Hartman v. Selling

HARRIS, J. 1. The plaintiffs, it will be recalled, paid $5,000 for the option, and the purchase price was fixed at $295,000, making a total of $300,000. The plaintiffs transferred their beneficial interest in the land for an expressed consideration of $330,000. However, the plaintiffs did not actually receive $330,000 from the Parkrose Association; but they were reimbursed the amount paid for the option and also the amount of the first installment, totaling $50,000; and in addition the plaintiffs received $30,000. The plaintiffs were engaged by the Park-rose Association to act as selling agents, and for such services they received a commission from the Parkrose Association on all the lots and acreage sold by them. Receipt of these moneys from the Park-rose Association cannot prevent the plaintiffs from recovering a commission from the defendants. In his agreement,to pay a commission, Emanuel May says to the plaintiffs: “You are to form a syndicate for the purchase of this land.” The uncontradicted testimony is to the effect that the plaintiffs' told him that they could not undertake to handle the property, unless they were paid a commission by Emanuel May, and also “a 10 per cent cost for organizing” a company, or a “syndicate,” as they sometimes called it, to take over the property. In other words, May knew at the time he signed the writing promising to pay a commission exactly what the — 379 — plaintiffs planned to do, and that a part of such plan included the creation of a corporation to which the option was to be assigned; and, indeed, May understood that the plaintiffs would not attempt to handle the property unless they could do just what subsequently was done. Moreover, May was present and voted at the meeting of the stockholders of the Park-rose Association when, with a knowledge of the whole truth, a resolution was unanimously adopted authorizing the purchase of the option from the plaintiffs; and, afterwards, according to the uncontradicted evidence, May acknowledged that the plaintiffs had a just claim for a commission. 2. The other defense is founded upon the contention that the promise to pay a commission was conditioned upon the payment of all the purchase price within four years, and that, since all the purchase price was not paid within four years, the plaintiffs are not entitled to recover. The defendants argue that the four years period began on September 16, 1911, and that time was made the essence of the agreement. The plaintiffs go on the theory that the four years period began to run on October 10, 1911, the time when they transferred the option to the Parkrose Association. The option signed by the May Land Company and the plaintiffs, under date of September 15, 1911, does not make time the essence of the contract, except as to the payment of the first installment; the writing signed by May under date of September 16, 1911, and in which he agrees to pay a commission, does not declare that' time shall be of the essence of the agreement; no writing found in the record in terms speaks of time as of the essence of the contract, except the option; and in that paper, as already explained, only the time for the — 380 — payment of the first installment is declared to be “of the essence of this option”; and, therefore, it cannot be said that the parties expressly stipulated that time should be of the essence of the agreement for the payment of the commission. When attempting to ascertain what Emanuel May intended when he wrote “on or before the end of four years,” the letter in which he used that language should be construed in the light of the provisions found in the option. Although the option was not delivered until September 21, 1911, it was evidently prepared on or before September 15, 1911, for on it appears that date; and in view of the fact that all the details had for a long time been discussed by May and Thompson, it is obvious .that May knew what the option contained, or would contain, when he signed the letter dated September 16th, which it will be observed is the day following the date of the option.- It is appropriate to add that the option was signed by May as president, and by Lowengart as secretary of the May Land Company. In his letter, May agrees to pay a commission “on my interest in the May Land Company,” and he declares that his interest “now amounts to $184,000.” The litigants here agree that, if $295,000 is fixed as the purchase price, May’s share would amount to $184,000. The option fixed $295,000 as the price to be paid for the land, and manifestly May had in mind this price named in the option when in his letter he said to the plaintiffs: “You are to form a syndicate for the purchase of this land,” and “when this sale is negotiated” (sale to the syndicate), the commission of 5 per cent on $184,000 is due and payable on or before four years, provided “the $184,000 is paid” as provided in' the contract — 381 — of purchase, on or before the end of four years. Within the meaning of May’s letter a sale was negotiated on October 10, 1911, the date when the option was transferred to the Parkrose Association; bnt the commission, according to the letter, is not dne and payable unless “the $184,000 is paid as provided in the contract of purchase.” The language last quoted makes it plain that the option which, although not delivered and possibly not yet signed on September 16th, had on or before the previous date been prepared, was “the contract of purchase” to which May referred. If the four years period be calculated from the date of the option, or from the date of the transfer of the option to the Parkrose Association, the period within which the installments were required to be paid extended beyond four years; but if the time be calculated from October 20, 1911, the daté when the first installment was absolutely required to be paid, the four years period ended on October 20, 1915, the date when the final installment became due. It seems clear to us, however, from the language employed in May’s letter, that he in effect intended to say that if the purchase price fixed- in the option should be paid within the time fixed by the option, he would pay Hartman & Thompson a commission of 5 per cent on $184,000. 3-5. The plaintiffs’ alleged right to a commission is based upon a contract plus performance of it. The writing of September 16, 1911, is the contract, and in this contract the obligation to pay a commission is in effect made dependent upon the payment of the purchase price on or before October 20, 1915. The plaintiffs aver in unequivocal terms in their complaint that the Parkrose Association paid the balance of the purchase price on July 14, 1915. In — 382 — other words, the adjustment which was made on July 14th is relied upon by the plaintiffs as payment of the balance of the purchase price, and therefore as performance or fulfillment of the condition. It is true that in their reply the plaintiffs say that Emanuel May consented to the adjustment made on July 14th, and that, therefore, the defendants, as his representatives, are estopped to deny payment. The plaintiffs do not claim that May personally consented to the adjustment, but they take the position that consent was given through his guardian Ben Selling. Having been adjudged incompetent May, of course, could not act for himself or for the May Land Company in the adjustment on July 14th. In the settlement made on July 14th, Ben Selling represented the May Land Company as vice-president, and as such he signed the release given by that company to Hartman & Thompson. Selling was at that time guardian of the person and estate of Emanuel May, and, because of that circumstance and the fact that Selling participated in the adjustment, the plaintiffs insist that May must be deemed to have consented to the adjustment. There is no evidence in the record showing that Ben Selling was acting or pretending to act in his capacity as guardian when the adjustment was made. It is not necessary, however, to decide whether Ben Selling’s participation in the transaction of July 14th operated to estop the defendants to deny performance of the contract; for in their brief the plaintiffs expressly disclaim any intention to rely upon waiver, or modification of the contract, or estoppel, but they stand upon the ground that the purchase price was paid on July 14, 1915. The theory of the complaint is that the conditions of the contract were fulfilled and that the giving of the — 383 — notes operated as payment. This is the theory of the findings and conclusión of the trial court, and it is likewise the theory contended for by the plaintiffs on this appeal. The obligation to pay a commission was by the terms of the letter made dependent upon the payment of the purchase price; and, having sued on the contract according to its terms, the plaintiffs can succeed in this action only by showing fulfillment of those terms: Cranston v. West Coast Life Ins. Co., 63 Or. 427 (128 Pac. 427). The judgment rendered by the trial court is predicated upon the notion that when Hartman & Thompson paid the first installment of $45,000, they, by that act, transformed a mere option to purchase into a binding obligation on their part to complete the purchase by paying the remaining installments; and that, by the adjustment of July 14th, the May Land Company released the plaintiffs from their obligation, and in lieu of it accepted the notes from the Parkrose Association. An examination of the option will disclose that it does not contain even a word attempting to obligate Hartman & Thompson to pay any moneys at any time. The plaintiffs do not in the option promise to pay any moneys whatsoever. At no time could the May Land Company have sued Hartman & Thompson and recovered from them any part of the purchase price. There is nothing in the record to show that the Parkrose Association promised to pay any moneys prior to the execution of the six notes. It is true that, until they transferred the option to the Parkrose Association, Hartman & Thompson had the right to pay, but they were not obliged to pay; and, so too, until the execution of the notes, the Parkrose Association had the right to pay, — 384 — but it was not obliged to pay. When, therefore, the Parkrose Association gave' its notes to the May Land Company, it did not, by giving these notes, pay the debt of Hartman & Thompson, for the reason that neither the Parkrose Association iior Hartman & Thompson were indebted to the May Land Company. It was not a transaction in which one obligation was given and accepted in lieu of another obligation, but it was a transaction by which an obligation was created where none existed before. Moreover, before receiving the notes, the May Land Company expressly stated that the notes should not be regarded as payment of the indebtedness; and, consequently, the notes cannot be treated as payment: Riner v. Southwestern Surety Ins. Co., 85 Or. 293, 299 (165 Pac. 684, 166 Pac. 952). A meeting of the board of directors of the May Land Company was held on July 14, 1915, “for the purpose of considering an adjustment of differences with the Park-rose Association and with Hartman & Thompson.” The minutes of this meeting show the purpose for which it was held, and they contain a recital of the amount of the unpaid balance of the purchase price. The minutes also state that the Parkrose Association “would give notes” for $80,608.50, and an additional note for $6,918.25 as evidence of the interest, provided the May Land Company “would release Hartman & Thompson frojn and against all claims of every name and nature that it has against the said Hartman & Thompson growing out of the sale of the lands of the May Land Company”; and then the minutes declare that— “The notes referred to are to be taken only as evidence of the indebtedness, and the securities held for — 385 — the indebtedness are to remain in the Title & Trust Company as heretofore.” The minutes close by stating that the vice-president and secretary are authorized to accept the notes of the Parkrose Association and to give a re-' lease to Hartman & Thompson. A copy of these minutes was delivered to the Parkrose Association, and that corporation placed the copy in its own minute-book. If the recorded minutes of the May Land Company, knowledge of which was admittedly brought to the Parkrose Association, speak the truth, the May Land Company took the position that both the Parkrose Association and the partners were liable for the balance of the purchase price; for we read in the minutes as follows: “The board informally discussed all negotiations previously had with representatives of the Parkrose Association, and the May Land Company was claiming that there is due, owing and unpaid from said association and from Hartman & Thompson, growing out of the sale, * * the sum of $90,608.50 with interest from October 20, 1914.” There is no evidence to show that Hartman & Thompson admitted at any time prior to July 14, 1915, that they were personally liable for any of the purchase price; and, as we have already stated, they were not in truth personally liable. It does appear, however, that the May Land Company was claiming that both the Parkrose Association and the partners were liable, and hence, on the basis of the position taken by the May Land Company, one of two joint debtors was released; but the debt was expressly preserved and was not paid, althougth reduced in amount and evidenced by promissory notes. At no time during the negotiations which culminated in the — 386 — adjustment of July 14, 1915, did Ben Selling pretend to act in his capacity as guardian of May; and, therefore, it cannot be said that May, through his guardian, agreed with the plaintiffs that the notes should operate as payment. The most that the plaintiffs contend for is, not that the guardian agreed, but that he is estopped to say that he did not agree. Neither the Parkrose Association nor May, acting’ through his guardian, agreed that the notes paid any actual or supposed debt. The purchase price was not fully paid when this action was commenced, nor was it paid at the time of the trial. Payment of “the one hundred eighty-four thousand” was made one of the conditions of the contract, and that condition had not been performed even at the time of the trial; nor, indeed, had all the purchase price, as reduced, been paid; and, consequently, having failed to show performance of this ■ material condition, the plaintiffs cannot recover in this action. It may be that, if the notes are now fully paid, the plaintiffs can compel payment of a commission, notwithstanding the fact that a comparatively small reduction was made in the purchase price, and even though the time for payment of that reduced balance was extended beyond the four, years period; but^if, in these circumstances, the plaintiffs are entitled to a commission, they cannot compel the payment of such commission in this action on the pleadings as they now are. There is a sufficient bill of exceptions within the rule established in Malloy v. Marshall-Wells Hardware Co., 90 Or. 303 (173 Pac. 267, 175 Pac. 659, 176 Pac. 589). — 387 — Denied September 21, 1920. Mr. John H. Hall and Mr. Jesse Stearns for the petition. Messrs. Dolph, Mallory, Simon & Gearm and Messrs. Platt & Platt, contra. The judgment is reversed, and the cause is remanded for such further proceedings as may be consistent with this opinion. Reversed and Remanded. McBride, C. J., and Benson and Burnett, JJ., concur.