Bloom v. Christensen , 18 Wash. 2d 137 ( 1943 )

¹ Reported in 138 P.2d 655. Plaintiff brought this action to recover an amount which he claimed was earned as a commission for the sale of real property belonging to the defendants. The case, tried to the court, resulted in a judgment for the defendants, and the plaintiff has appealed. The assignments of error challenge the findings of fact, conclusions of law, and the judgment of the trial court.

A statement of facts was not brought to this court. It is therefore necessary to ascertain whether the findings of fact sustain the judgment of dismissal.

The court's findings disclose the following facts: July 25, 1941, appellant, a licensed real estate broker, and respondents entered into a written agreement whereby respondents agreed to pay appellant a five per cent commission on the sale of their apartment house. The pertinent part of the agreement provided that appellant

". . . shall be authorized and empowered to sell said property for a period of thirty days from date, at the stipulated price of Twelve Thousand Six Hundred Fifty Dollars ($12,650.00). If the real estate agency shall sell said property for said price, or some lower price which said principal may authorize him to accept, the real estate agent shall receive a commission of five (5) per cent of the amount of the sale.

"IT IS FURTHER AGREED, that the seller shall deliver to the purchaser or cause to have delivered to the purchaser, an abstract or title insurance, and further a warranty deed, the property to be shown free and clear of all encumbrances as of the date of sale.

"Interest rate shall be five (5) per cent on the unpaid balance of the purchase price.

"Should this sale be made directly or indirectly by the said agency, the above agreed commission shall be paid."

Upon the same day appellant showed the property to one Evans, who expressed satisfaction and entered into a written contract with appellant and respondents and paid appellant one hundred dollars on the purchase price. The contract, called an earnest money receipt, provided:

"Received from James A. Evans and Lulah Evans One Hundred and no/100 Dollars on account of the purchase price of the following described real estate [description of property] . . .

"Total Purchase price is Twelve Thousand Six Hundred Fifty and No/100 Dollars ($12,650.00). Balance of 4,900.00 to be paid at signing of contract and the balance to be paid as follows: Seventy-five No/100 Dollars on the first day of the month, starting with the month of Oct. 1, 1941, and seventy-five dollars ($75.00) on the first day of each and every month thereafter, until the unpaid purchase price together with interest at Five per cent, per annum, on the remaining balance, has been fully paid, all payments shall first apply to the account of interest and the balance to (if any) principal. Any multiple payments may be made at any payment date.

"Title is to be shown by abstract or Title Insurance Policy (either one or both successively,) certified to date by a responsible Abstract or Title Insurance Company furnished at the expense and option of the seller and 30 days allowed for examination.

"IT IS HEREBY AGREED that if title is not good and cannot be made good within reasonable time from receipt of written notice of any defect, this agreement is void, and the earnest money herein receipted for shall be refunded, but if title is good as shown by abstract or Title Insurance, and the purchaser refuses or neglects to comply with any of the conditions of this sale, then the earnest money herein receipted for may be forfeited as liquidated damages.

"The property is to be conveyed by contract of sale and warranty deed free and clear of all encumbrances of every nature whatsoever, except as above noted, and building restrictions, zoning law or easements heretofore imposed on said property.

"Taxes and assessments that are a lien on the property, if not assumed by the purchaser, will be adjusted when the deal is closed.

"Any other encumbrances may, at the option of the seller or his agent, be paid out of the cash portion of the purchase price at the consummation of the sale.

"Rents, water and light, insurance and interest, if any are to be prorated as of date of delivery of deed or real estate contract.

"IT IS UNDERSTOOD AND AGREED that the agent is in no wise responsible for the delivery of this title, and this agreement is entered into subject to the approval of the owner thereof within 30 days.

"IT IS FURTHER UNDERSTOOD that there are no verbal or other agreements which modify or affect this contract.

"The consummation of the sale is to be made in the office of W. Howard Bloom Co. 110 First Street, Cascadian Hotel Bldg. Wenatchee, Washington

"Time is the essence of this contract.

"Purchaser agrees to buy said property on above terms.

"JAMES A. EVANS W. HOWARD BLOOM CO. Purchaser Agent By W. HOWARD BLOOM "Wenatchee, Washington, July 25, 1941.

"I hereby agree to the above sale and to all of the foregoing terms and conditions, and agree to pay W. Howard Bloom as agent, commission of 5% for services.

"In the event that the earnest money receipted for is forfeited, I agree that such forfeiture shall go to, and be retained by, the agent to the extent of the agreed commission, and the residue to the owners.

"CARL CHRISTENSEN Owner SALLIE CHRISTENSEN Wife"

Four days later, appellant visited Evans for the purpose of securing his signature to a formal contract embodying the terms of sale. Evans refused to sign the contract upon the ground that he was ill with the "flu," disgusted with the climate, and that the forfeiture clause of the contract was unsatisfactory.

July 31, 1941, respondents, with appellant's approval, addressed a letter to Evans and his wife at their Wenatchee address, urging them to reconsider the matter. However, Evans had left the state, and this letter, after being forwarded to Wyoming, was returned to respondents unopened. Respondents thereupon consulted with appellant, who then secured Mr. Evans' address and wrote him at Monmouth, Illinois, urging him to reconsider his decision. In the meantime, respondents wrote to Evans August 30, 1941, acknowledged that they considered the former deal terminated and stated that, inasmuch as the thirty days allowed under the brokerage agreement with appellant had expired, they were at liberty to deal with Evans directly, and offered him the property for twelve thousand dollars. The offer was accepted in substance by letter received September 28, 1941, and the transaction for the sale of the property was closed November 29, 1941. During the month of September, and prior to the time respondents received a reply to their letter of August 30th, appellant showed the property to another prospect who made an offer to purchase the property at the original figure, but with a comparatively small initial payment. The offer was not acceptable to respondents because of the small cash payment proposed, but they did, in writing to appellant, set forth the terms they were willing to accept from the new prospect, which, except for the price, were more liberal than those finally accepted from Evans.

It is appellant's contention that he earned his commission at the time of the execution of the earnest money agreement, and that he is entitled to a commission of five per cent of the purchase price of $12,650, less the one hundred dollars retained by him. He argues that the earnest money agreement is a binding, enforcible contract, and that by securing its execution he did all that was required of him.

Respondents, on the other hand, contend that the judgment is supported by the findings on two theories: First, that the earnest money receipt provided for the consummation of the prospective sale by the making of additional contracts and additional payments of money, and that the sale was never completed; second, that, after Evans decided not to purchase the property on July 29th, appellant abandoned any further effort to sell respondents' property to him.

[1] It is the general rule that a broker is entitled to his commission when he produces a purchaser who is ready, able, and willing to purchase upon the terms required. This court has held to that effect in Carstens v. McReavy, 1 Wn. 359,25 P. 471; Arthur D. Jones Co. v. Eilenfeldt, 28 Wn. 687,69 P. 368; and Ollinger Co. v. Benton, 156 Wn. 308, 286 P. 849. The following authorities adhere to that rule: 12 C.J.S., p. 188, Brokers, § 85; 8 Am. Jur., p. 1090. Brokers, § 174; Kendrick v.Speck, 67 F.2d 295; Goss v. Broom, 31 Minn. 484,18 N.W. 290.

The rule applies even though the sale is not consummated by the owner or is consummated by him upon terms different from those stipulated in the brokerage agreement. Barnes v. German Savings Loan Society, 21 Wn. 448, 58 P. 569; Norman v. Hopper,38 Wn. 415, 80 P. 551; Lawler v. Armstrong, 53 Wn. 664,102 P. 775; Philips Co. v. Langlow, 55 Wn. 385,104 P. 610; Godefroy v. Hupp, 93 Wn. 371, 160 P. 1056, L.R.A. 1918 E, 494; Ollinger Co. v. Benton, 156 Wn. 308, 286 P. 849;Tarbell v. Bomes, 48 R.I. 86, 135 A. 604, 51 A.L.R. 1386, 1394e.

In Lawler v. Armstrong, supra, an owner accepted five hundred dollars earnest money on a thirty thousand dollar contract to purchase in the following terms:

"``We approve the above sale and agree to pay George Lawler $750 in case sale is consummated or 1/3 of earnest money in case same is forfeited, and covenant that we are the owners of the above described property in fee simple.'"

The purchaser defaulted and the owner instituted a suit for specific performance and secured a judgment for the full purchase price. This court recognized that the broker was entitled to his commission and held that the sale was consummated as required by the brokerage agreement. In the opinion several cases from outside jurisdictions are cited which hold that the procuring of an enforcible contract entitles the broker to his commission. We refer particularly to Goss v. Broom, 31 Minn. 484, 18 N.W. 290, from which we quoted as follows:

"``He [the agent] became entitled to the stipulated compensation when he had done all that he was empowered to do. This he did by negotiating a sale and making a contract binding the purchaser to a performance of the terms prescribed.'"

In Ollinger Co. v. Benton, supra, the broker secured a contract of exchange and the papers were placed in escrow, the contract was later rescinded and another arrangement made. This court upheld the broker in his claim for a commission, saying:

"The law is so well settled as to require no citation of authority that, where a broker has produced a customer who is accepted by the other side and who enters into a binding and enforceable contract for the exchange or sale of property, he has earned his commission. In this particular case, the exchange actually took place, and the respective properties were deeded pursuant to the terms of the exchange agreement. Some five or six months thereafter, the parties got together, declared the deal off, and re-exchanged their properties. Under such circumstances, the broker is entitled to his commission.

"``The authorities are practically unanimous in holding that unless the broker and his employer have expressly stipulated to the contrary the broker is entitled to his compensation upon the completion of the negotiations he undertook irrespective of whether or not the contract negotiated is ever actually consummated, so long as the failure to carry it through to a successful completion is not due to any fault of the broker.' 4 R.C.L., p. 310, § 50."

[2] The earnest money agreement was a valid contract enforcible by a suit for specific performance, and was not in any sense an option to purchase. Newell v. Lamping, 45 Wn. 304,88 P. 195; Asia Inv. Co. v. Levin, 118 Wn. 620,204 P. 808, 32 A.L.R. 578; Hamilton v. Norris, 144 Wn. 326,258 P. 4.

Respondents contend that the earnest money agreement provided for further acts on the part of the broker and contemplated that he would "consummate" the sale before earning his commission; and they point to the fact that the agreement used the terminology that the "consummation of the sale" take place in appellant's office. They base their contention upon our holding in Sams v.Olympia Holding Co., 153 Wn. 254, 279 P. 575. The contract construed in that case and the ones present here are entirely different. In that case, we held unenforcible a brokerage agreement which entitled a broker to a commission "when the sale is completed." The real estate agent secured a purchaser who agreed to but did not complete the purchase of the property upon the terms set out in the agreement between the owner and the agent. The contracts in this case, however, make different provisions. In the brokerage agreement, respondents agreed to pay a commission "if the real estate agency shall sell said property," and in the earnest money agreement they stated,

"I hereby agree to the above sale and to all of the foregoing terms and conditions, and agree to pay W. Howard Bloom as agent, commission of 5% for services."

In the first contract, they agreed to pay a commission only when the sale was consummated, and in the last agreement respondents approved the contract of sale secured by appellant.

We hold that these commitments entitled the appellant to recover his commission.

[3] Respondents contend that appellant abandoned the deal upon the purchaser's declaration of forfeiture, and point to his activities subsequent to the time that Evans refused to sign the contract. There was nothing inconsistent with his activities and his contention that he was entitled to his commission. He only endeavored to assist his principal in securing the money which was due him from Evans and to secure another purchaser. As we view it, this could not be construed in any way as an abandonment of his rights to secure his commission.

The fact that Mr. Evans bought the property at a figure within a few hundred dollars of the original price is definite proof of his ability to buy.

The judgment will therefore be reversed and the case remanded, with instructions to the trial court to enter a judgment in favor of the appellant as demanded in his complaint.

MILLARD, BLAKE, JEFFERS, MALLERY, and GRADY, JJ., concur.