Opinion
No. 28125.
November 20, 1951.
APPEAL FROM THE CIRCUIT COURT, CITY OF ST. LOUIS, ROBERT L. ARONSON, J.
Arthur U. Simmons, Ludwig Mayer, Clayton, for appellants.
Louis E. Miller, B. Sherman Landau, St. Louis, for respondent.
This is an action tried before the court in which plaintiff, David B. Shepley, doing business as Acme Realty Company, seeks to recover from the defendants Richard B. Green and Gladys M. Green the sum of $875, alleged to be due plaintiff as a commission for services rendered in connection with the attempted sale of certain real estate. From a judgment in favor of plaintiff, defendants Richard B. Green and Gladys M. Green have appealed.
The property in question was a hotel building located in the City of St. Louis and owned by Ernest Bradley and his wife, Carolyn L. Bradley. In September, 1948, the Bradleys were desirous of selling the hotel. At that time they were represented by Mr. Samuel S. Mandel as their attorney. Plaintiff, David B. Shepley, was at the time engaged in business as a real estate broker operating as the Acme Realty Company and, in some manner, became aware that the property in question was for sale. Shepley thereafter interested the Greens in the property and, on September 23, 1948, defendants Richard B. Green and Gladys M. Green signed a contract to purchase the hotel. The purchase price provided in the contract was $19,000, payable as follows: "Cash payment of $7,000, of which earnest money is a part, and deed of trust in sum of $12,000, with interest at the rate of 6% to be paid monthly plus $100 on the principal for 59 months, and the balance due on the 60th month. Costs of making loan to be borne by purchaser not to exceed 3% of principal amount of deed of trust." The contract further provided: "This contract to be binding when and if signed by the other party within two days. Sale is to be closed at office of Acme Realty Company." It was also provided that the salesman's commission would be paid by the seller.
At the time the defendants Richard B. Green and Gladys M. Green signed the contract Mr. Green delivered to plaintiff his check for $500 — the amount of the earnest money deposit — and plaintiff acknowledged receipt of said sum at the bottom of the contract. On the same day, plaintiff gave his check for $200 to Mandel to bind the contract.
Plaintiff testified that he did not have any contract of employment with the Bradleys, but did have an agreement with Mr. Mandel, the Bradleys' attorney, that he (plaintiff) was to receive a five per cent. commission in the event of a sale of the property.
Mr. Bradley, the seller, testified that plaintiff had authority from him to enter into the contract, and that he expected to pay plaintiff a five per cent. commission if the property was sold.
The Bradleys did not sign the contract until September 28, 1948, at which time defendant Green repudiated the contract because it was not signed by the Bradleys within two days after he (Green) and his wife had signed it. The next day, September 29, 1948, Green stopped payment on the $500 earnest money check which he had theretofore delivered to plaintiff. The $200 check which plaintiff had given Mandel had cleared and had been paid to Mandel on September 24, 1948, by the bank on which it was drawn. All parties thereafter considered the contract as abandoned.
Thereafter, further negotiations were had between plaintiff and Mr. Green relative to the sale of this property. Plaintiff testified that on October 4, 1948, Mr. Green was in his office and:
"said that he thought the property could be bought for less money, * * * and I said, `How much less do you want to buy it for?', and he said, `I would buy it for $17,000.' I said, `Look, Mr. Green, you gave me a check once for $500 and you stopped payment, I am not going to fool around with it any more.' He said, `That is all right, I am going to put up the money in the title company for $500 as part of your commission and in the event for any reason I don't close this deal again this money is yours.' * * * Mr. Green assured me that if I got this property for $17,000 that he would go ahead with the deal, close the deal, and I would get my commission.
* * * * * *
"The Court: Q. I thought you said before $17,500? A. $17,500, I beg pardon, your Honor.
"The Court: Which is right? A. $17,500. * * * Mr. Green had suggested that if I got this property for $17,500 for him he would close the deal, and that I would get my fee. * * * He assured me I would not have to worry a third time, if he would fail on the deal at that price I would get my commission.
"Q. Did you have any further negotiations with reference to the securing of any part of your commission? A. He was to deposit $500 in cash at the Title Insurance Corporation Escrow Department.
"Q. Was there any statement of any kind that your commission was to be limited to the amount deposited? A. No, sir.
* * * * * *
"A. At the time when he offered $17,500, I refused to go further on with his offers due to the fact that two or three times he had ducked out and wasted a lot of my time, and I said, 'Now, look, I will try to get it for $17,500, but this time I want to know if the deal is going through.' He says, my commission would be paid, closed or not closed, as far as I was concerned, he was going to put up in cash, not check, with the Title Insurance Corporation."
On this phase of the case Mr. Green testified, as follows:
"Q. Mr. Green, did you at any time tell Mr. Shepley that if he reduced the payment or if he reduced the price of the property from $19,000 to $17,500 that you would pay him a commission whether the deal went through or not? A. Never did; never did. * * * I never made any such statement to him as that * * *."
Plaintiff was successful in securing a reduction of the purchase price to $17,500.
On October 5, 1948, defendants Richard B. Green and Gladys M. Green entered into an escrow agreement with the Title Insurance Corporation. Said agreement (caption and signatures omitted) is as follows:
"Received of Richard Green and Gladys Green, his wife, $500.00 in currency which represents earnest money and part purchase price for property 3864-66 Delmar Boulevard.
"The said property is being purchased for a total sum of $17,500.00 which price includes all furniture, etc. as shown by inventory; terms of purchase is $5500.00 cash of which the above $500.00 is a part and a First Deed of Trust to be executed by above depositors securing the sum of $12,000.00 which Deed of Trust will be for a term of five years, interest at 6% per annum and payable $100 per month plus interest for 59 months and the balance on the 60th month.
"The above $500.00 is deposited in escrow to be held until such time as title of said property will vest in Richard Green and Gladys Green, his wife, according to the St. Louis City Records, subject only to taxes for 1948 and thereafter, the above mentioned $12,000.00 Deed of Trust and any restrictions of record at which time we are authorized to use said funds for the account of depositors.
"It is understood, however, that if, for any reason, the depositors herein fail to consummate the purchase of said property, then the Title Insurance Corporation is authorized to pay to Acme Realty Company the above receipted for $500.00.
"If for any reason the above conditions as to title vesting cannot be complied with on or before November 1, 1948, then said $500.00 will be returned to the depositors."
After the escrow agreement was signed, Mr. Green and Mr. Shepley went to the office of the Edward K. Love Real Estate Company in order to secure a loan under a deed of trust on the property. Mrs. Green did not accompany them. Plaintiff had previously secured a commitment for a loan of $12,000 from said real estate company. As to what transpired at the Love realty office on this occasion is the subject of conflicting testimony. Plaintiff testified Green discussed the matter with Mrs. Holman Morris, who was the head employee of the Love Realty Company, and that "Miss Holman thought if Mr. Green could pay $135 a month it would save some interest by making the payments faster than $100 a month, so Mr. Green agreed to that and Miss Holman drew up a contract. * * * So Miss Holman drew up an agreement of $135 a month, and Mr. Green signed the agreement, and the agreement remained at $135 a month, he voluntarily signed it."
Mrs. Marie Holman Morris, who was secretary of the Edward K. Love Realty Company, testified: "Well, as I recall, Mr. Green applied for a twelve thousand dollar loan, and he wanted to make monthly payments so to reduce interest, so we conversed about $150 a month, and then he decided that was too much, and he agreed to pay $135 a month, plus interest."
The written application for the loan made by Mr. Green at that time was addressed to Edward K. Love Realty Company, and reads as follows: "Gentlemen: This is to authorize you to make a loan for $12,000 for five years at six per cent. interest, payable $135 per month for fifty-nine months with the balance in sixty months, same to be a first lien on property 3866 Delmar Avenue. I further agree to pay you a commission of three per cent. for making said loan. It is also understood and agreed that all furniture as listed in inventory dated September 23, 1948 is to be a part of this deed of trust as additional security. Loan to be closed up at once. All insurance during the life of the loan to be placed by Edward K. Love Realty Company if they so desire."
The foregoing application was signed by Richard B. Green and accepted by Edward K. Love Realty Company, by Edward K. Love, President.
Mr. Green testified that after the escrow agreement was entered into Mr. Shepley called Mr. Love on the telephone and tried to arrange for the loan at $100 monthly payments and six per cent. interest; that after this conversation Mr. Shepley asked him to go with him to Mr. Love's office, which he did; that Shepley talked to Mr. Love in his presence, telling him about good credit references and tried to persuade Mr. Love to make this $12,000 loan with payments of $100 a month, plus interest, for fifty-nine months, with balance on the sixtieth month, but Mr. Love said he would be unable to do that because the rate of payments was too small. Green further testified:
"A. * * *, and then Mr. Shepley then stated to me, after he, Mr. Love, showed him the best he could do on it, he asked me why wouldn't I not accept that, and I said —
"Q. Do you mean accept the $135 a month? A. Yes, and Mr. Love had offered it, and I told him that I didn't think my wife would be inclined to want me to go through with the deal at such a price, because that would run the notes up around $190 * * * and that she was just inclined for me to not go through with the deal anyway. * * * I finally agreed with Mr. Shepley, Mr. Shepley said that if my wife didn't agree * * * that he would forget about it, if my wife didn't agree."
Mrs. Morris testified that she did not hear the foregoing conversation. Mr. Love did not testify. Shepley testified:
"Q. Didn't Mr. Green tell you that he didn't believe his wife would go through with it on the basis of $135 a month? A. Never said one word.
"Q. Didn't you tell him that it was all right, if she won't go through with it we will forget about it? A. No, I didn't tell him that."
Green further testified that his wife did refuse to go through with the deal on the basis of $135 monthly pay-off.
On cross-examination, Mr. Green testified that when he was presented with the loan agreement he read same and fully understood it. He stated:
"I considered I agreed to that; I not only understood it, I agreed with Mr. Love to take it. * * * I had an agreement with him to take it. * * * He committed himself to lend the money at $135 and I signed that I would take it.
* * * * * *
"Q. Now, having executed this agreement with Mr. Love for the deed of trust at $135, did Mr. Love at any time say anything to you which would indicate to you that he was — that he wanted to rescind this agreement and reduce the monthly payments to a hundred dollars a month? A. I went down and talked to him and asked him if he would, he said he would not.
"Q. Mr. Love did not at any time indicate to you that he was going to change or alter this contract in any way, did he? A. No."
Plaintiff testified that on the closing date, November 1, 1948, Mr. Green telephoned him and "told me to go and get my $500 for part of my commission at the title company, that he was not going to close the deal * * * he didn't tell me why * * * the conversation was short." Plaintiff further testified that later that same afternoon he went to the Title Company to get the money but Miss Moore, the assistant escrow officer, refused to turn over the money, stating that Mr. Green had called and told them not to give it to him.
Miss Moore testified that she talked to Mr. Green over the telephone and that he told her she could turn over the $500 to Mr. Shepley. She further testified: "then later Mr. Green telephoned me, just a short time afterwards. Now, I am unable to say whether Mr. Green said to not turn the earnest money over until he could talk with his attorney, or until he had talked with his attorney, but in either case the Title Insurance Corporation would have stopped there and waited for further and more definite instructions.
"Q. Did you thereafter refuse to turn the $500.00 over to Mr. Shepley? A. Certainly."
On this phase of the case Mr. Green testified:
"Well, now, here is what I did tell Mr. Shepley * * * he told me that he had obligated himself to Mandel, and to Love, on this property, he was out the money, and I told him that the deal was out, so I told him, I says, well, if you are out of money, you just take the $500 that I have in escrow, you take that and that will help you in your obligations, I says, and I called Mr. Love and I told Miss Moore to give it to him, since he kept saying that he had to pay Love off, and that he was out of money to Mr. Mandel * * *.
* * * * * *
"Q. Did you ever tell the Title Insurance Corporation not to pay the $500 out to Mr. Shepley under the escrow agreement dated October 5? A. Yes, sir, I did, after I paid Mr. Love myself, I told them not to pay out anything."
The evidence shows that Mr. Green had paid the three per cent. commission on the proposed loan on October 28, 1948. Green testified: "I paid it because Mr. Shepley said he had obligated himself to pay this, he would have to pay it if I didn't * * he claimed if I didn't pay it that he would have to pay it."
On cross-examination, Mr. Green testified that he fully understood that provision of the loan agreement calling for a three per cent. commission for making the loan, and that he was obligating himself to pay it. The record then shows the following: "The Court: Q. Well, if you had obligated yourself that way, why did you say the reason you paid it was Mr. Shepley had told you that he had made the obligation? A. Well, here is the way about it, is this, I had not gone into the full reasoning of the thing, as to whether or not by me not taking the money whether or not I was really obligated to pay it, but after Mr. Shepley said, `I have obligated myself to Mr. Love to pay this commission and if you don't pay it I will have to pay it,' then I concluded that although I had not taken the money that rather than see Mr. Shepley pay out of it, if that is the case, I will go and pay it."
Green testified that he told Mr. Shepley that he was willing to go through with the escrow agreement according to its terms. This occurred at a meeting at the Title Insurance Corporation. He stated that his wife, and his lawyer, Mr. Simmons, were with him at the time, and that the latter told Mr. Shepley that if Mr. Shepley could make the loan in accordance with the escrow agreement he (Green) would go through with the deal. Green stated that Shepley said it could be done, but that Shepley never presented them with such a loan.
Plaintiff testified that when Mr. Green's attorney said that his client would go through with the contract in accordance with the escrow agreement, he told Mr. Green to get the loan arranged differently; to go to Mr. Love and have it changed. He further testified:
"Mr. Love had originally offered to make the loan at $100 * * *
"The Court: Did Mr. Love's office refuse to make a loan of $100 a month, fifty-nine months, and the balance on the sixtieth month? A. No, your Honor.
* * * * * *
"Mr. Simmons: Q. Didn't you tell me that that couldn't be done? A. I didn't tell you, I said Mr. Green had chosen to pay $135 a month himself, voluntarily.
"Q. Didn't you tell me in front of Mr. Green that you could not go through with the loan because the real estate people making the loan would have to have $135 a month, because the loan was too heavy? A. No, sir, but I told you that Mr. Green had already signed at $135, I couldn't change it back to $100, that is what I said."
Plaintiff thereafter instituted this suit. Joined with the Greens as parties defendant were the Bradleys and the Title Insurance Corporation. The title company thereafter paid the $500 deposit into the registry of the court and was discharged. Out of said fund the title company was allowed a fee of $25. The Bradleys filed a cross-claim against the Greens, alleging damages in the sum of $1,500 as a result of breach of contract.
The trial judge found for plaintiff and against defendants Richard B. Green and Gladys M. Green, and decreed that the $475 remaining on deposit in the registry of the court be paid Shepley, and that judgment be entered against defendant Richard B. Green alone for $400. The trial judge further found against the Bradleys on their cross-petition. The Greens alone have appealed.
Appellants contend that Shepley was not entitled to recover for the reason that he represented the Bradleys in the sale of the property in question.
It is a well settled rule of law that a real estate broker who secretly undertakes to represent the owner and the prospective purchaser cannot recover a commission from either. Corder v. O'Neill, 207 Mo. 632, 106 S.W. 10; Windsor v. International Life Ins. Co., 325 Mo. 772, 29 S.W.2d 1112; Chapman v. Currie, 51 Mo.App. 40; Loeb v. Kroger Grocery Baking Co., Mo.App., 205 S.W.2d 913. Contracts of dual agency are not void per se, but only so when the fact that the agent represented both parties was not known to each; and while any such agency requires the consent of each principal in order to legalize its dual character, yet, where the fact that the agent is representing two principals is known to each and they go forward with the transaction without objecting, their consent will be implied both as between themselves and as to such agent. And, since fraud is never presumed, it has been held that the defense of dual employment must be specially pleaded. Reese v. Garth, 36 Mo.App. 641; McGee v. Dunnigan, Mo.App., 223 S.W. 681; Paxson v. Gast, 202 Mo.App., 610, 215 S.W. 515; Ray v. Miller, Mo.App., 245 S.W. 584; Gray v. Novinger, 166 Mo.App., 85, 147 S.W. 1128. In the case at bar, defendants did not set up any such defense in their answer. Therefore, under the foregoing authorities, they are precluded from asserting for the first time in this court that the contract sued on was void as against public policy.
In view of the condition of the pleadings, we must assume that the plaintiff's representation of the Greens was with the knowledge and consent of the Bradleys.
It is next urged that there was no consideration for the alleged contract between plaintiff and defendants. There is no merit to this contention. The promise by plaintiff to submit the defendants' offer and to go forward with the deal furnished ample consideration for the defendants' promise to plaintiff regarding payment of the commission.
Appellants next contend that plaintiff's right to recover under the agreement depends upon a showing that appellants "arbitrarily" and "without good reason" failed to consummate the purchase and, since appellants were not offered the property on the terms set out in the escrow agreement, they were justified in refusing to go through with the deal.
There is no evidence in the record that would justify a finding in accordance with appellants' contention. The deal failed through no fault of the plaintiff or the Bradleys. The escrow officer testified that she had in her possession at the date of closing all the necessary papers, and that the Greens' money was the only thing lacking necessary to close the deal. Appellants claim the transaction failed to be completed because a loan was not secured on the terms set out in the escrow agreement. If this be the reason for the failure of the Greens to complete the purchase, their inability to secure the loan was not the fault of either the plaintiff or the Bradleys. The evidence is clear that appellants were, in fact, offered the property on the terms set out in the escrow agreement. Appellants breached their agreement in failing to go through with the purchase, and are, therefore, liable to plaintiff for the commission he would have earned had the transaction been completed. Cavender v. Waddingham, 2 Mo.App. 551; Taussig, Day and Company v. Poleman, 360 Mo. 470, 228 S.W.2d 722; Danciger Oil Refining Co. v. Wayman, 169 Okl. 534, 37 P.2d 976, 97 A.L.R. 854.
Finally, it is urged that in assessing damages on a quantum meruit basis those services rendered the Bradleys prior to September 28, 1948, should not be considered, hence the allowance of damages in the sum of $875 was excessive. It is further urged that, in any event, no recovery could be had in excess of $500 — the amount of the deposit under the escrow agreement.
Plaintiff did not sue to recover the reasonable value of the services which he rendered the Greens. On the contrary, plaintiff's action was based on the promise made by Richard B. Green that if plaintiff would procure the sale to appellants of the property in question at an agreed price, appellants would purchase same; and that if they failed for any reason to go through with the deal he, Green, would pay plaintiff his commission.
When appellants, without good reason, failed to complete the purchase, plaintiff was entitled to recover his damage, and the measure thereof was the amount of commission which plaintiff would have been entitled to receive had the deal been completed, which commission was, according to the evidence, five per cent. of the purchase price. James v. Home of the Sons and Daughters of Israel, Sup., 153 N.Y.S. 169.
After considering all the evidence, we believe it was not the intention of the parties to limit the damages to $500 in the event the Greens refused to go through with the purchase.
In our opinion, the judgment of the trial court was proper under the evidence. No other result would have been justified. The judgment appealed from is accordingly affirmed.
BENNICK, P.J., concurs.
RUDDY, J., not sitting, because not a member of the Court at the time of argument and submission.