Aetna Life Ins. Co. v. Home , 193 Okla. 478 ( 1943 )

A complete understanding of the issues involved here requires a more detailed statement of some of the pertinent facts than is given in the majority opinion. Defendant, the owner of numerous pieces of real property which it desired to sell, compiled a printed circular, listing such properties and offering them for sale. These circulars, one of which was sent to plaintiff, a real estate broker, described each property separately, stated the sale price thereof, and also gave the amount of the approximate annual payment required to purchase the property under defendant's "29 year amortization plan." The two tracts here involved were described therein as follows:

"RE — 4425-S Drake, 160 Acres — 8-1/2 miles N.W. of Wagoner, 120 acres good quality dark sandy loam soil in cultivation, 15 acres meadow, balance pasture. Unimproved except fences. On a mail route and convenient to grade and high schools. A good community of prairie farms. Under Oil and Gas Lease. $268.80 annually. $5,000.

"RE — 4425-S Drake, 340 Acres — 7-1/2 miles northwest of Wagoner. Approximately 200 acres good quality dark loam soil in cultivation, balance pasture. 6-room frame house; frame barn, 36x60; poultry house, 14x20; rock and concrete celler; and 2 silos. Buildings are in good condition. House is wired for electricity. Adequately fenced and water. 1 mile to grade school and 1/2 mile from high school bus line. Good community. Producing gas wells on farm. $560 annually. $10,000."

After plaintiff had procured a purchaser for the second tract, above described, able and willing to purchase the same at the price named in the listing, defendant refused to consummate the sale unless the purchaser would also buy the first tract. It gave as its reason therefor that "it has been decided that it would not be advantageous to dispose of the improved portion of this Drake farm because then we would be confronted with the task of moving an unimproved and much less salable place."

Defendant, knowing at the time of preparing its printed offer whether it would be advantageous to sell the tracts separately, divided the farm into two tracts, listed each tract separately, stated the separate price of each, described the first tract as unimproved and the second tract as improved, and invited plaintiff to find purchasers therefor.

The real question in this case, not discussed in the majority opinion, is whether, by agreeing that "all deals are subject to the acceptance" of defendant and that plaintiff should receive his commission "if the proposal of purchase is accepted," the parties contemplated that defendant might arbitrarily refuse to accept a proposal made on the exact terms of the listing, simply because the owner changed its mind, and thus deprive plaintiff of his commission. I think it is reasonably clear that they did not so intend.

By the words "subject to acceptance" the parties meant that the defendant might reject the proposal for any reasonable cause, such, for example, as that the proposed purchaser was not an acceptable credit risk. They did not mean, however, that after plaintiff had procured a suitable purchaser, ready and able to buy on defendant's listed terms, defendant could refuse to accept the proposal, and thus deprive plaintiff of his commission, solely on the ground that it had changed its mind and did not, after all, desire to sell the property in the manner in which it had listed it. Such a construction is harsh, unreasonable, and unjust, and should, if possible, be avoided. Kansas City Bridge Co. v. Lindsay Bridge Co., 32 Okla. 31,121 P. 639; 13 C. J., 540; 17 C.J.S. 739; 12 Am. Jur. 791.

I find no case from this or any other jurisdiction construing the phrase "subject to acceptance" in broker's contracts. There are many cases, however, where the contract contained a stipulation that no commission was payable "if the sale for any reason is not consummated," or similar stipulations. By the great weight of authority the courts, in these cases, hold that such contracts do not contemplate an arbitrary refusal to sell on the part of the owner, and that if he does so refuse, or if the sale is prevented by his fault or some arbitrary act on his part, the commission is payable despite the fact that the sale was "not consummated." 8 Am. Jur. 1096; Restatement, Agency, vol. 2, p. 1043, comment e; Greenwald v. Rosen,61 Misc. 260, 113 N.Y.S. 764; Alvord v. Cook, 174 Mass. 120, 54 N.E. 499; Rabinowitz v. North Texas Realty Co. (Tex. Civ. App.)270 S.W. 579. We have recognized the converse of this rule. First Trust Joint Stock Land Bank of Chicago, Ill., v. Ferguson,187 Okla. 48, 104 P.2d 427; Williams v. Seminole Oil Gas Co.,171 Okla. 406, 43 P.2d 59; McComas v. Smith, 151 Okla. 193,3 P.2d 213. These authorities lay down the rule that the commission is not collectible unless the failure of the purchaser to complete the transaction was caused "by the fault of the seller."

The situations are analogous and the reasoning in the cited cases applies in construing the phrase "subject to acceptance."

The statement from Corpus Juris (9 C. J. 590), quoted in the majority opinion, is correct when properly understood, but has no application here. The cases cited in the footnote as sustaining the text are chiefly cases where the broker agreed to find a purchaser on terms "satisfactory" to the owner, or where the contract did not mention the terms of sale. Aside from these cases the footnote cites Goin v. Hess,102 Iowa 140, 71 N.W. 218; Berry v. Tweed, 93 Iowa 296, 61 N.W. 858; and Sawyer v. Bowman, 91 Iowa 717, 59 N.W. 27. In the Goin Case the contract provided that the owner's land was to be traded for other lands "subject to the approval of the owner." The owner refused to consummate the transaction on the ground that the farm found by the broker was encumbered and unsatisfactory. In the Berry Case the owner authorized the broker to sell on "almost any terms to suit purchaser." In a prior case (Furst v. Tweed, 93 Iowa 300, 61 N.W. 857) it had been decided that such language plainly implied that the terms were to be submitted to the owner, and that the owner had a right to reject the terms if unsatisfactory, and the court followed such decisions. And in the Sawyer Case the sale was abandoned with the consent of the broker. It will thus be seen that in the cited cases the owner did not state the exact terms on which he would sell but left them to be negotiated by the broker with the stipulation that they were to be subject to his approval. That situation is very different from one where, as here, the owner prescribes the exact terms on which he will sell, and after the broker has provided a purchaser on such terms, the owner refuses to complete the sale on the ground that he should not have made such offer in the first place. Furthermore, the footnote to the Corpus Juris citation points out that even in cases where the contract provides that the broker shall negotiate a "satisfactory lease" the lessor may not arbitrarily refuse to accept a negotiated lease and thereby deprive a broker of his commission.

I do not mean to say that a principal may not reserve the right to arbitrarily reject any proposal submitted. I do say, however, that before a contract should be given such a harsh construction, the provision should appear in plain and unmistakable language, and that under the authorities above cited such right is not reserved by the mere provision that the proposal is to be "subject to acceptance." In this case defendant prepared the printed matter in which such terms appear, and any uncertainty in the interpretation of the terms should be resolved against it.

In the final paragraph of the opinion the majority seems to accept this rule, but state that "in order to recover the burden was his (plaintiff's) to show by allegation and proof that the defendant by some arbitrary or fraudulent act prevented the contract from being fully carried out. This he did not do." I am unable to concur in the conclusion of the majority that the refusal of defendant to accept the proposal made in exact accordance with the terms of its offer was not arbitrary, and that the failure to complete the transaction was not caused by its fault.

I therefore respectfully dissent.

RILEY and ARNOLD, JJ., concur in this dissent.