Ikeoka v. Kong

386 P.2d 855, 47 Haw. 220, 1963 Haw. LEXIS 87

• Court: Hawaii Supreme Court
• Decided: October 24, 1963
• Docket: 4269
• Status: Published

Opinions

OPINION OP THE COURT BY

MIZUHA, J.

Plaintiffs-appellants, Katsunori Ikeoka and his mother, Onami Ikeoka, residents of Honolulu, instituted this suit, alleging in their complaint that defendant-appellee, John H. Kong of Hilo, a real estate broker, was indebted to them in the sum of $2,500 for monies paid to him. Defendant entered a general denial and by way of counter-claim, alleged that the plaintiffs were indebted to him for the unpaid balance of broker’s commissions in the amount of $3,900. Trial was had without a jury and judgment rendered in favor of defendant in the sum of $3,900.

Plaintiff Katsunori Ikeoka, acting for himself and his mother, Onami Ikeoka, authorized defendant, under an “Exclusive Authorization to Sell” contract dated June 27, 1960, to sell within 180 days, certain properties situated in Hilo, Hawaii, for the sum of $64,000 to be paid in the following manner: “25% Down Payment, Balance on agreement of sale. Balance payable in 5 years.”

Under the terms of said “Exclusive Authorization to Sell” the plaintiffs promised “to pay” defendant “upon any such sale being effected or contracted for, * * * for services in securing such purchaser, a commission of Ten per cent (10%) of the selling price;* * *.”

On November 28,1960 plaintiff Ikeoka went to Hilo to negotiate for the sale of the property in question. Defendant bad two prospective buyers. Agreement on tbe total price could not be reached between plaintiff and the first prospective buyer. On December 2, 1960, plaintiff was introduced to Dr. Chock, treasurer and stockholder of Kauwe’s Land & Research Development, Inc., hereinafter referred to as “corporation,” the second prospective buyer.

Acting in behalf of the corporation Dr. Chock agreed with plaintiff as to the price, the schedule of payments and other terms that were to be incorporated in an Agreement of Sale.¹ Dr. Chock then handed to plaintiff a check, dated December 2, 1960, for $5,000 as earnest money, to be applied to the purchase price. Immediately thereafter an Agreement of Sale was drafted by an attorney, according to the terms and conditions agreed upon by plaintiff and the purchaser. The written Agreement of Sale was then presented to Dr. Chock. After execution of the agreement by the officers of the corporation, the Agreement of Sale was accepted by the plaintiff, who then cashed the check which was deposited as earnest money, and paid defendant one-half or $2,500 on account of his commission. At the time plaintiff Ikeoka accepted the Agreement of Sale, he did not object to any of the terms and conditions contained therein as being contrary to what he had previously orally agreed, but claims he accepted the document subject to the approval of his attorney. Plaintiff informed defendant that he was taking the document with him to Honolulu where he and his mother were to sign it and send it back no later than Wednesday (next). It was never executed by the plaintiffs.

Upon his return to Honolulu plaintiff was advised by his attorney that the Agreement of Sale was not satisfactory because it favored the buyer and not the seller; that the officers of the corporation should be included in their individual capacities in the Agreement of Sale as guarantors because if the corporation became bankrupt, he (appellant) “may not get his money back.” A modified Agreement of Sale was drafted by appellant’s attorney wherein it provided, among other provisions, for the officers to sign as officers of the corporation, as well as in their individual capacities as guarantors, and for the consent to any assignment of the Agreement of Sale. This Agreement of Sale was rejected by the corporation and its officers. Since the parties were not advancing in their negotiations, the corporation submitted to plaintiff an Agreement of Sale drafted by its own attorney, which plaintiff categorically rejected. Thereafter, upon the advice of his attorney, appellant returned the $5,000 to the corporation and demanded the return of $2,500 from defendant, paid him as part payment on account of his commission.

The basic question involved in this case is whether the defendant, a real estate broker by profession, has earned and therefore is entitled to his commission pursuant to his employment contract.

Plaintiffs contend that the original Agreement of Sale was never signed by them, therefore the commission was not earned, for “no sale of the property in question was ■effected” and “no contract of sale was entered into” according to the “Exclusive Authorization to Sell.”

Plaintiff Ikeoka testified that he had orally agreed to •the terms and conditions of the sale, but that he informed both defendant and Dr. Chock that the Agreement of Sale was accepted by him, subject to the approval of his attorney. Both Dr. Chock and appellee denied that appellant made such a statement to them. Plaintiffs argue that this disputed fact “can only be resolved on the basis of credibility of witnesses,” and that the testimony of plaintiff Ikeoka should be believed, and if there is any conflict, then it should be resolved in favor of plaintiffs.

The trial judge found that plaintiff Ikeoka did not make his acceptance of the Agreement of. Sale subject to ■the condition that his attorney must approve the agreement.

“* * * Mr. Ikeoka dealt directly with the purchaser and did not object to or inquire about the purchaser’s financial responsibility; * * *.

*********

“No objection was made that the purchaser was not ready, able, and willing to purchase. Mr. Kong [defendant] and Mr. Ikeoka [plaintiff] were satisfied at the time of the negotiation as to the ability of the Corporation to perform the contract, and the seller agreed to sell it to the Corporation. The terms of sale, down payment, deferred payments, and interest were all discussed by Mr. Kong, Ikeoka, Kauwe and Dr. Chock before the contract was drafted, and * * * the terms and conditions, especially payments therein, were fixed by the seller, * * *.”

The trial judge also found that the plaintiff accepted the check for $5,000 as earnest money, cashed the same, and paid one-half of it, the sum of $2,500, to defendant as partial payment for his services.

H.R.C.P., Rule 52(a) provides that “Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses. * * *” After a careful review of the evidence, we cannot say that we are left with a definite and firm conviction that a mistake has been committed by the trial court and that these findings are “clearly erroneous.” Filipino Federation of America, Inc. v. Cubico, 46 Haw. 353, 380 P.2d 488; Peine v. Murphy, 46 Haw. 233, 377 P.2d 708; Miller v. Loo, 43 Haw. 76; Lima v. Tomasa, 42 Haw. 478; Lum v. Stevens, 42 Haw. 286; Hawaii Builders Supply Co. v. Kaneta, 42 Haw. 111.

It is elementary that a real estate broker’s right to his commissions depends primarily upon the terms of the employment contract where there has been a failure to consummate a sale. Barnard v. Monnot, 3 Keyes (N.Y.) 203, 33 How. Pr. 440; Staula v. Carrol, 312 Mass. 693, 45 N.E.2d 822; 4 Williston, Contracts, § 1030A (Rev. ed.); 8 Am. Jur., Brokers, § 179.

There is a distinction between the employment of a broker to find or procure a purchaser of property, and the employment of a broker to effect or contract for the sale of such property. Under the first type of employment contract, a broker is required only to produce a purchaser ready, able and willing to perform upon the terms fixed, in order to be entitled to his commissions. We have before us the second type of employment contract where the broker claims his commissions not only after he has found a purchaser who is ready, able and willing to buy upon the terms fixed by the seller, but also after he has effected a sale or procured from the prospective purchaser a binding contract of purchase on the terms and conditions specified in the contract of employment. In order to effect a sale or contract for a sale under this type of employment contract, something more that a mere verbal agreement coupled with the payment of earnest money is necessary. In the absence of contractual stipulation to the contrary, the sale must be effected, purchase money paid and title legally or equitably transferred, or if this were not done, the broker must secure the execution and delivery by the purchaser of a binding written contract of purchase, upon the terms and conditions agreed by the seller, which the seller could enforce, if necessary. Livingston v. Malever, 103 Fla. 200, 137 So. 113; Malever v. Livingston, 95 Fla. 272, 116 So. 15; Wiggins Adm'r. v. Wilson, 55 Fla. 346, 45 So. 1011; Ormsby v. Graham, 123 Iowa 202, 98 N.W. 724.

The evidence in the instant case clearly indicates that the negotiations for the sale of the property had gone further than the mere production of a purchaser, ready, able and willing to buy upon the terms authorized in the “Exclusive Authorization to Sell.” The broker did bring the purchaser and sellers together, and after arriving at an oral agreement as to the terms and conditions of the sale of the property which were fixed by the sellers, the same agreement was reduced to writing. The Agreement of Sale, after execution by the purchaser, was accepted by the sellers, and all that remained to be done was the signing of the same by the sellers. The trial judge found that the broker had procured an Agreement of Sale in which the minds of the sellers and purchaser had met on all terms deemed by them to be essential thereto. There was no express understanding in the “Exclusive Authorization to Sell” that “the vendor was to pay nothing, unless he should choose to make the sale” Kock v. Emmerling, 63 U.S. (22 How.) 69, 75, 16 L. Ed. 253, nor was there a reservation that any Agreement of Sale before signature by the plaintiffs was subject to the approval of their attorney.

Ordinarily, under the type of contract before us, a broker employed to sell property is not entitled to compensation until a valid, binding and enforceable contract of purchase has been entered into. The language created a condition precedent to the vendor’s liability to pay. Kolodziejczak v. Bak, 220 Mich. 274, 189 N.W. 929; Tant v. Gee, 348 Mo. 633, 154 S.W.2d 745; Amies v. Wesnofske, 255 N.Y. 156, 174 N.E. 436; Estate of Boley, 211 Wis. 431, 248 N.W. 452; 8 Am. Jur., Brokers, § 168; 12 C.J.S., Brokers, § 89. But there is a recognized exception to this general rule. Where the seller has not reserved full liberty of action, including the right to refuse on any ground whatsoever, “the broker is entitled to his compensation upon the completion of the negotiations which he undertook, irrespective of whether or not the contract negotiated is ever actually consummated or whether the failure to complete the contract is due to the default or refusal of the employer * * * so long as the failure to carry it through to a successful completion is not due to any fault of the broker or so long as he has not been guilty of fraud or bad faith. * * *” 8 Am. Jur., Brokers, § 179. See also Staula v. Carrol, supra; Stern v. Gepo Realty Corp., 289 N.Y. 274, 45 N.E.2d 440; Tanenbaum v. Boehm, 202 N.Y. 293, 95 N.E. 708; Sibbald v. The Bethlehem Iron Co., 83 N.Y. 378, 38 Am. Rep. 441; Collins v. Vickter Manor, Inc., 47 Cal. 2d 875, 306 P.2d 783; McAlinden v. Nelson, 121 Cal. App. , 262 P.2d 627; Penney v. Speake, 256 Ala. 359, 54 So. 2d 709; Knowles v. Henderson, 156 Fla. 31, 22 So. 2d 384; 12 C.J.S., Brokers, § 95.

“* * * [I] f a promisor himself is the cause of the failure of performance * * * of a condition upon which his own liability depends, he cannot take advantage of the failure.” 5 Williston, Contracts, § 677 (Rev. ed. 1961). If a promisor, without legal excuse, prevents the happening of an event upon which his liability depends, he cannot thus be allowed to defeat the promise. Fitzpatrick v. Gilson, 176 Mass. 477, 57 N.E. 1000; Patterson v. Meyerhofer, 204 N.Y. 96, 97 N.E. 472; Middleton v. Thompson, 163 Pa. 112, 29 Atl. 796; Fischer v. Bell, 91 Ind. 243; Peet v. Sherwood, 43 Minn. 447, 45 N.W. 859; Cheatham v. Yarbrough, 90 Tenn. 77, 15 S.W. 1076; United States v. United Engineering Co., 234 U.S. 236, 34 S. Ct. 843, 58 L. Ed. 1294. * * * [N]o one can avail himself of the non-performance of a condition precedent, who has himself occasioned its non-performance.” Sibbald v. The Bethlehem Iron Co., supra at 384. Young v. Hunter, 6 N.Y. 203. The doctrine is purely one of waiver. Amies v. Wesnofske, supra; Livingston v. Malever, supra; 5 Williston, Contracts, § 678 (Rev. ed. 1961).

The great weight of authority, as expressed in the Restatement, Agency, § 445, comment e, is that “Although a promise by a principal is expressed to be conditional upon the execution of an enforceable contract between the principal and the customer, a principal is subject to liability if the broker procures a customer who is willing to enter into an enforceable contract with the principal on the principal’s terms and whose failure to do so is because of the principal’s refusal to execute such agreement. Likewise, a promise to pay a commission if the broker ‘effects a sale’ or ‘negotiates a sale’ ordinarily subjects the principal to liability not only if a transfer of title is effected but also * * * if a suitable customer is produced who is ready, willing and able to execute such a contract.” See also Costilla Land Co. v. Robinson, 238 F.2d 105 (10th Cir. 1956); Dickey v. Waggoner, 108 Colo. 197, 114 P.2d 1097; Spence v. Lawrence, 337 Mass. 355, 149 N.E.2d 379; Marschalk v. Weber, 11 N.J. Super. 16, 77 A.2d 505; 12 C.J.S., Brokers, § 95.

Generally, where the seller has good grounds for refusing to complete the sale and does so, the broker is not entitled to commissions. Buckner v. Tweed, 157 F.2d 211 (D.C. Cir. 1946), cert. denied 330 U.S. 825, 67 S. Ct. 866, 91 L. Ed. 1275, rehearing denied 330 U.S. 856, 67 S. Ct. 1092, 91 L. Ed. 1297; Smith v. Gibraltar Oil Co., 254 F.2d 518 (2d Cir. 1958); Rifkind v. Turner, 52 A.2d 501 (D.C. App. 1947); Reeser v. Crawford, 147 Okla. 53, 294 Pac. 181; Best v. Kelley, 22 Wash. 2d 257, 155 P.2d 794; Blunt v. Wentland, 250 Iowa 607, 93 N.W.2d 735; 12 C.J.S., Brokers, § 95. On the other hand, unless the broker and his employer have expressly stipulated to the contrary, the basis for refusal “must not be arbitrary, capricious, unreasonable, wrongful or fraudulent.” 12 C.J.S., Brokers, § 95. See also Kock v. Emmerling, supra; Collins v. Vickter Manor, Inc., supra; Notkins v. Pashalinski, 83 Conn. 458, 76 Atl. 1104; Wendle v. Palmer, 77 Conn. 12, 58 Atl. 12; Mengel v. Lawrence, 276 App. Div. 180, 93 N.Y.S.2d 443; Wagner v. Derecktor, 306 N.Y. 386, 118 N.E.2d 570; O’Connor-Sullivan, Inc. v. Otto, 283 App. Div. 269, 127 N.Y.S.2d 373; In re Hepburn’s Estate, 30 Misc. 2d 12, 211 N.Y.S.2d 311. However, regardless of whether the principal gave one or no reasons at the time of his refusal to complete the transaction, a reason not mentioned to the broker at the time of refusal cannot later be asserted in defense of a suit for commissions. Lathrop v. Gauger, 127 Cal. App. 2d 754, 274 P.2d 730; Rainier v. Champion Container Co., 294 F.2d 96 (3d Cir. 1961); 12 C.J.S., Brokers, §95.

Plaintiffs contend that there are at least two valid reasons to support his refusal to execute the Agreement of Sale. “First, the Agreement of Sale * * * did not provide for consent by the seller to a mortgage or assignment of the purchaser’s interest in the property, and second, the Agreement of Sale did not provide for adequate security for the deferred payments which amounted to 71% of the total purchase price.”

Although no specific objections were raised by plaintiff Ikeoka to the original Agreement of Sale at the time he accepted it in Hilo, this court is satisfied that the additional provisions incorporated in the modified Agreement of Sale drafted by plaintiffs’ attorney about a month later and submitted to the corporation sufficiently raises their objections to enable them to assert same in the instant case.

These reasons were not presented separately and independently as grounds for refusal to sign the original Agreement of Sale. They were incorporated in a modified Agreement of Sale which was rejected by the purchaser on the ground that the personal guaranty provision for the payment of installments was ridiculous.² We are unable to determine from the evidence whether the purchaser would have accepted the consent to assignment provision, had it been proposed independently from tbe personal guaranty provision. No testimony on this provision was offered by the plantiffs during the trial.

Nevertheless, we will separately consider each reason advanced by the plaintiffs. Plaintiffs argue that the consent to assignment provision is important to the seller “as a matter of self-protection,” and though “he might be well satisfied with the solvency and integrity of his purchasers, he might not be at all satisfied with the solvency of purchaser’s assignees * * Consent to assignment features in Agreements of Sale are dependent upon each individual case and situation. Here, the argument with reference to the solvency or integrity of the purchaser’s assignees is unimpressive inasmuch as appellants retain title to the property under the Agreement of Sale until the entire purchase price is paid and all interim payments received by them will be retained in case of default by the purchaser or their assignees.³ Provisions of a similar nature were written into the Agreement of Sale under which plaintiffs themselves acquired possession of the property. Hence the omission of such a consent provision cannot be deemed a reasonable ground for the plaintiffs refusal to sign the Agreement of Sale.

Although the court in Best v. Kelley, supra, held that where a broker had knowledge of facts sufficient to put him on notice at the time of employment of a defect in title which subsequently prevented consummation of the transaction, he was not entitled to his commission, appellants depend upon other statements of that court with reference to security for deferred payments on an assignment of a lease, in support of their argument that the Agreement of Sale did not provide for adequate security for the deferred payments. In discussing the earnest money receipt purporting to embody the terms of the contemplated sale, which provided that the deferred purchase money “be secured by the furniture and equipment now in the building on said property,” the court stated at page 261 that no provision was made “* * * in the earnest money receipt that the deferred payments be secured by the most valuable portion of the property, namely, the lease. It would seem that the furniture, if separated from the lease, could not be adequate security for the balance due. It is not to be imagined that appellant intended to leave twenty-five thousand dollars in deferred payments absolutely unsecured.***”

The security argument in the Best case is distinguishable in that under the Agreement of Sale we have before us, the sellers are the holders of the legal title of 64 acres of land without partial release, until full payment is made. In the event of failure on the part of the corporation to perform according to the terms, appellants have the right to cancel the agreement and retain all payments made as liquidated damages. In other words, the security for the deferred payments is the land described in the agreement. (See footnote 2.) Whereas, in the Best case, the security for the deferred payments was manifestly inadequate inasmuch as it was secured merely by the furniture and equipment, a minor part of the subject matter of the sale and not “secured by the most valuable portion of the property, namely, the lease.”

The trial judge found that plaintiff’s refusal to consummate the sale was predicated on tbe ground that “if the Corporation became bankrupt he cannot get his money back.”⁴ This objection to a corporation being a purchaser was presumably raised during the trial in support of plaintiff’s contention that the Agreement of Sale did not provide adequate security for deferred payments. After a careful examination of the Agreement of Sale, we find that plaintiffs insistence that the officers of the corporation sign in their individual capacities as guarantors is unreasonable. Under the agreement, the sellers retain title to the land until the full purchase price is paid and there is no release clause for any acreage to the purchaser at any time during the entire period of the agreement. (See footnote 2.) The evidence clearly shows that the corporation had paid $5,000 and it was ready, willing and able to meet tlie further payment of $13,500 on January 15, 1961, and all subsequent payments thereafter, pursuant to the terms of the sale agreement. See Driscoll v. Bunar, 328 Mass. 398, 103 N.E.2d 809. No evidence was offered by plaintiffs to show that the purchaser was financially unable to make the payments called for in the Agreement of Sale. “While it is true that in the ordinary suit to recover a commission the broker must establish the financial ability of the purchaser, yet where the seller accepts the purchaser and his offer and then prevents the consummation of the sale by his own default the burden is upon him, in order to defeat the broker’s right to compensation, to show the purchaser’s want of ability. * * *” Shaffer v. Berger, 81 A.2d 469 (D.C. App.); Dotson v. Milliken, 27 D.C. App. 500, aff’d 209 U.S. 237, 28 S. Ct. 489, 52 L. Ed. 768; Heyward v. Kirsch, 77 A.2d 551 (D.C. App.); Stokes v. Wolf, 137 Md. 393, 112 Atl. 566. See also Jacobs v. Rothschild, 200 Okla. 599, 197 P.2d 951; McFarland v. Lillard, 2 Ind. App. 160, 28 N.E. 229.

When the terms of the Agreement of Sale were agreed upon and a written agreement embodying the said terms was prepared and signed by the purchaser, defendant had accomplished all that he could under the “Exclusive Authorization to Sell” in order to earn the 10 per cent commission. Defendant’s duty as a broker consisted “in bringing the minds of the vendor and the vendee to an agreement. He could do no more. He had no power to execute a contract, to pay the money for the one side, to convey the land on the part of the other, or to compel the performance by either of their duties. The plaintiff produced a purchaser, willing and ready to accept the terms of the defendant, and able to perform the obligation on his part. He had then earned his commissions, and it would be a singular conclusion of the law that the refusal of his employer to complete the bargain, should destroy his right to them. * * *” Barnard v. Monnot, supra at 441. See also Tracy v. O’Neill, 103 Conn. 693, 131 Atl. 417; McGavock v. Woodlief, 61 U.S. (20 How.) 221, 15 L. Ed. 884; Kock v. Emmerling, supra; Hart v. Pierce, 98 Fla. 1087, 125 So. 243; Walker & McClelland v. Chancey, 96 Fla. 82, 117 So. 705.

In Home Banking & Realty Co. v. Baum, 85 Conn. 383, 386-87, 82 Atl. 970, 971, a real estate broker was authorized by defendant and wife in writing “ ‘to sell my property [for $5,800] * * * and do hereby agree to pay a commission of 2% on the sale price, if sold or exchanged at price satisfactory to me.’ ” (Emphasis added.) Since a buyer could not be found at the above stated price, the broker was authorized “to sell at a price less than $5,800.” Broker found buyers who were ready, able and willing, and who offered to purchase the property at the price of $5,600 and and on terms not mentioned in the written authorization. Defendants accepted the terms and agreed to sign a deed for the transfer of their property. Whereupon buyers deposited $1,106.82 with the broker. Then after some delay, defendants refused to convey title unless the buyers paid $5,800 in cash. The court stated in rendering judgment for the broker, that “It is well settled that a broker in whose hands real estate has been placed for sale by its owner is entitled to the commission agreed upon when his efforts have resulted in a sale, or in procuring a customer who is ready, able, and willing to buy upon the terms prescribed by the owner.” Furthermore, the court held that “* * * the broker had done all that it could. It rendered the stipulated service, and through no fault upon its part the matter was not completed. The efforts of the plaintiff were rendered futile by the refusal of the defendants to convey their property, and therefore they should not be allowed to say that the plaintiff had not performed its contract.”

The Oklahoma Supreme Court was presented with a similar situation in Jacobs v. Rothschild, supra. The owners gave to the broker a written contract of employment to sell an apartment house. A buyer was secured by the broker who was ready, able and willing to purchase on the owners’ terms, and who executed a contract for the purchase and made an earnest money payment. The seller objected neither to the contract for purchase nor to the buyer but he refused to sign the contract. Upon further refusal on seller’s part to sign the contract, broker instituted his suit alleging that he was entitled to his commissions. In reversing judgment for the defendant, the court stated: “* * * To decline to execute the contract without valid reason was arbitrary. * * *” Jacobs v. Rothschild, supra at 601.

In Livingston v. Malever, supra, the court stated that the refusal of the owner to go through with the sale of land to a prospective purchaser procured by his broker constituted a waiver, on the owner’s part, of full performance by the broker, of his contract to “sell” the land, and the broker was therefore entitled to maintain an action to recover his compensation, notwithstanding the fact that an actual sale was not consummated. See also Walker & McClelland v. Chancey, supra; Hutchins & Co. v. Sherman, 82 Fla. 167, 89 So. 130.

Walter C. Chuck and Albert W. Evensen for plaintiffs-appellants. TJshijima & Hakamoto (John T. TJshijima) for defendant-appellee.

We find that the subsequent refusal on the part of the plaintiffs to complete the transaction by executing the Agreement of Sale, the terms of which were previously agreed upon, was based on unreasonable and arbitrary grounds. Therefore, we hold that plaintiffs by their conduct, waived the condition precedent for the payment of the commissions in the employment contract and are estopped from declaring that the sale was not “contracted for” by the defendant. 8 Am. Jur., Brokers, § 180; 12 C.J.S., Brokers, § 95(a) (2); Mengel v. Lawrence, supra; Livingston v. Malever, supra; Wagner v. Derecktor, supra.

Judgment affirmed.

1 Direct examination of Mr. Ikeoka:

“Q And did you reach an agreement on the sale’s price?

“A Yes.

“Q What was that amount?

“A $64,000.00.

“Q Did you reach any agreement as to how this money was to be paid?

.“A Yes.

“Q And what agreement did you reach in that?

“A As you say, well, we raised up the downpayment for, if I remember correctly, but anyhow the money terms was agreed on. I had no objection to the money.

“Q Do you recall agreeing on an increased downpayment instead of 25 per cent agreeing to 29 per cent you paid down?

“A If I look through the Agreement Of Sale I could be definite.”

Cross-examination of Mr. Ikeoka:

“Q And according to the agreement then, it was $5,000.00 down, is that correct?-

“A No, it was not $5,000.00 down. That was more or less, what you call it, going through.

“Q $5,000.00 down upon the execution of the Agreement Of Sale, is that correct?

“A That was to be added on to the downpayment.

“Q That’s right. And you agreed that on January 15th, the following year, that $13,500.00 was to be paid, is that correct?

“A Yes.

“Q That’s what you agreed with Dr. Chock?

“A Yes.

“Q And you also agreed then as to the terms of the payment, right?

“A Yes.

“Q Five equal installments?

“A Yes.

“Q At 6Y2 per cent interest?

“A Yes.”

2 Direct examination of defendant:

“Q And now what did you do with that Agreement Of Sale when you brought it back to Hilo?

“A Gave it to Dr. Chock.

“Q And what did Dr. Chock tell you?

“A Week afterwards, he says, ‘Why should I sign? That’s as guarantor.’ I says, T don’t know.’ Then he brought that to his attorney. His attorney or the Kauwe’s Land & Research attorney. He says, ‘I will not sign it.’

“Q So the Agreement Of Sale was made by Walter Chuck was brought over to the hotel. Then what happened?

“A Then I brought it home. Then the next day I gave it to Dr. Chock. He read it. He started to laugh and he says, well, he will see his attorney. At that time I don’t know who was the attorney. Then I wait a week. I said, ‘What happened?’ Then he says they’re going to make a new one. ‘Give it to me, I send it down to Mr. Ikeoka.’ ”

3 Agreement of Sale (Defendant’s Exhibit 2 in evidence).

“0.3. That in the eyent the Buyer or its assigns shall refuse or fail to pay the balance of said total purchase price or complete said purchase as hereinabove provided or otherwise breach the terms of this Agreement the Sellers, among other things, may:

“(a) Bring an action for damages for breach of contract; or “(b) Tender a proper deed, duly executed by the SeUers, and sue the Buyer or its assigns for the balance of the total purchase price; or “(c) Cancel this Agreement and retain all payments made on account hereof to the Sellers by the Buyer or its assigns as and for Uquidated damages.

“C.4. All covenants and agreements herein contained shaU extend to and be obligatory upon the heirs, executors, administrators, successors and assigns of the respective parties.”

“Q And did he [Mr. Ikeoka’s attorney] check it [Defendant’s Exhibit 2] over for you?

“A Then he explained to me the bad points because when I deal with a corporation that I had no guarantee that in case they go bankrupt that I would get any money back or anything like that. Because he said the corporation is something that they’re not liable for the personal property and all that, that they could even if they had a million in asset, the next day they could withdraw the whole thing. He explained to me all the bad points about dealing with a corporation. * * *”

4 Cross-examination of Mr. Ikeoka:

“Q Well, isn’t it true, Mr. Ikeoka, that this Agreement Of Sale was, in so far as you’re concerned, was satisfactory only upon the advice of your attorney after you went back that he told you that the buyer is a corporation; therefore, you should have the personal signature, is that correct?

“A As a — sign as guarantors.

“Q But up to that time — point—when you agreed with Mr. Chock, they explained to you that their corporation is purchasing this land, is that correct?

“A I didn’t know nothing about corporation. I knew it was a corporation, but I didn’t know a corporation could file bankruptcy right the next day if they have no — ”

Examination of Mr. Ikeoka [appellant], by the Court:

“Q And now in so far as the provision as to payments were concerned, downpayment and installment payment—

“A That was all agreeable.

“Q You understood that?

“A Yes.

“Q You agreed to that?

“A Yes.

“Q And in so far as at the time that Kauwe and Sato executed that Agreement Of Sale prepared by Mr. Ushijima [Defendant’s Exhibit 2], were you satisfied as to the terms then of payment and all of that?

“A No. The payment, yes. The payment part, yes, but as far as the other legal angle I have to show ’em to my attorney.

“Q But as far as the payment is concerned, you didn’t have to show your attorney or did you ever show it to your attorney?

“A The payment part I figured they agreed to my terms. That was o.k. But then I found out about corporation, how they could file bankruptcy, this and that, and they are not liable for personal property, you cannot attach the personal property, or anything like that, then I told Mr. Chuck [appellant’s attorney], that, oh, hell, if I going to borrow money from the bank I going get stuck if they shove ’em down my throat. I would get stuck and I would lose everything.”