Bacon v. Davis

The importance of the principle and the value of the property involved justify a somewhat extended consideration of the transaction out of which has grown this litigation.

The action was brought to determine the validity of an adverse claim made by the appellant, defendant Davis, to certain real property on Broadway street, in the city of Oakland. Davis claims to have purchased the property, and in his amended answer and cross-complaint he sets forth the basis of this claim as resting in: First, a contract between plaintiff and the Laymance Real Estate Company, by which the said company was authorized to sell the property, and secondly, a contract of sale made by said company with the defendant. The prayer is that plaintiff take nothing by the action and that defendant have a decree of specific performance of said contract and for general relief.

The plaintiff interposed a general demurrer to the amended answer and the amended cross-complaint. Each demurrer was sustained, and thereupon, in due time, a judgment was entered for plaintiff as prayed for in the complaint, quieting his title as against any claim of said defendant.

From this judgment the appeal is taken.

The said contract between the plaintiff and the Laymance Real Estate Company, as far as material to the present inquiry, is as follows:

“Oakland, Cal., March 31, 1905.

“In consideration of securing the services of Laymance Real Estate Company, a Corporation, and .efforts on its part, and at its expense to obtain for me a purchaser for the property hereinbelow described, I hereby authorize said Laymance Real Estate Company exclusive right to sell for me, in my name and receipt for deposit thereon, for a term of sixty days from date hereof and until I give said corporation ten days’ notice in writing to cancel this authorization, the following described property,—(describing it) for the sum of $135,-000.00 net to me on the following terms, to wit, 20 per cent cash on the delivery by me of a good and sufficient deed; balance to be paid as follows: one note for $72,000.00 payable in one year after date, with interest at 7% per annum secured by a trust deed to the 151 feet on Broadway by uniform depth of 100 feet; one note for $36,000, payable one year after date with interest at 7% per annum, secured by a trust deed to all

the balance of the land in said block 261 above described in the name of the Bacon Land and Loan Company.

“And I hereby agree to sell and convey by a good and sufficient grant, bargain and sale deed of conveyance and give the usual covenants therein to any purchaser obtained by said Laymance Real Estate Company, a Corporation, and if sale is made, 15 days to be allowed to search title to said property.

“And I hereby agree that said Laymance Real Estate Company, a Corporation, may retain all over said net sum for which they may sell said property as its expenses and said commission for services rendered.

(Signed) “F. P. BACON.

“Witnessed by M. J. Laymance.”

The contract between the Laymance Real Estate Company and defendant Davis provided as follows:

“Know all men by these Presents: For a valuable consideration the receipt of which is hereby acknowledged by the Laymance Real Estate Company, a corporation, the duly accredited agent and on behalf of F. P. Bacon, the owner of the property hereinafter described, Elliott B. Davis hereby buys and the said F. P. Bacon by his duly accredited agent, the said Laymance Real Estate Company, hereby sells to said Davis, the said real property for the sum of $135,000.00, and the said Davis hereby deposits on account of said purchase price the sum of $5,000.00; the said sum of $135,000 to be paid as follows: [The terms here set out are the same as in the said contract between Bacon and the Laymance Real Estate Company.] “This agreement of sale is made in accordance with that certain written authorization dated Oakland, California, March 31, 1905, and signed and executed by said F. P. Bacon, authorizing the said Laymance Real Estate Company, a corporation, to sell said land for and in the name of said Bacon and to receipt for a deposit thereon and which said written authorization is recorded this first day of December, 1905, in the office of the County Recorder of the County of Alameda, and to which said authorization and the record thereof in said Recorder’s office reference is hereby made for a more particular statement of the matters and things set forth therein.” Then follow the description of the property and the signature of the parties.

The whole case, it will be seen, therefore, virtually hinges upon the construction of the terms of the said contract between Bacon and the Laymance Real Estate Company. It is not disputed that the agent had no authority to sell the property so as to bind the owner unless the authority is found, in the terms of said written authorization. Indeed, both parties cite and rely upon section 1971 of the Code of Civil Procedure and section 1741 of the Civil Code to fortify their claims. It is sufficient to quote the latter, which provides that “No agreement for the sale of real property, or of any interest therein, is valid unless the same, or some note or memorandum thereof, be in writing and subscribed by the party to be charged, or his agent thereunto authorized in writing.” Some verbal criticism of the word “thereunto” is indulged by counsel, but its meaning seems altogether free from doubt. In simple language, the section provides substantially that any agreement for the sale of real property to be valid and binding must be subscribed either by the owner of the property or by his agent who has been authorized in writing by said owner to enter into such an agreement. The word “thereunto” has its ordinary signification of “to that,” and is obviously an elliptical form of expression for the phrase “to do that.” Hence, as far as the agent is concerned, he must be authorized in writing “to do that”; in other words, to execute an agreement of sale, to make it binding and operative.

There is no escape from the proposition that in order to determine the extent of the agent’s authority we must look to the terms of the instrument as they have been employed by the parties thereunto. Unless the Laymance Real Estate Company by said agreement of March 31, 1905, was expressly authorized to enter into a contract of sale of said property, then the owner had the right to repudiate as unwarranted the contract between said agent and the defendant Davis of

It is not denied that in our efforts to reach the intention of the parties to said instrument we must invoke the ordinary rules for the interpretation of contracts. For instance, "The language of a contract is to govern its interpretation if the language is clear and explicit and does not involve an absurdity.” (Civ. Code, see. 1638.) “The whole of a contract is to be taken together so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.” (Civ. Code, sec. 1641.) “The words of a contract are to be understood in their ordinary and popular sense rather than according to their strict legal meaning, unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed.” (Civ. Code, see. 1644.)

Taking up, then, the contract in question “by the four corners,” and viewing it in the light of these familiar rules of interpretation, what authority is conferred upon the Laymance Beal Estate Company in relation to the property therein described? In the first place, it must be obvious that if the words are to be understood in their ordinary and popular sense, and if effect is to be given to all of them, the said realty company did not exceed its authority in entering into a contract of sale. There can be no doubt what the average man would understand from this language: “I hereby authorize said Laymance Real Estate Company exclusive right to sell for me in my name . . . and I hereby agree to sell and convéy by a good and sufficient grant, bargain and sale deed of conveyance and give the usual covenants therein to any purchaser obtained by said Laymance Real Estate

But the expression “to sell” is sometimes used in the sense of an executed contract of sale, or an agreement to sell as defined by the code. (Barber Asphalt Paving Co. v. Standard Co., 39 App. Div. 617 , 58 N. Y. Supp. 408 ; Rice v. Mayo, 107 Mass. 550 .) It has also a peculiar and restricted meaning acquired by usage wherein it signifies to obtain a purchaser ready, willing and able to buy, and it is the contention of respondent that in this last sense the term was used by the parties to said contract of March 31, 1905. It is urged that “the language is that usually found in contracts between owners of property and real estate agents, when the former list property with the latter for sale, and there is nothing to indicate that the parties to the contract in question intended anything further than that the real estate broker was given the exclusive privilege for a limited period of finding for plaintiff a purchaser. At the very outset of the authorization it is stated that the broker is to make efforts ‘to obtain for me (plaintiff) a purchaser, ’ that is to say, the service of the broker was to consist in obtaining a purchaser, not in disposing of the property. . . . When the defendant contends that the broker’s authority ‘to sell’ carries with it the power of making a contract of sale enforceable by a proposed purchaser, he overlooks the code provisions of this state and ‘also decisions of the courts of last resort, not only in California, but also in other states.”

We have already noted the code provisions to which he refers. We proceed to the consideration of some of the cases,

In Brandrup v. Britten, 11 N. D. 376 , [ 92 N. W. 453 ], the court said: ‘ ‘ The trial court held that as a matter of law the real estate brokers had not authority to sign the contract of sale, and that the defendant (owner of the property) is not bound thereby. This conclusion is sound and must be sustained. In this state it is essential to the validity of a written contract for the sale of real property signed by an agent that the authority of the agent to sign the same shall be embodied in a writing subscribed by the principal.” (Citing, as said by respondent, sec. 3887, Revised Code, which is the same as subd. 5, sec. 1624, of our Civil Code, and said sec. 3960, Revised Code, which is the same as our said see. 1741 of the Civil Code.) “It is well settled that the agency of such persons is limited to finding purchasers who are acceptable to vendors . . . and in the absence of express authority, does not extend to signing contracts of sale ... in behalf of the principals. ... A real estate broker may be given authority to execute contracts for his principal, but it is an additional authority. The instrument under consideration does not confer any such additional authority. It merely grants to the real estate broker ‘the sale’ or the selling of the land for a limited period, and for the guidance of such brokers it states the total net' sum which the principal will accept and the amount of cash payment which he will exact in case of a sale—as will be seen by an examination of the instrument, the details essential to the consummation of a sale are omitted. It does not provide the length of time the deferred payments are to run, or how they are to be divided, or as to the rate of interest to be charged, or as to whether a deed shall be given to the purchaser and a mortgage to secure the deferred payments, or as to whether any deed shall be executed prior to the full payment of the purchase price. These omissions tend strongly to show that it was the intention of the parties to the instrument that the sale was to be approved and the contract of sale executed, by the principal, and not by the broker.”

A leading case upon the question, cited with approval by many courts, is Duffy v. Hobson, 40 Cal. 240 , [ 6 Am. Rep. 617 ]. It appears that the contract of sale there was executed by one Atkins as agent of Hobson and in the name of the latter, the owner of the property. The only testimony as to the

In Armstrong v. Lowe, 76 Cal. 616 , [ 18 Pac. 758 ], the language used was: “You are hereby authorized to sell my prop

In Grant v. Ede, 85 Cal. 418 , [ 20 Am. St. Rep. 237 , 24 Pac. 890 ], the authority of the agent was contained in the following entry:

“San Francisco, Aug. 3, 1867.

“Mr. Wheeler Martin:

“As you stated you could get $30,000.00 for the place yon occupy on Market street, if you can, we will sell at that price any time before the first day of September, 1887, and allow you 2y2 per cent on said price, and if no sale is made no expense is made to us.

“Tours truly,

“WILLIAM EDE.”

Martin sold the property to the plaintiff Grant for the sum of $30,000 and took a deposit from the purchaser of $500. The owner, Ede, refused to make a conveyance, and the action was brought to enforce specific performance. The court decided against plaintiff and held that Martin was simply authorized to find a purchaser who would pay $30,000, and if he did so he was entitled to the commission and that there was nothing in the writing indicating any other intention. It was-said that: “The object of the writing doubtless was to fix the price which the defendant was willing to take for the land and the compensation he was willing to allow Martin for making the sale.” The court calls attention to the fact as significant that there was nothing in the contract specifying the form of deed or time of payment. The question of the sufficiency of the agent’s authority was discussed in Delano v. Jacoby, 96 Cal. 275 , [ 31 Am. St. Rep. 201 , 31 Pac. 290 ], and it is there said: “There is an apparent conflict of authority on the ques

In Stemler v. Bass, 153 Cal. 791 , [ 96 Pac. 809 ], it is said: “The ordinary authority of a real estate agent deputed to sell real estate is simply to find a purchaser, and he has no power to bind his principal by a contract of sale unless it appears that it was intended to confer such additional authority. . . . Whether or not it was intended to confer such additional authority is to be determined from the language used regarded in the light of the surrounding circumstances. . . . The case at bar is very different in its facts from Rutenberg v. Main, 47 Cal. 220 , relied on by plaintiff, where it clearly appeared that it was intended by the owner to clothe the agent with authority to do generally whatever was necessary to make the proposed sale binding upon the principal.”

These quotations disclose clearly that by usage the phrase “to sell” has acquired this restricted and conventional meaning, that is, to secure a purchaser, and that, standing alone, it is not sufficient to authorize the agent to enter into a contract of sale, binding the principal. They also reveal and illustrate the reason for the rule and the importance, in case additional words are used, of examining with care the whole instrument to determine the intention of the parties.

On the other hand, it is appellant’s contention: “That the only construction of the contract under discussion, which is at all reconcilable with the wording of its various provisions, is one in accordance with which the language of the contract is recognized as authorizing, not only ‘by fair implication,’ but also ‘in terms,’ the making of a contract of sale ‘in the owner’s name.’ ” Thus only, it is claimed, can effect be given to the

“Interpret the contract as respondent would have it interpreted, and you find it impossible to avoid attributing to the parties a use of language so strange and improbable that you make a new agreement for then! on the theory that they did not mean what they said.”

The leading case in this state cited by appellant and in line with his contention is Rutenberg v. Main, 47 Cal. 213 . Rutenberg was the owner of property in San Francisco, and through his agent he sold the same to the defendant, but the latter refused to make payment when the deed was tendered. The action was for specific performance. The defense was that the agent was not authorized to sell the premises, the contention being that he had authority simply to find a purchaser. It is said in the opinion that “It is true that the power of a mere broker is thus limited, although he be employed to sell real estate, because these words are construed, with reference to the actual purpose of his employment. But if the language used, regarded in the light of surrounding circumstances, clearly shows that the agency is intended to be more extensive than that of a mere broker, the court will so find. . . . That the plaintiff intended and clearly expressed his intention that Meineeke should do more than discharge the functions of a broker is apparent from the evidence.” The court then sets out the evidence as follows: “In the month of 'July the plaintiff, who was at Bremen, wrote to Meineeke in respect to the property in the controversy: ‘If you can get a binding offer of over $50,000, I may conclude to sell at once.

In the case of Lyon v. Pollock, 99 U. S. 668 , the plaintiff authorized his attorney in fact, B., to sell his property in Texas. B. did not make the transfer, but placed the property in charge of C., of which Lyon was notified. Thereupon Lyon wrote C. as follows: “I wish you to manage my property as you would with your own, and if a good opportunity offers to sell everything I have. I would be glad to sell,” etc. C. made a deed of the property. The court, through Mr. Justice Field, says: “The deed executed by C. in the name of Lyon, though invalid as a conveyance, was good as a contract for the sale of the property described in it, and was sufficient, therefore, to sustain the bill for a decree directing Lyon to make conveyance to the grantee therein.” It was held, further, that the letter to Lyon was sufficient to authorize C. to enter into a contract for the sale of the property. The court, moreover, declares that the surrounding circumstances of that case were strongly corroborative of the view taken of the written instrument.

Many other cases and authorities are cited by appellant, but we shall refer to only two or three additional ones in an examination of the peculiar phraseology of the instrument before us. Indeed, as the intention of the parties is to be determined by the language used and the surrounding circumstances of each particular case, and as no case has been found involving the same language and circumstances as those in controversy here, we are practically without direct precedent

In Farris v. Marten, 29 Tenn. 495 , we have an illustration of the significance commonly attached to the words “for me” and “in my name.” The written authorization was: “Dear Sir: I have received seventy-two dollars, rents you collected for me, for which I kindly thank you and wish you to rent it

In Heywood v. Heywood, 42 Me. 229 , [ 66 Am. Dec. 277 ], it is said: “It is a general principle that no word in the contract is to be treated as a redundancy if any meaning, reasonable and consistent with its parts, can be given to it.”

In Haydock v. Steele, 40 N. Y. 363 , the authorization was: “You are authorized and empowered as agents for me to sell my property. ” It is said by the chief justice, speaking for the court: “I consider the instrument to be a plain, direct, unqualified power of attorney to sell the land mentioned in it, nothing more, nothing less.” Assuredly, the words “to sell for me in my name” are equally as potent. In fact, withoul the words “in my name” the authorization here would be almost exactly the same as in the Haydock case, for the word “empowered” is a synonym for “authorized,” and the words “as agents” add nothing to the significance of the expression, for they are clearly implied, and with or without them there could be no doubt as to the agency but only as to its extent. The New York case is simply this, therefore: “You are authorized for me to sell my property.” Here we have the additional confirmation of authority disclosed by the phrase “in my name.”

But again the owner meant something by this covenant: “I agree to sell and convey by a good and sufficient grant, bargain and sale deed and give the usual covenants therein to any purchaser obtained by said company.” It certainly imposes some obligation upon the owner in reference to a purchaser that might be secured by the agent. As suggested by appellant, it is difficult to distinguish between the significance of these two clauses taken together and that of the ordinary

In Grant v. Ede, 85 Cal. 418 , [ 20 Am. St. Rep. 237 , 24 Pac. 890 ], where the broker was authorized to sell for $30,000, it was held that he was entitled to his commission on finding a purchaser willing to buy at that price.

In Oullahan v. Baldwin, 100 Cal. 648 , [ 35 Pac. 310 ], the broker was authorized in writing to negotiate the sale of certain lands. The instrument contained the statement, “Our price for said land is $116,666.65 net to us and any amount over and above said sum for which our said agents may sell said land we agree to give them for commissions for their services.” It is said by the court: “The brokers were simply authorized to negotiate a sale. Their contract was completed and their commissions earned when they produced a purchaser within the five days, willing, ready and able to purchase upon the terms stated in the contract of employment.”

If it is meant to intimate that the Laymance Real Estate Company could compel a sale to protect itself, this authority must be found in the contract, and amounts to the same grant of power as that contended for by appellant. But the answer to the whole contention is that the owner solemnly promised to execute a deed to any purchaser secured by the real estate company. The language is free from doubt, and the duty of the court is plain to give effect to the covenants of the parties and not to seek to emasculate the contract by groping for some reason to conclude that its meaning is otherwise than the language clearly imports.

Again, the circumstance in reference to the terms of the sale, while not controlling, is of persuasive force in indicating the intention of the parties. The importance of this circumstance is indicated in the case of Brandrup v. Britten, 11 N. D. 376 , [ 92 N. W. 453 ], by the language which we have already quoted.

The omissions as to the terms of the sale, which, in that case, are said to tend strongly to show that the sale was to be approved and the contract of sale executed by the principal and not by the broker, are supplied in the instrument before us. Hence it is fair to argue that these details being present,

There are, indeed, portions of the instrument in question isolated from the context that would support respondent’s contention. For instance, the inducement, “in consideration of securing the services of Laymance Real Estate Company, a Corporation, and efforts on its part, and at its expense to obtain for me a purchaser, ’ ’ etc., and, if this had been followed simply by the authorization “to sell,” appellant could not prevail. But considering the whole of the instrument, it seems to mean nothing less than “I authorize the Laymance Real Estate Company to enter into an executory contract of sale of the property described and upon the terms set out and I promise to execute to the purchaser a good and sufficient deed to said premises. ’ ’

If this is the right construction of the instrument, then there can be no doubt that defendant in his answer and cross-complaint set out sufficient facts to entitle him to a specific performance of the contract. It cannot be held that the contract was not made for his benefit, and therefore he is not entitled to take advantage of it. Because it is a question of the authority of the agent to bind the principal. If it had such authority, its act was the act of the principal. “An agent authorized to sell either real or personal property may enter into a contract within the terms of his authority which will bind his principal. This is of the very essence of the authority given, viz., an authority to sell. That he can bind his principal by a formal contract is the doctrine of the books from the earliest law on the subject.” (Haydock v. Steele, 40 N. Y. 363 .)

It would hardly be contended that if the principal directly entered into such a contract, he could repudiate it and successfully resist an action for specific performance, assuming, as appears here, that the contract was fair and reasonable and the consideration just and adequate.

But even if section 1559 of the Civil Code has any application, which provides that “a contract made expressly for the benefit of a third person may be enforced by him at any time before the parties rescind it,” it would require no argument to show that when the owner promises to convey to any purchaser who might be secured, the contract was made for the benefit of such purchaser. It is said in Chung Kee v. Danielson, 73 Cal. 522 , [ 15 Pac. 100 ]: “It is not necessary that the parties for whose benefit the contract has been made should be named in the contract. It must appear, however, by the direct terms of the contract that it was made for the benefit of such parties. ’ ’

We cannot agree with the conclusion of the learned trial judge, and the judgment is, therefore, reversed.

Chipman, P. J., and Hart, J., concurred.

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on November 19, 1908.