Morgan v. Whatley & Whatley , 205 Ala. 170 ( 1920 )

The evidence on the main issues of fact in this case is in sharp dispute, but we think the trial court was warranted in finding: (1) That though Whatley Whatley primarily represented the defendant Morgan, and Spurgeon primarily represented the other trader, Berentz, yet both firms of brokers were jointly employed by both parties to effect the real estate trade proposed by Morgan; and hence the Whatleys and Spurgeon are properly joined as parties plaintiff. (2) That each party knew that his own broker was acting in this matter in a dual capacity, and would receive a part of his compensation from the other party. (3) That under this employment plaintiffs were not bound to procure Berentz's signature to the written proposal submitted by Morgan, but only to procure his agreement thereto, and his offer to execute it. (4) That they in fact procured his agreement, and tendered to Morgan a duly executed deed from Berentz to the property to be exchanged by him, the title to which was good and merchantable, and the incumbrances as stipulated. (5) That nothing remained to be done in completion of the trade except the tender of a deed by Morgan conveying a good title to his property to Berentz. (6) That Morgan failed to tender such a conveyance, and his failure was due solely to his wife's refusal to sign the deed.

Under these findings of fact plaintiffs were clearly entitled to recover the $200 commission which Morgan agreed to pay as his part, and also the $700 to be received by plaintiffs from Berentz as his part, provided the latter item was within the contemplation of the parties (Morgan and these plaintiffs) at the time of the employment, as an element of damage in case of Morgan's breach of his contract to exchange. B'ham. Land, etc., Co. v. Thompson, 86 Ala. 146, 5 So. 473; Sayre v. Wilson,86 Ala. 151, 5 So. 157; Handley v. Shaffer, 177 Ala. 636,59 So. 286. It was Morgan's duty to tender a sufficient deed, and his undertaking with his brokers was that he would be able and ready to do so; and if, to the conveyance of a good title to Berentz, the execution of the deed by Morgan's wife was necessary, he was bound to procure it. It follows, of course, that the abandonment of the trade, whether by both or by either of the parties, because of Morgan's inability to procure his wife's signature and deliver a sufficient deed, cannot avail to defeat the brokers' claim for compensation; they having done all that devolved upon them, and all that they could do in the premises. Cofield v. McGraw, 16 Ala. App. 369,77 So. 981; Hamlin v. Schulte, 34 Minn. 534, 27 N.W. 301; 9 Corp. Jur. 626, § 103, and cases cited in note 78; B'ham. Land, etc., Co. v. Thompson, 86 Ala. 146, 5 So. 473.

It is to be noted, also, that the fact that the purchaser has not become bound in writing, so as to exclude the operation of the statute of frauds, is no defense to an action by the brokers for compensation, so long as the purchaser takes no advantage of the statute. Sayre v. Wilson, 86 Ala. 151,5 So. 157; 19 Cyc. 255, 256.

Moreover, in the instant case, the undisputed evidence is that Morgan's only assigned reason for not carrying out the trade was his inability to procure his wife's execution of the deed — a waiver of other objections, if any he had.

The principal question of merit in the case arises upon the propriety of the judgment in its inclusion of the fee of $700, due to the brokers from the other party, Berentz, as an element of recoverable damage. If Morgan was informed and understood that the brokers, besides the commission of $200 which he himself was to pay them, were to receive the rest of their compensation from Berentz, and knew also that his own failure to execute his agreement to make the exchange with Berentz would prevent the brokers from earning their commission from Berentz and cause them a loss to that extent, then, under all the authorities, Morgan would be liable to his brokers for that loss. The general rule is stated and discussed in Bixby-T. Lumber Co. v. Evans, 167 Ala. 431, 52 So. 843, 29 L.R.A. (N.S.) 194, 140 Am. St. Rep. 47; and see, also, 8 R. C. L. 459, §§ 27, 28.

In the authority last cited it is said:

"The requirement that, in order to charge with liability under special circumstances, the party sought to be charged shall have had notice of such circumstances, should receive reasonable interpretation with reference to the subject to which such notice is applied. As a general rule, knowledge of the special circumstances must be brought clearly home to him at the time the contract is made, in such a way that he must know that the person with whom he is contracting reasonably believes that he accepts the contract with the special condition. It is not required that he must have exact knowledge or information in detail as to just what loss will result; nor is it always essential that such special conditions be mentioned in the negotiations or included in the contract in express terms. It is sufficient if they are known to the parties or are of such character that they may be fairly supposed to have been in contemplation in the making of the contract." 8 R. C. L. 461, § 28.

Although the evidence was in dispute, and the burden was on plaintiffs to show notice to defendant of the special circumstances under which they undertook to make the exchange of properties, the decided weight of the evidence shows such notice and understanding; and in a number of cases, substantially identical with the instant case, it has been held that loss of commissions to be paid by the other party, by reason of the principal's default in carrying out his agreement to sell or exchange, became a recoverable element of damage in a suit by the broker against his defaulting principal.

The case of Eells Bros. v. Parsons, 132 Iowa, 543,109 N.W. 1098, 11 Ann. Cas. 475, is well considered, and, we think, decisive of the question. The court there said:

"The action is for breach of defendant's contract, and not for the commissions from the landowner. To the latter, plaintiff was not entitled, for the reason that, through defendant's fault, as it alleged, it had not earned them. * * * If plaintiff were attempting to recover a commission for the sale of the land he should be defeated, for defendant never promised him this. What he (defendant) did agree to do was to purchase the land which suited him, thus enabling plaintiff to earn its commission. The parties understood when they made the contract what plaintiff's damages would be in the event defendant failed to perform it. In other words, loss of plaintiff's commission was within the contemplation of the parties in the event of defendant's failure to perform. * * * Plaintiff is suing for breach of a contract made between it and defendant, and not upon the commission contract made with the land company. It has, as we have already said, not earned these commissions, and was prevented from doing so by defendant's failure, without excuse, to keep and perform his engagement with plaintiff. There are several cases from other jurisdictions which sustain plaintiff's right to recover. See Livermore v. Crane, 26 Wn. 529, 67 P. 221, 57 L.R.A. 401; Bishops v. Averill, 17 Wn. 209, 49 P. 237, 50 P. 1024; Cavender v. Woddingham, 2 Mo. App. 551; Atkinson v. Pack,114 N.C. 597, 19 S.E. 628."

It is to be noted that, in the instant case, defendant's promise to plaintiffs was to convey his property to Berentz, if plaintiffs would induce Berentz to convey his property to defendant. This is the promise for the breach of which this action is brought.

It is the contention of defendant that this principle of liability cannot be applied to him in this case because it does not appear that he was informed of the exact or the approximate amount of the compensation to be received by plaintiffs from Berentz. But such exact knowledge is not necessary. Kelley Co. v. La Crosse, etc., Co., 120 Wis. 84, 97 N.W. 674, 102 Am. St. Rep. 971, 979. It is enough that he knew that the greater part of the commission was to be gotten from Berentz, and he was charged with notice that its amount would be based upon the customary and usual percentage of the value of the property handled. Plaintiffs were properly allowed to show what such a percentage would be, and that the amount claimed — $700 — was not in excess of that basis.

It is true, as urged for defendant, that several counts of the complaint do not contain the necessary allegations to show that this item of damage is a proper subject for recovery. But this did not render the counts demurrable, the proper method for its exclusion being by motion to strike, and by objection to the evidence or appropriate instruction to the jury. W. U. T. Co. v. Garthright, 151 Ala. 413, 44 So. 212. However, the complaint contained a count or counts with the necessary allegations, and there was no prejudice to defendant in this regard.

We find no error in the rulings on the evidence which could have been prejudicial to defendant.

It is insisted that the defense that plaintiffs were not lawfully licensed to carry on the business of real estate brokerage was a good defense in law, and should have defeated a recovery in the conceded absence of any showing by plaintiffs that they were in fact licensed.

The rule is fully settled that the doing of business without the required license, though subject to criminal penalty, does not invalidate acts done or obligations contracted therein. Sunflower Lbr. Co. v. Turner Sup. Co., 158 Ala. 191, 48 So. 510, 132 Am. St. Rep. 20; Smith v. Sharpe, 162 Ala. 433,50 So. 381; Alford v. Creagh, 7 Ala. App. 358, 62 So. 254. The Revenue Act of 1915 (Acts 1915, p. 490) provides that —

"Every person * * * engaged in any business * * * for which a license or privilege tax is required shall first procure a license," etc.

And section 3 (p. 527) provides:

"Before any person, firm or corporation shall engage in or carry on any business or do any act for which a license by law is required, he, they or it shall pay to the judge of probate * * * the amount required for such license," etc.

While the authorities in general are not harmonious in their application of the general principle, the basis of decision seems to be that if the requisition of a license is for revenue only, and not for police protection, the penalty for operating or acting without a license is visited upon the person and not upon the business, and contracts made in carrying on the business are not held void unless the statute expressly prohibits or vitiates them. Sunflower Lbr. Co. v. Turner Sup. Co., 158 Ala. 191, 48 So. 510, 132 Am. St. Rep. 20, citing 25 Cyc. 633, and reviewing many cases.

A majority of the court, consisting of ANDERSON, C. J., McCLELLAN, SAYRE, GARDNER, and THOMAS, JJ., are of the opinion that there is nothing in the language of the present law which, by reasonable construction, prohibits the doing of business or any act of business, in the sense of avoiding contractual validity, in default of a license paid for and procured according to law; and that the plaintiffs' contract here sued on was not invalid by reason of his operating without a license. In consequence, the action of the trial court in disregarding the plea so alleging is held as free from error.

No prejudicial error appearing, the judgment will be affirmed.

Affirmed.

ANDERSON, C. J., and McCLELLAN, SAYRE, GARDNER, and THOMAS, JJ., concur.

SOMERVILLE and BROWN, JJ., dissent as shown by opinion appended.