any interest in the land; but a contract of sale does transfer to the vendee an interest in the land; and therefore a person appearing in the character of an optionee possesses nothing except the right to elect to buy, and he has no interest in the land until by his acceptance of the option he transforms the option into a contract of sale and changes his character from that of an optionee to that of a vendee: Kingsley v. Kressley, 60 Or. 167, 172 (111 P. 385, 18 P. 678, Ann. Cas. 1913E, 746); Gamble v.Garlock, 116 Minn. 59 (133 N.W. 175, Ann. Cas. 1913A, 1924)."

In the same case involving the same option, Mr. Justice BURNETT says:

"There are two fallacious contentions advanced by the plaintiffs as the basis of their grievance. The first is that they had a contract of sale of the property involved, whereas in fact, according to the documents which they propound and attach as exhibits to their complaint, they only had options to buy the property. In neither of the documents quoted do they agree to buy the property. Having paid a valuable consideration for the option, they could have enforced it and procured title only by paying according to its terms, but they did not. These same documents were construed by this court as options in Strong v.Moore, 105 Or. 12 (207 P. 179, 23 A.L.R. 1217), in an option by Mr. Justice HARRIS. Nowhere, in either of the instruments, do the plaintiffs or their representative agree to buy. At any time they could have abandoned their option and none of the defendants could have compelled them to pay for or take title to the realty involved. Hence the plaintiffs never had any interest in the property at any time."

A citation of these two cases might have concluded the discussion on this branch of the case, but if the dictum inHouse v. Jackson, supra, standing alone, has misled the eminent counsel for appellant, as it seems to have done, it might mislead others, and therefore the writer thinks it necessary to go thoroughly into the subject so that hereafter there may be no misunderstanding among the profession as to the quality and efficacy of option agreements. But this is far from disposing of this case. The defendant denies that he employed plaintiff to negotiate the lease and option set forth in plaintiff's complaint. He claims that instead of applying to plaintiff that plaintiff applied to him to know if he would consider leasing the property, and that upon his indicating that he might do so plaintiff returned with a proposition from Taylor to lease the property for what plaintiff considered an inadequate consideration, which plaintiff rejected and the transaction fell through, and that thereafter plaintiff again approached defendant with a proposition from Morris Taylor to lease the property, which proposition was in writing, and was as follows:

"February 24, 1925.

"Charles Richanbach Company, "Portland, Oregon.

"Gentlemen:

"You are hereby authorized to negotiate a lease for me covering all of lot 6 and the north 30 feet of lot 7, block 31, Couch Addition to the city of Portland, Multnomah County, Oregon, being 80 feet by 100 feet in size, and the southeast corner of 5th Burnside Sts., and all of the building situated thereon, for a period of thirty years, beginning March 1st, 1925, for the advanced monthly rental of $1,000.00 per month for the first ten year period, $1,100.00 per month for the next 10 year period and $1,200.00 per month for the last ten year period, net to owner.

"I will pay all taxes, insurance and one-half of all assessments levied after date of lease. I will take over the leases now on certain parts of said premises, which I understand are as follows, and are represented to me as such:

"Hotel situated at 286-1/2 Burnside St. — lease for about 2 years, $450.00 per month, hotel containing 67 rooms.

"Restaurant situated at 286 Burnside Sts. — lease for 1 year, $110.00 per month.

"Barber shop situated at 288-1/2 Burnside St. no lease, paying $65.00 per month.

"Tailor shop situated at 290-1/2 — 292 Burnside St. — no lease — paying $110.00 per month.

"Theatre situated at 290 Burnside St. — lease for 6 years — $450 per month.

"Fruit stand on the corner — no lease — paying $150.00 per month.

"Furthermore, I will deposit with the owners the sum of $10,000 in cash for security for the payment of the rental in performance of the covenants and conditions of the lease, for which I shall be entitled to receive interest at the rate of 6% per annum, payable quarterly, provision to be made to return the said $10,000, upon the termination of the said lease, and a further provision of forfeiture of said $10,000, as liquidated damages, should the terms of said lease be broken, etc.

"I herewith hand you my check for $1,000.00 as evidence of good faith in carrying out this offer and the same shall be returned to me immediately upon the time limit of this offer, as herein mentioned. Time being the essence hereof, and if this offer is not accepted by noon Thursday, February 26, 1925, same shall be and is hereby withdrawn.

"Lease to contain the usual provisions for the protection of lessor and lessees as is now the custom at Portland, Oregon. Lease also to contain an option for the purchase of the said property by lessee during the life thereof for the sum of $200,000, $50,000, in cash and balance to be paid in terms to be agreed upon.

"Very truly yours, "MORRIS TAYLOR."

To which proposition defendant replied in a letter addressed to Richanbach as follows:

"February 26, 1925. "Charles Richanbach Company, "Portland, Oregon.

"Gentlemen:

"I acknowledge receipt of your letter of February 24th, 1925, making us an offer from Morris Taylor to lease the property covering Lot 6, and north 30 feet of Lot 7, block 31, Couch Addition to the city of Portland, Multnomah County, Oregon, being 80 feet by 100 feet, on the southeast corner of 5th and Burnside Streets.

"I will accept Morris Taylor's offer and the conditions as contained in your letter of the above date, with the exception of last paragraph of your letter as to the option, which you have asked to purchase the above property, and wish to give you the following option during the first ten years of the 30-year lease. As asked in your letter, I will give you an option to purchase the above property for consideration of two hundred thousand ($200,000.00) dollars, as purchase price and will accept the fifty thousand ($50,000.00) dollars down in cash as first payment, if the option is taken up during the above time.

"During the term of the first ten years of the lease, if I have a bonified offer to sell the above property, I am to give Mr. Morris Taylor, written notice for 90 days, and if the said Morris Taylor does not take up his option within 90 days, then, and in that event, the above option will immediately become cancelled and null and void.

"Very truly yours, "A.C. RUBY."

To sustain his contentions, the plaintiff offered these letters in evidence and they were received. Beyond these, there was little evidence introduced in the case tending to show plaintiff's employment by defendant except his own statement, that defendant agreed to pay him a commission, and his account in detail of the conversation with defendant, which conversation was strenuously denied by defendant.

The defendant's counsel requested the court to give the following instruction, which was refused:

"There has been introduced in evidence a letter written by the defendant to the plaintiff mentioning prices and terms relating to the transaction alleged in the complaint. I instruct you that this letter does not show that the defendant employed plaintiff as his agent and did not make the plaintiff the defendant's agent or broker to negotiate the transaction alleged in the complaint."

It is the duty of the court to construe documents introduced in evidence and this exhibit did not show or tend to show that Richanbach was employed by Ruby to negotiate the lease. In fact, taken in connection with exhibit "A," its tendency was exactly the reverse, and the instruction should have been given. The fact that the letter was addressed to Richanbach instead of Taylor might have led an inexperienced jury to infer that by writing it defendant was in some way engaging the services of Richanbach; but in view of the admitted fact that the letter was in reply to Taylor's letter authorizing Richanbach to make the proposition to Ruby, it ought not to be so considered.

The case was close and the testimony conflicting, and the court should have cleared up all doubt as to the legal effect of this letter. For this reason the case should be reversed and a new trial directed.

REVERSED. REHEARING DENIED.

RAND, C.J., and BELT and COSHOW, JJ., concur.