Anderson v. Craig

108 P.2d 205, 111 Mont. 182, 1940 Mont. LEXIS 34

• Court: Montana Supreme Court
• Decided: November 22, 1940
• Docket: No. 8,114.
• Status: Published

Opinions

MR. JUSTICE ARNOLD

delivered the opinion of the court.

This appeal followed the judgment of the district court of Stillwater county dismissing a suit by a real estate broker for commissions claimed to have been earned in the sale of a tract of real estate in that county. The cause was tried by the court sitting without a jury.

The defendant Craig had signed a listing agreement with the plaintiff which provided, among other things, that “if during the term of this contract you find a party ready, able and willing to purchase on above or other price and terms acceptable to me * * * I agree to pay you for your services five per cent of above price.”

Within the time limited by the listing agreement, the real estate broker produced a prospective purchaser who made the following proposal:

“Agreement.

“To Arthur C. Anderson,

“Bonded Beal Estate Dealer,

“Columbus, Montana.

“I hereby make an offer for the property known as the Geo. W. Craig property, located in sections 20 and 21- twp. 2 S-20 E. Containing 100 acres more or less. $4,500.00 offered as follows:

“200.00 cash and $2,800.00 on or before March 1, 1939.

“I agree to assume a mortgage in the amount of $1,500.00 and paid the interest from Jan. 1, 1939, if offer is accepted.

“I agree to paid the last half of 1938 taxes if offer is accepted.

“If offer is accepted it is understood that I will have immediate possession, for the purpose of improving property.

“I agree to forfeit the down payment if I fail to meet the March 1, 1939, payment.

“I understand that my check will be returned to me or down payment refunded if this offer is rejected.

“Carl Wegner.

“Witness:

“Arthur C. Anderson”

The defendant and his wife upon receipt of the proposal signed the following acceptance: “Above offer accepted and receipt of down payment of $200.00 acknowledged this 31st day of December A. D. 1938.” ,

It is the contention of the defendant, which we gather from the brief and oral argument of his counsel, that the offer on the part of the prospective purchaser and acceptance thereof by the seller, constituted only an option by reason of the clause providing a forfeiture of the down payment on condition that the payment of March 1, 1939, was not met. We fail to see how such a clause would convert the agreement into an option. There is no provision in the offer indicating that the forfeiture was to be deemed liquidated damages for breach of the contract or the sole remedy for such breach, or as releasing the purchaser from further liability. There is no language in the contract limiting the defendant’s remedy to such forfeiture for a breach. It is clear from the language in the offer and acceptance that the transaction was a sale. An option is the choice, right or privilege of buying or selling. (Whorley v. Patton-Kjose Co., Inc., 90 Mont. 461, 5 Pac. (2d) 210.) It is not a sale of property but of a right to purchase. (30 Words and Phrases, Perm. Ed., p. 5.)

The written instruments involved in this cause show an offer to purchase property under certain terms and an unqualified acceptance of that offer, which make a binding contract. A deed had been prepared for the property to the purchaser and left in the hands of the plaintiff broker. The purchaser put his own padlocks on the property in question. While the evidence shows that the defendant kept the down payment of $200 and made no effort to enforce the contract as to its other terms, this does not support his view that the agreement was an option. There is no allegation or proof of any fraud or deceit in the production of the prospective purchaser.

Defendant also contends that the provision in the listing agreement that the plaintiff should find a party ready, able and willing to purchase had not been met. It would seem that by signing the offer, the terms “readiness” and “willingness” had been met. In such contracts “ability” usually means financial ability. The law seems well established in the several jurisdictions that in the absence of fraud or deceit in produc ing a purchaser, if the seller actually enters into an agreement of sale with the prospective purchaser, the seller is thereupon foreclosed from questioning his readiness, willingness or ability to purchase. As stated in 12 C. J. S., Brokers, section 85, page 188, “ * * * or where the broker acts in good faith, and the principal accepts his customer and enters into a contract with him, in which case the question of the customer’s ability, readiness, and willingness is no longer open to question [citing numerous cases]. ’ ’. The seller under such conditions has the right to refuse to enter into such a contract if the terms are not satisfactory or if he doubts the ability of the prospective purchaser to carry out the agreement. Having accepted such an agreement, he is thereupon obligated to pay the broker his commissions as beyond doubt the broker had complied with the terms of his listing agreement and has done all that could be done by such intermediary. (Apple v. Henry, 66 Mont. 244, 213 Pac. 444.)

It is obvious that the rule of law which we have followed, as announced supra, may in some instances mark a hardship upon a seller of property who sells through a broker — particularly in such instances where the down payment is less than the commission agreed upon. Nevertheless, the seller has it within his power to reject an offer of purchase if he doubts the prospective purchaser’s ability. However, once he accepts such purchaser, he thereupon becomes obligated to pay the broker for his services.

The judgment of the district court is reversed with direction to enter judgment for plaintiff as prayed for in the complaint.

Mr. Chief Justice Johnson and Associate Justices Morris, Angstman and Erickson concur.