Hughes v. Melby

340 P.2d 511, 135 Mont. 415, 1958 Mont. LEXIS 45

• Court: Montana Supreme Court
• Decided: July 16, 1958
• Docket: No. 9638
• Status: Published

Opinions

MR. JUSTICE ANGSTMAN:

This is an action for specific performance of an alleged contract for the purchase by plaintiff, John Junior Hughes, from defendants, R. M. and Eli Melby, of certain described real estate situated in Petroleum County and for damages for the refusal of the defendants to surrender possession of the property. The action was tried to the court sitting without a jury resulting in findings of fact and conclusions of law in favor of the defendants. Plaintiff has appealed from the judgment.

The facts are these: On September 24, 1953, defendants, R. M. Melby and Eli Melby, his wife, signed an agreement employing E. F. Camell as their agent to sell the property. The agreement was as follows:

“I hereby appoint E. F. Camell of Lewistown, Montana, whose office is located in said City and State, my agent with the exclusive right to sell the following property:

“My ranch property on Flat-willow T. 12 N-R. 26 E, Petroleum County, Mont. (3560 acres more or less.)

“For the sum of $105,000 — including 5 stacks of hay on Pike Creek. Conditions and terms of the sale are as follows:

“29 J0 Cash — bal. 10 annual p’m’ts. 5% int. by Nov. 15th, possession of land April 1 — -1954—seller reserve % land-owner’s Royalty. Transfer all water rights & grazing rights in District. Seller pay 1953 taxes.

“And I agree to furnish a title as outlined in the following paragraph A.

“A. An abstract of title showing a good merchantable title to said property together with a warranty deed properly executed.

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“Said sale may be made for a less amount if hereafter authorized by me; you are further authorized to receive a deposit on the sale price. I agree to pay a commission of $5,000 — on the sale price and the commission shall be payable as soon as the sale is made and a down payment has been made, or sale price paid in full at the time of sale, and, or as soon as a binder fee has been collected on the sale, which ever be first.

“This authorization is to remain in effect and full force for 10 days * * *

“Dated at Lewistown, Montana this 24 day of Sept —1953—

“/s/ R. M. Melby

“/s/ Eli M. Melby”

Carnell immediately thereafter contacted plaintiff and induced him to buy the property. The plaintiff thereupon signed the following statement:

“To E. P. Carnell, Agent and Broker, for the sale of the Melby lands as per listing.

“I, John Jr. Hughes, have read the Listing Agreement covering the Melby ranch in Petroleum County, Montana and I hereby agree to purchase the same and pay for the said lands in accordance with the said listing agreement and I deposit herewith with you the sum of Ten Thousand Dollars ($10,-000.00) as a binder payment and as evidence of good faith and I will go through with the contract in accordance with the listing agreement signed by Mr. and Mrs. Melby, with you as agent.

“Dated this 24th day of Sept. 1953.

“/s/ John Jr. Hughes”

Plaintiff paid to Carnell the sum of $10,000 and received the following receipt:

“Received of John Jr. Hughes-

“Ten Thousand & no/100 Dollars

“Dep. on Melby Ranch as per Listing

“Dated Sept. 24 — 1953—-

“$10,000/00 /s/ E. P. Carnell”

Carnell thereupon wrote his own check in the sum of $5,000 and delivered it to the defendant, R. M. Melby. However, before delivering the check to Mr. Melby, Carnell informed Melby that he had sold the ranch to Mr. Hughes. Then for the first time, according to Carnell, Mr. and Mrs. Melby informed Mm that their son William owned a part interest in the ranch and that before the contract could be performed they wanted to discuss the matter with William. On October 8, 1953, Camell received a letter which was written by Mrs. Melby at the request of her husband which was as follows:

“Mr. E. F. Camell,

“Lewistown, Mont.

“Dear Sir:

“Called at your office Tue. Oct. 6, 1953 found you out. Also called on Mr. Hugh he too out.

“Son said O.K. to sell.

“Sincerely yours,

“/s/ R. M. Melby”

It was after receipt of this letter that Carnell delivered the $5,000 check to Mr. Melby. Arrangements were then made for the plaintiff and Mr. and Mrs. Melby to meet in Roundup at the office of lawyer Mather to prepare and place in escrow the necessary papers. Before this contemplated meeting Carnell received another letter from Mr. R. M. Melby reading as follows:

“Roundup, Montana

“Oct. 15, 1953

“Mr. E. F. Camell

“Lewistown

“Mont.

“Dear Sir:

“Came to see you today, but find you were out of your office.

“Had another letter from son asking us to hold this deal off until he comes home for his vacation Christmas.

“Enclosing is your check don't want to hold it that long.

“Yours sincerely,

“/s/ R. M. Melby”

On October 15, 1953, R. M. Melby caused two deeds to be recorded which vested an undivided one-third interest in the property to the son William. These deeds had been executed and acknowledged several months before they were recorded. It should be noted that Mr. Melby testified that he had informed Carnell at the inception of the negotiations that the son William had an interest in the ranch. This Carnell denied. However there is no testimony in the record that plaintiff at any time was advised of the fact that William had any interest in the ranch. It should be noted also that before Mr. Carnell undertook any of the dealings resulting in the sale of the property he examined the records in Petroleum County and found that the title to all the property stood in the name of R. M. Melby and his wife, and that there was nothing of record to indicate the son had any interest in it. Carnell agreed to wait until the son returned during the Christmas holidays and plaintiff was so advised. During the Christmas holidays the Melbys declined to go through with the contract and this action followed.

One of the findings made by the trial court was that the plaintiff on November 15, 1953, did not have as much as $20,450 of his own and had no legally binding agreement from any person or corporation or other entity to give him such sum of money. At this point it should be noted that the pleadings do not raise any question of the plaintiff’s ability to meet the obligations under the contract. The only defense asserted by the answer is that there was not any binding contract on the part of the defendants because the writing was insufficient to authorize Carnell to make the contract under the statute of frauds. Had the issue been raised by the pleadings doubtless plaintiff would have submitted more evidence of his ability to meet the contractual obligations assumed by him. He did, however, testify in substance as follows: That at the time of this transaction he was the owner of 250 head of cattle and around 1,500 acres of land; that he had made arrangements with the Northwestern Bank in Lewistown to make full payment for the property; that at the time of the trial he was in a position to make the entire down payment and could in fact write a check for the entire purchase price. This evidence was uneontradicted.

The conclusion reached by the trial court cannot be sustained upon the finding that plaintiff was not able to make the down payment of twenty-nine percent of the purchase price.

The principal contention, however, is that there has been a failure to meet the requirements of the statute of frauds. This was expressly raised in the answer which alleged that the action is barred by sections 13-606, 93-1401-7 and 74-203, R.C.M. 1947. It is well settled that the note or memorandum necessary to meet the requirements of the statute of frauds may consist of several writings. Johnson v. Elliot, 123 Mont. 597, 218 Pac. (2d) 703; Johnson v. Ogle, 120 Mont. 176, 181 Pac. (2d) 789; Ward v. Mattuschek, 134 Mont. 307, 330 Pac. (2d) 971. Likewise it is sufficient if it contains all the essentials of the contract and they may be stated in general terms. Dineen v. Sullivan, 123 Mont. 195, 213 Pac. (2d) 241; Long v. Needham, 37 Mont. 408, 96 Pac. 731; Hunt v. S. Y. Cattle Co., 75 Mont. 594, 244 Pac. 480. The fact that the memorandum did not specify when the deed should be furnished does not defeat the sufficiency of the note or memorandum because the law implies that it be furnished within a reasonable time after plaintiff performed the obligations imposed upon him. R.C.M. 1947, section 13-723.

There are many cases supporting the view that ordinarily the contract with a broker simply constitutes a listing of the property for sale and authorizes the broker to search for a purchaser, but it does not give the broker authority to bind the owners of land to any agreement of sale that he might make. There are exceptions to the rule and of necessity each individual contract must be given its own interpretation. It is, of course, essential to ascertain the intention of the parties. If the sellers intended to give the agent authority to make an agreement in their behalf there is no reason why they may not do so. What then was the intention of the parties as expressed in the agreement employing the broker? The document signed by the defendants authorized the broker Camell to receive a down payment. It is difficult to understand how he could do so without at the same time obligating the defendants to sell the land. That is the sum and substance of our holding in the Ward case, supra. But even on that point there is a conflict of authorities. Thus in 8 Am. Jur., Brokers, section 61, pages 1018-1019, it is said that “Ordinarily, there is no implied authority to execute a contract of sale from a mere listing of the property with a broker, even though the owner specifies the terms of sale, from a mere employment to find a purchaser or to sell real estate, even though an exclusive power of sale is given, from an employment to negotiate or effect a sale, from an authorization to accept a deposit or close.a deal * *

For cases holding that the authority to accept and receipt for a deposit on a sale does not carry with it the implied authority to make an agreement binding upon the owner see Slater v. Rauer, 43 Cal. App. 748, 185 Pac. 864; Thompson v. Scholl, 32 Cal. App. 4, 161 Pac. 1006.

We think the better-reasoned eases support the view that where the broker is authorized to receive a down payment he has the implied authority to enter into an agreement binding upon the sellers. See Steele v. Nelson, 139 Kan. 559, 32 Pac. (2d) 253; Goldberg v. Sosnowski, 244 Mich. 515, 221 N.W. 617; Ward v. Mattuschek, supra, and compare note in 48 A.L.R. 644 and 43 A.L.R. (2d) 1028.

The case of Solana Land Co. v. National Realty Co., 77 Ariz. 18, 266 Pac. (2d) 739, is an interesting ease, but there the broker did not have the authority to accept a deposit. The court in that case rested its decision largely on the Michigan case of Landskroener v. Henning, 221 Mich. 558, 191 N.W. 943, but as above noted the Michigan Court takes the contrary view when the broker is given the authority to accept a down payment.

Another circumstance in this case which points to the conclusions that the broker Camell had authority to close the deal is the fact that the agreement expressly recites in substance that a sale for a less amount than that stipulated in the contract may be made, but in that event it would have to be authorized by the sellers. This indicates that so long as the stipulated price was obtained there was no necessity to further contact the sellers.

The court erred in holding that there was not a sufficient note of memorandum to meet the requirements of the statute of frauds above cited. This being true the plaintiff was entitled to specific performance of the contract. Since it is alleged that the defendants caused plaintiff damages by their refusal to surrender possession, plaintiff is entitled to damages, if proved. The cause must be remanded for further proceedings to determine the amount of the damages sustained by him. So far as the interest of the son is concerned, he had no interest in the property at the time these transactions took place; that is to say his interest was not known to plaintiff who was an innocent purchaser. Since the agent Carnell was the agent for the defendants and not the plaintiff, plaintiff was not bound by any knowledge possessed by Carnell even if we assume that Carnell knew of the son’s interest before these transactions took place.

Accordingly the cause is remanded for further proceedings consistent with the views herein stated.

MR. CHIEF JUSTICE HARRISON, MR. JUSTICE CASTLES, and THE HONORABLE C. B. ELWELL, District Judge (sitting in place of MR. JUSTICE BOTTOMLY), concur.