Dotson v. Milliken

27 App. D.C. 500, 1906 U.S. App. LEXIS 5195

• Court: Court of Appeals for the D.C. Circuit
• Decided: May 1, 1906
• Docket: No. 1642
• Status: Published

Opinion

Mr. Chief Justice Shepard

delivered the opinion of the Court:

1. The first assignment of error is founded on exceptions to the following instruction given to the jury at the request of the plaintiff:

“If the jury believe from the evidence that the defendant, on or about the 30th day of April, 1902, represented to the plaintiff that he, the defendant, was desirous of securing a purchaser for either the whole or any considerable quantity of the Harlan county coal lands at the price of $20 per acre; that he had obtained from the Southern Eailway Company its consent or agreement to construct a branch railroad into the said coal lands; and that he would pay to the plaintiff the sum of $2.50 for each and every acre for which he should find a purchaser at and for the price of $20 per acre, and that shortly thereafter, namely, on or about the 8th day of May, 1002, he further represented to the plaintiff that the Southern Eailway Company was willing to build the said railroad into the said property without placing any requirements on the holders of the said lands to put in any certain size of plants or number of coke ovens, and that the plaintiff relying upon the said representations of the defendant, expended time and effort in the attempt to find a purchaser, and did find a purchaser able, ready, and willing to purchase 10,000 acres of the said lands at the said price, provided the defendant’s said representations were correct; and that the said sale failed because of the inaccuracy of the defendant’s representations that the said railway company had so consented or agreed to construct a branch railroad into the said lands, — then the plaintiff is entitled to recover the said stipulated sum of $2.50 per acre on the said 10,000 acres, or $25,000 in all.”

It is convenient, and will save some consumption of time, to consider the above assignment of error in connection with those founded on exceptions taken to the refusal of the second and eighth special instructions asked by the defendant, as follows :

2. “If the jury believe from the evidence that the plaintiff entered into the special agreement with the defendant as alleged in the declaration, by the terms of which his compensation or commission depended on the sale of the lands at a stated price, or on procuring a purchaser at the owner’s price and terms; and that said plaintiff did not, in accordance with the terms of his said special agreement, effect an actual sale of the land by a binding and enforceable agreement obtained by him for the sale and conveyance of said land to a purchaser who was ready to close and able to perform such agreement of purchase, — then the plaintiff is not entitled to recover.

“And if you believe from the evidence that the plaintiff has shown simply a provisional arrangement for the sale or purchase of said land by general negotiation or written option, which may have been accepted or rejected by the proposed purchaser at his pleasure or privilege, and which sale or purchase was never consummated, then the plaintiff cannot recover.”

8. “The burden of proof on the issue of the plaintiff having found a purchaser for the defendant’s land, who was willing, able, capable, and ready to purchase 10,000 acres of such land, is upon the plaintiff; and if the jury believe from the evidence that the plaintiff has failed to prove that there was any such corporation as the Tri-State Coal & Coke Company of Pennsylvania; or has failed to prove that there was such corporation as the Tri-State Coal & Coke Company of Pennsylvania in existence at the date of the alleged sale of 10,000 acres of defendant’s land to it; and has failed to prove that said alleged corporation as a corporation in fact was ready, willing, and had the financial ability to purchase and pay cash for 10,000 acres ■of defendant’s land at $20 per acre; and has failed to prove that authority was given by the board of directors of said alleged corporation to T. J. Easter, its president, to make an arrangement to purchase, or to purchase said land for and in the name ■of said corporation; and has failed to prove that the acts of said Easter relating to negotiations to purchase said land or the alleged purchase thereof were never ratified by the board of directors or other proper authority of said corporation; or if the plaintiff has failed to prove either of the allegations of the declaration in this respect, — then the plaintiff cannot recover upon the allegations of the declaration.”

(1) We are of the opinion that the foregoing instruction, given at the request of the plaintiff, was a statement of the law applicable to the cause of action alleged and the evidence that was introduced.

It is well settled that when an agent, employed for the purpose, procures a purchaser willing and able to buy on the authorized terms, he becomes entitled to his compensation although the sale may not be consummated, provided the consummation is prevented by the refusal, fault, or defective title of the principal. Koch v. Emmerling, 22 How. 69, 16 L. ed. 292; McGavock v. Woodlief, 20 How. 221, 15 L. ed. 884; Bryan v. Abert, 3 App. D. C. 180, 181; Cheatham v. Yarbrough, 90 Tenn. 11, 19, 15 S. W. 1076; Washburn v. Bradley, 169 Mass. 86, 88, 47 N. E. 512; Holden v. Starks, 159 Mass. 503, 38 Am. St. Rep. 451, 34 N. E. 1069; Knapp v. Wallace, 41 N. Y. 477; McFarland v. Lillard, 2 Ind. App. 160, 166, 50 Am. St. Rep. 234, 28 N. E. 229.

(2) The contract between the parties, concerning which in this particular there was no conflict in the evidence, required the plaintiff to find a purchaser ready, able, and willing to buy on defendant’s terms and in accordance with his representations of material facts. He was not bound or even empowered by the terms of his agency to effect an actual sale by a binding and enforceable agreement. Mannix v. Hildreth, 2 App. D. C. 259, 275; Fitzpatrick v. Gilson, 176 Mass. 477, 478, 479, 57 N. E. 1000; Middleton v. Thompson, 163 Pa. 112, 120, 29 Atl. 796; McCreery v. Green, 38 Mich. 172, 184, 185.

There was no error, therefore, in refusing the defendant’s second instruction.

(3) Nor was it error to refuse the defendant’s eighth special instruction aforesaid, for however sound the propositions of law therein enounced may be in the abstract, they have no application to the case made by the evidence.

Under all the conditions shown by the uncontradicted evidence, the proof of the corporate existence of the Tri-State Coal & Coke Company, and of its power to make the purchase, was sufficient for the purposes of the case. The defendant knew that the corporation was the proposed purchaser, and that Easter was its president, representing it in the transaction. Knowing this, he approved the action of the plaintiff and came to Pittsburg, upon his suggestion, to execute the contract and receive the purchase money. He was apparently satisfied in respect of the power of the corporation to make the purchase and of the authority of Easter to represent it, for he made no inquiry and asked for no evidence. There was not the slightest indication that he had any doubt upon either point. He accepted the offer, and the only thing that prevented the consummation of the sale, so far, at least, as he knew or had reason to believe, was his failure to make good his representation that he had a contract or agreement for the construction of the railway to Harlan County Court House. Moreover, notwithstanding the failure then to close the sale, he undertook to remove the purchaser’s objection, the reasonableness and materiality of which he did not dispute, and asked the plaintiff to continue the negotiations to that end. It seems quite clear, from all of the evidence, that the objections were the result of afterthought.

The refused instruction also declared that in order to recover it was incumbent upon the plaintiff to prove the financial ability of the purchaser to make good its offer. Whether in actions generally by agents to recover commissions for procuring purchasers, where there has been no consummation of the sale, the burden is upon the agent to show the ability of the proposed purchaser to pay the consideration, or upon the seller to show the want of that ability, is a question about which there is a conflict of authority. Some hold that solvency and ability are to be. presumed; others maintain the opposite doctrine. In view of the particular facts of the case, we deem it unnecessary to express an opinion upon the broad question.

As we have seen, the defendant accepted the purchaser without condition or inquiry. He evidently had no more doubt of its ability to pay the consideration than he had of its authority to make such a purchase.

Whatever doubt there may be as regards the general question above stated, we are of the opinion that when the principal accepts the purchaser without question of his ability to perform, and the sale fails of consummation by his own fault or failure to make good his offer, the burden is upon him, in order to defeat- the agent’s right to compensation, to show the purchaser’s want of ability. Davis v. Morgan, 96 Ga. 518, 520, 23 S. E. 417. In that case, where the facts were quite like those in this, the court said:

“Upon this question the authorities are conflicting, but we think the true rule is this: That, as a general proposition, a broker who has been employed to sell is not entitled to recover his commission unless he shows that he procured a person willing, ready, and able to purchase upon the terms prescribed by his principal; but where it appears that the proposed purchaser was accepted by the principal, the burden is upon the latter to show that the purchaser was not able to comply with the terms of the contract [citing cases]. In the present case, according to the defendant’s own evidence, he accepted the proposed purchaser without objection, recognizing him as answering all the requirements; and there is no suggestion that he was not entirely solvent. Indeed, it appears that the failure to complete the sale was due wholly to the defendant’s inability to make a good title to the land. This being so, we think the court erred in making the plaintiff’s right to recover depend upon whether he had established the ability of the purchaser to pay for the land.”

Eor other cases directly in point see Lockwood v. Halsey, 41 Kan. 166, 169, 21 Pac; 98; Fairly v. Wappoo Mills, 44 S. C. 227, 248, 29 L. R. A. 215, 22 S. E. 108.

Another contention urged by the appellant may be briefly considered, though it would seem sufficient to say 'that it was not made on the trial and has no foundation in any exception that appears in the record. It is this: That the proposition to sell 10,000 acres out of the larger quantity owned by the defendant contained a description too uncertain to be made the subject of an enforceable contract- between seller and purchaser.

If a contract had been actually entered into between seller and purchaser, and this was a suit for its specific performance, or an action of damages for its breach, the question might be a serious one, notwithstanding there are many decisions to the effect that such a contract carries with it the right of reasonable selection by the vendee, and may therefore he rendered sufficiently certain. Wofford v. McKinna, 23 Tex. 36, 46, 76 Am. Dec. 53; Cheney v. Cook, 7 Wis. 413, 422; Walsh v. Ringer, 2 Ohio, 327, 333, 15 Am. Dec. 525; Brown v. Munger, 42 Minn. 482, 44 N. W. 519; Armstrong v. Mudd, 10 B. Mon. 144, 50 Am. Dec. 545; Lingeman v. Shirk, 15 Ind. App. 432, 437, 43 N. E. 33; Lauder v. Peoria Agricultural & Trotting Soc. 71 Ill. App. 475, 481.

But we have no such case before us. The plaintiff had nothing to do with this question of uncertainty. He was employed to find a purchaser for the whole tract or any considerable portion of it. He procured an offer for 10,000 acres that was acceptable to his principal. The sale did not fail of consummation through any misunderstanding of the parties as to the land to be purchased, or any controversy respecting it, but solely by reason of the seller’s failure to make good a representation of fact that was an essential condition of the sale. Had the seller and purchaser come together upon all other points, and yet failed to consummate the sale by reason of the purchaser’s insistence upon an unfair and unreasonable right of selection, it may well be that the plaintiff could have lost his right to compensation. But nothing of the kind occurred, and the failure of consummation was the fault of the seller. Having, therefore, done all that he had contracted to do, he became entitled to the compensation promised therefor. In an analogous case, where a proposition for sale procured by an agent was accepted, and the purchaser made a part payment and tendered complete performance, which the seller refused, it was held that the seller could not set up the insufficiency of the contract under the statute of frauds, to defeat the agent’s claim for compensation. The court said: “If the plaintiff was authorized to make the sale, * * * he is, under these circumstances, entitled to compensation, notwithstanding that the purchaser could not have been compelled to carry out his contract if he had chosen to set up the statute of frauds. It was the defendant’s own fault that the sale was not consummated.” Holden v. Starks, 159 Mass. 503, 38 Am. St. Rep. 451, 34 N. . And in another ease heretofore cited, a lease having failed of consummation because of the party’s misrepresentation of a material fact, the same court said: “Whether the covenant was insufficient under the statute of frauds was immaterial if the proposed tenant’s omission to perform the covenant was not for that reason, but because of the defendant’s own fault.” Washburn v. Bradley, supra. See also McFarland v. Lillard, 2 Ind. App. 160, 164, 50 Am. St. Rep. 234, 28 N. E. 229; Fitzpatrick v. Gilson, 176 Mass. 477, 57 N. E. 1000.

As has been said heretofore, the plaintiff’s duty under the contract was to find a purchaser, and not to enter into an enforceable contract with him.

The last question to be determined (other assignments of error having been practically abandoned on the argument) arises on the refusal of the court to give the defendant’s fifth special instruction to the jury.

The refused instruction reads as follows:

“5. If the jury believe from the evidence that any bona fide purchaser was actually found by the plaintiff for 10,000 acres of said land as claimed in the declaration, upon the representations of said plaintiff to said purchaser as to the existence of a certain agreement between the defendant and .the Southern Bailway Company concerning the construction of a branch railroad into said lands, and the purchaser did not rely on the said statements and representations of said plaintiff, but with the knowledge or co-operation of said plaintiff and at his suggestion sought to verify the truth of such statements and representations during the pendency of the negotiations for the purchase of said land, before any transaction was closed for the purchase thereof, and that said purchaser had the opportunity of investigating, ascertaining, and verifying the truthfulness of such statements and representations, and took advantage of that opportunity by interviews, conferences, or written communications, either personally or by attorney, or by others, with the president and first vice president of the Southern Bail-way Company for the purpose of verifying the said statements and representations so made by the plaintiff as to any agreement existing between the defendant and Southern Railway Company in regard to the construction of said branch railroad, and ascertained from the said officers of the said railway company, from time to time, during such negotiations and before September 15, 1902, the date upon which it is alleged in the declaration that said purchaser was found, that no agreement existed between the defendant and the said Southern Railway Company to build such branch railroad, but that the subject of building such branch railroad had only been discussed, and that the building thereof depended on the development and improvements to be placed on said land prior to the construction of any railroad, in the way of opening coal mines, establishing coke ovens, or furnishing the railroad with a sufficient amount of tonnage, and that said plaintiff and alleged purchaser had full knowledge and information from the proper officers of the Southern Railway Company of all the facts relating to the conditions upon which the said branch railroad would be constructed and of the nonexistence of any agreement between the defendant and Southern Railway as alleged, then the defendant is not responsible for the nonperformance of the alleged sale or purchase of the land between the plaintiff and the alleged purchaser, and you should find for the defendant.”

This instruction was refused, as we draw from the remarks of the court recited in the bill of exceptions, not for the reason that it did not embody a sound rule of law in the abstract, but because it had no foundation in the evidence; As said by the learned trial justice, the evidence had no tendency to show that the plaintiff did not fully rely upon the defendant’s representation of the promise to construct the railway to the land. Assuming it to be true, as testified to by the defendant, that the plaintiff, while he was engaged in efforts to procure a purchaser, saw the letters that had been written to the former by the president of the Southern Railway Company, Mr. Spencer, still, that correspondence did not inform him of the falsity of the representation upon which he acted. The letters do not contain a positive agreement to build the railway, but they do show that Mr. Spencer was deeply interested in the possible advantage to result from the development of defendant’s lands, and was willing to build upon some certainty of immediate development of the coal mines. Not only this, but during the time the plaintiff was engaged he was informed by the defendant that the railway engineers were surveying the line, and had secured almost the entire right of way. The only uncertainty regarding the construction of the railway that could reasonably be created in the mind of the plaintiff was in respect, of the amount of development that the railway people would require as a condition. This is shown by the telegram of May 7, saying he would write to Spencer, and that the parties he was dealing with wanted to know positively about the railroad. It appears from the testimony, however, that he did not write to Spencer, and the latter testified that he received no such letter from the plaintiff. In reply to the telegram of May 3 the defendant wrote plaintiff on May 8, also quoted in the preliminary statement, in which he said that he had seen Spencer and that the latter was ready to build without any requirement as to development. On May 29 he wrote that the railway company had secured the right of way with a few exceptions,, and that he had requested Mr. Spencer to call his men off until he could secure more land. On June 9 plaintiff mentioned the anxiety of Easter to know how soon the road could be built; that he had asked if he could have a talk with Mr. Spencer, and plaintiff had said yes. June 12 defendant answered this, letter, saying that it would not be necessary for him to go with Easter to see Spencer, and that the latter would not hesitate to'tell Easter that he would build at once. The tenor of defendant’s entire correspondence up to the time that he received notice of the willingness of Easter to take 10,000 acres was to the effect that the road would be built at once. On August 25 plaintiff had brought the parties to agree to purchase, and telegraphed defendant to that effect. Plaintiff’s letter of August 25 referred to his telegram and letter confirming the offer to purchase, and announced that the matter could be closed that week if Spencer should reply promptly to a letter written him by Judge Potter, who was one of the members of the Tri-State Coal & Coke Company. Plaintiff assented to the purchasers’ making inquiries of Spencer to satisfy themselves, and defendant, knowing it, concurred. Any other course on the part of either would have aroused the suspicion of purchasers. That they may have instituted inquiries could not affect plaintiff’s right. It is true that Easter wrote to Mr. Spencer on August 23, asking him to give a definite idea as to when he could expect the railroad, as it would enable him to decide on taking the land. Mr. Spencer, it seems, went to Europe about that time, and the letter was answered by Vice President Einley on the 29th, who said: “The construction of a line in the territory mentioned by you is under investigation and consideration, but no final conclusions have been reached. Conclusions in the matter would be greatly facilitated if we could be advised from time to time of actual developments which parties in control of lands contiguous to such a line would obligate themselves to undertake.”

This letter was not from Mr. Spencer, to whom all the references had been made, and while it showed that no positive agreement was acknowledged, indicated nevertheless a disposition to carry on the enterprise. Before this was received, however, the purchasers made their proposal in- the faith of the representations made, and there is nothing to indicate that they would not have performed if defendant had been able to satisfy them that his representation was true, or would be made good by Mr. Spencer. Besides, the plaintiff had no knowledge of the letter. His work was done when he procured the offer, which there is nothing to show was in bad faith. What was thereafter done by plaintiff or any of the parties to secure the promise of railway construction in a fruitless attempt to consummate the sale could have no bearing on the rights of plaintiff which had accrued on or about August 25.

No error having been committed on the trial, the judgment will be affirmed, with costs. Affirmed.

A writ of error to the Supreme Court of the United States was prayed and allowed May 8, 1906.