Chapin v. J. E. Bolles Iron & Wire Works

Fellows, J. (after stating the facts). We do not understand it to be contended that the memorandum signed by defendant does not satisfy the statute of frauds. The principal defense that is interposed to plaintiff’s claim may be summarized as follows: There were two incumbrances on the premises, the Willing Company lease and the Doble-Detroit Company lease; of these leases the plaintiff had actual knowledge; he did not procure a customer ready, able and willing to purchase these premises with these incumbrances existing, but procured one who would accept only a free and unrestricted title and the sale failed because of one of these incumbrances. Defendant, therefore, invokes the rule that a broker who has knowledge of restrictions in the seller’s title may not recover his commission where the sale fails of consummation because of such restriction. The existence of the general rule has been recognized by this court and — 519 — it has been applied in the following cases: Appleby v. Sperling, 194 Mich. 681; Cain v. Masurette, 196 Mich. 7; Gettleson v. Lewis, 206 Mich. 113. The question which here confronts us is whether the rule as broadly contended for by defendant’s counsel is applicable to the facts of the instant case, whether the rule as thus broadly contended for has any limitations, exceptions or qualifications which prevent its application to the case before us. A consideration, therefore, of these three eases and of the facts involved in them and what was stated by this court in considering them is of prime importance. In Appleby v. Sperling, supra, the plaintiff, a real estate broker, had by one of his employees, Mr. Smith, procured an agency contract from the land owner in which he agreed to furnish an abstract and tax history showing clear title. It was there claimed by the defendant that Mr. Smith was fully advised as to the mineral reservations, and that defendant was induced to sign the agency agreement on Mr. Smith’s representations made after knowledge of such reservations that— “Your title is all right; lots of farms with such claims on, and never any trouble. It ain’t necessary to put it in the contract.” And we there said: . “Whatever effort he put forth to make a sale of the land, plaintiff knew that the alleged infirmity in the title to the land would be eventually confronted, and that it might result in defeating a sale. He says it did defeat a sale. The injustice of permitting him to now claim that the commission has been earned is manifest.” This case was followed by Cain v. Masurette, supra, which was likewise an action brought to recover commissions. We quote from what was there said by Mr. — 520 — Justice STONE, italicizing the language applicable to the instant case: “While the weight of authority is to the effect that it Is no defense to an action brought by an agent against his principal to recover commissions for negotiating a sale of land that the principal does not hold title to the land, or cannot convey a perfect title (see 19 Cyc. p. 240, and cases cited in note), yet the decisions generally hold that where a broker, who at the time he makes his contract with the owner, knows of defects in the employer’s title, or who knows of facts sufficient to put a prudent person on inquiry, which, if followed with reasonable diligence, would have resulted in such knowledge, he is not entitled to recover where the sale failed because of such facts, unless it was the intention of the parties that the employer should subsequently perfect his title in order to be able to perform.” The latest speaking of the court was in Gettleson v. Lewis, supra. There the restrictions were of a character that could not be removed. We there said: “But where the principal’s title is defective and the agent has knowledge of such defect and it is not such a defect as may be removed by the principal, the agent does not earn his commission by producing as a purchaser one who is willing to and does contract for only a good or a merchantable title or an ‘absolutely unrestricted’ one.” Authorities were there cited, and the language above quoted from the Cain Case was quoted, and it was further said: “In the instant case there is no claim that the title was or could be perfected, and the sale fell through by reason of the restrictions.” This resume of these three cases demonstrates that while we have recognized the general rule we have at the same time recognized that it has its limitations and qualifications. In the Cain and the Gettleson Cases — 521 — we cited 4 R. C. L. p. 313. We now quote what was there said on this subject: “Accordingly, although it has been held that the fact that the broker knew of the defect in the principal’s title and of the equitable estate of a third person therein would not defeat his right to commissions, the decisions generally hold that a broker who at the time he makes Ms contract with the owner knows of defects in the employer’s title, or knows of facts sufficient to put a prudent person on inquiry, which, if followed with reasonable diligence, would have resulted in such knowledge, is not entitled to recover where the sale fails because of such facts, unless it was the intention of the parties that the employer should subsequently perfect Ms title in order to be able to perform.” In the instant case all of the testimony shows that it was the intention of the parties that defendant should perfect the title by removing the incumbrances in the form of the leases in order to be able to per-from. Everyone connected with the transaction knew of these leases. The contracts, the letters and other written evidence, the oral testimony, all tended in but one direction, all tend to establish such intention, and no claim or request was made in the court below that the question of intention of the parties should be submitted to the jury, both parties having asked for a directed verdict. Under these facts the case falls within the exception we have noted to the rule, rather than within the rule as broadly stated and as broadly contended for by defendant. While the precise point here involved was not involved in the recent case of Bagaeff v. Prokopik, 212 Mich. 265, where we held that services of a real estate broker performed without the written memorandum required by the statute of frauds if resulting in a pecuniary benefit to the promissor created such a moral obligation as to furnish a consideration for a promise in writing in the form of a note, it should be — 522 — noted that we there declined to follow the holdings of the New Jersey court but did follow the holding of the Washington court in Muir v. Kane, 55 Wash. 131 (104 Pac. 153, 26 L. R. A. [N. S.] 519, 19 Ann. Cas. 1180). An examination of the Washington case will disclose that that court had under consideration a contract whose language was held not to comply with the statute of frauds of that State which is somewhat dissimilar to ours but which language is in essential effect similar to the language of the contract before us. The language there was “and pay two hundred dollars ($200) of the purchase price to B. L. Muir & Company for services rendered.” In the contract-before us the language is: “In consideration of services rendered,” etc. The Washington court there held (we quote the syllabus) : “The moral obligation to pay for services of a real estate broker under a contract unenforceable, because not in writing, is sufficient to support a subsequent written agreement to make such payment.” This suit was instituted on November 25th, the day the property was deeded to Kolb, and plaintiff was permitted to recover interest from that date. It is insisted that this was error and that the suit was prematurely brought. It would seem to be the claim of defendant that if it is liable at all that liability did not become due until the settlement of the suit for specific performance. By the terms of defendant’s contract with the Mutual Electric & Machine Company payment of the purchase price was due to it on November 1st. On that day Mr. Frank made the tender. Defendant did not accept the tender because through its own negligence in failing to procure a release of the Doble-Det-roit Company it was obliged to breach its — 523 — contract with the Mutual Electric & Machine Company. It cannot now be heard to interpose its own breach, its own negligence, to defer the date of maturity of the contract. If there was any error it was to the prejudice of the plaintiff. It follows from what has been said that the judgment must be affirmed. Steere, C. J., and Moore, Wiest, Stone, Clark, Bird, and Sharpe, JJ., concurred.