Opinion
No. 70-641 (Supreme Court No. 24194)
Decided April 27, 1971. Rehearing denied May 18, 1971.
Action on two claims for brokerage commissions allegedly earned for procuring lender to make certain construction loans to defendant. From judgment, for plaintiff on second claim, for defendant on first claim, both parties alleged error.
Affirmed in Part, Reversed in Part.
1. CONTRACTS — Acceptance — Modifies Offer — Counteroffer — Rejection — Original Offer. Where acceptance modifies the offer in any particular it amounts to nothing more than a counteroffer by the offeree and such counteroffer operates as a rejection of the original offer.
2. BROKERS — Verbal Commitment — Lender — Counteroffer — Did Not Fulfill — Agreement of Parties — Secure — Definite Commitment. Where broker was to secure a "definite commitment" of a lender to loan defendant building construction funds on certain specified terms and testimony indicated that verbal commitment by representative of lender was preliminary to written commitment and no written commitment would be made until building was completed according to specifications, free of all liens, and until all other contingencies were satisfied, the verbal offer to make a commitment was a counteroffer which did not satisfy the agreement between the parties and was never accepted by defendant.
3. APPEAL AND ERROR — Performance of Contract — Ordinarily — Question of Fact — Evidence Wholly Insufficient — Sustain Finding — Plaintiff Fulfilled Obligations. Although performance of a contract is ordinarily a question of fact which will not be set aside where such determination is supported by competent and adequate evidence, where the only evidence supporting the assertion that the plaintiff performed its part of the agreement was the counteroffer by the alleged potential lender, the evidence was wholly insufficient to sustain a finding that plaintiff fulfilled its obligations under the contract.
Error to the District Court of the City and County of Denver, Honorable Neil Horan, Judge.
Robert L. McDougal, for plaintiff in error.
Grant, Shafroth, Toll McHendrie, P.C., Donald M. Burkhardt, for defendant in error.
This case was transferred from the Supreme Court pursuant to statute.
This case involves two separate claims for brokerage commissions allegedly earned by Mortgage Finance, Inc. Mortgage Finance, Inc., was plaintiff in the action below and will herein be referred to as plaintiff. Yorty was defendant below and will be referred to as defendant. Trial was to the court which denied recovery on the plaintiff's first claim and entered judgment in favor of plaintiff on its second claim.
The first claim involved an apartment building which defendant proposed to build at 1430 Franklin Street in Denver. Defendant signed a brokerage agreement on July 21, 1967, agreeing to pay the plaintiff a 3% brokerage commission for plaintiffs' procuring a lender ready, willing and able to loan the defendant $93,000 payable in 15 years at 7% interest. Defendant did not own the Franklin Street property on July 21, 1967, although a few months earlier he held an option to purchase the property. Defendant was unsuccessful in renewing the option to purchase the property. Consequently, when the plaintiff advised the defendant on or about August 11 that it had obtained a verbal commitment from a prospective lender, defendant declined the loan and stated that he was trying to find another location for the building. Therefore, the loan agreement was never consummated.
As basis for the second claim, the plaintiff alleged that the defendant verbally requested plaintiff to obtain a lender for the same building which defendant then proposed to build at 1128 Corona Street. More specifically, plaintiff alleges that defendant orally agreed to pay plaintiff a 3% brokerage commission for plaintiff's procuring a lender ready, willing and able to loan defendant 70% of the appraised value of that property payable in 15 years at 7% interest. Plaintiff claimed that it again procured a verbal commitment from a lender amenable to the terms above and that defendant again failed to consummate the loan. Defendant ultimately built the apartment building at the Corona site, but financed it with a loan from a source other than that allegedly procured by plaintiff.
Plaintiff's first claim included the cost of an appraisal, which it claimed was incurred in obtaining the lender, plus the 3% commission set forth in the written brokerage agreement. The second claim was based on the alleged oral brokerage agreement. Alternatively, both claims were based upon a quantum meruit theory for obtaining a loan on defendant's terms.
The trial court found that although plaintiff had established its right to the commission based on the written agreement alleged in the first claim, plaintiff abandoned its right and concluded that plaintiff could not recover thereon. However, the court entered judgment in the amount of $3,292.43 on the plaintiff's second claim based on the alleged oral agreement.
Both parties assigned a number of errors attacking the trial court's judgment. Defendant claims the trial court erred in entering judgment on the plaintiff's second claim and plaintiff claims the trial court erred in not entering judgment on its first claim.
Defendant claims that the evidence was insufficient to sustain the trial court's judgment. We agree. There can be no doubt that the defendant entered into a written contract whereby plaintiff was to procure a permanent loan on the terms previously set forth. However, as the defendant contends the plaintiff never performed its part of the agreement.
The record discloses that plaintiff presented a witness in its case in chief who testified on direct examination that he made an oral commitment to Mortgage Finance, Inc., that he would lend Yorty $93,000 at 7% for 15 years. On cross-examination, this witness testified that the verbal commitment was a preliminary to a written commitment; that ultimately the written commitment would be based on the oral commitment; that his organization made no written commitments until it was satisfied that the building was completed according to specifications, free of all liens and that all other contingencies were satisfied. As such, the "oral commitment" procured by the plaintiff was nothing more than a conditional offer to make a commitment.
[1] The issue presented in this case is somewhat similar to the problem before the Supreme Court in Baldwin v. Peters, 141 Colo. 529, 349 P.2d 146. In that case a stockbroker sought to recover on account for the purchase of some corporate stock. A dispute arose with respect to the price per share at which the stock was ordered. Plaintiff contended it was directed to buy "as close to $.02 as possible," while defendant contended the price was to be "two cents per share." Plaintiff purchased the stock at 2 1/8 cents per share and defendants declined to complete the purchase and refused payment. In reversing the trial court's judgment in favor of the broker, the Supreme Court relied on Salomon v. Webster, 4 Colo. 353, and quoted the following therefrom:
"If the acceptance modified the proposition in any particular, it amounts to nothing more than a counter proposition. It is not in law an acceptance which will complete the contract."
The Supreme Court also cited Hall v. Gehrke, 117 Colo. 223, 185 P.2d 1016; Nucla Sanitation District v. Rippy, 140 Colo. 444, 344 P.2d 976; and 1 S. Williston, Contracts § 51, and quoted therefrom:
"When an offer has been rejected it ceases to exist and cannot thereafter be accepted. * * * This principle is most commonly illustrated where a counteroffer is made by offeree. This operates as a rejection of the original offer."
[2] The agreement between plaintiff and defendant was that plaintiff was to secure a "definite commitment," and upon doing so, defendant would be liable for the 3% brokerage fee. We hold that the verbal conditional offer to make a commitment relied upon by the plaintiff in both of its claims was a counteroffer which did not satisfy the agreement between the parties and was never accepted by the defendant.
[3] Performance of a contract is ordinarily a question of fact and as such this court will not set aside the determination of the trial court where such determination is supported by competent and adequate evidence. However, in this case, the only evidence supporting the assertion that the plaintiff performed its part of the agreement was the counteroffer made by the alleged potential lender. This evidence was wholly insufficient to sustain a finding that plaintiff fulfilled its obligations under the contract.
The judgment of the trial court on the first claim is affirmed and judgment on the second claim is reversed and the plaintiff's complaint is dismissed with prejudice.
JUDGE COYTE and JUDGE DWYER concur.