ROSE v. HUNTER

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Docket Number

Docket No. 17609.

Attorney(S)

Noland, Hamerly Etienne for Appellants. Dennis L. Woodman for Respondent.

Judges

DOOLING, J.

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Smart Summary

Factual and Procedural Background

Respondent Robert Rose, a licensed real estate broker, was authorized by appellant Hunter, Jr. in February 1955 to sell a motel near Palo Alto for $197,500. Respondent’s salesman, Spratt, showed the motel to a prospective buyer, Schmidt, on April 28, 1955, and notified Hunter, Jr. by letter on April 29, 1955, claiming brokerage rights and a 5% commission if the sale to Schmidt was completed. Despite this, appellants did not respond to the letter. Hunter, Jr. later informed respondent on May 5, 1955, that the motel was off the market, then authorized respondent on May 31, 1955, to show the motel to qualified buyers with the restriction "No trades considered." Meanwhile, Schmidt continued negotiations with appellants, and in July 1955, the motel was sold to Schmidt for $165,000, including an exchange of property valued at $30,000.

The complaint joined Schmidt and his brother as defendants along with appellants. It contained two counts: the first alleged that after respondent introduced the motel to Schmidt and notified appellants, the parties negotiated and completed the sale excluding respondent; the second alleged a conspiracy by appellants to exclude respondent and avoid paying his commission. The trial court found the first count true and found a conspiracy among appellants but not involving the Schmidts. Judgment was entered against appellants and in favor of the Schmidts. Appellants appealed.

Legal Issues Presented

Whether respondent was the procuring cause of the sale and thus entitled to the brokerage commission.
Whether the trial court's findings supported the judgment despite the absence of an express finding on procuring cause.
Whether the appellants' termination of agency and restrictions on respondent’s authority affected respondent’s right to commission, especially given the exchange of property in the sale.
Whether the Schmidts were parties to a conspiracy to deprive respondent of his commission.
Whether the admission of a copy of the letter notifying appellants of brokerage rights was proper evidence.

Arguments of the Parties

Appellants' Arguments

There was no evidence supporting the finding that respondent was the procuring cause of the sale.
The trial court made no express finding on procuring cause, so the findings do not support the judgment.
Schmidt already knew about the motel and was negotiating before respondent’s involvement.
Respondent failed to find a buyer in accordance with his authorization because the final sale included an exchange of property, which was not authorized.

Respondent's Arguments

Respondent was the procuring cause of the sale because his salesman introduced Schmidt to the property and notified appellants accordingly.
Appellants conspired to exclude respondent from negotiations to avoid paying commission.
Even if the sale included an exchange of properties, the broker’s right to commission is not affected.
The letter notifying appellants of brokerage rights was properly admitted as evidence despite only a copy being available.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sessions v. Pacific Imp. Co., 57 Cal.App. 1, 17 (206 P. 653)	Determining procuring cause as the predominating efficient cause in sales involving several agencies.	Supported the court’s approach to evaluating which party was the procuring cause of the sale.
Wilson v. Turner Resilient Floors, 89 Cal.App.2d 589, 595 (201 P.2d 406)	Definition of procuring cause and deference to trial court’s determination on conflicting evidence.	Reinforced that the trial court’s finding on procuring cause should not be disturbed on appeal.
Brea v. McGlashan, 3 Cal.App.2d 454, 465-466 (39 P.2d 877)	Definition and application of procuring cause in broker commission cases.	Supported the court’s legal standard for procuring cause.
Webster v. Parra, 72 Cal.App. 639, 648 (237 P. 804)	Broker need not be the first to bring property to purchaser’s attention to claim commission if procuring cause is established.	Supported the court’s conclusion that respondent was procuring cause despite prior negotiations.
Palmtag v. Danielson, 30 Cal.2d 517, 521 (183 P.2d 265)	Price in listing is a guide; broker entitled to commission if purchaser procured willing to pay lower price.	Supported the principle that broker’s commission is due even if final price is lower than listing price.
Heffernan v. Merrill Estate Co., 77 Cal.App.2d 106, 117 (174 P.2d 710)	Principal cannot avoid commission by revoking authority in bad faith after broker procures purchaser.	Supported the court’s rejection of appellants’ attempt to avoid commission through revocation and restrictions.
Walter v. Libby, 72 Cal.App.2d 138, 144 (164 P.2d 21)	Same as above regarding bad faith revocation of broker’s authority.	Reinforced the court’s holding on brokers’ rights against bad faith actions by principals.
Bail v. Glantz, 78 Cal.App. 49, 56 (248 P. 258)	Broker’s right to commission not affected by voluntary exchange of properties in lieu of sale.	Supported the court’s conclusion that the exchange included in the sale did not defeat commission rights.
Hughes v. Pacific Wharf Storage Co., 188 Cal. 210 (205 P. 105)	Copy of a lost original document can be admitted on proof of mailing the original.	Supported the admission of the copy of the April 29, 1955 letter as evidence.
Simpson v. Bergmann, 125 Cal.App. 1, 8 (13 P.2d 531)	Failure to reply to a letter can be construed as an admission against interest.	Supported the court’s interpretation of appellants’ failure to respond to the brokerage claim letter as an admission.
Inskeep v. Bear Creek Co., 54 Cal.App.2d 723, 729 (129 P.2d 401)	Trial judge’s opinion can be used to understand the basis of the court’s decision and findings.	Justified the appellate court’s consideration of the trial judge’s memorandum to affirm procuring cause despite absence of express finding.
In re Oster, 135 Cal.App.2d 769, 775 (287 P.2d 859)	Same as above regarding use of trial judge’s opinion to understand findings.	Supported appellate court’s approach in affirming judgment.
Kallmeyer v. Poore, 52 Cal.App.2d 142, 152 (125 P.2d 924)	Same as above regarding trial judge’s opinion as part of record on appeal.	Supported appellate court’s reliance on trial judge’s opinion to supply missing findings.

Court's Reasoning and Analysis

The court analyzed the evidence regarding whether respondent was the procuring cause of the sale. Although appellants claimed Schmidt was negotiating before respondent’s involvement, the trial court credited respondent’s evidence, including the April 29, 1955 letter notifying appellants of the brokerage claim. The court found appellants’ conduct—ignoring the letter and later restricting respondent’s authority—unexplained and suspicious. The court defined procuring cause as the originating cause that leads continuously to the transaction and noted that the broker need not be the first to bring the property to the buyer’s attention, only the predominating efficient cause.

The trial court’s memorandum, though not incorporated in findings, clearly concluded respondent was procuring cause, and the appellate court held it proper to consider this memorandum to supply the missing finding. The appellate court exercised its power to amend findings accordingly rather than reverse on a technicality. The court also addressed appellants’ argument that the exchange of property in the sale exceeded respondent’s authority, holding that such voluntary exchanges do not defeat a broker’s commission. Furthermore, the court rejected appellants’ attempt to avoid commission by revoking authority in bad faith after respondent procured the buyer.

Regarding evidence, the court found no error in admitting the copy of the letter notifying appellants of brokerage rights, reasoning that the original was lost and the copy was admissible upon proof of mailing. The failure of appellants to respond to the letter was properly considered an admission against interest. Finally, the court distinguished the Schmidts’ exclusion of respondent from negotiations from any conspiracy to deprive respondent of commission, finding no evidence that the Schmidts knowingly participated in such a scheme.

Holding and Implications

The court affirmed the judgment awarding respondent a commission for procuring the sale of the motel. It ordered the findings amended to expressly state that respondent was the procuring cause of the sale. The decision upheld the principle that a broker who is the procuring cause is entitled to commission even if the final sale price is lower than the listed price or includes an exchange of property. It also reinforced that a principal cannot avoid commission liability by revoking authority in bad faith or by conspiring to exclude the broker from negotiations. The ruling directly benefits the respondent by affirming his commission rights and does not establish new precedent beyond applying existing principles to the facts of this case.

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ROBERT ROSE, Respondent, v. JAMES T. HUNTER, SR., et al., Appellants.

DOOLING, J.

Defendants appeal from a judgment awarding plaintiff, a licensed real estate broker, a commission for procuring the sale of a motel near Palo Alto to one Schmidt. In February 1955 appellant Hunter, Jr. authorized respondent to sell this property for $197,500. On April 28, 1955, one Spratt, a salesman for respondent, showed the motel to Schmidt. On April 29, 1955, Spratt notified Hunter, Jr., by letter that information concerning the motel had been furnished to Schmidt. The letter stated: "This letter is being sent to you to put you on notice that this office was the procuring agent and that all brokerage rights are being claimed and in the event of a sale to Mr. Schmidt a 5% brokerage commission of the sale price will be due Robert Rose Realty Company." No reply was made to this letter. On May 5, 1955 Hunter, Jr., sent a letter to respondent advising him that the motel was "off the market." On May 31, 1955, another letter was sent to respondent informing him that he could again show the motel to qualified buyers. A postscript to this letter stated: "No trades considered." In the meantime Schmidt had continued to negotiate with appellants and in July, 1955 the motel was sold to Schmidt for $165,000 which included the transfer of real property belonging to Schmidt at an agreed value of $30,000.

The complaint joined Schmidt and his brother, named as First Doe, as defendants as well as the appellants. It was in two counts, the first charging that after plaintiff had brought the motel to Schmidt's attention and notified appellants of that fact, the parties had negotiated between themselves to the exclusion of plaintiff and had effected the sale of the property. The second count charged a conspiracy among defendants to eliminate plaintiff from the negotiations and avoid paying him the commission earned by him. The trial court found the allegations of the first count to be true, and on the second count found a conspiracy among appellants as alleged but found that the Schmidts were not parties to such conspiracy. Judgment was against appellants and in favor of the Schmidts.

Appellants' primary contentions are that there is no evidence to support a finding that respondent was the procuring cause of the sale and that in any event no such finding was made by the trial court and hence the findings fail to support the judgment. [1] "In the absence of a special contract, a broker must be the procuring or inducing cause of a sale or transaction in order to be entitled to commissions thereon." (9 Cal.Jur.2d, Brokers, § 80, p. 242.)

[2a] The defendants and their witnesses testified that Schmidt already knew of appellants' motel and was negotiating for its purchase when he was first shown the property by respondent's salesman. In this respect Schmidt and Hunter, Sr. both testified that when Spratt went to show the motel to Schmidt in the presence of Hunter, Sr., who was on the premises, Spratt was told that Schmidt had already met Hunter, Sr., and had negotiated for the property. Spratt denied this conversation and testified that when he introduced Schmidt to Hunter, Sr., they gave no evidence of having previously met. There was evidence also of one Holderbein that he had called Schmidt's attention to this motel in September 1954. The trial judge filed a memorandum in which he reviewed the evidence. He said in part: "Plaintiff did not participate in the closing of this deal and had no notice of it at the time; he claims, however, to have been the procuring cause of the sale. To determine the matter, it is necessary to go somewhat into the background as developed by the defendants." After a résumé of the evidence the memorandum states the court's conclusions: "If the plaintiff's salesman did in fact write Plaintiff's Exhibit 1 [the letter of April 29, 1955, from Spratt to Hunter, Jr.], and the Court finds that he did, then the conduct of the defendants is inexplicable. Certainly, no owner is about to ignore the fact that a real estate broker claims commissions on a sale to a certain prospect with whom negotiations are pending, when in fact such negotiations had been initiated before the authorization to the broker. Neither is an owner, who is trained in real estate transactions, likely incorrectly to notify the broker that the property concerned is off the market. . . .

"Everything considered, it appears that the plaintiff has made his case against defendants Hunter, Sr., Anderson, Hunter, Jr., and Merrill. . . ."

[3] "`Procuring cause' has been defined as the cause originating a series of events that, without break in their continuity, result in the accomplishment of the prime object of the employment." (9 Cal.Jur.2d, Brokers, § 80, pp. 242-243.) "Where several agencies have been active in bringing about a sale . . . the crucial question is, which was the predominating efficient cause?" ( Sessions v. Pacific Imp. Co., 57 Cal.App. 1, 17 [ 206 P. 653].) [4] "The word `procure' does not necessarily imply the formal consummation of an agreement. . . . In its broadest sense, the word means to prevail upon, induce or persuade a person to do something. . . . The originating cause, which ultimately led to the conclusion of the transaction, is held to be the procuring cause. [Citation.] And where the evidence is conflicting, the conclusion as to the procuring cause is one for the trial court and will not be disturbed on appeal." ( Wilson v. Turner Resilient Floors, 89 Cal.App.2d 589, 595 [ 201 P.2d 406]; Brea v. McGlashan, 3 Cal.App.2d 454, 465-466 [ 39 P.2d 877].) [5] If the broker is, in fact, the procuring cause "it is unnecessary for the broker to prove that he was the first one to bring to the attention of the purchaser the fact that the property in question was for sale. . . ." ( Webster v. Parra, 72 Cal.App. 639, 648 [ 237 P. 804].)

[2b] Weighing the whole course of conduct of the parties and the reasonable inferences to be drawn therefrom the evidence is sufficient to support the determination of the trial court that respondent was the procuring cause of the sale.

The quoted language from the trial court's memorandum shows that he considered and decided in respondent's favor the question of procuring cause. The findings of fact, however, were framed by reference to the pleadings which contained no express allegation of procuring cause. [6] The opinion of the trial judge is properly a part of the record on appeal. (Rules on Appeal, rules 5(a) and 5(b).) This opinion cannot be used to contradict the findings but "may be considered for the purpose of discovering the process by which the trial judge arrived at his conclusions, or when the opinion furnishes the basis of the court's action in its decision of the case." ( Inskeep v. Bear Creek Co., 54 Cal.App.2d 723, 729 [ 129 P.2d 401]; In re Oster, 135 Cal.App.2d 769, 775 [ 287 P.2d 859]; Kallmeyer v. Poore, 52 Cal.App.2d 142, 152 [ 125 P.2d 924].) It is clear from this opinion that the trial judge fully realized that the question of procuring cause was the crucial question in the case and decided the case on the basis of his determination that respondent was the procuring cause of the sale. [7] It would serve no purpose to reverse the case on the purely technical ground that an essential finding is lacking when we know from the trial judge's opinion that upon reversal he would make the necessary finding to support his judgment and we have the power to make that finding. (Code Civ. Proc., § 956a)

The exact terms of the listing with respondent were never proved. At the opening of the trial counsel for respondent asked counsel for appellants if it would be stipulated "that Robert Rose had sufficient authority to satisfy the statute of fraud [sic]" and counsel for appellants replied: "Yes. I would stipulate to that." It was testified that the listing was at a price of $197,500 and nothing further as to its terms was established.

[8] "Ordinarily, the price at which a broker is authorized to sell property is considered merely an asking price to guide the broker in his negotiations with prospective purchasers. (See Rest., Agency, § 447, Comment b.) If the broker procures a purchaser willing to pay a lower price, the owner cannot deprive the broker of his commission by conducting the final negotiations himself and selling at a lower figure to the purchaser procured by the broker. (See 128 A.L.R. 430; 43 A.L.R. 1103.)" ( Palmtag v. Danielson, 30 Cal.2d 517, 521 [ 183 P.2d 265]; Filante v. Kikendall, 134 Cal.App.2d 695 [ 286 P.2d 448]; Baker v. Curtis, 105 Cal.App.2d 663 [ 234 P.2d 153]; Rutherford v. Berick, 82 Cal.App.2d 331 [ 186 P.2d 23].)

Appellants, however, argue that having terminated the agency by their letter of May 5, 1955, and by their letter of May 31, 1955, having given authority to sell but not to negotiate an exchange of properties (by the postscript language: "No trades considered"), the respondent failed to find a buyer in accordance with his authorization because an exchange of property at an agreed price of $30,000 was a part of the final transaction. [9] The principal cannot escape his liability to the agent where he revokes the agent's authority, after a prospective purchaser for the property has been procured, in bad faith and for the purpose of avoiding the payment of the agreed commission. ( Heffernan v. Merrill Estate Co., 77 Cal.App.2d 106, 117 [ 174 P.2d 710]; Walter v. Libby, 72 Cal.App.2d 138, 144 [ 164 P.2d 21].) It is equally clear that he could not put a new limitation on his broker's authority for the same purpose. Here the trial court expressly found that appellants ". . . did conspire . . . to eliminate plaintiff from said negotiations and transaction and thereby avoid paying plaintiff the brokerage commission earned by him . . ." This the law will not permit them to do. [10] Where the owner as here voluntarily engages in an exchange of properties, instead of a sale, with the prospect procured by his broker the broker's right to a commission is not affected. ( Bail v. Glantz, 78 Cal.App. 49, 56 [ 248 P. 258].)

[11] There is no inconsistency between the finding that Schmidt carried out the negotiations with appellants to the exclusion of respondent and the finding that the Schmidts were not parties to the conspiracy to deprive respondent of his commission. The fact that the negotiations were carried to a conclusion without respondent's participation does not compel a finding that the Schmidts were consciously parties to a scheme to deprive respondent of his commission.

The admission of a copy of the letter of April 29, 1955, from Spratt to Hunter, Jr., was not error. When the copy was produced counsel for respondent asked counsel for appellants if they had a copy of the letter. Counsel for appellants answered: "We don't have a copy of the letter . . ." [12] Where the original is lost a copy can be introduced on proof of mailing the original. ( Hughes v. Pacific Wharf Storage Co., 188 Cal. 210 [ 205 P. 105].) Counsel's statement that they did not have the letter shows that a more formal demand to produce it would have been futile and it was therefore unnecessary. [13] The letter coupled with the failure of appellant Hunter, Jr., to reply thereto could be, as it was, construed by the trial court as an admission against interest. ( Simpson v. Bergmann, 125 Cal.App. 1, 8 [ 13 P.2d 531].)

The findings of fact are ordered amended by adding thereto the following: "The court further finds that plaintiff was the procuring cause of the sale of said motel by defendants James T. Hunter, Sr., Oliver I. Anderson, James T. Hunter., Jr., and Boyd E. Merrill to said Walter Schmidt." The judgment is affirmed.

Kaufman, P.J., and Draper, J., concurred.