Opinion
June 4, 1958 —
June 26, 1958.
APPEAL from a judgment of the municipal court of Racine county: HOWARD J. DuROCHER, Judge. Reversed.
The cause was submitted for the appellant on the brief of Harvey Harvey, attorneys, and Earle L. Christ of counsel, and for the respondent on the brief of Foley, Capwell Foley, all of Racine.
Action by a real-estate broker to recover the amount of the commission alleged to be due him arising out of the sale of land.
The plaintiff operated as a sole trader under the name of "Benjamin Mitler Company." The defendant corporation owned a large number of vacant lots in "Greencrest," a subdivision in the city of Racine, and engaged the plaintiff broker to sell all of such lots except 28 lots located in block 6 of such subdivision. The reason such lots in block 6 were excepted from sale was because the same comprised high ground which the defendant was using as fill material for filling in its remaining lots in the subdivision. A written listing agreement was entered into between the parties on June 29, 1954, which described the lots to be sold by the plaintiff. The agreed commission specified in this contract, which the plaintiff was to receive for his services in the event he was successful in selling any of the lots, was 10 per cent of the sales price, but not less than $100 per lot.
In April, 1955, Auto Insurance Agency, Inc. (hereinafter referred to as the "purchaser"), submitted two written offers of purchase to the plaintiff. Under one it offered to purchase all of the lots described in the listing contract, except such as had been previously sold, for $183,000, there being 139 of such unsold lots. Under the second offer the purchaser offered to buy all 28 lots in block 6 for $42,000. Such two offers to purchase were accompanied by a down payment of $7,000 and a letter of transmittal which made each of the two offers contingent upon the defendant owner accepting both. The plaintiff deposited the $7,000 down payment in his trust account, and apparently delivered the offers to purchase to the defendant. Direct negotiations then ensued between the purchaser and the defendant to work out the terms of sale.
On May 12th, during such negotiations, the plaintiff was requested to turn over the $7,000 down payment to the defendant. Because the plaintiff had no written listing agreement with the defendant covering the sale of the lots in block 6, the plaintiff on the same day personally delivered a check for the $7,000 to the defendant together with a letter signed by plaintiff dated May 12, 1955, reading as follows:
"Upon telephone advice of Mr. Jerome J. Foley, Jr., and Mr. Harry Kaminsky, we are delivering herewith our trust-account check for $7,000 which is the deposit on both offers to purchase tendered to you by the Auto Insurance Agency, Inc., for certain lots in Greencrest.
"We wish it understood that we expect to be protected by all parties on our contract for commission, and this delivery does not constitute any waiver of our rights. We wish it understood that we are in no sense releasing any claim for commissions on the $42,000 offer which is one of the two on which we received the deposit."
The next day, May 13, 1955, a written contract for the sale of all of the unsold lots owned by the defendant in "Greencrest" was drafted between the purchaser and the defendant. However, such contract contained a covenant on the part of the defendant whereby the latter agreed to pay the plaintiff the commission due him on the sale. The contract was in the form of an offer by the purchaser and an acceptance by the defendant and such covenant was set forth in the acceptance executed by the defendant. The offer bore date of May 13th and the acceptance the date of May 16, 1955.
On August 18, 1955, the defendant, through its attorney, tendered to the plaintiff a check for plaintiff's commission on the sale in the sum of $18,600 which the plaintiff refused to accept. The actual sales price was $225,000 and the plaintiff insisted that he was entitled to a commission in the sum of $22,500. Thereafter, the defendant decreased its offer of commission to $16,074.51, and the plaintiff accepted such payment under circumstances whereby he did not waive his right to bring action for the balance to which he claimed that he was entitled. The reason for the defendant decreasing such payment from $18,600 to $16,074.51 was because the defendant claimed it had been forced to assume payment of certain special assessments covering the lots sold.
The plaintiff then commenced action to recover the balance of $6,425.49 commission he claimed was due. As exhibits to his complaint, which were incorporated therein by reference, were set forth true copies of the listing contract of June 29, 1954, and the contract of sale entered into between the defendant and the purchaser in May, 1955, which contained the covenant by the defendant to pay the plaintiff's commission. The defendant first demurred to the complaint on the ground that it failed to state facts sufficient to constitute a cause of action. The trial court overruled such demurrer.
The defendant then answered admitting all the material facts and offered judgment in the amount of $2,437.67 and costs, such offer of judgment stating that this sum represented the amount previously deducted by the defendant from the $18,600 figure by reason of the special assessments together with interest on the same. The defendant followed this with a motion for judgment on the pleadings. The plaintiff countered with a motion for summary judgment.
By order entered August 14, 1957, the trial court granted the defendant's motion, denied the plaintiff's motion, and directed that judgment be entered in accordance with the defendant's offer of judgment. Without waiting for such judgment to be entered, the plaintiff appealed from such order to this court. Such appeal was dismissed. Mitler v. Associated Contractors (1958), 3 Wis.2d 331, 88 N.W.2d 672. Thereafter, under date of March 19, 1958, judgment was entered in the trial court adjudging that the plaintiff recover from the defendant the sum of $2,437.67 in accordance with the offer of judgment, and that the defendant recover from the plaintiff its costs and disbursements in the sum of $110 because of plaintiff's rejection of the offer of judgment. Such judgment also again denied plaintiff's motion for summary judgment.
The plaintiff has appealed from such judgment and the parties have stipulated for use on this appeal of the briefs filed on the prior appeal.
Under the judgment of the trial court the plaintiff was awarded no commission on the sale of the 28 lots in block 6. The principal issue upon this appeal is whether the plaintiff had a contract in writing which provided that he was to receive a commission on the sale of these 28 lots that contained the essential terms required by sec. 240.10, Stats.
"240.10 Every contract to pay a commission to a real-estate agent or broker or to any other person for selling or buying real estate or negotiating lease therefor for a term or terms exceeding a period of three years shall be void unless such contract or note or memorandum thereof describing such real estate, expressing the price for which the same may be sold or purchased, or terms of rental, the commission to be paid and the period during which the agent or broker shall procure a buyer or seller or tenant, be in writing and be subscribed by the person agreeing to pay such commission."
The covenant of the contract of sale on the part of the defendant to pay commission to the plaintiff was contained in the defendant's acceptance of the purchaser's offer. Such acceptance was dated May 16, 1955, and read as follows:
"The above offer is hereby accepted, and the undersigned hereby agrees to sell and convey the above-described property on the terms and conditions as set forth; and promises to pay a broker's commission to Benjamin Mitler Company, realtors, in accordance with the present agency contract executed by this corporation, and acknowledges receipt of a copy of this agreement."
Such contract of sale contained a schedule which described all of the lots being sold, including the 28 in block 6.
If the afore-quoted covenant by the defendant to pay commission contained in the contract of sale had contained an unequivocable promise to pay a commission on all the lots described in the schedule, including those in block 6, in accordance with the terms of the prior listing contract, we are satisfied that there would have been full compliance with sec. 240.10, Stats. The statutory contract or memorandum may consist of separate writings, if such separate writings when construed together contain all the elements specified by the statute. Furthermore, the fact that the plaintiff was not a party to the contract of sale is immaterial because it was subscribed by the defendant who is the person who is claimed to have agreed to pay the commission.
We are further satisfied that, as to the plaintiff, the covenant for payment of commission in such contract of sale was a contract for the benefit of a third party which the plaintiff is entitled to enforce. At the time such contract of sale was entered into there was a brokerage commission legally due from the defendant to the plaintiff as to the sale of all the lots except those in block 6. Therefore, the plaintiff was a "creditor" beneficiary of such contract rather than a "donee" beneficiary. Restatement, 1 Contracts, p. 151, sec. 133. Williston points out that under the Restatement an intent to benefit the third-party beneficiary is only material in the case of a donee beneficiary and not when such third party is a creditor beneficiary. 2 Williston, Contracts (rev. ed.), p. 1047, sec. 356. Therefore, it is wholly immaterial in the instant case as to whether there was any intent on the part of the defendant to benefit the plaintiff by covenanting with the purchaser in the contract of sale that the defendant would pay the plaintiff's commission.
This brings us to the nub of the controversy, i.e., is such covenant in the contract of sale to be construed as a promise by the defendant to pay a commission on the sale of the lots in block 6 as well as the other described lots?
When this issue was presented to the trial court for the first time by the defendant's demurrer to the complaint, the trial court in its memorandum opinion made the following comment:
"However, there is an express agreement to pay commissions embodied in the acceptance attached to the agreement of purchase and sale (Exhibit B).
"It is true that this acceptance provides that commissions shall be paid `in accordance with the present agency contract' which may well mean as the plaintiff contends that payment shall be made at the rate specified in that contract. It raises a question with respect to the construction of the agreement which results from the reading of the agreement of purchase and sale in conjunction with the listing contract which two agreements do not cover identical real estate. The ambiguity which exists when these agreements are read in conjunction with each other presents a question of fact which cannot be settled upon demurrer, but may call for evidence of surrounding circumstances to permit construction and interpretation under proper pleadings."
We are in full accord with such holding of the trial court that an ambiguity does exist which requires an inquiry into the surrounding circumstances to resolve. This being so, it was error for the trial court, when he was later again presented with the same issue by defendant's motion for judgment on the pleadings, to grant such motion. The effect of granting such motion was to determine that no ambiguity existed.
This brings us to the further issue of whether the surrounding circumstances set forth in the affidavits and counteraffidavits, which were presented to the trial court upon the plaintiff's motion for summary judgment, were sufficient to resolve the ambiguity and permit the trial court to grant such motion. We are satisfied that they were not. This is because such affidavits disclosed a conflict in the essential facts.
We will first consider the facts in the affidavits favorable to plaintiff's contention that the defendant by its covenant contained in the contract of sale as to payment of commission did intend to include the lots in block 6. The plaintiff performed the same services with respect to the sale of these lots as he did the other lots originally described in the listing contract. On May 12, 1955, he notified both the defendant and the purchaser that he expected to be paid commission on the lots in block 6. The very next day the contract of sale was drafted containing the ambiguous covenant. Although the plaintiff was present at the closing between the purchaser and defendant there was no statement made by defendant denying the plaintiff's right to commission in accordance with his demand of May 12th. The defendant first disputed plaintiff's right to commission with respect to the lots in block 6 in August, 1955, approximately three months after the ambiguous covenant had been made by it.
Failure to deny a claim asserted by letter against one party by another under circumstances where it would be natural for the recipient of the letter to make such a denial if the claim were groundless may give rise to an inference of admission of liability by silence. Alex G. Goethel S. M. W. Co. v. American L. P. Co. (1933), 213 Wis. 248, 256, 251 N.W. 474; Mahoney v. Kennedy (1920), 172 Wis. 568, 572, 179 N.W. 754; and 4 Wigmore, Evidence (3d. ed.), p. 92, sec. 1073 (3). Under the facts set forth in the plaintiff's affidavits the defendant made no direct reply to plaintiff's letter and did not deny the claim for commissions set forth therein until many weeks had elapsed. However, the very next day after receipt of such letter the defendant participated in the drafting of the agreement of sale which contained the covenant to pay commissions that is now before the court for construction. From these facts a court could well infer that it was the intention of the defendant that its covenant to pay commissions, which was expressed in the agreement of sale, extended to all of the lots described in such agreement and that the reference therein to the listing contract was only for the purpose of determining the rate of commission.
However, the counteraffidavits executed by two of defendant's officers which were filed in opposition to the plaintiff's motion for summary judgment, give a contradictory picture of the facts to that presented by plaintiff's affidavits. Such two officers of the defendant averred in their affidavits that they had conversations with the plaintiff "following April 26, 1955, and prior to August 18, 1955," and on all of such occasions the defendant took the position that the plaintiff would not be entitled to commissions on the lots in block 6. If the defendant's officers both before and immediately after receipt of plaintiff's letter of May 12th had informed plaintiff that the defendant refused to pay commissions on the lots in block 6, there would then be no inference that the covenant as to commissions contained in the agreement of sale was intended as an acquiescence in the plaintiff's demand of May 12th. The affidavits of the defendant's officers therefore raised a conflict as to material facts, which necessitates that a trial be had on the merits.
By the Court. — Judgment reversed, and cause remanded for further proceedings not inconsistent with this opinion.
BROADFOOT and FAIRCHILD, JJ., dissent.