Halland v. Johnson

174 N.W. 874, 42 N.D. 360, 1919 N.D. LEXIS 188

• Court: North Dakota Supreme Court
• Decided: June 3, 1919
• Status: Published

Opinions

Grace, J.

Appeal from the judgment of the district court of Cass county, and an order denying motion for a new tidal, C. M. Cooley, Judge,' sitting in place of A. T. Cole, Judge for the third judicial district.

The action is one in which the plaintiff seeks to recover a commission of $1,725 against the defendant for the alleged procuring of a purchaser for section 7, township 137, range 50. The complaint is in the usual form. The answer is a general and specific denial to the allegations of the complaint. A statement of the facts will give the clearest understanding of the matters at issue:

The defendant owned only the N.E.¿ of the section, Edward E. Johnson the N.W.|-, Kate Bergquist the S.W.J, and John Johnson, who was incompetent and was under guardianship, the S.E.J. At the time the plaintiff claims to have listed this land, he knew that the land above described was then owned by the respective parties above named; He made inquiry from defendant; he knew about the title and the source of it, which was from the estate of defendant’s father. He knew at that time also that John Johnson was under guardianship. The listing contract, if any, between plaintiff and Martin E. Johnson, was-oral. Plaintiff claims the net price to have been $50 per acre. Defendant claims he told plaintiff that he would expect a commission of $2 per acre if he sold it at the list price, and if sold for more than that price, a 5 per cent commission. He claims that Martin E. Johnson gave him authority to sell all of section 7. The defendant, in substance, claims that he listed only his quarter, and that he did not undertake to furnish title to the remaining three quarters. The plaintiff claims that defendant authorized him to sell the whole section, and that the defendant represented that he had authority to act for the others. All of section 7 had been leased by Evan Johnson, the father, to one Fjelstad for the term of five years. The lease did not expire for approximately three years from the time of the alleged sale of section 7 by the plaintiff. The plaintiff, having no other authority than the alleged oral contract between himself and Martin E. Johnson, entered into a written agreement with one T. P. Borderud and Frederickson and Brakke. The agreement is as follows:

Fargo, N. Dak., Jan. 7, 1915.

This agreement entered into between John G. Halland, party of the first part, as agent for Martin Johnson, and T. P. Borderud, and Frederickson & Brakke, parties of the second part:

Witnesseth, that the said John G. Halland has this day received one thousand dollars ($1,000)- from T. P. Borderud and Frederickson & Brakke, parties of the second part, as a part cash payment of the sum of thirty-four thousand five hundred dollars ($34,500) which is the purchase price, and for which consideration the said party of the first part as agent for Martin Johnson agrees to furnish good and merchantable title to the following tract of land:

Section seven (7), township one hundred thirty-seven (137), range fifty (50) Normana township, Cass county, state of North Dakota.

The terms of this purchase are as follows:

The whole purchase price for the above-described section 7 shall be $34,500, one thousand dollars ($1,000) paid down on the date of this agreement, and $9,000 in cash to be paid on or before the 1st day of March, 1915. , For the balance of the said purchase price, namely, $22,000, .the parties of the second part agree to give notes drawing 6 per cent interest, due in five years from March 1, 1915, with the privilege of prepaying sums of $100 or multiples thereof on any interest paying date. Such notes to be secured by .a first mortgage on the above-described land. Such notes and mortgage to be drawn as may be directed by the parties of the first part.

It is further stipulated that the whole of this parcel of land above described shall be transferred to the parties of the second part, or such parties as they may direct, free of all encumbrance excepting a mortgage of $2,500, bearing interest at the rate of 6 per cent annually, due in five years, on the northwest quarter section of the said section 7.

The parties of the second part agree to assume the mortgage on the northwest quarter section, drawing interest at the rate of 6 per cent annually, due in five years.

It is furthermore stipulated that the cash payment of $1,000, together with all subsequent payments made on or before the 1st of March, shall be deposited with the Scandinavian American Bank of Fargo, such moneys to be turned over by the said bank to the party of the first part, when abstract of title, good warranty deed, notes, and mortgages shall have been duly executed and examined by the respective parties in this agreement. Should the party of the first part fail to furnish siich title within a reasonable period, then the cash payment made shall be returned to the parties of the second part.

It is further stipulated that sufficient time shall be given in which to secure abstracts and carry out such court proceedings as may be necessary in order to give good title. If for such, purpose more time-should be necessary than up to the 1st of March, 1915, through nc fault of the party of the first part, then the date of payment of the' $9,000 shall be extended until such time.

■ The parties of the second part assume the rights and obligations of lease in force at this date.

[Signed] John G. Halland, Agent.

T. P. Borderud.

Frederiekson & Brakke.

By P. B. Frederiekson.

Witnesses:

Amy Hill.

It will be noted that in the first part of the agreement, John G. Halland entered into the agreement, styling himself the agent for Martin E. Johnson. He signs it as John G. Halland, agent. The price at which the sale was undertaken to be made was $56.24 an acre. It is also to be noted that there are no specific terms of sale of the land set forth in the alleged verbal original listing agreement; neither is there substantial proof that specific terms of sale of the land were stated in the alleged verbal listing agreement. The terms of the alleged sale of said land, as contained in the written agreement hereinafter referred to as exhibit 1, are not shown to correspond with any terms of the listing agreement, if there were any. The terms contained in exhibit 1 are evidently such terms as the plaintiff saw fit of his own volition to insert therein. Such terms were neither given, consented to,, nor legally ratified by defendant.

The trial was had to a court and jury, and a verdict was returned in favor of the plaintiff for $2,006, damages and costs. The defendant specifies twelve errors based upon the insufficiency of the evidence to sustain the verdict, forty-four'errors based upon the admission or exclusion of testimony, eight errors based upon the giving of certain instructions to the jury. All the errors assigned have been fully considered. It is impracticable to discuss each separately; they will be considered and discussed as a whole in connection with our analysis of several of the most vital errors. We will consider first, error 22, which relates to the admission in evidence of exhibit 1. After showing the circumstances surrounding the execution of exhibit 1, which was drawn up in the plaintiff’s office* defendant not being present, and ■signed by the alleged purchasers and the plaintiff, the latter claiming to act as agent for the defendant, it was offered in evidence by the plaintiff. To the introduction of the same, the defendant interposed the following objection:

“Objected to on the ground that it is incompetent, irrelevant, and immaterial, and on the further ground that it appears from the evidence in this lawsuit, that neither Halland nor Johnson, his principal, was able to make conveyance of one-quarter section of the land that was involved, for the reason that that land was owned by a party that was incompetent to convey, save and except through the probate court, and that there is no foundation laid in the authority on the part of the plaintiff or Johnson to convey the land in question, save and except one-quarter section thereof which is described as the N.E.J, the title of which was in the defendant, Johnson, and upon the further ground that it appears from the face of the record that even under the terms ¿of the contract, exhibit 1, there could be no conveyance to th.e lands tfchat were in the hands of the probate court, and it does not appear that Mr. Halland had any authority to make the contract in question or that Johnson had any power or authority to ratify such contract. The contract being one for the conveyance of lands, that is within the Statute of Frauds, and it already appears from the evidence that the plaintiff had no power of attorney or written authority from the owners of the land in question to enter into any contract for the sale thereof, and that his assuming authority and power under the very terms of the contract was void and of no effect, and not binding in any manner, neither upon the defendant nor the so-called purchasers; that the pretended contract, exhibit 1, in no sense shows the. procuring of a purchaser that could buy or pay, for the reason that it involved the sale of the entire section, one quarter of which was beyond the power of -either Johnson or Halland to give title to, and that the contract is absolutely void as a purchase contract, and therefore the evidence is incompetent, irrelevant, and immaterial, and does not prove nor tend to prove the procuring of a purchaser.”

The court overruled this objection and admitted in evidence exhibit 1. We are of the opinion and so hold that this was prejudicial, reversible error. Exhibit 1 constitutes no evidence of the sale nor terms of sale, nor ability, readiness, nor willingness on the part of the prospective purchasers to purchase the land, for the reason that Halland was wholly without any authority to enter into the contract as the agent -of Johnson, nor was exhibit 1 ever, as a matter of law, ratified. The agreement was neither binding upon the purchasers nor upon Johnson. It is not a legal, binding, nor effective sales contract. It was wholly void. The plaintiff contended it was introduced for the purpose only of showing that he had purchasers able, ready, and willing to purchase the land in question. Considered in this light it is a mere self-serving instrument, and, as evidence, a self-serving declaration. At the time the plaintiff formulated exhibit 1 and inserted therein the terms and conditions .upon which the land was sold, he was doing that which only the owner of the land had the authority to do. Halland had authority only to bring purchasers able, ready, and willing to purchase upon terms fixed by Johnson. Assuming, though not conceding, Johnson had authority to contract for the sale of all the land, it is clear the plaintiff was placed in this dilemma, viz., that if he did not prepare an instrument such as exhibit 1 in which definite terms were stated, he would not be in position to prove that he had brought to defendant purchasers who were able, ready, and willing to buy upon terms fixed by the ■defendant. Thus he usurped the position of the owner of property, arbitrarily fixed terms in the alleged agreement, procured them to be •signed by the purchasers, — all of which was wholly unauthorized and wholly void at the time those things were done. Plaintiff claims that ■exhibit 1 was presented to defendant and approved by him. The Statutes of Fraud squarely cover these matters. Section 5963, Compiled Laws 1913, provides: “No agreement for the sale of real property, or -of an interest therein, is valid unless the same, or some note or mem•orandum thereof, is in writing and subscribed by the party to be charged, -or his agent thereunto authorized in writing.” Section 6330, Compiled Laws 1913, which makes § 5963 more specific as to the authority ■of the agent to enter into a contract on behalf of his principal where the contract is required by law to be in writing, reads thus: “An oral ■authorization is sufficient for any purpose, except that an authority to enter into a contract required by law to be in writing can only be ■given by an instrument in writing ’’

We think it is conceded by both parties that exhibit 1 had no force or effect as a sales contract. As such it had no validity; it was void. Ballou v. Bergvendsen, 9 N. D. 289, 83 N. W. 10, and cases cited therein; Brandrup v. Britten, 11 N. D. 376, 92 N. W. 453; Lichty v. Daggett, 23 S. D. 380, 121 N. W. 868. Plaintiff, however, claims-.that defendant ratified exhibit 1, and thus it was proper to introduce it in evidence to prove the terms.of sale and the ability, readiness, and willingness of the alleged purchasers to comply with such terms. There is no claim by plaintiff that there was any approval or ratification of exhibit 1 by .Johnson except a verbal one. Testimony relative thereto-shows that the alleged approval or ratification of exhibit 1 was entirely verbal. It was not ratified by any writing signed by Johnson. In that case, such verbal ratification under our statute would be a nullity and of no force or effect.

The sections above set forth and authority cited fully demonstrate that exhibit 1 is absolutely void as a sales contract. If it be conceded for the sake of argument that the plaintiff did verbally ratify exhibit 1, it must be held that such ratification or approval, if any, had no force or effect in this case. A contract for the sale of the land is, by law, required to be in writing. The same is true of the ratification of it. Section 6331, Compiled Laws 1913, reads thus: “A ratification can be made only in the manner that would have been necessary to confer an original authority for the act ratified, or, when an oral authorization would suffice by accepting or retaining the benefit of the act with notice thereof.”

The contract was absolutely void and of no legal effect. Section 614, Bishop on Contracts, 2d ed., is as follows: “A void deed of land conveys nothing. A void sale of goods passes no title though they are delivered, not even operating as a gift. And persons other than the-direct parties, equally with them, may impeach a void judgment. There can he no confirmation of a void contract; nor will it constitute-an adequate consideration for a new one.”

Sec. 694, vol. 2, Page on Contracts, is as follows: “Whether añora! ratification of an unauthorized signature is sufficient depends in-part upon the statutory requirements for the original authority of the-agent. Putting aside questions of estoppel and performance, ratification requires the same degree of proof as original authority. Hence if the statute requires original authority to be proved by writing, an oral ratification by the principal of an unauthorized contract for the sale of land made by his agent is within the statute, even if the agent had ■written authority with the terms of -which he did not comply.”

Under our statute, Halland could not sign the contract unless he was authorized in writing by Johnson so to do. This being true, a ratification to be effective would also have to he in writing. There was no written ratification, hence all testimony relating to oral ratification was wholly incompetent and inadmissible, and should have been excluded. All such testimony in this case was without probative force. It should not have been received as evidence; it was reversible error to receive it.

With exhibit 1 excluded, there remains no competent evidence sufficient to support plaintiff’s claim. In this state at the time the cause of action herein arose, it was not necessary that the agent’s authority be in writing in order to authorize him to procure a purchaser for land. A verbal authorization for that purpose was sufficient. He has, however, no authority by reason of such an agency to make any written contract with reference to the sale of the property for which he is thus agent which will in any way bind the owner of the property. Before he can do so, he must be for that purpose duly authorized in writing. If he does make such contract without such written authority, it is wholly illegal and void, and an oral ratification of it, if any were made, would in no manner affect its illegality, and it would still remain wholly void for every purpose.

So far as the testimony shows, Johnson received no benefit from this transaction. It is not shown that any money was paid to and retained by him. It clearly appears that he never in writing ratified exhibit 1. Section 6331 was enacted, as we view it, for the purpose of meeting conditions similar to those- existing in this case. The alleged ratification being of no force nor effect, exhibit 1 was not valid as a sales contract, nor was it admissible to prove the terms of the sale of the land; for, as we have seen, Johnson did not legally approve nor ratify the same, and therefore did not ratify its terms nor any part or portion of it, and it is of no binding force nor effect as to him for any purpose, and is wholly void. As evidence, exhibit 1 must be considered, so far as Johnson is concerned, as a mere self-serving instrument and declaration of the plaintiff, and wholly incompetent and inadmissible for any purpose.

Borderud, one of the alleged purchasers, was sworn as a witness, and in effect testified that he and the parties associated with him were able to carry out the contract according to its terms. This testimony in no manner strengthens the plaintiff’s case. There was no contract to carry out. The purchasers knew, or must be held to have known, that they were not bound upon the contract, and that it and the attempted ratification of it were, as a matter of law, absolutely void. There was no partial performance as the $1,000 claimed to have been paid on on the contract was not shown to have been received by the defendant nor by anyone authorized by him to receive the same. What we have said, we believe completely disposes of the real merits of the case.

In order to more fully clarify issues involved, it may be well to examine the relative positions of the plaintiff and defendant at the time of the alleged listing agreement with reference to the knowledge each possessed of the condition of the land as to ownership and title. Plaintiff was in no manner misled or deceived in this matter. He knew at the time of the alleged listing agx*eement that the defendant owned only one-quarter section of the land. He knew who owned each of the other quarters of section 7. He knew the condition of the title of this land. .He inquired about it at the time of the alleged listing of it. He was not innocent of who the real owners were. It is not such a case as if the defendant had represented to him that he owned all this land when he did own but one quartex, and the plaintiff relied upon his statement that he owned all of the land, or had authority to sell all of the land, and the plaintiff had no knowledge to the contrary. The plaintiff made no further inquiiy into defendant’s authority to sell the land.

If he desired, he could easily have fully determined this matter by inquiry from the other owners, and, in any event, he must have known that there would be considex’able difficulty in getting title to the one-quarter section of John Johnson, incompetent. In addition to this, the records of Cass county were constructive notice to him of condition of the title, an.d additional knowledge was brought home to him at the time he negotiated a loan upon the N.W.|: for Edward E. Johnson. Plaintiff cannot close his eyes to all these matters and claim that he was in any manner misled or deceived. He was not. He was a man, according to the testimony, accustomed to doing this kind of business. He was a real estate agent. It must be presumed that he had knowledge of the importance of the condition of the title of the property of which he was to undertake to negotiate a sale. He knew the necessity of being invested with proper authority by Johnson or by the owners of the land in order to effect a sale, and the further necessity of delivering to the purchaser the title.

It is clear that the defendant is under no liability for the alleged procuring of purchasers for the whole section nor for his individual quarter. The whole transaction was void and that included his quarter. Defendant signified his willingness to make sale of his own quarter section for <$50 an acre. He prepared an unsigned deed which was offered' in evidence. It does not appear that the plaintiff has acted upon such offer nor indicated any willingness to complete the sale as to such quarter. In such case, it must be considered the plaintiff declined to consider the offer of the defendant in this regard. Exhibit 1 being wholly void, the defendant was under no obligations to complete the sale of his own quarter, and it is held he is under no liability for not doing so. Upon an examination of the entire record, we are satisfied there is no evidence or at least insufficient evidence to sustain the verdict. There are many other errors assigned, some of which are of merit and would justify a reversal of the judgment. We feel it not necessary to enter into further consideration of them. They have all been considered. Some of them are quite closely related to those we have discussed. Erom what we have stated and the conclusions we have reached with reference to the law of this case, it is apparent that the plaintiff cannot recover. If our statement of what the law is in the case is correct, a new trial could avail the plaintiff nothing.

The judgment is reversed, the case is remanded to the District Court, with instructions to it to enter an order for dismissal. Defendant is entitled to recover his statutory costs upon this appeal.

Bikdzell, J. I dissent.