Opinion
Decided April 6, 1931.
Brokers — Commission for exchange of realty — Written promise in contract between owners, sufficient, though broker not party — Statute of frauds — Consideration need not appear in memorandum.
1. A written promise to pay a commission to a real estate broker, signed by the party to be charged, and relied upon by the broker, is sufficient upon which to base an action at law to recover said commission, although the promise is contained in a contract in which the broker is not a party.
2. In Ohio, in an action at law to recover a real estate commission, it is not necessary that the consideration appear either expressly or impliedly in the memorandum required by the statute of frauds.
ERROR: Court of Appeals for Summit county.
Mr. Lee J. Myers, for plaintiff in error.
Mr. Clyde F. Beery, for defendant in error.
The parties stand in the same relation in this court as they did in the court of common pleas.
The action below was one in which the plaintiff, Edward S. Smith, a licensed real estate broker, sought to recover from the defendant, Chloe M. Watters, a commission for negotiating a contract with a man by the name of Dales, by which Dales agreed to exchange certain real estate for certain real estate of the defendant.
The case came on for trial, and, after the plaintiff had introduced his evidence and rested, the defendant made a motion to direct the jury to return a verdict in her favor. After that motion had been made and argued, but before the trial judge had indicated what his decision would be, the plaintiff asked permission to dismiss his action without prejudice, which permission was denied, as was also the motion of plaintiff to withdraw a juror and continue the case; and, after the court had offered to permit plaintiff to reopen his case and introduce any further evidence which he desired, which the plaintiff declined to do, the court decided that certain evidence in behalf of the plaintiff which had been admitted over objection of the defendant was improperly admitted, and excluded the same, and then granted the motion of the defendant for a directed verdict in her favor.
Proper exceptions were saved, and the case is before this court on the claim that the court erred in excluding said evidence and in refusing to permit the case to be dismissed and in directing a verdict for the defendant and rendering judgment thereon.
The oral evidence discloses that the defendant's agent, who had authority so to do, gave to the plaintiff a description of four pieces of real estate owned by the defendant, together with a statement as to the incumbrances thereon, and that plaintiff negotiated with Dales for the exchange of said properties for his property, and later conferred with the defendant's agent, with the result that said agent, acting for the defendant, added a fifth piece of property to the list; that thereafter plaintiff negotiated again with Dales, and finally had a lawyer prepare a contract for the exchange by Dales of his property for the five parcels of property of the defendant, and then took said contract to the defendant and called her attention to the fact that it was provided in said contract that the defendant should pay to the plaintiff a stipulated real estate commission; that the defendant, knowing that said contract contained that provision, signed the contract, with the understanding that the plaintiff would present said contract so signed by the defendant to said Dales and procure his agreement and signature thereto, which the plaintiff did, the contract being executed in triplicate; and that, after said contract had been signed by the parties, one copy was delivered to Dales, one to the defendant, and one retained by the plaintiff.
The contention of the defendant was and is that the plaintiff could not maintain his action under such circumstances, because there was no written agreement between plaintiff and defendant in which she agreed to pay the plaintiff a commission.
The contract which was signed by the defendant was not a contract with the plaintiff, but with Dales; but in that contract there was a stipulated purchase price of the property of Dales which was to be exchanged for the properties of the defendant, and a stipulated purchase price of the properties of the defendant which were to be exchanged for Dale's property, and there was a provision in said contract that Dales was to pay a commission to the plaintiff, based on the stipulated purchase price of his property, and the defendant was to pay a commission to the plaintiff based on the stipulated purchase price of her properties. The provision in the contract reads as follows:
"The parties of the first part and the party of the second part agree to pay to Edward S. Smith a real estate commission of four per cent upon the first $10,000.00 and three per cent upon the remainder of the purchase price of the premises now owned by them at the valuations herein fixed, and each party agrees to pay the cost of procuring the extension of the abstracts upon his property."
Although the promise to pay a commission is not contained in a written contract between the plaintiff and defendant, it is not for that reason an insufficient memorandum under the statute. Jacobs v. Joseph E. Copp Co., 123 Ohio St. 146, 174 N.E. 353; Clark on Contracts, Section 50, page 116.
It is contended, however, that it is not a sufficient memorandum to satisfy the requirements of Section 8621, General Code, because no consideration for the promise is stated in the writing.
There is a considerable conflict of opinion and diversity of holding on the question whether the memorandum of a contract falling within the statute of frauds must express the consideration. The statutes of some states expressly require the consideration to be stated, and other states expressly declare that the memorandum is sufficient, although the consideration is not stated. But, where the question is not controlled by a specific statute on the subject, the courts in some states hold that a memorandum is not sufficient, unless the consideration is stated, while the courts of other states hold that the memorandum is sufficient, although the consideration is not stated, and that parol evidence is competent to prove the consideration.
In the memorandum in this case, the promise of the defendant was to pay "a real estate commission" to the plaintiff, which in itself indicates that the consideration for the promise was services rendered or to be rendered in negotiating the contract of exchange of properties referred to in the contract in which the promise was made, and we think that the memorandum was sufficient because the claimed consideration appears from the writing and the surrounding circumstances to be gathered from it; but, in any event, very early in the history of the state of Ohio, the Supreme Court adopted the view that the consideration need not be stated in the memorandum. Reed v. Evans, 17 Ohio, 128.
That case, so far as we can find, has not been reversed or modified, but, on the contrary, so far as we know, has been applied and followed by the courts of Ohio since its decision in 1848.
In the opinion in the case of Duckwall v. Rogers, 15 Ohio St. 544, at page 546, it is specifically stated that the "consideration * * * in this state, need not be stated in the writing" (citing with approval Reed v. Evans, supra), and it is also therein stated that "if, however, the rule were otherwise, a consideration is clearly inferable from the face of the instrument," which, as we have pointed out, is also true in the case at bar.
We therefore hold that the memorandum in question is not insufficient because it fails to state a consideration for the promise, and that the admission of said memorandum in evidence, and of the oral evidence which was offered tending to prove a consideration, was proper in this case, and that its later exclusion by the court was erroneous.
It is next contended that in fact there was no consideration for the promise contained in the memorandum in the case at bar. It is urged that the services rendered by the plaintiff were rendered without any binding agreement to pay therefor, and therefore could not constitute a consideration for the promise contained in the written memorandum; that the past performance of services constitutes no consideration for an express promise, and as authority for such claim the following cases are cited: Warner Co. v. Brua, 33 Ohio App. 84, 168 N.E. 571; Field v. Hamm, 254 Mass. 268, 150 N.E. 3; Syring v. Zelenski, 77 N.J. Law, 406, 71 A. 1119; Stout v. Humphrey, 69 N.J. Law, 436, 55 A. 281.
In the case of Warner Co. v. Brua, supra, there was no evidence tending to prove that the services rendered were performed at the express or implied request of the defendant, and there were no services performed after the written memorandum was signed by the party to be charged. These facts differentiate said case from the case at bar, but it is said in that case, at page 87 of 33 Ohio App., 168 N.E. 571, 572, that, "had there been evidence of oral contracts employing the plaintiffs, it would not have helped their position, since they would have been acting under unenforceable contracts at the time."
Where services are rendered without an express or implied promise to pay therefor, and there is no legal, but only a moral, obligation to pay therefor, such moral obligation will not constitute a consideration for an executory promise to pay for such services. However, if services are rendered with an express or implied promise to pay therefor, and such promise is not enforceable because not in writing, as required by the statute of frauds, a legal obligation to pay for such services would have existed but for the statute of frauds, and, as the statute does not declare the promise void, but only makes it unprovable, the better rule would seem to be that under such circumstances the moral obligation to pay may constitute a consideration for a subsequently made written promise to pay, required by the statute of frauds.
But we need not determine in this case whether the statement hereinbefore quoted from Warner Co. v. Brua is a correct statement of the law, because in the case at bar there was evidence before the court that the plaintiff rendered services after the signing of the written memorandum by the defendant, which services were a necessary prerequisite to plaintiff's claim for a commission, regardless of the question whether there was a written contract to pay commission. At the time the memorandum agreeing to pay commission was signed by the defendant, there was no binding agreement by Dales to make the exchange, and there was evidence tending to prove that, after said memorandum was signed by the defendant, the plaintiff, at the instance and request of the defendant, procured Dales to sign the agreement to make the exchange, and in this particular the case at bar differs from all of the cases cited by the defendant in support of her contention.
The contract importing a consideration, and there being evidence tending to prove that, as contemplated by the parties at the time the memorandum was signed, services were rendered by the plaintiff after the signing of said memorandum by the defendant, there was before the court at the time said motion was made some evidence of a consideration for the promise made by the defendant; and, upon the motion to direct a verdict the court was required to treat as proven all facts which the evidence tended to prove, and it was error for the court to direct a verdict for the defendant and render a judgment in favor of the defendant.
Having reached this conclusion, it is unnecessary for us to pass upon the other claim made by the plaintiff, which is that, at the time he asked permission to dismiss his case without prejudice, he had a right, under Section 11586, General Code, to do so.
For error in excluding evidence and in directing a verdict and in rendering judgment for the defendant, the judgment of the common pleas court is reversed, and the cause remanded.
Judgment reversed and cause remanded.
PARDEE, P.J., and FUNK, J., concur.