Cranke v. Trinity Gravel Co. , 1925 Tex. App. LEXIS 421 ( 1925 )

J. P. Cranke, appellant, sued Dan S. Harston, L. S. Brotherton, D. G. Smith, C. B. Van Deman, M. F. Smith, and the Trinity Gravel Company, an unincorporated association composed of the individuals above named, to recover judgment for the sum of $3,875, compensation claimed for procuring a purchaser for and assisting in making the sale of 471 acres of land situated near Arlington, in Tarrant county, Tex. Appellant alleged his cause of action in two counts — one based on an express agreement by appellees to pay 5 per cent. commission upon the price at which the land should be sold; the other based on a quantum meruit for the reasonable value of services performed in procuring a purchaser and in assisting in the sale of the land. The case was tried without the intervention of a jury; judgment was rendered in favor of appellees, from which this appeal is prosecuted.

The evidence, in our opinion, justifies these conclusions: Mr. Harston, acting for himself and associates, the other appellees, listed the 471 acres of gravel land for sale with appellant, a real estate broker of Dallas, to be sold at $200 per acre, and agreed to pay him a commission of 5 per cent. of the sale price; that appellant procured the services of C. R. Chamblin, an engineer and gravel expert, had him examine the land with the view of ascertaining the extent it would produce gravel, and also to assist appellant in procuring a purchaser; that appellant, Mr. Chamblin and Mr. Harston, visited and inspected the land, with the result that, from the information obtained by inspection and from conversations with Mr. Harston, Chamblin was favorably impressed with the land as a gravel proposition, and authorized appellant to so quote him; that Cranke and Chamblin both interviewed W. E. Callahan, who was connected with the Callahan Construction Company, with the view of interesting him in the purchase of this land, and succeeded in so doing, introduced him to Harston, induced him to have the land tested for gravel, with favorable results, and, after bringing Callahan and Harston together, as the result of negotiations thus set on foot, a sale of the land was agreed on between appellees and Callahan, which comprehended the formation of a corporation styled Harston Sand Gravel Company.

This corporation was formed for the purpose of taking title to the land and developing it for the production and sale of gravel. The consideration agreed on between appellees and Callahan, or the company organized by Callahan to take title was $77,500, as follows: $10,000 cash, and equivalent, the assumption of an indebtedness against the land of $22,500, and stock in the Harston Sand Gravel Company to the amount of $45,000. The company was chartered with an authorized capital stock of $120,000, and the land conveyed to it by appellees about January 1, 1923, on the terms and for the consideration named above.

Appellant's agreement of employment was made with Mr. Harston. In all acts, conversations, and negotiations with appellant, and with Chamblin and Callahan, Harston acted for himself and the other appellees; they were advised of the employment of appellant, the progress of the negotiations, and acquiesced therein.

Under the undisputed facts of this case, we find that appellant was the efficient procuring cause of the sale of the land, on terms satisfactory to appellees, and that the evidence justifies a recovery under either count of his petition.

According to our view, it is wholly immaterial that the land was ultimately sold at a less price and on different terms from those stipulated by Mr. Harston when the land was listed with appellant, but the material facts that are decisive of the case are that, while his contract of employment was in force, appellant produced and introduced Callahan to Harston, as a prospective purchaser, to whom, after negotiations, a sale of the land was made on terms satisfactory to appellees, though different from those limited to appellant. The idea here advanced is sustained by the Supreme Court in Goodwin v. Gunter,109 Tex. 56, 185 S.W. 295, in the following language by Chief Justice Phillips, to wit:

"It is no answer in such a case to say that a purchaser has not been produced by the broker ready, able, and willing to buy upon the terms limited by the contract, and the owner is therefore free to deal with the buyer, though produced by the broker, without any liability to the latter. That becomes unimportant in the face of the outstanding fact that it is by the broker the buyer is produced, and, before his negotiation is concluded, a sale is made, as the result of his effort, which is presumably just as satisfactory to the owner. The owner will therefore be deemed, in such a case, to have waived the terms to which the broker was confined, and the law declares him liable for the commissions fixed by the contract, for the reason that, except as to such waived provision, the broker's part of the contract has been fully performed. The decisions of this court clearly affirm this principle. It is recognized, generally, elsewhere; and nothing else could well be the law."

To the same effect is West Bros. v. Thompson Greer,48 Tex. Civ. App. 362, 106 S.W. 1134; Hancock v. Stacy, 103 Tex. 219,125 S.W. 884; Bellis v. Hahn Kendall (Tex.Civ.App.) 157 S.W. 427; Webb v. Harding (Tex.Com.App.) 211 S.W. 927; Keener v. Cleveland (Tex.Com.App.) 250 S.W. 151.

Nor is it an answer to appellant's demand for compensation to say that the land was conveyed to a corporation organized by Callahan, instead of to Callahan in person. The organization of the corporation evolved from negotiations set on foot by appellant, and was simply a means to the end desired. The language of the Supreme Court of Nevada, in Page v. Sutton,45 Nev. 395, 204 P. 881, 207 P. 1102, is quite to the point. The court said:

"Conceding that a company was organized after Mr. Page had been employed to procure a purchaser for the property, and that the property was in fact transferred to the corporation and the stock in the company sold to Loring instead of the property itself, to hold that the plaintiff could not recover because of this fact would be to put a premium upon chicanery. To approve such a theory would enable a seller of property through an agent to defeat a claim for commission in every instance. All the principal would have to do would be to organize a corporation to take over the property and then transfer the stock. No such transaction can be looked upon with tolerance by a court of justice."

The case of Fouke v. Jordy, 289 F. 220, from the Circuit Court of Appeals (Fifth Circuit) is very similar to the case under consideration. As the result of negotiations between the purchasers produced by the broker and the owners of the property, a corporation was organized to which the properties were conveyed by the owners in consideration of a cash payment, the assumption of an indebtedness, and stock in a newly formed corporation.

The court held that this was a sale within the meaning of the contract between the broker and the owners, using the following language:

"We are of opinion that the transactions between defendants and the parties produced to him by the plaintiff constituted a sale. The title was conveyed to a corporation organized and financed by the parties, whom the plaintiff interested as prospective purchasers."

Mr. Harston, speaking for himself and his associates, attempted to justify their refusal to pay appellant a commission, on the ground that the contract with appellant came to an end, and that thereafter he negotiated the sale with Callahan, unaided by appellant. The evidence bearing on this point is as follows: Mr. Harston testified:

"In something like three weeks, or probably a month (after appellant began efforts to sell the land), Mr. Cranke came into my office and said: ``Mr. Harston, those people [meaning Callahan and his associates] haven't got any money. I don't think there is a sale.' So I said, ``All right,' and then, after that, Mr. Callahan and I got to talking about it. * * * The way I understood it, that ended any relation with him; then Mr. Callahan and I began to form a company, to organize a gravel company, and then I dropped down from $94,000 to $77,000 and put it [the land] in the company. During all the time I was talking to Mr. Callahan and in my dealings and investigations with him, Mr. Cranke was not helping in that matter and I didn't even consider him as being in it at all. * * *

"Q. Mr. Cranke talked to you several times during the time these negotiations were going on about the forming of the company, didn't he? A. No, sir; I don't think he was ever in there to my knowing after he came in there that day and said it was off.

"Q. He didn't say the deal was off, did he? A. He said, ``Those fellows haven't got any money;' he meant Callahan and the Callahan Construction Company. I considered it off when he said that; that was the conclusion I drew from it; I never talked to Cranke any more about it; When I considered the sale off, then I began negotiations to form this company with Mr. Callahan; I never told Mr. Cranke that the negotiations were off; I supposed he knew about it."

The refusal of appellees to compensate appellant must find justification, if at all, in the reasons thus stated by Mr. Harston. An authority in point is Weidemeyer v. Woodrum, 168 Mo. App. 716,154 S.W. 894. In that case the agent had performed all that was required to earn a commission, that is, he had produced a purchaser with whom the owner, after negotiations, made a sale. The broker, it seems, was ignorant of the fact that a sale was about to be consummated, and wrote to the owner, expressing the opinion that there was nothing to the proposed purchaser; that it (the company) had nothing. A trade was made, however, and the broker sued for his commission. The case was defended on the ground that the broker abandoned his efforts to bring about a trade. The Kansas City Court of Appeals, denying this contention, said:

"In the midst of these efforts, and as a direct result of them, defendant finds a deal which he can accept, but which all parties seem to have endeavored to carefully conceal from plaintiff. Plaintiff has already done what was required of him, but does not know it, and, impatient at the delay, he writes this letter, expressing his impatience. This letter had no effect whatever on the trade, as the contract therefor had already been signed, and the trade was finally perfected in a few days. Under these circumstances his letter was not an abandonment of his agency, and he is not to be denied a recovery upon that ground."

In answer to a similar defense in Sallee v. McMurry, 113 Mo. App. 253,88 S.W. 157, the court said:

"It seems clear to us that the mere fact that the prospective buyer, Jamison, said in the conversation at the wood pile, that he did not want defendant's farm without that of his brother, and that defendant replied to him that ``this ends the matter, then, between you and me,' cannot operate to terminate the agency, * * * though it was said in their presence and they heard it, as such remark was evidently only a part of the negotiations. It is an everyday occurrence with the prospective buyer, when he fully intends to buy, to say that the article does not suit him, that he don't believe he wants it; * * * and such statements cannot be treated, in cases of this kind, as terminating all negotiations. There was nothing said by the respondent to the appellant which tended to terminate their agency, if they had one."

The statement of appellant, as testified to by Mr. Harston, that "those people haven't got any money; I don't think there is a sale," in our opinion has no significance, other than the expression of discouragement in the midst of negotiations, characterized, as is usual in such cases, by alternating currents. The statement in no way delayed, hampered, or interfered with the deal. It came at a time when, under the undisputed facts, appellant had done all he could do or was required to do to entitle him to compensation; that is to say, after he had produced Mr. Callahan, the purchaser, with whom appellees negotiated in their own way and finally consummated a sale of the land on terms, conditions, and arrangements satisfactory to them. Neither appellant nor Harston said the agency was at an end, nor does the language used by appellant justify that construction.

Harston and Brotherton testified in regard to the agreement with appellant to pay a commission, if the land was sold at $200 per acre, but both insisted on the trial that no agreement existed to pay a commission on the "corporation deal." Mr. Harston said: "I never made any kind of an agreement to pay any kind of a commission on the corporation deal."

It is undisputed that Callahan, with whom appellees consummated the deal, was produced by appellant as a prospective purchaser, and that the organization of the Harston Sand Gravel Company resulted from negotiations between Callahan and appellees. This is conclusively shown by the testimony of Mr. Harston, who testified as follows:

"Q. Now, at the time Mr. Cranke told you he didn't believe these parties had any money, what did you say to Mr. Cranke, or whether or not that ended your relations with Cranke? A. The way I understood it, that ended my relations with him; then Mr. Callahan and I began to form a company, to organize a gravel company. * * * After I made that trade with Mr. Cranke he came with Mr. Callahan down to my office, and we went out to the land to show Mr. Callahan the land; after Mr. Cranke brought Mr. Callahan to my office we went out and looked at the land; I think it was the same day; I am sure; Mr. Callahan had never seen the land before, to my knowledge; the matter of a trade was not discussed with Mr. Callahan that day; I left it to Mr. Cranke about pricing the land to Mr. Callahan and trying to sell it to him. Myself and associates afterwards sold the land to a company or association in which Mr. Callahan was a stockholder; that company was formed by Mr. Callahan and others. * * * It was some time about October that Mr. Cranke and I had the trade whereby he was to sell the land for $200 an acre; I think it was right along about the first of the year 1923, probably in December, 1922, that we consummated the sale to the Harston Sand Gravel Company. * * * The negotiations that finally resulted in the formation of the company and the sale of the land were had after Mr. Cranke had brought Mr. Callahan to my office and after Mr. Cranke and I had shown Mr. Callahan the land."

In our opinion the conclusion from the undisputed evidence is irresistible that appellant, in pursuance of his contract of employment, produced Callahan, introduced him to Harston, set on foot negotiations, in the midst of which Harston and his associates, availing themselves of his services, took the matter into their own hands, changed terms, and abated the price limited to appellant, and finally consummated a sale and conveyed the land to a corporation formed by Callahan and his associates for that purpose.

Appellees should not be permitted to avail themselves of the services of appellant by consummating a sale on terms entirely satisfactory to themselves with the purchaser introduced to them by appellant and then refuse to pay, on the ground that there was no specific agreement to pay a commission on the sale as actually made. Such contention could be made in almost every instance where a satisfactory sale is finally consummated by the owner on terms different from those limited to the broker. If such a turn of affairs were permitted, the business of the land agent would rest upon such an insecure foundation as not to be worth following for a livelihood. The language of the court in Chilton Cole v. Butler, 1 E. D. Smith (N.Y.) 150, quoted with approval by our Supreme Court in Hancock v. Stacy, 103 Tex. 219, 125 S.W. 884, is relevant at this juncture. The court said:

"If vendors were permitted to employ brokers to look up purchasers and call the attention of buyers to the property which they desire to sell, limiting them as to terms of sale, and then, while such purchasers were negotiating, take the matter into their own hands, avail themselves of the labor, services, and expenses of the broker in bringing the property into market, and accomplish a sale by an abatement in the price, and yet refuse to pay the broker anything, the business of a broker would not be worth pursuing; gross injustice would be done; every unfair and illiberal vendor would limit his property at a price slightly above the market and make use of the broker to bring it into notice, and then make his own terms with the buyers, who were in reality procured by the efforts of the agent."

The doctrine announced in this case is unquestionably the law and is conclusive against the contention of the appellees. It is the opinion of the majority of the court that the evidence admits of but one conclusion, to wit, that appellant made out his case and is entitled to recover.

The judgment below will be reversed and rendered in favor of appellant against appellees for the sum of $1,625, with 6 per cent. interest per annum from the 6th day of February, 1923, being 5 per cent. of $10,000, the cash consideration, and the debt assumed for $22,500. The writer is of the opinion that appellant is also entitled to recover the further sum of $2,250, being 5 per cent. of $45,000 stock in the Harston Sand Gravel Company received by appellees as a part of the consideration for the land, but, as Mr. VAUGHAN, Associate Justice, does not assent to this view, the contention is waived by me, and the judgment as rendered agreed to; but in a separate paper my views on this point will be stated.

As the evidence does not, in our opinion, justify a judgment against the Trinity Gravel Company, the case as to it will be affirmed.

Affirmed as to the Trinity Gravel Company, and reversed and rendered as to the other appellees.