King v. Tilden Park Estates

King v. Tilden Park Estates, 156 Cal.App.2d 824, 320 P.2d 109 (Cal.App. 1 Dist. 1958).

KAUFMAN, Presiding Justice.

This is an appeal from a judgment of nonsuit in favor of respondents. The motion for a nonsuit as to respondent Pringle-Hurd and Co., Inc., was granted at the conclusion of appellant's opening statement on the ground that the terms of the agreement were not determined at the time the respondent agreed to pay the commission. The motion for a nonsuit as to respondents Gillett and Tilden Park Estates was granted at the close of appellant's case in chief on the ground that the alleged agreement violated the Statute of Frauds.

The amended complaint stated three alternative causes of action: the first on an oral broker's agreement for compensation for obtaining the assignment of a contract right to purchase real property; the second in quantum meruit for the reasonable value of the services rendered by the appellant to the respondents in the amount of $141,500; the third for the expenses incurred by the appellant in handling this transaction for the respondents in the amount of $8,500.

The facts as disclosed by the record are as follows: The plaintiff and appellant, Robert W. King, has been a licensed real estate broker in California since 1946. Early in 1951 appellant received a brochure from the East Bay Municipal Utility District stating that the 2,545 acre tract in Contra Costa County known as the Wildcat Canyon Area was for sale. In 1952 the District, by a written contract of sale, agreed to sell the property to Phillip Ross who was acting for a buying syndicate composed of Mr. Ross, Louis Navellier, Mr. Weingard, Arnold Moore and others.

Appellant contended that from May 1953 until May 1954 he had had an oral agreement with Mr. Ross to find a purchaser for all of Ross' interest in the Wildcat Canyon Area in return for a 10% commission. Appellant testified that his oral agreement was made over the telephone with Mr. Navellier who represented Mr. Ross. Mr. Ross denied the existence of this agreement and stated that he met the appellant for the first time in December 1953.

In April 1954 Phillip Ross and his syndicate assigned all of their interest in the contract of sale with the Municipal Utility District to the defendant, Tilden Park Estates, a corporation formed for this purpose on May 3, 1954, with the defendant, Harry R. Gillett, as president. This transaction is the basis of this action.

With the help of Jeff Branscom, a business associate of the appellant, and the brother-in-law of respondent Gillett, the appellant on a vacation visit to Las Vegas in November 1953 met Gillett in Las Vegas and discussed the purchase of the Wildcat Canyon property. On December 3, 1953, Gillett came to Berkeley to look at the property which was shown to him by one of the appellant's salesmen, as the appellant was in the hospital. A week or so later Mr. Gillett again came to Berkeley to more extensively look at the property with the appellant and Mr. Navellier. About December 20, 1953, the appellant, Mr. Ross, and Mr. Navellier flew to Las Vegas for further negotiations relating to the price of the property. At that time the appellant discussed the matter of his commission privately with Mr. Gillett, $25,000 plus a four per cent override. In the latter part of December 1953 the parties again met in Los Angeles, at which time the appellant again discussed the commission with Mr. Gillett on the same terms as before. The appellant testified that he next saw Mr. Gillett in Las Vegas in January 1954 and at this time they discussed a commission of $25,000 flat payment, with an interest in the construction, real estate and insurance companies to be formed, but no definite terms were agreed upon. The appellant met Ross and Gillett again in the Bay Area in February 1954.

On April 28, 1954, another meeting was held in Los Angeles with the above parties present as well as a representative of the respondents Pringle-Hurd, a New York corporation which was to finance the transaction.

Appellant testified that the conversations in regard to his commission at that time were as follows: Mr. Ross said that-- You understand, Mr. Hurd and Mr. Gillett, that you are to pay Mr. King's commission, and they understood. They replied that they understood that. At that meeting Mr. Hurd made a $25,000 deposit on the purchase price of the property. At this time no definite agreement pertaining to appellant's commission had been reached, except that the purchaser was to pay appellant's commission. It would appear then that until April 28, 1954, appellant was looking to Ross, the seller, to pay his commission.

On May 10 and 11 the appellant met Mr. Gillett and his associate, Mr. Charley Horsey, in Las Vegas, at which time they had the following conversation in regard to appellant's commission: At that time we discussed the twenty-five thousand dollars--Mr. Horsey was present--the two per cent override--he said Pringle-Hurd wouldn't go for any more than that--and an interest in the insurance company to be formed, the real estate company to be formed, and construction company to be formed. I asked him to put it in writing at that time, give me a memo on it, and I was making my notes, and both he and Mr. Horsey assured me that their word was good enough and it would be taken care of after we got back to the Bay Area and after the ratification of the contract that had been drawn by their respective attorneys on ratification by the East Bay MUD. Appellant further testified that he relied on Gillett's word and that after this discussion Gillett stated he was going to send Pringle-Hurd a wire verifying the two per cent override, to which the appellant consented and that Gillett then asked him to find some customers for the property.

Appellant testified that after May 10, 1954, he showed the property to various contractors and other potential purchasers; he arranged for the site and remodeling of offices for Tilden Park Estates; he made speeches in front of various groups on behalf of the defendants, generally spending 90-95% of his business time on these matters to the detriment of the rest of his real estate business.

Appellant admitted that he had never signed a written agreement for his commission with Gillett or Tilden Park Estates. The record shows that an agreement was prepared by the defendants and submitted to the appellant. After consulting his attorney, Mr. Gray, appellant rejected the above agreement and had Mr. Gray draft another agreement. This agreement, Plaintiff's Exhibit No. 7, varies materially from appellant's complaint and oral testimony in that it proposes a flat figure of $22,000 (instead of the $25,000 alleged) and a two per cent override and makes no mention of any interests in an insurance or construction company to be formed. This second agreement was forwarded to defendant's counsel, Mr. DeLap, who prepared and returned another draft to the appellant which the appellant never signed. Shortly thereafter all negotiations between the parties collapsed, and this action was filed.

Appellant contends on appeal that the trial court erred in granting the motion of nonsuit as to the defendants Harry Gillett and Tilden Park Estates. Appellant contends that the evidence discloses an oral broker's agreement for procuring the assignment of a contract right to purchase real property, which is not an interest in real property and therefore not violative of the Statute of Frauds; that this agreement is supported by adequate consideration as appellant gave up his rights under the oral agreement with Ross; that even if the Statute of Frauds is applicable, an estoppel operates in his favor because of the statements made by Mr. Gillett on May 10; that the agreement, even if illegal and in violation of the Statute of Frauds, was severable as to the provisions for the commission and the provisions for appellant's interest in the various corporations to be formed for the development of the property. We see no merit in any of these contentions.

Viewing the evidence most favorably to the appellant, i.e., that it does show that an agreement was reached, we turn to appellant's first contention that the agreement is not an agreement authorizing or employing an agent or broker to purchase or sell real estate for compensation or a commission, within the language of Civil Code, section 1624(5), and Code of Civil Procedure, section 1973(5) because a contract right is not real property. We think the agreement alleged by the appellant perfectly fits the language of the above statutes. In Pacific Southwest Development Corp. v. Western Pac. R. Co., appellant's point as to the nature of the interest was squarely refuted in the court's holding that the plaintiff, a licensed real estate broker, could not recover compensation for alleged services rendered in connection with defendant's procurement of an option to purchase real property, as the agreement was not in writing. The court stated in 47 Cal.2d at pages 67 and 68, 301 P.2d at page 829: In determining the nature of the services which will bring an employment contract within the statute, the phrase to sell or purchase includes to aid or assist in the purchase or sale of real estate. Such broad construction of the term conforms with one of the primary purposes of the statute, the protection of real estate owners from the assertion of false claims by brokers and agents. Likewise, the procurement of an option agreement for the purchase of real property is a contract that aids or assists in the purchase or sale of real property, and properly comes within the provisions of the statute. Accordingly, a contract employing a broker to obtain an option for the purchase of real property, like a contract employing a broker to purchase or sell real property comes within the statute and must be in writing. To hold otherwise would open the door to the assertion of unfounded claims by brokers and others on the pretense of oral employment in real estate transactions relative to options, and so frustrate the purpose of the statute.

The chief element required to be shown in writing is the fact of employment of the broker to act for the principal in the transaction. The fact that plaintiff rendered services and conducted unsuccessful negotiations with Lenfest does not constitute a change of position to plaintiff's detriment, nor does the fact that defendant refused to pay plaintiff a real estate commission upon an option which defendant later procured through direct negotiations with Lenfest constitute an unjust enrichment within the meaning of the estoppel doctrine. To hold otherwise, in the absence of any showing of fraud, would defeat the purpose of the statute of frauds in relation to real estate transactions. Dabney v. Edwards, cited by the appellant held only that a lease for a definite term of years is not real property under Civil Code, section 1624(5) while a lease to continue so long as gas and oil are produced is real property within the above section. In Belieu v. Power, the court was faced with the entirely different question of whether a judgment lien attaches to the vendee's interest under a sales contract and based its holding on the different wording in the statutes relating to execution and those relating to judgment liens.

It has long been held in this state that a real estate broker is presumed to know that contracts for real estate commissions are invalid and unenforceable unless put in writing. The appellant here admitted that he had never signed an agreement with any of the respondents. He therefore assumed the risk of relying on oral promises and has no cause for complaint if his efforts go unrewarded.

Nor, as pointed out Sweeley v. Gordon, can one in appellant's position invoke the equity powers of the court to urge that the judgment of nonsuit be reversed under the doctrine of estoppel. The general rule as to estoppel to rely on the Statute of Frauds is stated in 12 California Jurisprudence, p. 934, as follows:

Circumstances Creating Estoppel in General.--Equity is bound by the statute of frauds, and, in general, will give relief against it only in two classes of cases; first, where to allow the statute to be set up would be to secure to the party relying upon it the fruits of actual fraud; and, second, where to allow the statute to be set up would place the party resisting it in an inequitable position, it appearing further that there is evidence just as good as a writing of the agreement between the parties. To create an estoppel to assert the statute, the party relying on it must be able to show clearly, not only the terms of the contract, but also such acts and conduct of the opposite party as amount to a representation that he will not avail himself of the statute to escape his agreement, and, further, that the party asserting the estoppel has, in reliance on such representation and in pursuance of the contract, so far altered his position as to incur an unjust and unconscionable injury and loss, if the statute be allowed to be set up. If no such loss or injury is shown the reason for the estoppel fails. Changes in the position of a party, not made as a necessary consequence of an oral contract within the statute, and not induced by or known to the opposite party when the contract was made, do not estop the latter from setting up the statute.

The facts alleged here do not contain the elements of estoppel. The facts do not establish appellant's reliance on the alleged agreement but only the usual conduct of real estate brokers in obtaining purchasers and operating under a nonexclusive listing agreement. Nor does it appear that the appellant was bound to perform the various services. He was acting as a mere volunteer.

Le Blond v. Wolfe, cited by the appellant, is easily distinguishable. In that case, the plaintiff real estate broker had a written contract obligating the seller to pay him a commission. The broker released the seller from this obligation in reliance on the oral promise of the defendant purchaser to pay the commission. The appellate court affirmed the judgment for the plaintiff, holding that the doctrine of estoppel applied as the plaintiff had immediately changed his position to his detriment by releasing the seller. In the instant case, the appellant alleged an oral agreement with the seller Ross (the existence of which Ross denied), which appellant allegedly gave up in return for the respondent's oral promise. It is elementary that the giving up of an unenforceable right is not sufficient consideration for a new promise.

Appellant's argument that the alleged agreement was severable was not raised below and cannot be urged for the first time on appeal. Nor can the appellant enforce his second and third causes of action indirectly where the contract was unenforceable because of the Statute of Frauds.

As there is no legal or equitable basis for sustaining appellant's action, the trial court was correct in entering the judgment of nonsuit.

Judgment affirmed.

Exceptions Unnecessary under New Procedure Act

The record discloses defendant had in no manner made its position known to the court below nor was the claimed fault called to its attention either by adequate objection or motion to strike. No question may be brought to this court except that upon which it is made to appear that the trial court has had fair opportunity to pass judgment.

We held in City of Barre v. Brown that exceptions are unnecessary. Under our new Procedure Act a party must either object at the time a ruling on a question of law is made below or make known the action which he desires the court to take, otherwise there is nothing for this Court to consider or review.'

For lack of proper and adequate objection, the question defendant attempts to raise is not for consideration.

At the conclusion of the court's charge to the jury, the defendant made this objection: 'I have just one objection. I believe there was testimony over my objection as to the amounts of other awards in the area and I would object to the failure of the Court to charge the jury that the awards in the area should have no bearing whatever on the amount of damage that they find for the Plaintiff in this case.' The transcript does not show any comment, or a ruling, by the court to the objection.

The defendant urges it was the duty of the court to instruct the jury on the subject-matter stated in its objection or exception. The real, or basic, issue in the case was the amount of damages required to fairly compensate the plaintiffs for the taking. The testimony as to other awards in the area arose during the cross-examination of defendant's expert witness. The witness did not testify concerning specific properties, give detailed evidence about them, or the amount of any specific or individual award. He gave no dollar value of any award, either generally or specifically. As we have pointed out, the evidence came in without adequate objection being made. Thus, the subject-matter was not a matter of issue but rather was strictly one of evidence. It cannot be stated as an absolute proposition, or rule, that evidence improperly admitted without objection is not for consideration of the jury. Our cases run contra to this.

Defendant Cannot Appeal Due to Failure to Request Instruction During Trial

Considering this general proposition that evidence unobjected to is for the jury in the first instance, it clearly became the duty of the defendant to make plainly known to the court its basis for a special charge on the point. Thus, this is not an instance where the court failed to charge fully upon all points of law in the case whether or not it is requested to do so under the rule stated in Blondin v. Carr, and State v. Brisson. The record fails to disclose that this testimony in any manner raised, or injected, a material issue of law during the trial. It clearly was not an essential issue, or element, in the case. The trial court is not bound to charge on an issue not in the case. Neither is it bound to make every conceivable comment on the evidence, Covell v. McCarthy, or the weight of it, Mercier v. Holmes. The extent of the elaboration of the various points contained within the charge is within the discretion of the court.

Moreover, the defendant did not request the court to give the instruction respecting the matter it objected to which, under the circumstances shown, defendant's counsel could have done under County Court Rule 30. The evidence being in the case without objection, together with other conventional evidence of damages, the court was entitled to treat that testimony as properly for consideration by the jury unless timely and adequately moved to do otherwise by the defendant. Considering the exception to be in substance a request to charge, it came too late, and there was no error in the refusal to comply with it. No error appears.

Judgment affirmed.

Legislative Intent Addressed by Court on Appeal

The legislative intent may be summed up to be that a foreign corporation complying with all the requirements of law relative to its doing business in this state shall be as amenable to the laws of this state, and in duty bound to obey them as though it were a domestic corporation.

The legislative intent is also clear and plain that a foreign corporation doing business in this state, but unwilling to place itself in the position of being amenable to the laws of this state, cannot use the courts of the state to institute an action on a contract made here by it.

Harsh as this bar to enforcement of its contract rights by a foreign corporation may seem to be, it can only arise by reason of such corporation's own volition. If such foreign corporation chooses to do business in this state without affording the protection to both the State, as well as to those with whom it contracts, as it is required to do by the statute, by the same choice it has foregone the enforcement of its contractual rights in the Vermont court.

It cannot be said that the purpose of these statutes is to unjustly enrich one with whom the foreign corporation has contracted. Such person is given no right to bar suit against him. It is only the corporation itself, through its failure or refusal to accept the statutory requirements that can bring into effect the bar against its enforcement in court of its contractual rights.

We now must consider plaintiff's contention that all of what we have just said may apply to non-complying foreign corporations attempting to enforce an executory contract in this State, but is not applicable to an action brought by such corporation on a contract fully executed, as here. Plaintiff cites to us the case of Roberts et al. v. W. H. Hughes Co. in support of its argument that the bar is not applicable to its suit here on a completed contract.

The language of this Court in Hughes, upon which plaintiff's position is taken, is 'The orators' brief treats the transaction between Hughes and the company as an executed contract, as it evidently is; and it is held that a prohibition of this character will not prevent the corporation from maintaining or defending suits to protect its rights under a contract fully executed.'

In Hughes, contrary to the present case before us, the non-conforming foreign corporation was a defendant in the action there brought. The question presented was whether a foreign corporation which is prohibited from maintaining a suit may defend one brought against it. The Court then plainly stated: 'Our statute prevents the enforcement of the contract, but does not declare the contract void.' It is the enforcement of a contract that the corporate plaintiff seeks here and this the statute prevents, as was held in Hughes.

The lower court, having found that the plaintiff foreign corporation doing business in Vermont did not possess the certificate of authority required by the statute for it to transact business in Vermont, lacked the necessary support in its findings of fact for us to affirm its judgment here. For the reason that the judgment below must be reversed, no consideration is necessary of other exceptions briefed by the defendant. The entry is 'Judgment reversed and the cause dismissed'.

Lawful Authority for Foreign Corporations to Do Business

The 'lawful authority' required by a foreign corporation to do business in this state is that furnished by a 'certificate of authority' from the commissioner of foreign corporations to a foreign corporation. Except as otherwise provided, a foreign corporation shall not do business in this state until it has received a certificate of authority from the commissioner of foreign corporations.

The applying corporation must furnish a copy of its articles of incorporation to the commissioner. It must also file affidavits setting forth its assets and its indebtedness in considerable detail, as well as the names of its directors, the type of business which it proposes to carry on in Vermont, and the proposed location of its Vermont office. Further, it must stipulate that the secretary of state shall be its attorney for the service of process in any action or proceedings brought against it in this state, as well as its agent for the service of notices relating to taxation against it under the laws of this state.

No problem is presented in ascertaining the legislative intent requiring a foreign corporation to obtain a certificate of authority to do business in this state. The furnishing of the data relative to such corporation's corporate standing, and its financial standing, is so that residents of this state may have obtainable to them the same information on such foreign corporation's business responsibility as is available to such residents on the stability of domestic corporations under our corporation laws, before contracting with it.

The requirement that the foreign corporation appoint the secretary of state as its process agent assures Vermont residents contracting with such corporation a redress in Vermont courts for any wrong suffered thereby. It also assures that the State of Vermont can collect any taxes lawfully due it as a result of the business done here by the foreign corporation.

Rhode Island Corporation Sues over Digging of Well

The plaintiff, a Rhode Island Corporation, brought an action in contract against the defendants in the Bennington County Court for the digging of a well on the defendant's premises pursuant to a contract between the parties. The case was heard by the court, without jury; findings of fact were made, and judgment was entered for the plaintiff. Defendant has appealed here from the judgment below.

While several questions are presented here by the briefs submitted, the vital question before us is whether or not the plaintiff, a foreign corporation, not registered to do business in Vermont under the statutes, is entitled to bring an action against Vermont residents, upon a contract made in Vermont, in a Vermont court, once such contract is fully executed.

The defendant first sought to raise the question by a motion to dismiss made at the end of all the evidence in the hearing below, which motion was denied. For the reason that such motion was premature, having been made before findings of fact were filed, its denial is not before us.

However, the findings of fact are that the plaintiff is a foreign corporation doing business in Vermont, and that the contract, which is the subject of this action, was made and performed in Vermont, and that the plaintiff did not qualify to do business in Vermont as a foreign corporation and that a certificate of authority has never been issued to the said corporation to transact business in Vermont.

On appeal, the question before us on an exception to the judgment is whether the judgment order is supported by the findings of fact.

The certificate of authority, which the findings disclose the defendant did not possess is entitled 'Unenforceable contracts.' This section of the Foreign Corporation law reads as follows:

A foreign corporation shall not maintain an action in this state upon a contract made by it in this state if, at the time of making such contract, it was doing business in this state without lawful authority. This prohibition shall also apply to an assignee of such foreign corporation, and to a person claiming under such assignee or such corporation except a domestic receiver of such foreign corporation. But this prohibition shall not apply to any contract made prior to January 31, 1903.

Remaining Evidence Led to Fatal Prejudice Against Defendant

In this Court the defendant contends he was fatally prejudiced because this evidence remained in the case without supporting expert testimony as to the fact of pregnancy. Defendant's standing to argue this issue is compromised by the object to the record, because, by failing to object to the testimony, the defendant waived his right, if any, to have this evidence stricken.

His argument here is addressed to a claimed failure to make this evidence competent by the introduction of further supporting evidence. As was pointed out Towle v. St. Albans Publishing Co., the right to have evidence stricken for failure to produce supporting evidence is premised on a timely objection having been originally interposed. The motion to strike was correctly denied.

The motion for a mistrial was addressed to the court's discretion and the denial of the motion will be held erroneous only if prejudice is affirmatively made to appear.

As we have seen, the evidence now claimed to be prejudicial and a proper basis for a mistrial, came in without challenge from the defendant. He must, therefore, assume the responsibility for whatever prejudice to his case derived from this evidence. He made it available for the consideration of the jury. He cannot, therefore, be heard to say that it was error for the court to refuse to base a mistrial ruling on this evidence.

These are not mere technical rulings. Sound policy considerations underlie them. If questions as to the prejudicial effect of unchallenged testimony need not be raised until the close of evidence, litigation could be rendered uncertain, inconclusive and punitively protracted. A party who allowed inadmissible evidence to come in without objection could gain an unconscionable advantage. He would, in effect, have a built-in 'veto' over the litigation if it took a course unfavorable to him, for he could then bring forth his unmentioned assignments of error and require a retrial.

This would be a flagrantly unjust situation, since it would derive from his own failure to forthrightly point out error prejudicial to him at a time when prevention or correction of its adverse effect was still possible. For this reason, even though other bases for supporting the rulings of the trial court in connection with this evidence may exist, we confirm its denial of the motion to strike and the motion for a mistrial on this ground.

The complaint in this case is in two counts, one alleging alienation by enticement and the other alleging criminal conversation. The defendant insists that the verdict and judgment cannot stand because there is no evidence to establish that the defendant caused the alienation under count one, or to prove criminal conversation under count two.

The weight of the evidence is not for this Court. The question must be treated as a review of the lower court's denial of defendant's motion to set aside the verdict. This motion was grounded on two contentions: that the verdict was unsupported by the evidence, and that it was against the evidence. The first contention raises an issue of law; the second is reviewed as a discretionary ruling of the trial court.