Opinion
No. 4676.
February 7, 1972. Dissenting Opinion March 10, 1972.
APPEAL FROM TWENTY-FOURTH JUDICIAL DISTRICT COURT, PARISH OF JEFFERSON, NOS. 92-937, 93-312 AND 94-980, FRANK V. ZACCARIA, J.
Anthony J. Russo, New Orleans, for Leonard A. Aubert, plaintiff-appellee.
Robert H. Fray, Gretna, for Vincent J. Trapani, plaintiff-appellee and defendant-appellee.
Marshall J. Favret, New Orleans, for Clark Clark, Inc., plaintiff-appellee.
Graffagnino Perez, A. J. Graffagnino and Philip E. O'Neill, Metairie, for Lauland A. Bourg, defendant-appellant.
Before REGAN, REDMANN and STOULIG, JJ.
This dispute, involving three separate suits which have been consolidated, arises out of an aborted real estate transaction in which Leonard A. Aubert agreed to sell and Lauland A. Bourg to buy a certain piece of property located at 1601 Newton Street in Jefferson Parish, Louisiana. The sale was never consummated and Aubert filed suit against Bourg and his realtor, Vincent J. Trapani, for $2,300, the amount of the deposit specified in the agreement to purchase, together with attorney's fees and costs. Realtors Trapani and Clark Clark, Inc., the latter being the exclusive agents of Aubert, filed suit against Bourg for their commissions, costs and attorney's fees. The trial court found in favor of the respective plaintiffs and against Bourg, awarding Aubert the requested $2,300, together with attorney's fees in the amount of $500, plus costs and legal interest from date of judicial demand. It also granted each of the two plaintiff realty firms $690, representing their pro rata of the commission and additionally awarded each of them $200 for attorney's fees. Bourg appealed from the judgments rendered against him and plaintiffs Aubert and Clark Clark, Inc., have answered, requesting increases in attorney's fees. No answer to the appeal was filed on behalf of Trapani.
The facts of this dispute are as follows: On February 11, 1965, Lauland A. Bourg entered into an agreement authorizing the purchase of the Newton Street property for a specified price and under certain stipulated conditions. On February 16, 1965, in a separate document Leonard A. Aubert agreed to sell the property under the identical terms. The property was to be sold for $23,000, the sale being conditioned upon the ability of the purchaser to borrow, with the property as security, the sum of $20,000. The agreement obligated the purchaser to deposit with the seller's agent $2,300 on, or prior to, 18 days after its acceptance. No such deposit was ever made. The agreement provided that the act of sale was to be passed before May 15, 1965, though the parties later agreed to extend the contract to July 15, 1965, due to certain curative work which had to be accomplished; all other conditions and terms remained the same. In due course the act of sale was set for passage on July 14, 1965, before Meyer L. Dresner, notary, and all parties were notified.
Subsequent to the notification but prior to the 14th, Trapani was informed by counsel for Bourg that the agreement to sell was void because of the failure to convey title within the specified time. The interested parties — with the exception of Bourg — nevertheless met at the appointed place and time, and when the appellant did not appear, reset the sale for the following day, July 15. Bourg was duly notified of this fact by certified mail but again he did not appear. He was then formally placed in default by notarial act dated July 15, 1965.
Appellants argue that the trial court erred in finding in favor of plaintiffs-appellees in that the contract contained suspensive conditions which were not satisfied and further in that appellees failed to properly place appellant in default.
The suspensive condition which counsel for Bourg contends was never met, therefore rendering the contract null and void, reads as follows:
"This sale is conditioned upon the ability of purchaser to borrow upon this property as security the sum of $20,000.00 by a mortgage loan or loans at a rate of interest not to exceed 6 1/2% per annum, interest and principal payable on or before 15/20 years in equal (monthly) x (quarterly) __________ (semi-annual) (annual) __________ installments.
"Should purchaser, seller or agent be unable to obtain the loan stipulated above within 30 days from acceptance hereof, this contract shall then become null and void and the agent is hereby authorized to return the purchaser's deposit in full. Commitment by lender to make loan subject to approval of title shall constitute obtaining of loan."
Specifically, appellant submits that the agreement to sell of February 16, 1965, became a nullity on or about March 18, 1965, for the reason that no loan had been obtained before the expiration of 30 days.
This reasoning is specious. It is implicit in the clause upon which the sale is conditioned that good faith attempts will be made on the purchaser's part to obtain the loan. Only if he is unable to secure the stipulated loan is the contract rendered null. In the case of Brewster v. Yockey, 153 So.2d 489, 492 (La.App. 4th Cir. 1963), the court stated in this regard:
"The law of Louisiana is now well settled that a contractual provision making a sale contingent on the purchaser's obtaining a particular loan on the property is not a potestative condition rendering the agreement null and void as to the obligor under LSA-C.C. arts. 2024 and 2034. As stated by the trial judge, it is a valid suspensive condition which imposes upon the purchaser the inescapable duty to make bona fide efforts to obtain the loan, Morrison v. Mioton, 163 La. 1065, 113 So. 456; Braden v. Reisch, La. App., 125 So.2d 781; Williams v. Cormier, La. App., 100 So.2d 307, and cases cited therein; Stephen L. Guice Co. v. Perkowski, La. App., 12 So.2d 692 (overruling East Bank Land Company v. Hoffstetter, 13 La. App. 564, 125 So. 160, relied on by plaintiff)."
There is no evidence, testimonial or documentary, that Bourg was unable to obtain a $20,000 loan solely with the Newton Street property as security. In fact, it affirmatively appears from the record that he never attempted to obtain such a loan on this basis. Certainly, under these circumstances Bourg cannot now be heard to argue that his failure to obtain a loan in accordance with the agreement to sell renders the instrument null, relieving him from all liabilities of the contract. Under this reasoning the buyer could nullify the legal efficacy of an agreement to sell by the simple expedient of voluntarily failing to comply with its terms.
The record discloses, however, that the purchaser did submit a loan application to the New Orleans Homestead Association at which time he tendered other property as additional collateral for the $20,000 mortgage loan. We find that this action on his part constituted a voluntary waiver of his right to insist that the subject property be the sole security for the mortgage. See Schroeder v. Krushevski, 186 So.2d 640 (La.App. 4th Cir. 1966). Therefore, the timely (i. e. within 30 days of acceptance of the offer to purchase) approval by the homestead of this loan as proposed is sufficient to constitute fulfillment of the suspensive condition, thereby making the contract to sell fully executory. This conclusion is warranted by the very terms of the agreement which provides: "Commitment by lender to make loan subject to approval of title shall constitute obtaining of loan."
We further find that the contention of appellant that the agreement to sell had not been extended to July 15, 1965, but, rather, expired on May 15, 1965, is clearly refuted by the document itself. On the face of the instrument at line 23 pertaining to the date the sale must be passed there appears the following handwritten insertion "extended to July 15, 1965" with the signature of Lauland Bourg in the margin. On the reverse side is the written concurrence of Mr. and Mrs. Aubert agreeing to this extension.
In light of our conclusion that the contract was validly extended, the purchaser's refusal to sign the act of sale on July 14 for the reason that it had expired on May 15 has no basis in law or fact and amounted to a breach of the contract. The purchase agreement contains the following language relative to a breach of its terms:
"In the event the purchaser fails to comply with this agreement within the time specified, the seller shall have the right to declare the deposit, ipso-facto, forfeited, without formality beyond tender of title to purchaser; or the seller may demand specific performance.
"In the event the deposit is forfeited, the commission shall be paid out of this deposit, reserving to the seller the right to proceed against the purchaser for the recovery of the amount of the commission.
"If this offer is accepted, seller agrees to pay the agent's commission of As per Contract which commission is earned by agent when this agreement is signed by both parties and when the mortgage loan, if any, has been secured.
"Either party hereto who fails, for any reason whatsoever, to comply with the terms of this offer, if accepted, is obligated and agrees to pay the agent's commission and all fees and costs incurred in enforcing collection and damages."
Thus the appellee was clearly entitled to the $2,300 deposit or in its absence an amount equal to it. Bourg was also liable for realtors' commissions and for all fees and costs in enforcing the collection of these amounts.
We find no merit in appellant's contention that he was not properly placed in default. A review of the evidence clearly shows that he was timely notified that the act of sale would be passed on July 14 in the office of Meyer L. Dresner, notary public. Bourg failed to appear and the sale was reset for the following day at 7:30 p.m., the last day of the extension. He was advised of this fact by special delivery certified mail which was receipted for by "E. Bourg," purchaser's wife, at their household on July 15. When Bourg nevertheless failed to appear a second time he was formally placed in default by notarial act dated July 15, 1965. Thus all of the requisites for the placing in default were met.
The judgment of the district court awarded attorney's fees of $500 to Aubert and $200 to each of the realtors. Attorneys for Aubert and Clark Clark have requested increases in these amounts. Considering the extent of legal efforts expended in the prosecution of this action we are of the opinion that the award to attorney for Clark Clark, Inc., should be increased to $400. However, the judgment awarding attorney's fees to the plaintiff-vendor is contrary to the jurisprudence and must be reversed. In the case of Scurria v. Russo, 134 So.2d 679 (La. App. 4th Cir. 1961), the court, in construing provisions setting out the rights of the parties in the event of default which are identical to those quoted above, concluded that attorney's fees may be assessed in enforcing the collection of the agent's commission but are not applicable to the enforcement of the rights of either the seller or the purchaser. Accordingly, the plaintiff-seller is not entitled to a judgment for these fees.
For the foregoing reasons the judgment appealed from is reversed in part, amended in part, and affirmed as amended. Appellant Lauland A. Bourg is cast for costs of this appeal.
Reversed in part; amended in part; and affirmed as amended.
I concur in that part of our judgment which reversed the lower court's award of attorney's fees to Aubert. If I could agree with the balance I would still have to dissent from allowing $400 (or even $200) attorney's fee on $690 commission, when the commission contract stipulates 25%, or $172.50.
But I disagree with the balance of our judgment. I hereafter explain why I believe that there never was a buy-sell contract, that the trial judge's reasons for judgment show it was founded on legal error, and that there never was an extension agreement. I also indicate my recently aroused suspicion that our own judgment is null.
Absence of Buy-Sell Contract
Printed forms were used in the original transaction. They are titled "Agreement to Purchase". The form begins "__________ offer and agree to purchase" (the alternative "sell" was stricken), the intended usage being completion with "I" or "We", or perhaps the name of the offeror.
But instead this form was completed to read " I authorize you to offer and agree to purchase", and Bourg signed it as thus completed. No one else — no one — signed the form Bourg signed to accept it, although it contained below Bourg's signature a printed "acceptance", reading "I/We accept the above in all its terms and conditions."
Instead, the agent presented a carbon copy of this filled-in form, including " I authorize you to offer and agree to purchase", to the owner, Aubert. This carbon copy, at the line for the offeror's signature, was filled in "Original signed by Purchaser, Vincent J. Trapani, Realtor". Aubert (the owner) signed the carbon on the signature line following the printed "acceptance" quoted above. (I pretermit rudimentary contract-law observations about the fact the carbon copy acceptance, if such, was altered to show a later lease-expiration date than that contained in the offer. See C.C. art. 1805.)
There may have been no contract with Bourg at all. But if there was a contract, its very terms merely authorized Aubert to offer to purchase. Because Aubert (and the real estate agents) seek to enforce a penalty clause, which is in law disfavored and must be strictly construed, I believe we are obliged to construe the contract (if any) as written, i. e., as a mandate, which was of course not breached by Bourg and thus no penalty is due.
Trial Court Reasons
Apparently the trial court considered the question whether an extension had been mutually agreed upon immaterial, because of the circumstance that Bourg had never made a $2,300 deposit which the contract (if a buy-sell contract) called for. The court reasoned:
"The proposed sale was conditioned upon the purchaser obtaining a $20,000 loan on said property. Subsequently he authorized the mortgaging of another piece of property as additional security since the subject property did not warrant a $20,000 loan. He [i. e., of course, "the purchaser"] also extended the date for passage of the sale to July 15, 1965. He was formally placed in default for not appearing at the act of sale and this litigation ensued.
"The court is of the opinion that the defenses urged by defendant are not meritorious. His failure to place a deposit would have given plaintiff the right to avoid liability under the contract but it was never intended that defendant's breach could be used by him to his advantage. The court does not believe that Mr. Aubert was ever advised by his agents that a deposit had not been made. In view of the decisions in Bayon v. Pettingill, 77 So.2d 202 [La. App. 1955, cert. denied], and Castellon v. Pate, 204 So.2d 662 [La. App. 1967], it appears that defendant is liable for all claims herein and as set forth in the judgments herein." [Bracketed matter supplied.]
It may be observed that, in fact, the trial judge did not conclude that Aubert, the owner, signed any extension agreement. He only stated that Bourg, the purchaser, had extended the date, and this statement was made in reasoning that Bourg had waived the $20,000 loan condition. A man who is insisting on a loan condition which cannot be met does not thereafter agree to an extension.
The sole authority cited for imposing the penalties related to the breach in merely failing to make the deposit. Yet that reasoning of Bayon was expressly disapproved by our supreme court in Richmond v. Krushevski, 243 La. 777, 147 So.2d 212 (1962), which held that only actual, proven damages (there $0) are recoverable for breach of the obligation to deposit. Castellon's dicta, although later than Richmond, is equally wrong because directly contrary to the supreme court's holding.
Accordingly the trial judge's reasons do not support his judgment.
Absence of Extension
I have above pointed out that the trial judge did not find, as a matter of fact, that the owner had signed an extension agreement (although our majority does).
I conclude that, as a matter of law, what is claimed to be the seller's extension agreement on the back of the alleged contract (the carbon copy) is not, and on its face does not even purport to be, any extension agreement signed by the seller. Perhaps this "agreement" must be seen to be disbelieved. A photocopy follows, but is preceded by a photocopy of the signature of Aubert on the face of the alleged contract (so that the signatures may be compared — note the "L" and "r", for example):
Address
I/We accept the above in all its terms and conditions.
(Signed)
Address
This contract is extended from May 15, 1965 to July 15, 1965. All other terms and conditions to remain the same.
I find it difficult to suppose both signatures are Aubert's.
Assuming both signatures photocopied are Aubert's, it is still unreasonable to say that an extension agreement is proved by the signature at the very top of a page, with words of agreement typed under it and empty signature lines under those words of agreement.
(I also pretermit comment on "July" being typed in different type over an erased "June" still discernible in the original. The contract had been extended to June 15 because of a title problem.)
I daresay that Bourg would have been laughed out of court if he were trying to enforce that "agreement" against Aubert. As a matter of the law of mutuality of obligations, Aubert should likewise be treated.
Bourg admitted he signed, on the face of the document, the notation "extended to July 15, 1965." There is no explanation of why Aubert did not sign (as I believe one would normally do) at the same location on the document. Nor is there any attempt at explanation of why Aubert's alleged signature on the reverse was above rather than below the words of agreement. To the contrary, the only testimony was from Aubert, who testified he did not know whether or not the typewritten words were on the reverse of the document when he signed! (He also did not know when he did sign.)
Bourg's expressed willingness to extend could not become binding on him unless Aubert also agreed, in writing (C.C. art. 2275). It takes two to contract, C.C. art. 1798. Aubert never signed any extension agreement, and an extension "agreement" signed by Bourg alone is not enforceable. Not against Aubert, not against Bourg.
Nullity of Judgment
Our attention (and that of the trial judge) was never directed to the dissimilarity of the purported Aubert signatures. In preparing my dissent (subsequent to the majority opinion and judgment) I noted this matter. Impressed by the naked eye's inclination to conclude the two signatures are not by the same hand, I believe it my duty to point out the possibility our judgment may be null, C.C.P. art. 2004.
If I had noted this issue when this case was still under advisement, I would alternatively have urged remand. Now, only an action of nullity, C.C.P. art. 2004, can squarely present this issue. The district court has, it hardly need be said, jurisdiction to nullify our judgment or even a supreme court judgment; Tracy v. Dufrene, 240 La. 232, 121 So.2d 843 (1960). And today, the false evidence alleged as grounds of nullity need not have been participated in by a party; see comment (c) to C.C.P. art. 2004. Thus even the judgment in favor of a real estate agent who may have been ignorant of the extension signature not being Aubert's (if that is a fact) is equally subject to the action of nullity.