Oregon Home Builders v. Crowley

170 P. 718, 87 Or. 517, 1918 Ore. LEXIS 284

• Court: Oregon Supreme Court
• Decided: January 29, 1918
• Status: Published

Opinions

Mr. Justice Harris

delivered the opinion of the court.

1. The only question for decision is whether the writing signed by Crowley satisfies the statute of frauds. The defendant contends that the writing is insufficient to meet the requirements of Section 808, L. O. L., because (1) it fails to express the consideration; and (2) it is a mere offer and therefore not an agreement. Section 808, subdivision 8, L. O. L., reads thus:

“In the following cases the agreement is void unless the same or some note or memorandum thereof, expressing the consideration, be in writing and subscribed by the party to be charged, or by his lawfully authorized agent; evidence, therefore, of the agreement shall not be received other than the writing, or secondary evidence of its contents, in the cases prescribed by law:— * #

“8. An agreement entered into subsequent to the taking effect o.f this act, authorizing or employing an agent or broker to sell or purchase real estate for compensation or a commission.”

Our statute was adopted in 1862 as a part of the Civil Code and, as originally enacted, it embraced seven subdivisions which covered the several classes of cases which were provided for by the fourth and seventeenth sections of the English Statute of Frauds. Subdivision 8 was added to our statute in 1909. In each of the eight classes of cases mentioned in Section 808, L. O. L., there must be a writing or writings evidencing the agreement and expressing the consideration. The contention that the writing signed by Crowley does not express the consideration naturally involves'two questions: (1) What is the consideration that must be expressed; and (2) when can it be said that the consideration is expressed. There was a reason for inserting in our statute the clause “expressing the consideration. ’ ’ A history of the English statute and the fact that American courts had differed in their views about the necessity of expressing the consideration under their respective statutes of frauds serve to explain the clause in question.

The Statute of Frauds, 29 Car. II, c. 3, became operative in 1677. The fourth section provided:

‘‘And bee it further enacted by the authoritie aforesaid That from and after the said fower and twentyeth day of June noe Action shall be brought whereby to charge any Executor or Administrator upon any speciall promise to answre damages out of his owne Estate (2) or whereby to charge the Defendant upon any special! promise to answre for the debt, default or miscarriages of another person (3) or to charge any person upon any agreement made upon consideration of Marriage (4) or upon any Contract or Sale of Lands Tenements or Hereditaments or any Interest in or concerning them (5) or upon any Agreement that is not to be performed within the space of one yeare from the making thereof (6) unlesse the Agreement upon which such Action shall be brought or some Memorandum or Note thereof shall be in writeing and signed by the partie to be charged therewith or some other person thereunto by him lawfully authorized.”

It will be observed that the fourth section does not in terms require an expression of the consideration. However, in the celebrated case of Wain v. Warlters, 5 East, 10, decided in 1804, it was held that the writing must express the consideration. Wain and another were the indorsees and holders of a bill of exchange dated February 14, 1803, drawn by one Gore upon and accepted by one Hall, whereby Gore requested Hall 70 days after date to pay to Gore’s order 56£, 16s and 6d. The sum expressed in the bill of exchange became due and the indorsees retained an attorney to sue Gore and Hall for the amount due, when Warlters on April 30, 1803, in consideration that the indorsees would forbear to proceed for the recovery of the amount due on the bill of exchange, promised the indorsees to pay them by half-past 4 o’clock that day 56£. and the expenses which had then been incurred by them on the bill of exchange. The indorsees stayed proceedings against Gore and Hall and upon the failure of Warlters to make payment they sued Warlters. At the trial they produced a writing signed by Warlters which was in these words:

“Messrs. Wain and Co. I will engage to pay yon by y¿ past 4 this day fifty-six pounds and expenses on bill that amount on Hall. (Signed) Jno. Warlters, (and dated) No. 2, Comhill, April 30th, 1803.”

Warlters objected to the writing upon the ground that it did not express the consideration. It was held that the word “agreement” included both the promise and the consideration and since the writing only contained the promise and made no reference to the consideration for the promise it did not comply with the fourth section of the statute of frauds. The decision in Wain v. Warlters has probably caused more discussion than any other case dealing with the statute of frauds. Some of the American courts followed Wain v. Warlters while others declined to do so: Browne on St. of Frauds (5 ed.), § 390; Anson on Contracts (2 Am. ed.), 70, note 2; 1 Reed on St. of Frauds, §§ 421, 422 and 427; 20 Cyc. 262. Prior to the adoption of Section 808, L. O. L., the courts of this country had been differing in their opinions as to whether or not a statute which required an agreement to be in writing meant that the consideration as well as the promise should be in writing, and in order to make the statute certain the legislature inserted the clause ‘ ‘ expressing the consideration.” In a few of the states statutes have been enacted, as in Oregon, requiring the consideration to be expressed in the writing while many of the states have expressly provided by statute that the consideration for an agreement within the statute of frauds need not be expressed in the writing; and in those states where the statute, like the English statute of frauds, does not in terms speak of the consideration for the agreement, the courts are still divided upon the question of whether the consideration must be expressed as ruled in Wain v. Warlters: Browne on St. of Fr. (5 ed.), §§ 391, 393; 20 Cyc. 262.

The territory of Alaska and the states of Alabama, Minnesota, Nevada and Wisconsin have enacted statutes requiring an expression of the consideration in the writing: Comp. Laws of Alaska (1913), Section 1876; 2 Code of Ala. (1907), Section 4289; General Statutes of Minn. (1913), Section 6998; Revised Laws of Nev. (1912), Section 1075; Wis. Statutes (1913), Section 2307. In Colorado the writing must contain an expression of the consideration if it be a contract for the leasing of land for a longer period than one year or if it be for the sale of any interest in land; Mills’ Col. Stat. (1912), Section 3061.

The statute of frauds first enacted in New York on February 26, 1787, like the English statute, did not in terms require an expression of the consideration: 1 N. Y. Revised Laws (1802), p. 79, Section XI. However, the statute was afterwards amended by requiring that the contract or agreement “or some note or memorandum thereof, expressing the consideration, be in writing”: 2 Revised Statutes of New York (1829), Ch. 7, Title I, Section 8 and Title II, Section 2, p. 135. In 1863 the legislature again amended chapter 7, Title II, Section 2 of the Revised Statutes by eliminating the words “expressing the consideration”: Laws of New York, 86th Sess. (1863); 4 Birdseye’s Cumming & Gilbert’s Con. Laws of New York Ann., p. 4188, Section 31. This legislation must be kept in mind when reading the New York decisions.

Statutes expressly providing that the consideration need not be expressed in the writing have been enacted in the territory of Hawaii and in the states of Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, New Jersey, Virginia and West Virginia: Section 2660, Revised Laws of Hawaii; Section 5869, J. & A. 111. Stat. Ann.; 3 Burns’ Ann. Ind. Stat. (1914), Section 7464; Section 470, Carroll’s Ky. Stats. (1915); Ch. 114, Section 1, p. 1395, Revised Stats, of Me. (1916); Revised Laws of Mass. (1902), Ch. 74, Section 2; Howell’s Mich. Stat. (1912), Sections 11,396, 11,403; 2 Comp. Stats, of N. J. (1911), Section 9, p. 2616; Pollard’s Code of Ya. (1904), Section 2840; W. Ya. Code (1913)-, Section 4171.

Tennessee has a statute which provides that all contracts in writing signed by the party to be bound are prima, facie evidence of a consideration: Shannon’s Ann. Code of Tenn. (1917), Section 3214. In the states of Montana and Idaho a written instrument is by statute made presumptive evidence of a consideration: 1 Rev. Codes of Mont. (1907), Section 5010; 1 Ida. Rev. Codes (1907), Section 3314.

While as already shown courts and legislatures may differ in their views as to whether or not the consideration for an agreement within the statute of frauds must be expressed in the writing, nevertheless it is quite manifest that the term “consideration” has a definite meaning. It does not have one definition when applied to subdivision 8 and another when applied to the remaining subdivisions of Section 808, L. O. L. It cannot have one signification under the English statute and another under the American statutes. The “consideration” which by force of judicial opinion must be expressed to comply with the English and some of the American statutes is the same “consideration” which by force of the statute itself must he expressed to comply with a few of the American statutes; and so too the “consideration” which by force of judicial decision need not he expressed in some of the states is the same “consideration” which by force of statute need not he expressed in many of the states. In brief a definition of “consideration” applicable to one statute of frauds is equally applicable to all other statutes of frauds, because they all deal with agreements; and a definition which will apply to the first seven subdivisions of Section 808, L. O. L., will likewise apply to the eighth subdivision.

One author defines “consideration” as “a benefit to the party promising or a loss or detriment to the party to whom the promise is made ”: 9 Oye. 308. Another text-writer states that “consideration is that which moves from the promisee, or to the promisor, at the express or implied request of the latter, in return for his promise”: Clark on Contracts (3 ed.), § 61. Blackstone says that the consideration upon which a contract is made is “the reason which moves the contracting party to enter into the contract”: 2 Black. Com. 444. In Lueddemamn v. Rudolph, 79 Or. 249, 257 (154 Pac. 116, 155 Pac. 172), this court said: “The consideration is that which induces a party to act or promise.” The same test is announced in Hildebrand v. Bloodsworth, 12 Or. 75, 78 (6 Pac. 233), and in Woods v. Dunn, 81 Or. 457, 467 (159 Pac. 1158). A prominent text-writer says that “consideration may be defined as any act or forbearance called for and induced by the promise”: 1 Elliott on Cont., § 203.

2. The consideration for the promise upon which this action is brought cannot be said to be a promise made by the plaintiff or money paid by it, because the writing-does not state nor is it claimed that the plaintiff gave a promise or paid money for the promise of the defendant. If the consideration is not found in a promise made by the plaintiff or money paid by it then it must be found either in the act performed by the plaintiff or in the commission to be paid. The action is brought upon a promise made by the defendant. The promise is to pay a certain sum of money as a commission. How can it be said that the commission or the payment of it is the inducement for the promise to pay it when the payment of a fixed commission is a part of the promise itself. The amount promised measures the extent of the promise and the payment of the amount is the fulfillment of the promise and not the consideration for the promise. Eliminate the commission and there is no promise. The promise and the consideration are not the same thing. The promise to pay is not its own inducement to pay. In Wain v. Warlters the action was brought on the promise of Warlters to pay, while the consideration for the promise was the forbearance to sue. The service rendered by the Oregon Home Builders is the consideration for the promise upon which this action is brought because the service to be rendered furnished the only inducement for the promise : Hall v. Olson, 58 Or. 464, 466 (114 Pac. 638); Henderson v. Lemke, 60 Or. 363, 365 (119 Pac. 482); Woods v. Dunn, 81 Or. 457, 467 (159 Pac. 1158), In Roberts v. Griswold, 35 Vt. 496 (84 Am. Dec. 641), David Roberts, an attorney, had rendered services for Daniel B. Griswold and afterwards A. V. Griswold wrote to Roberts thus:

“I can assure you that he [referring to Daniel B.] is perfectly good, and will hold myself accountable that he shall pay you for all the services you have or may render him in the suit with Sheldon”;

and it was held that “the services thereafter to be rendered constituted the consideration.” In Browne on the Statute of Frauds (5 ed.), Section 405, we find the following:

“As a general rule, however, in all cases where the language of the memorandum shows with reasonable clearness that the defendant’s promise is designed to procure something to be done * * by the party to whom it is made, * * for the promisor, * * such act * * so stipulated for by the defendant, is taken to be the inducement to his promise. ’ ’

The promise made by Crowley was designed to procure the services of the Oregon Home Builders in offering a sale of his land and therefore the services, when rendered, constituted the consideration for the promise.

3, 4. It is true that the writing must state the amount of the commission agreed to be paid to the broker but it is also true that this requirement is predicated upon the fact that the amount of the commission agreed upon constitutes one of the terms of the contract which must be in writing: 3 Jones on Ev., § 429, p. 128. Price and consideration should not be confounded for, though sometimes the same, they are not always identical. Even in those states where the writing need not state the consideration for a promise it is nevertheless generally held that the price agreed upon by the parties must be stated in the writing because, for example in the case of a contract of sale, the price when agreed upon is one of the component terms of the contract: Browne on Statute of Frauds (5 ed.), §§ 376, 381, 381a, 381b; 3 Jones on Ev., §429, p. 128; 20 Cyc. 269. If, however, one party agrees to sell property to another and the parties do not fix a price it is generally held that the writing need not refer to the price on the theory that what the law is deemed to write into the contract, the parties need not also write: 3 Jones on Ev., § 429, p. 128; Browne on Statute of Frauds (5 ed.), .§ 377; 20 Cyc. 263. This general doctrine has been applied in California to a statute like our subdivision 8: Deering’s Civil Code of Cal. (1915), § 1624, subd. 6. In Muncy v. Thompson, 26 Cal. App. 634 (147 Pac. 1178), it was held that “in the absence of any agreement as to commission, the agent, if authorized in writing to negotiate a sale of real estate, is entitled to a reasonable compensation for Ms services.” In Washington, another state with a statute like subdivision 8, it is held that the amount of the commission must be stated in the writing: Pierce’s Wash. Code Annotated (1912), Tit. 203, § 3, subd. 5. In Foote v. Robbins, 50 Wash. 277 (97 Pac. 103), the court said:

“If by the written agreement the payment of a commission by respondents was contemplated, resort must now be had to oral evidence for the purpose of showing the amount of such commission, and that it was to be paid by the appellant as vendor and not by the purchaser as vendee. The unmistakable purpose of the statute was to avoid any such method of fixing the extent of the liability, or the liability itself, of either a vendor or a vendee for the payment of a commission.”

This rule was announced on the authority of Zimmerman v. Zehendner, 164 Ind. 466 (73 Pac. 920, 2 Ann. Cas. 655), construing an Indiana statute in substance the same as ours; and in this connection it is interesting to note that since May 6, 1853, Indiana has had a statute reading thus:

“The consideration of any such promise, contract or agreement need not be set forth in such writing, but may be proved:” 3 Burns’ Ann. Ind. Stat. (Bev. of 1914), §7464.

See also; Forland v. Boyum, 53 Wash. 421 (102 Pac. 34); Keith v. Smith, 46 Wash. 131 (89 Pac. 473, 13 Ann. Cas. 975); Houtchens Co. v. Nichols, 81 Wash. 238 (142, Pac. 674). In at least two of the states, Nebraska and New Jersey, the question is taken from the field of judicial construction by positive statutes which provide that the amount of the commission must be stated in the writing: Rev. Stats, of Neb. (1913), Section 2628, p. 739; 2 Comp. St. of N. J., p. 2617, Section 10. The difference between the views expressed by courts of other jurisdictions as well as the express statutory requirements in some of the states only illustrate the real difficulties that may arise out of seemingly plain statutes like subdivision 8 of Section 808, L. O. L. However, all further debate in this state is foreclosed by this court speaking through Mr. Justice Benson in Taggart v. Hunter, 78 Or. 139 (150 Pac. 738, 152 Pac. 871), where after an exhaustive presentation by learned counsel and a careful consideration of all phases of the question it was concluded that if the writing is silent upon the amount of the commission to be paid it fails to satisfy the statute of frauds. Subdivision 8 was designed as a remedy for a twofold evil: (1) Brokers claiming commissions when they had never been authorized to sell; and (2) brokers claiming excessive rates although authorized to sell. The conclusion reached in Taggart v. Hunter, that the writing must state the amount or rate of commission to be paid is justified by the history and purpose of the statute.

5. The next question is whether the writing expresses the consideration. The fact that our statute in terms states that the consideration must be expressed is not to be taken to mean that the expression shall be different in degree from the expression required by Wain v. Warlters under the English statute. In one instance an expression of the consideration is required by the legislature and in the other it is required by the judiciary; but both demand that the consideration be “expressed.” The consideration is sufficiently expressed under the English statute if it is expressly stated or if it appears by necessary inference from the terms of the writing: James v. Williams, 5 Barn. & Ad. 1109; Raikes v. Todd, 8 Ad. & E. 846. All the courts, in states having statutes which, like ours, require a writing “expressing the consideration,” have given approval to writings in which the consideration appeared by necessary inference: Jenkins v. Harrison, 66 Ala. 345, 354; Nelson v. Shelby Mfg. & Imp. Co., 96 Ala. 515, 528 (11 South. 695, 38 Am. St. Rep. 116); Wilson Sewing Mach. Co. v. Schnell, 20 Minn. 40, 45; Osborne v. Baker, 34 Minn. 307, 311 (25 N. W. 606, 57 Am. Rep. 55); Straight v. Wight, 60 Minn. 515, 517 (63 N. W. 105); White Sewing Mach. Co. v. Fowler, 28 Nev. 94 (78 Pac. 1034); Williams v. Ketchum, 19 Wis. 231, 247; Houghton v. Ely, 26 Wis. 181, 194 (7 Am. Rep. 52); McFarlane v. Wadhams, 176 Fed. 82, 85 (99 C. C. A. 602).

In those jurisdictions where the consideration must be expressed,- whether the requirement be by force of statute or by force of judicial decision,' it is sufficient if the consideration appears by necessary inference: 3 Jones on Ev. 430; 20 Cyc. 266; 1 Eeed on Statute of Frauds, §429; Henderson v. Lemke, 60 Or. 363 (119 Pac. 482); Balfour v. Knight, 86 Or. 165 (167 Pac. 484, 485). See, also, Johnston v. Wadsworth, 24 Or. 494, 502 (34 Pac. 13).

A clear statement of the criterion by which to determine whether the consideration is adequately expressed is furnished in Hawes v. Armstrong, 1 Bing. N. C. 761, where the point in dispute was whether the consideration sufficiently appeared in the written memorandum. The court said:

“That such consideration does not appear expressly, and in terms, in such memorandum, is apparent on the bare inspection of the writing itself. It is not, however, necessary that such consideration should appear in express terms: It would undoubtedly be sufficient in any case, if the memorandum is so framed that any person of ordinary capacity must infer from the perusal of it, that such and no other, was the consideration upon which the undertaking was given. Not a mere conjecture, however plausible, that the consideration stated in the declaration was that intended by the memorandum, would be sufficient to satisfy the statute; but there must be a well-grounded inference, to be necessarily collected from the terms of the memorandum, that the consideration stated in the declaration, and no other than such consideration, was intended by the parties to be the ground of the promise. ’ ’

See also: Wilson Sewing Mach. Co. v. Schnell, 20 Minn. 40, 45; 20 Cyc. 266; 3 Jones on Ev., § 430, p. 130; Browne on Statute of Frauds (5 ed.), § 399.

Looking now to the writing signed by Crowley and applying to it the test accepted by nearly all, if not all, the authorities, it will plainly appear that the consideration is expressed in the writing. The promise is to pay a commission. For what? “For your services” is the answer given in the very words of the writing, after having first specified the services mentioned. The writing sufficiently states the consideration whether the consideration is the service rendered or the commission to be paid, for both are expressed in the writing. This action is brought upon a promise to pay money. The writing which contains the promise also contains a statement of the consideration for the promise, the services of the broker.

6. The next contention of the defendant is based upon the theory that the writing contains a mere offer and that it does not evidence an agreement. The defendant states his argument thus:

“The respondent’s offer was a voluntary one, for which no consideration was given, no mutual promises were exchanged, and nothing of value passed as a consideration. The offer, therefore, was a mere nudum, pactum, and the appellant acquired no rights by reason of it.”

We may assume that in the beginning the writing only contained a promise by the land owner and that such promise did not amount to an obligation for the reason that the broker neither paid anything to the land owner nor promised to do anything. The complaint alleges that the broker orally accepted the employment and contract; but we shall assume that the oral, acceptance did not convert the promise of the owner into an obligation. In passing, however, it must be noted that there was a meeting of the minds of the parties and nothing depended upon further treaty between them; and this feature distinguishes the instant case from Lueddemann v. Rudolph, 79 Or. 249 (154 Pac. 116, 155 Pac. 172). In order to present the contention of the defendant in the strongest light possible and for the purpose of viewing it in that position we shall go a step farther and assume, without deciding, that actually entering into the employment by advertising or otherwise attempting to find a purchaser would not change the writing into a binding contract. However, the broker did more than merely try to find a purchaser; he actually produced a person who purchased; he performed the condition of the promise and the owner accepted the performance. The owner promised to pay a commission if the broker found a purchaser; the broker accepted and then performed the condition of the promise by finding a purchaser. The rule applicable to this situation is stated in 6 R. C. L. 687, thus:

“Where one makes a promise conditioned upon the doing of an act by another, and the latter does the act, the contract is not void for want of mutuality, and the promisor is liable though the promisee did not at the time of the promise engage to do the act; for upon the performance of the condition by the promisee, the contract becomes clothed with a valid consideration, which relates back and renders the promise obligatory.”

Our own precedents conform with this rule and many illustrations of the doctrine can he found in the recorded opinions of other courts: Hall v. Olson, 58 Or. 464, 466 (114 Pac. 638); Krausse v. Greenfield, 61 Or. 502, 511 (123 Pac. 392, Ann. Cas. 1914B, 115); Roberts v. Griswold, 35 Vt. 496 (84 Am. Dec. 641); Braniff v. Baier, 101 Kan. 117 (165 Pac. 816, L. R. A. 1917E, 1036); Des Moines Val. R. Co. v. Graff, 27 Iowa, 99 (1 Am. Rep. 256); Muscatine Water Co. v. Muscatine Lbr. Co., 85 Iowa, 112 (52 N. W. 108, 39 Am. St. Rep. 284); Underwood Typewriter Co. v. Century Realty Co., 220 Mo. 522 (119 S. W. 400, 25 L. R. A. (N. S.) 1173); L’Amoreux v. Gould, 7 N. Y. 349 (57 Am. Dec. 524); Willetts v. Sun Mut. Ins. Co., 45 N. Y. 45 (6 Am. Rep. 31); Gurvin v. Cromartie, 33 N. C. 174 (53 Am. Dec. 406); 9 Cyc. 300, 329, 333. When the broker performed the act upon which the promise was conditioned he furnished the consideration which was necessary to convert the promise to pay a commission into an obligation to pay it and thus transformed a nudum pactum into a binding agreement.

7, 8. The writing and the contract are not one and the same thing. While the statute makes certain agreements void and declares that no evidence, except a writing or secondary evidence of its contents, shall be available to prove such agreements, yet the statute of frauds has not added any new element to the contract itself. Whatever would be a good contract in the absence of the statute is a good contract in the presence of the statute; provided, only it is in writing and expresses the consideration. The same parties can agree upon the same terms for the same things that they could agree upon and contract for if there were no statute of frauds; but the statute simply requires the agreement and the consideration to be in writing. Broadly stated, a writing to satisfy the statute of frauds must show the contracting parties, intelligently identify the subject matter involved, disclose the terms and conditions of the agreement, express tbe consideration and be signed by the party to be charged: Catterlin v. Bush, 39 Or. 496, 501 (59 Pac. 706, 65 Pac. 1064). The writing signed by Crowley meets every requirement. The parties, the owner and the broker, are named; the subject matter is sufficiently described; the terms and conditions are fully stated; every term and condition is found in the writing including the promise and the consideration for it; and the party to be charged has signed his name to the writing.

(171 Pac. 214.) Messrs. Angelí é Fisher, for the petition. Mr. W. B. Shively, contra.

The complaint states a cause of action. The judgment is reversed and the cause is remanded for further proceedings not inconsistent with this opinion.

Reversed and Remanded.

Mr. Chief Justice McBride and Mr. Justice Benson concur. Mr. Justice Burnett concurs in the result.