Gulf Trading Co. v. Radcliff , 216 Ala. 645 ( 1927 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The suit is to recover alleged commission due a real estate broker.

The complaint contained the common count for work and labor done, and a special amended count No. 3, as follows:

"The plaintiff claims of the defendant $3,326.25 damages for the breach of an agreement entered into on, to wit, the 23d day of May, 1925, as follows, that is to say, that the defendant employed the plaintiff to procure for it a purchaser for certain land, sometimes known as the Wilson property, and sometimes as the Goelet place, and agreed to pay the plaintiff for obtaining such purchaser 5 per cent. of the purchase price, for which the defendant might sell said property to such purchaser, and the plaintiff avers that, in accordance with said contract, he procured a purchaser for said property, and the defendant sold said property to said purchaser for a large sum of money, to wit, the sum of more than $66,000, the defendant failed and refused to pay to the plaintiff the commissions due to him on said sale."

The matter of special plea No. 5 was covered by the general issue, and evidence was fully presented thereunder. Striking plea 5, on motion of plaintiff, was harmless, and therefore its sufficiency as addressed to the third count need not be considered. As this plea, however, aptly sets forth the theory of the defendant, it is here inserted:

"For further answer to the said third count of the plaintiff's complaint as last amended the defendant says: That the only agreement that the defendant ever made with the plaintiff, and that the only authority that the defendant ever gave the plaintiff, either for the sale of the property described in the third count or for the plaintiff to find a purchaser for said property ready, able, and willing to buy, was an agreement in writing which the defendant entered into with the plaintiff on the 26th day of May, 1925, and which is as follows:

" 'We give you until 6 p. m. Saturday, May 30, 1925, to close up deal of Wilson property located on Mobile Bay at $40 per front foot. There is about 1,350 foot frontage. After 6 p. m. Saturday, May 30, 1925, this option is null and void.'

"And the defendant avers that the plaintiff failed to close said deal or to find a purchaser ready, able, and willing to buy said property on or before Saturday, May 30, 1925, at or before the hour of 6 p. m., and on June 1, 1925, the defendant notified the plaintiff in writing as follows:

" 'We have withdrawn the Wilson property off the market. We do not care to sell at the present time. Please govern yourself accordingly.'

"And the defendant further avers that the said authority which had been given to the plaintiff, as aforesaid, was thereby withdrawn, and that thereafter the plaintiff had no authority to purchase the said property or to sell the same for the defendant, or to find a purchaser ready, able, and willing to buy it.

"Wherefore the defendant says that the plaintiff is not entitled to recover in this action."

The testimony of plaintiff, Robert Herndon Radcliff, was to the effect that about May 23d he entered into an agreement with defendant through its president, George S. Leatherbury, whereby plaintiff was to sell the property at price named on 5 per cent. commission. Radcliff requested Leatherbury to put it in writing. On May 26th he called at Leatherbury's office, and was handed the letter of that date set out in the plea above. Appellant's view is that this paper is the sole memorial of the contract between the parties; that it carries merely an option to buy the property at a fixed price; that evidence of the parol agreement to pay commission to a sales agent adds to, or varies, the terms of the written contract, and is inadmissible.

This writing purports to give a limited time to "close up a deal" on the described property at a stated price. This is entirely consistent with the idea that a "deal" was then in progress or in contemplation pursuant to former arrangement.

Both parties agree that in the former interview it was understood an outside party should be found as purchaser, and that, at Radcliff's request, Leatherbury induced his associates in ownership of other neighboring property to engage plaintiff to sell it on 5 per cent. commission.

They differ as to any agreement to pay commissions on property here involved. Appellant contends plaintiff was to take an interest as copurchaser.

The use of the word "option," as known among real estate people, does not necessarily import an option to buy only. The ordinary real estate agency, an agreement in effect that, if the agent procures a purchaser ready, able, and willing to buy on the terms named, he shall be paid a commission, has many of the elements of an option. The agent binds himself to no defined efforts or outlays.

The performance of the service while the agency exists is ordinarily a condition precedent to the right to commissions. There may be an option to sell as well as option to buy. As an option to buy the writing before us would be void for want of consideration. It expresses no consideration as required by the statute of frauds. It may be regarded as an incomplete memorandum showing the terms the agent was authorized to submit to prospective purchasers, letting the matter of compensation as between owner and agent rest in parol.

The evidence of a parol agreement to pay commissions was therefore admissible. Sayre v. Wilson, 86 Ala. 151, 5 So. 157. If plaintiff's evidence in that regard be true, the writing did not cut off his right to recover commissions, if earned.

Further evidence on behalf of plaintiff went to this effect: Mr. Radcliff, having reason to think Mr. J. L. Dickey of New Orleans was, or could be, interested in the property, approached Mr. Leatherbury, and secured the agency to sell on commission at the price named in the letter of May 26th above. Having gotten in touch with Mr. Dickey, and induced him to come to Mobile, the property was inspected on Saturday, May 30th, whereupon Mr. Dickey advised Mr. Radcliff, in the presence of others, that he would take the property. Mr. Radcliff accepted Mr. Dickey's invitation to spend Sunday with him at Ocean Springs, both returning to Mobile Monday morning with the purpose to close up the transaction. Meantime Mr. Frank Boykin, one of the men interested in the neighboring property, and with the party on Saturday, agreed to and did notify Mr. Leatherbury on Sunday morning of Mr. Dickey's agreement to buy the property. On return to Mobile Monday forenoon Mr. Radcliff found at his office the note of June 1st announcing a withdrawal of the property from the market, in effect revoking Radcliff's agency.

We note here that Mr. Leatherbury admits having extended the time to Monday morning June 1st. If he was notified on Sunday morning of Mr. Dickey's agreement to purchase on the terms specified, although no contract was made, or could be lawfully made, on that day, this information would abide with Mr. Leatherbury until Monday, and if, in fact, on that day Dickey was ready, able, and willing to close the deal, Radcliff's commissions were fully earned. The revocation was too late, and plaintiff may recover whether a sale was consummated or not.

Plaintiff's evidence proceeds: On receiving the revocation note of June 1st, Radcliff called Leatherbury by telephone at his office. His son, Tommy Leatherbury, secretary of defendant company, answered, saying to call his father again in 30 minutes. Radcliff called again, Tommy again answered, and said call again in 30 minutes. Radcliff, impatient, said to Tommy: " 'I don't want to call him in 30 minutes; you know what I want to talk to him about. I have sold Dickey this property down there, and he is trying to run out on me.' " Tommy said: "I'll tell you what papa is going to do about it. He is not going to deliver the property. He cannot get it."

Thereupon Mr. Radcliff enlisted Messrs. Boykin and Prine, interested in the neighboring property, to act as a go-between and persuade Mr. Leatherbury to conclude the trade as agreed upon. In this they failed. Finally, on June 6th, they obtained from him a new price of $66,525, and on the same day the property was sold to Mr. Dickey at this price, some $13,725 in excess of the price first named.

Defendant's evidence went to the effect that the letter of May 26th expressed the sole agreement of the parties, gave the same time and terms as first named; that thereafter Mr. Leatherbury heard no more from Mr. Radcliff until the time expired Saturday, May 30th, or the extended date Monday morning, June 1st; that the note of that date was sent that there be no misunderstanding; that the subsequent negotiations by Messrs. Boykin and Prine were in their own name; that they expressly disclaimed any connection with Radcliff; that Mr. Leatherbury had no knowledge that Mr. Dickey was a customer of Mr. Radcliff; that he nor any one else had agreed to take the property before the time expired; that the final offer was made to Boykin and Prine personally; and that the first-known connection of Dickey with the matter was when he was presented and the deal closed June 6th, and then only as a customer of Boykin and Prine.

One other phase of plaintiff's evidence goes to the effect that is the original understanding of May 23d the plaintiff was to have ten days to find a purchaser; that the paper of May 26th reduced this time limit; that, when it was handed to plaintiff, he took Leatherbury to task for thus cutting down the time, and it was then verbally agreed that he should have ten days. All this is disputed by defendant's evidence.

We do not agree with appellee that this presents a case of two parallel contracts, one a verbal agreement to sell on commission within ten days, and the other a written option to buy within a shorter period at the same price, without commission.

The time limit in the paper was directed to whatever deal was then in view. The emphasis in the document is on the time limit.

But, in one view of the case, the testimony touching the original agreement for ten days was admissible. If plaintiff had entered upon negotiations to interest a purchaser on the faith of a ten-day period to consummate the deal, and defendant thereafter reduced the time, such action would be tantamount to a revocation of the agency as of the date last fixed. The rules of law in case of revocation hereinafter considered would apply. Evidence of the ten-day agreement at the time the paper was delivered was admitted without objection. In either event, a revocation of agency and subsequent sale to a customer enlisted by the agent was involved in the trial. Without question the final sale was after the expiration of the time limit. Without conflict, the evidence shows the sale was made to a customer found and interested by the plaintiff.

The evidence that Prine and Boykin were acting for and on behalf of plaintiff, and that his service was the efficient cause of the sale, would be without conflict, but for the testimony of Mr. Leatherbury that Prine and Boykin denied any connection of plaintiff with their negotiations.

In passing upon the various rulings of the trial court touching the law of the case, we try to keep in mind these several features of the evidence, and the varied conclusions the jury were authorized to reach from the testimony and its legitimate inferences.

The rules of law governing a sale by the owner after the expiration of the time limit fixed by contract to a purchaser first enlisted or procured by the broker apply to one phase of evidence; and the rules governing such sale where the agency is terminated by revocation apply to another, as the jury may find the facts.

When a limit of time is fixed by contract, the general rule is the broker must fully perform the required service within the time, else no right to commission accrues. This service involves finding and producing a buyer willing, able, and ready to purchase upon terms prescribed, and, if not prescribed, such as are satisfactory to the owner. He must be the efficient, not necessarily the sole, agent in bringing together the minds of the parties, and bringing them into such communication with each other that they may close the deal without further duty or activity on the part of the agent. This usually involves disclosing to the owner the identity of the purchaser, the person with whom he is expected to deal. No matter how far the negotiations have gone between agent and customer, until the latter is brought into communication with the owner, so there can be a meeting of the minds of the parties, the service of the broker is incomplete. If at that stage the time limit expires, the owner may treat all relations as at an end, may decline to go further, and, if so, no commissions are due. Hughes v. Daniel, 187 Ala. 41, 65 So. 518; Handley v. Shaffer,177 Ala. 636, 59 So. 286; Eldorado Coal Co. v. Rust Shelburne, 202 Ala. 625, 81 So. 567.

The time limit, like other terms of the agency contract, may be waived or extended. So, if the agent, with the knowledge and acquiescence of the owner, goes on with the negotiations, and a sale results, his commissions are due. If the owner continues the negotiations with a customer known to have been enlisted by the agent whose services constitute the efficient cause of the offer to purchase, and the owner, thus appropriating the services of the agent, closes on terms substantially equal to those offered through the agent, commissions are due.

The owner should not call time out on the agent while he redeems the time in harvesting the fruits of his labors. Extension of time for the purpose of reaping benefits should extend it as to obligations. Continuing relations with the purchaser procured by the agent, and whose services have proceeded to such point as to be the efficient cause of the purchase, continues the relation with the agent. Espalla v. Warren, 197 Ala. 601, 73 So. 23; Bailey v. Padgett, 195 Ala. 203,70 So. 637; Henderson v. Vincent, 84 Ala. 99, 4 So. 180; Alford v. Creagh, 7 Ala. App. 358, 62 So. 254; Howard v. Street, 125 Md. 289, 93 A. 923; note to Emerson v. Phelps, 26 A.L.R. 780 et seq.; Walker's Real Estate Agency, § 557, p. 496; 9 C. J. 608, note 90. But waiver is based on knowledge of matters alleged to be waived.

If the agent has failed to earn his commissions within the time stipulated, the owner, treating all relations at an end, is free to deal with his property generally as if no agency had ever been. In such case it is not the law that the owner must inquire of every one who approaches him whether he was interested in the property through the erstwhile agent. The general rule announced in Handley v. Shaffer, 177 Ala. 636,59 So. 286, to the effect that, if the owner accepts a purchaser sent to him or procured by the agent, and closes with him on terms the agent was authorized to offer, it is immaterial whether the owner knew he was dealing with the agent's customer, applies to cases of pending agency, cases in which the owner may expect a buyer sent by the agent.

The owner is under the duty of good faith in all dealings with his agent. Hence it is well settled that, if he obstructs or hinders the agent in concluding the negotiations within the time limit by avoiding interviews with the agent or customer by encouraging the buyer to delay his purchase, or any other device, and thereafter, acting directly or through another, he closes the deal with the customer procured by the agent on as good, or even less favorable, terms, commissions are due the agent. Likewise if, pending negotiations, he fraudulently revokes the agency, or partially revokes the same by reducing the time, depriving the agent of the opportunity to earn commissions, and, taking advantage of the agent's services, he closes with his client, commissions are due. Handley v. Shaffer, 177 Ala. 636, 59 So. 286; Chambers v. Seay, 73 Ala. 372; Alexander v. Smith, 180 Ala. 541, 61 So. 68; Hughes v. Daniel, 187 Ala. 41, 65 So. 518; Hutto v. Stough, 157 Ala. 566,47 So. 1031; Henderson v. Vincent, 84 Ala. 99, 4 So. 180; Cook Bro. v. Forst, 116 Ala. 395, 22 So. 540; Everson v. Phelps,104 Or. 288, 206 P. 306, 26 A.L.R. 780; 9 C. J. p. 564, note 48.

Subject to the rule of good faith, it is well recognized that a real estate agency to sell or find a purchaser is revocable. This is but an application of the general rule that, unless the agency is coupled with an interest in the subject-matter, or necessary to effectuate a security, the principal has power to revoke it at will. This inheres in the nature of the relation. Agency is an incident to the business in which it is employed. The power to control or to cease business is the power to and agencies to carry it on. As to third persons, revocation ends all authority of the agent. Whether it ends the obligations of the principal to the agent depends on the nature of their contract and the status growing out of it.

As applied to real estate agencies, where a stipulated time has been given, and the agent, as contemplated, has incurred labor and expense upon the expectation of earning commissions, within such time, his rights and remedies upon revocation have been the subject of divergent views in the court. Millican v. Haynes, 212 Ala. 537, 103 So. 564; Blount County Bank v. Brice,209 Ala. 670, 96 So. 769; Cronin v. American Sec. Co., 163 Ala. 533,50 So. 915, 136 Am. St. Rep. 88; Walker's Real Estate Agency, § 15, p. 19; 2 Mechem on Agency, § 2465; 9 C. J. p. 565, note 50.

We are not here concerned with this question as applied to cases where the matter is ended by revocation, but with the right of the broker to commissions in case the owner proceeds, after revoking the agency, to sell to a purchaser procured by the agent.

In such case, if the owner thus knowingly appropriates the services of the agent, the revocation should be deemed as merely colorable, if the terms of sale are as good or better than offered through the broker. The high morality of the law cannot sanction a revocation relieving of burdens, but holding on to the benefits. We do not think it of consequence that the owner had no such purpose at the time of revocation, nor that he should have then known negotiations were on with the customer. Though he may have had at the time the bona fide purpose to withdraw the property from the market, if he thereafter learns that a customer has been enlisted by the agent, and, finding him ready to buy, takes the opportunity to utilize such service, in good faith he should pay. In such case, the agent's services must have been the efficient cause of the purchase. On the other hand, if he revoked the agency in good faith, having no purpose to evade payment of commissions, and a purchaser thereafter appears, one the owner does not know or have cause to believe was procured by his former agent, the owner is free to deal with him, regardless of the agency.

Under one phase of the evidence, another condition arises. If the owner does have reason to believe he is dealing with the former agent's customer, but the agent by his own act, or, through those who are secretly representing him, disclaims any connection of the agent with the transaction, and the owner is induced to sell at a price he is then willing to take without deduction for commissions, no commissions are due. Good faith must be observed on both sides. Henderson v. Vincent, 84 Ala. 99,4 So. 180.

The amount of profit the owner makes is without consequence. If he revokes the agency because he considers he is offering the property too low, without intent to evade commissions, and does sell at a better price to one not known or believed to have been procured by the former agent, he is not liable for commissions.

Where there is an actual sale under conditions rendering the owner liable for commissions, they should be allowed on the sale price. This is the comtemplation of the parties in putting the compensation on a commission basis.

The instructions given the jury by the trial court were at variance with the principles above discussed in several instances.

The portion of the court's oral charge made the basis of the twenty-eighth assignment of error ignored defendant's evidence tending to show entire want of knowledge or notice that the purchaser to whom the property was sold after the expiration of the time limit was procured by the plaintiff. It is subject to other criticism.

Charge No. 3 given for plaintiff was error.

Under the evidence for defendant, if believed by the jury, the letter of May 26th did define and limit the time for finding a purchaser, and had the effect of revoking any prior agreement for a longer period.

Charge 4, given for plaintiff, is subject to the same criticism.

Charge 5 singles out and gives undue emphasis to certain features of the evidence. Such charges may well be refused.

There was no duty to make demand for payment of commissions before suit brought. In this regard charge 9 is free from error. It may have been well refused for other misleading tendencies already pointed out.

Charges 10 and 11, given for plaintiff, should have been refused for reasons heretofore given.

Charges 4, 5, and 6, refused to defendant, ignore all the evidence of plaintiff tending to show revocation of the agency pending negotiations with intent to take advantage of the services of the agent by selling to his customer at an increased price. They were properly refused.

Charge 9, refused to defendant, was misleading in requiring an agreement "for a sale," as distinguished from procuring a purchaser with whom the owner could conclude the sale. Handley v. Shaffer, supra.

The telephone conversation with Tommy Leatherbury was properly admitted as part of the res gestæ. It tended to throw light upon the conduct of both parties.

The motion to suppress the deposition of J. L. Dickey was properly overruled.

The witness' "understanding," when used in the sense of his recollection, or as expressive of a contract or transaction to the effect stated, is not rendered inadmissible by this manner of expression. The objection to answer of witness Dickey to the ninth interrogatory as a whole was overruled without error. The statement of this witness: "His services did result in my purchasing the property from the Gulf Trading Company," and the further statement: "When I went to the office of the Gulf Trading Company, the deal was supposed to be closed with Mr. Radcliff," should have been excluded on defendant's motion.

The sale of the neighboring property in which Boykin and Prine were interested, and payment of commissions therefor, was so related to that involved here, as part of the same transaction, that evidence of same and the relation of the parties thereto was properly admitted.

Charge 7 given for plaintiff was erroneous under the principles heretofore announced. It does not require that the services of the agent be the efficient cause of the sale. It also declares the owner liable to commission for selling to a known client of his agent at any price after the expiration of the time limit. If he has in no way hindered or obstructed a sale, the time limit has expired without his fault, and he, in good faith, finds he can sell only at a reduced price and accepts it, he is not liable for commissions.

In cases where the owner sells to his agent's client pending the agency, and in cases of any fraudulent device to evade commissions, and still reap the fruits of his labors, the fact that the owner does sell to such client is sufficient evidence that he was ready, able, and willing to purchase. Culver v. Gambill Realty Co., 214 Ala. 84, 107 So. 914; De Briere v. Yeend Bros. Realty Co., 204 Ala. 647, 86 So. 528; Handley v. Shaffer, 177 Ala. 636, 59 So. 286.

But a sale by the owner after the expiration of the time limit is not subject to this rule. Because a purchaser was ready to purchase at a later date does not prove he was ready during the pendency of the agency. In such case, the plaintiff must show his services were the efficient cause of the purchase.

Charge 8 given for the plaintiff was too broad, and ignored the case which defendant's testimony tended to support.

For the errors pointed out, the judgment is reversed, and the cause remanded.

Reversed and remanded.

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