Paulson v. Reeds

Birdzell, J. This is the third appeal in an action wherein the plaintiff sues to recover commissions upon the sale of 800 acres of land. Upon the first appeal (Paulson v. Reeds, 24 N. D. 211, 139 N. W. 1135) the respondent confessed error which resulted in the reversal of a judgment for $700 in his favor. Upon the second appeal the judgment was for $1,200, wdiich judgment was reversed for error in instructions to the jury (Paulson v. Reeds, 33 N. D. 141, 156 N. W. 1031). The facts necessary to an understanding of'the case have been previously stated, and it is not necessary to restate them in extenso. Sufficient — 332 — facts will be stated, however, in connection with the discussion of the-instructions given by the trial court, to demonstrate wherein the instructions are erroneous. However strong the disinclination may be to reverse a judgment-based upon the third favorable verdict of a jury, the duty to do so is-nevertheless incumbent upon the court when the error is clear and its-prejudicial effect obvious. The error in this case is of that sort, as-will readily appear from an examination of the charge to the jury. The charge of the court was in part as follows: “If the plaintiff and the defendant in this case entered into a contract for the sale of the defendant’s land, and you so find from the-evidence, if you also find that defendant signed exhibit ‘A’, wherein it is stated that he will take $16 an acre net for the lands in question,. I charge you that said exhibit is not of itself and standing alone a contract between the plaintiff and the defendant, fixing or determining the right of the plaintiff to a certain and definite commission or compensation for negotiating a sale, but if you find in fact it was signed by the defendant, and he knew what he was signing, it constitutes a link in the chain of evidence whereby plaintiff seeks to establish the contract alleged between himself and the defendant, not only for the sale of the lands in question, but a link in the chain of evidence seeking to establish and prove the compensation or commission which plaintiff was to-receive for his services as a land broker and an agent for the defendant. “In order for the plaintiff to recover in this áetion the minds of the parties must have met upon the proposition of the plaintiff acting as agent or broker for the defendant, and their minds must also have met upon the matter of paying a commission to plaintiff, and as to that matter their minds must have met upon the proposition of the plaintiff receiving as a commission all above the sum of $16 per acre received through the sale of the lands in question, as the plaintiff rests his case upon an express contract founded upon such claimed agreement. . . . “Among other matters to be weighed and considered by you in making up your verdict, is the question of whether or not there was a variation from the terms of sale as claimed to have been stipulated by the defendant to the plaintiff, in permitting the plaintiff to try to effect a sale of the lands in question, and if there was a variance in the sale that was made from the terms originally stipulated and agreed upon between — 333 — plaintiff and defendant, you must further find before you can find a verdict for the plaintiff, that the defendant understood and had his attention called to such variance, and that he accepted and adopted the same while still permitting the plaintiff to act as his agent and broker. . . . “If you find from the evidence that the contract claimed by the plaintiff was not entered into and agreed upon by and between plaintiff and defendant, in other words, if you find that at no time did the minds of the parties to this action meet upon the proposition alleged by plaintiff, to wit, that the defendant was to have a net price of $16 per acre, and the plaintiff to have all received above that as his commission, and it is agreed between the parties here that the land sold for $17.50 an acre, then you would find a verdict for the defendant. If you should find, however, that the agreement between the plaintiff and the defendant was as alleged by plaintiff, that the defendant should receive a net price of $16 an acre and the plaintiff take as his commission all above that, and that as a part of that agreement or an agreement with plaintiff to act as agent or broker named specific terms of sale, and you further find that those terms and agreements were departed from in any material respect, and the land was sold on other terms than the terms agreed upon between plaintiff and defendant, and you further find that the defendant did not agree with the plaintiff to the change of terms and •did not consent to a sale by plaintiff of the land under the claimed change in terms and agreement, but the sale was consummated without the agency of plaintiff continuing, and. without the defendant agreeing to the change in terms and conditions of sale alleged to have been made, then you must find for the defendant. . . . “The agent or broker must furnish a buyer ready, able, and willing to buy on the terms and conditions upon which the lands have been given by the seller to the agent for sale. However, if a purchaser, ready, able, and willing to buy is produced, and he refuses to buy on all the terms and conditions which the seller has named to his agent or broker, and the seller through his agent — in this case the defendant through the plaintiff — agrees to other terms and conditions as to the sale to the purchaser, and demands no new terms as to the compensation or commission which the agent or broker is to have, then if you find such to be the fact in this case, I charge you if the defendant received, or was to — 334 — receive, the $16 per acre net claimed by plaintiff to have been tbe agreed price between him and defendant, the seller/and tbe lands were sold, for a price netting tbe defendant $16 per acre, and you find that the-contract was as alleged by tbe plaintiff for bis compensation or commission to be all above tbe price of $16 per acre, and tbe defendant consummated tbe deal through and by tbe assistance of tbe plaintiff, bis-agent, then plaintiff has established bis claim herein, and your verdict must be in bis favor for tbe amount of commission claimed. . . . “As heretofore charged, you must find, first, whether or not there-was an express contract, as claimed by tbe plaintiff herein, to wit, a. contract for tbe sale of tbe land of tbe defendant at a net price to bim of $16 an acre, and if you also find that tbe plaintiff was to have as bis commission and compensation all of tbe price received over and above said $16 per acre net, and you further find that although tbe terms as originally stated by defendant to plaintiff upon which be would sell tbe land involved in this controversy were varied and changed to-some extent in tbe actual transaction as completed, then if you find that tbe defendant understood and was aware of tbe changes or valuations and accepted and adopted them while still permitting tbe plaintiff to continue to act as bis agent or broker in tbe transaction made at tbe sale of said lands, then you will find a verdict for the plaintiff, as claimed by bim. . . . “While tbe defendant claims a contract different from that set up by the plaintiff, and also claims a variation in tbe terms of sale, and has offered some testimony as to not accepting tbe variations from, tbe terms of listing, I charge you that.in this case, tbe plaintiff rests his case on tbe claimed contract between plaintiff and defendant for a compensation or commission of all received above tbe sum of $16 an acre net to tbe defendant, tbe plaintiff must recover, if be recovers at all, the sum of $1,200, with legal interest thereon from tbe 15th day of November, 1910, as it is agreed that tbe lands were sold for $17.50 an. acre. “Before the plaintiff can recover, be must prove, by a fair preponderance of tbe evidence, the following essential facts: . . . “3. That Paulson actually sold tbe land, on terms of sale then assented and agreed to by Mr. Reeds, with knowledge of tbe facts, whether they were the original terms or not. . . . — 335 — “If you find these four essential facts (of which the foregoing is one) in favor of the plaintiff’s contention for them, then the plaintiff should have a verdict for $1,200, with legal interest thereon since November-15, 1910. . . . “The terms of sale are stated and noted in exhibit ‘B,’ and this exhibit you will be at liberty to take with you to the jury room. It is admitted that these are not in all respects the same terms as the terms stated to the plaintiff when it is claimed the lands were listed with him by the defendant for sale. However, if you find that the defendant accepted and adopted them, and the sale was made on the terms as set out in exhibit ‘B,’ and the plaintiff Paulson continued as the agent of the defendant, then you must find a verdict for the plaintiff, as claimed by him.” Upon the latter of the two former appeals of this case, the judgment of the trial court was reversed because of instructions given to the jury, stating in substance that the commission which the plaintiff was to receive was governed by the terms of exhibit “A,” this exhibit being a memorandum as follows: Wyndmere, N. D., June 28, 1910. Martin Paulson:— You are hereby authorized to sell my land, W.-| S. 21, and E.-l of 20, 132 — 52, at $16 per acre net to me. J. A. Heeds. The jury, upon the trial reviewed upon that appeal, was told in substance that if Heeds signed exhibits “A” and “B” (the latter being the sale contract), he would owe the plaintiff $1,200 commission. It was held that exhibit “A” could not be considered as controlling on the question of commissions, and that this question should have been submitted to the jury on all of the oral testimony. Upon this trial the jury was correctly instructed as to the effect of exhibit “A,” but a reading of the quoted portions of the charge discloses that the jury was also instructed that, if the defendant signed exhibit “B” while plaintiff was acting as his agent, knowing at the time he signed it that it did not contain the terms of the contract the plaintiff had been authorized to negotiate for him, he would be bound to pay to the plaintiff his full — 336 — •commission of $1,200. It will be readily seen that this instruction makes the signing of exhibit “B” with knowledge of its contents, and, while .the plaintiff was still acting as agent for the defendant, conclusive as to the commission agreed upon. It authorized the jury to ignore the testimony given by the defendant to the effect that the plaintiff was to stand the difference between the value of the contract evidenced by exhibit “B” and the value of such a contract as the plaintiff was originally authorized to negotiate for the defendant. Upon analysis it will be seen that there is no substantial difference between the making of exhibit “A” an exclusive and absolute criterion of the amount of plaintiff’s commission and making it the criterion conditioned only on the circumstance of. Beeds’ signing of exhibit “B” with knowledge that Paulson was purporting to act as his agent. The instruction in this case is, in reality, open to the same vice as the one that was held erroneous upon the former appeal. The confusion which seems to have characterized all of the trials of this action results from a failure to apply elementary principles to a rather complicated set of facts. The listing agreement and the brokerage or commission contract are properly regarded as separate and distinct, but, though separate and distinct, they are yet parts of the same transaction, and the latter is so far dependent on the former that the right to the agreed commission can only arise when a sale has been negotiated in accordance with the authority contained in the listing agreement. In short, the execution of the listing contract to the point •of supplying a purchaser ready, willing, and able to buy upon the terms thereof, is the condition precedent to the right to recover the agreed compensation. It is not now, and has not been, as we understand it, the contention of the plaintiff and respondent that a sale has ever been negotiated in accordance with the original listing agreement, and similarly, it is not now and never has been the contention of the defendant and appellant that he ever agreed to pay to the plaintiff the full difference between $16 per acre for the land sold and the price obtained under the terms of exhibit “B.” In view of the respondent’s position, it is essential for him to show, before he can recover any sum as an agreed commission, that he sold the defendant’s land in accordance with the terms of a listing agreement in consideration of the fulfilment of which defendant agreed to pay him a stated commission. The plain — 337 — tiff admits that, at the time exhibit “A” was signed, the defendant had no knowledge of the terms of the sale which had previously been negotiated by plaintiff, and he further admits that the sale was not consummated according to the terms of the previous listing agreement, in that the cash payment was but one fourth of that stipulated in the listing agreement, and the interest on the deferred payments was more than $700 less than that originally contemplated. The respondent also admits that at the time exhibit “B” (the sale contract) was signed by the defendant, he did not even contend that it conformed to the previous listing agreement, and that the defendant became acquainted with its terms for the first time at the meeting at which it was signed. There is testimony in the case to the effect that at this meeting the defendant signed exhibit “B” with the understanding, had then and there between him and the plaintiff, that the plaintiff was to make up the difference between the value of the sale contract as made and the contract as it would have been had it been made in accordance with the original listing agreement. Beeds’s testimony on this subject is as follows: Q. When you came there, the contract had been prepared ? A. Yes, Paulson handed it to me. Q. Do you recall who gave it to you and how it came? A. Paulson handed me his and McGrann the other. Q. You remember it ? A. Yes. Q. This paper exhibit “B” I think you testified is one of the duplicates ? A. Yes, sir. Q. And did you read it over ? A. Yes,-1 did. Q. Now, what did you say to Paulson after you read that contract over? A. I said, “Who the devil authorized you to sell my land on them terms ?” I says, “I never did,” and he says, “I know you didn’t,” — I told him I wanted 7 per cent on the stuff that run from the date of the contract if it run five years, and he says, “I know, but I couldn’t get that — and I says, “This contract don’t say anything about any inter — 338 — ost until the 15th of November;” and he says, “I will make that up, I will make that right;” and I says, “Here is another thing, this $9,000 runs five years and only 6 per cent interest, instead of 7 per cent;” and he says, “I will make that right, I will make that right.” Q. Was there anything said to Huey there about modifying it? A. He told him but Huey wouldn’t pay no attention to him. Q. What did Huey say ? A. He told him, “No,” he wouldn’t do any more than he had done. . . . Q. After he had made the statement that he would make up the difference, you signed the contract ? A. Yes. Q. Has he ever made up any difference ? A. No. The jury should have had an opportunity to consider this testimony under proper instructions. If it is true, the defendant never agreed to pay the plaintiff a commission measured by the difference between $16 per acre and $17.50 per acre, in consideration of the procurement by the plaintiff of a purchaser who purchased according to the terms of exhibit “B.” The respondent presents a forcible argument to the effect that a change in the listing agreement which was assented to by the defendant would not alter the obligation to pay the commission previously agreed upon, but the facts and circumstances as testified to by the defendant go to show that there was a change, not only in the listing agreement, but one which affected the commission as well. In this state of the record, it was clearly error for the trial court to instruct the jury, which was done repeatedly in the charge, that if there was a change in the listing agreement and if the defendant assented to the sale with knowledge of the change, and while the plaintiff was still acting as his agent, he became bound to pay to the plaintiff the full amount of the commission which would have been earned had the sale been made according to the original listing agreement. We have not overlooked the fact that the charge, the giving of which was held .to be error in Paulson v. Reeds, 33 N. D. 141, 156 N. W. 1031, contained a statement somewhat similar to the one just referred to, and that it was not singled out as being erroneous in the opinion — 339 — rendered. But a careful reading of that case discloses that the principle according to which it was decided runs counter to the principle adhered to by the trial court in giving the instructions under examination. In the opinion referred to, the court cited with approval its own previous decision in the case of Anderson v. Johnson, 16 N. D. 174, 121 N. W. 139, wherein it was said: “It seems to have been the theory of plaintiff’s counsel and also the trial judge that all it was necessary for them to prove in order to recover was the existence of the contract as pleaded, and that they produced the person claiming to -own the property, and he, in fact, entered into a contract with defendant to sell the same to him upon some terms acceptable to defendant. In other words, even though Staiger Avas unwilling and refused to sell at the price of $2,300 [the listing contract], that, if defendant dealt with him on any other terms whatever, plaintiffs would still be entitled to their commission . . . This is clearly erroneous.” Furthermore, the court said that if a dispute had existed “as to that part of the listing contract having reference to the terms upon which the land should be sold, and pending this dispute exhibit “B” [the sale contract] was produced and shown to Reeds as plaintiff’s version of the listing contract, and Reeds then accepted the same, it would probably be presumed that he had receded from his position upon the contract, and had accepted the version contended for by plaintiff.” Paulson v. Reeds, 33 N. D. 141— 153, 156 N. W. 1031. But, according to the plaintiff’s 'own admission, exhibit “B” was not produced as the plaintiff’s version of the listing contract, but as an admitted departure therefrom. It cannot be said that by signing exhibit “B,” under such circumstances, the defendant necessarily agreed to pay the original commission. See Steinfeld v. Storm, 31 Misc. 167, 63 N. Y. Supp. 966, and Reiger v. Bigger, 29 Mo. App. 421. The record in this case discloses clearly that the signing of exhibit “B” by the defendant, under the circumstances, was an equivocal act and one reasonably susceptible of the inference that Beeds was thereby expressing his agreement to the payment of a commission measured by the difference between the value of exhibit “B” compared to the contract originally contemplated, or an agreement by him to pay a reasonable commission, or, if the jury disbelieved his version and believed that of the plaintiff, that he was to pay the full — 340 — amount of the commission originally agreed upon, but was to be given until November 15th following to pay it. This case is clearly distinguishable from the case of Gelatt v. Ridge, 117 Mo. 553, 38 Am. St. Rep. 683, 23 S. W. 882. In that case the. contract, negotiated for the principal and to which' he assented, gave him the benefit of the full net price stipulated in the listing agreement, and, at the time he assented to the terms of the contract, no question whatever was raised as to the amount of the commission. None of the authorities cited in the dissenting opinion seems to us to be applicable to a case such as is presented here. A careful examination of the cases cited will disclose that they merely support either of two propositions: First, that an owner of property who avails himself of the services of a broker and negotiates a sale of his property to a purchaser supplied by a broker is obliged to pay a commission; second, that where a broker supplies a purchaser, with whom the owner of the property negotiates a sale, such vendor cannot escape liability for the commissions agreed to be paid by taking over the negotiations and departing from the original listing agreement. Neither of these propositions is involved here, for the reason that the plaintiff is not attempting to recover on the quantum meruit, nor is it a case where he negotiated a sale differing in terms from the original listing agreement, in an attempt to avoid the payment of commissions. No authority has been cited, and we are confident none can be found, which will support the contention that an owner of property who has listed it for sale on stated terms and upon an agreed commission is bound to pay. such commission to a broker who has negotiated a sale upon terms not previously assented to by the owner, where it is expressly agreed between the owner and the broker, at the time of the signing of the sale contract, that the broker is to receive a commission different from that originally stipulated. It is as competent for the parties to a commission agreement to alter it by mutual understanding during the course of performance as it is to thus change an agreement of any other character. It is true the jury was instructed that the plaintiff, in order to recover, must establish the contract sued upon, and it was further told that exhibit “A” was to be considered in connection with all the other evidence in determining whether or not the defendant had assented to the alleged commission contract. But this general instruction, when — 341 — considered in the light of the entire charge given, cannot reasonably be said to have overcome the impression that must have been created by the repetition of the specific statement applicable to the transaction on June 28th. This statement was repeated in various forms, all meaning-in substance that if an agreement ever was made, whereby the defendant undertook to pay as a commission all that was received for his land above $16 per acre, such agreement bound him to pay the full commission if he assented to the terms of the sale as made, while the plaintiff was still acting as his agent. We do not agree with appellant’s counsel wherein he contends that, under the complaint, which alleged an express contract entered into on the 28th day of June, 1910, there can he no recovery under the evidence in this case. There was ample evidence from which the jury could have found that the express contract upon which plaintiff sues was made. There was, therefore, no error committed in refusing to grant the motion for a directed verdict. As we view the record, all of the evidence descriptive of the transaction had at the time of the signing of the sale contract should have been left to the jury under proper instructions, and from it they would have been warranted in finding that the defendant expressly agreed to pay the plaintiff the full amount of his commission, or that he expressly agreed to pay him a portion only of the commission originally agreed upon, or that no agreement whatever was reached, in which event, under proper pleadings, the recovery would he limited to the quantum meruit. The judgment of the trial court is reversed and the cause remanded.