Summary
In Northwestern Agencies, after an exchange of letters defining the terms and conditions of the loan sought, the defendant rejected the proposal and withdrew the offer to borrow.
Summary of this case from Alldrin v. LucasOpinion
Argued July 9, 1931
Reversed December 1, 1931
Department 2.
Appeal from Circuit Court, Multnomah County, C.H. McCOLLOCH, Judge.
Action by Northwestern Agencies, Incorporated, against Peter J. Flynn. From an adverse judgment, defendant appeals.
REVERSED AND REMANDED.
John J. Beckman, of Portland (P.J. Kirwin, of Vancouver, Wash., on the brief), for appellant.
W.W. McCredie, of Portland (McCredie Peterson, of Portland, on the brief), for respondent.
This is an action upon what the plaintiff claims to be a broker's contract, based upon application and acceptance, for a commission for services in procuring a loan for defendant.
The facts shown by the record are substantially as follows:
In August, 1929, the defendant, owner and operator of the Flynn Furniture Company of Vancouver, Washington, conceived a plan of purchasing land in Vancouver and constructing thereon a five-story building, to be owned by a corporation known as the Flynn Estate Corporation; the plan to be carried out by borrowing money and securing same by mortgage upon the building and land. In pursuance therewith defendant, having secured an option on land on which the building was to be constructed, applied to the plaintiff to procure for the Flynn Estate a loan of $60,000. The application reads:
"Northwestern Agencies, Inc.,
"Gentlemen:
"I hereby apply to Northwestern Agencies, Inc., to procure for me a loan of $60,000.00 payable 10 years after date, and will make payments monthly on the principal sum and interest of $10.00 per month per $1,000.00, beginning one month after date, and reserve the right to pay up to $30,000.00 in addition thereto on any interest payment date, with privilege of payment in full after 3 years upon giving 60 days' notice to you in writing.
"This loan is to be secured by a first mortgage and note in form satisfactory to you upon 1005-07 Main street.
"The North 49 ft. of Lot 5, and North 49 ft. of Lot 6, and the East 35 ft. of the South 50 ft. of Lot 6, Block 44, in that part of City of Vancouver lying east of Main street.
"Dimensions of ground 49x100 and 35x50. Dimensions of building same as lot. Number of stories, 5.
"Material, reinforced concrete. Building erected 1929.
"Furnace, steam. Basement, full concrete.
"Street paved with asphalt. Sewer, yes.
"Occupied by owner. Distance from carline, on lot line. Garage, no. Is lot above or below grade? Level.
"When did you purchase this property? 1929. What did you pay for it? $20,000. On what terms? Cash. Is the property now mortgaged, and for what amount? None.
"What is your full name? Flynn Estate, Inc.
"Where do you bank? Vancouver National Bank.
"What is your occupation? Furniture Store Manager.
"Who was the contractor? Johnson.
"Value of lot _______________________ $ 20,000 "Value of improvements ______________ 100,000 "Total ______________________________ 120,000 "Amount of insurance carried ________ 80,000
"I hereby appoint the Northwestern Agencies, Inc., as my agent to procure for me a loan as aforesaid for a period of 10 days from date, with the full understanding that the said mortgage is to be written upon the forms of the Northwestern Agencies, Inc., for the purpose of resale by them to the West Coast Life Ins. Co., or such other assignee as they may select, and upon the acceptance of said loan by the Northwestern Agencies, Inc., I agree to execute and deliver a promissory note and mortgage upon forms prepared by them in the amount of said loan upon the terms mentioned in said application, or any modification thereof. For its services in procuring said loan, I hereby agree to pay the Northwestern Agencies, Inc., $2,300.00 commission for its services in negotiating this loan, and a further sum of none covering the examination of the abstract and expenses of appraisal.
"As a further consideration for said services, I authorize and direct the Northwestern Agencies, Inc., to write or place fire insurance on the improvements covered by said mortgage to amount of same until such time as the loan is paid in full, and agree to pay them the premiums promptly as they become due.
"In the event my application is accepted and I refuse to execute a note and mortgage or I desire to cancel my application, I agree to pay said commission and expense, but if after acceptance of the application said loan should be rejected by reason of defects in the title which I am unable to remedy, then the expenses only shall be payable.
"(Signed) Peter J. Flynn."
"Aug. 17, 1929. "Phones: Res. 1023; Bus. 422.
On the day before the 10-day period for securing the loan had expired, the plaintiff wrote defendant and enclosed with its communication a certified copy of letter received by the plaintiff from "Victor Etienne, Jr., President," which letter reads:
"Portland, Oregon, August 23, 1929.
"Northwestern Agencies, Inc., "619 Failing Building, "Portland, Oregon.
"PLEASE REFER TO C.B. SHEAR — MANAGER
"Gentlemen:
"Subject: Application — Flynn Estate, Inc.
"Replying to your letters of the 19th and 20th, together with enclosure, beg to state that we are willing to grant a loan of Sixty Thousand Dollars ($60,000.00), providing you can produce contracts or bills which will total not less than Ninety-eight Thousand Dollars ($98,000.00), which is the amount you set out in your appraisement. This, of course, will be exclusive of any fixtures which could be classified as being fixtures usable solely for anyone in the furniture business, and not a necessary part of the building.
"Borrower is to furnish a surety bond satisfactory to this company guaranteeing the completion of the building, free of any liens. This bond would have to be a bond from the borrower direct to this company, and not from the construction company to this company.
"The monthly payment of Six Hundred Dollars ($600.00) per month, which is to include interest, is satisfactory to us — the loan to run for a period of ten years.
"As you realize this deed of trust is a contract, and we are willing to grant any repayments prior to the ten years, providing they are definitely set out as to amount and time in the first instance in the note.
"If they simply desire clause inserted therein giving them the privilege or option to repay any amount at any time they so elect, it would be necessary that they pay a premium of three per cent for this privilege, on such amounts that they may choose to pay.
"Another point arises as to when this money is to begin to earn interest. You will realize that we are making a commitment without knowing definitely when this money is to be paid out, and it seems to us that some date should be fixed at which time this money is to begin to pay interest.
"Yours very truly, "(Signed) Victor Etienne, Jr., "President."
The defendant rejected the proposal contained in the above letter, and notified the plaintiff that the offer was withdrawn. Thereupon, based upon the defendant's application, the plaintiff instituted this action for commission for services in procuring a loan for the defendant.
The case was tried to the court without a jury, and the plaintiff recovered judgment for the commissions claimed, in the amount of $2,300. From that judgment the defendant appeals.
The defendant asserts that the letter transmitted to him by the plaintiff does not constitute an acceptance of his offer or application for loan; and in this statement we think he is borne out by the writings set out above. To constitute a binding acceptance of an offer, every material condition prescribed by the offer must be met, nor shall there be any material variance from the terms of the offer. As to the essential components of a binding acceptance of a written offer, we set out the following excerpt from 13 C.J., 279:
"The offerer has a right to prescribe in his offer any conditions as to time, place, quantity, mode of acceptance or other matters which it may please him to insert in and make a part thereof, and the acceptance, to conclude the agreement, must in every respect meet and correspond with the offer, neither falling short of or going beyond the terms proposed, but exactly meeting them at all points and closing with them just as they stand."
At page 281 of that volume, the author sets out in the following language the effect of acceptance conditionally or on terms varying from the offer:
"An acceptance, to be effectual, must be identical with the offer and unconditional. Where a person offers to do a definite thing, and another accepts conditionally or introduces a new term into the acceptance, his answer is either a mere expression of willingness to treat, or it is a counter proposal, and in neither case is there an agreement."
The holdings of this court are in harmony with the excerpt just quoted. In the case of Dodge v. Root, 83 Or. 21 ( 162 P. 254), Mr. Justice BURNETT, in delivering the opinion for the court, thus spoke:
"It is well settled that when a contract is to be founded on offer and acceptance, it must be shown that the latter coincides precisely with the former. Unless this appears, there is no agreement: Hardy v. Sheedy, 58 Or. 195 ( 113 P. 1133); Hall v. Olson, 58 Or. 464 ( 114 P. 638); Henry v. Harker, 61 Or. 276 ( 118 P. 205, 122 P. 298); Lueddemann v. Rudolf, 79 Or. 249 ( 154 P. 116, 155 P. 172). The evidence of the alleged compact being all in the letters, it is the province of the court to construe them and see if they constitute a contract."
The defendant herein contends that the letter accompanying the plaintiff's communication is not a performance by the plaintiff, for the reason that the writer thereof does not bind himself or the company represented by him to make any loan to the defendant at all. The letter constituting the alleged acceptance states, among other things:
"We are willing to grant a loan of $60,000, providing you can produce contracts or bills which will total not less than $98,000."
Defendant likewise points out the following condition in the letter not embraced in the application for a loan:
"Borrower is to furnish a surety bond satisfactory to this company guaranteeing the completion of the building, free of any liens. This bond would have to be a bond from the borrower direct to this company, and not from the construction company to this company."
In addition, the defendant's application reserves the right to pay the plaintiff up to $30,000 on any interest payment date, with privilege of making payment in full after three years upon giving 60 days' written notice, whereas the counter proposal set out in the letter transmitted to the defendant exacts as a premium for this privilege a payment to the lender of 3 per cent of the amount so paid.
The defendant objected to the reception in evidence of the letter which plaintiff terms its acceptance of his application for loan, upon the ground that the so-called acceptance failed to comply with the terms and conditions of the offer, and that, in effect, it was but a counter offer. The court overruled the objection, and the defendant says the court erred in that ruling. At the same time, the court denied defendant's motion for a nonsuit against the plaintiff.
We have already pointed out what the law of this state demands of an offeree when he accepts the terms of an offeror. The difficulty in this case arises out of the attempt of the plaintiff to inject new and additional material conditions into the proposed contract. We have seen that the letter of acceptance contains a number of conditions not embraced, by implication or otherwise, in the terms of the offer. With reference to qualified or conditional acceptances, the editor of R.C.L. thus states the rule:
"In order that there may be a meeting of the minds which is essential to the formation of a contract, the acceptance of the offer must be substantially as made. There must be no variance between the acceptance and the offer. Accordingly a proposal to accept, or an acceptance upon terms varying from those offered, is a rejection of the offer, and puts an end to the negotiation, unless the party who made the original offer renews it, or assents to the modification suggested. * * * The acceptance must likewise be unequivocal and unconditional. If to the acceptance of a proposal a condition be affixed by the party to whom the offer is made, or any modification or change in the offer be made or requested, there is a rejection of the offer. Having in effect rejected the offer by his conditional acceptance, the offeree can not subsequently bind the offeror by an unconditional acceptance." 6 R.C.L., p. 608, § 31.
Furthermore, the offer is terminated by the expiration of the time limited for acceptance. Waterman v. Banks, 144 U.S. 394 ( 12 S.Ct. 646, 36 L.Ed. 479).
As to what constitutes an acceptance of a written offer, it is stated in 1 Page on Contracts, at section 151:
"Words or conduct amount to an acceptance only if they show that the offeree means to accept the offer. For this reason an uncommunicated offer can not be accepted. Silence does not amount to assent; and cross-offers do not constitute a contract."
This is not a case involving immaterial variances, or of adjustments implied by law. Before the plaintiff herein can recover for services in procuring a loan for the defendant, it must prove that the offeree irrevocably accepted the defendant's application precisely as made. That is the doctrine announced by our court and by the authorities hereinbefore cited. Because of the failure of the proposed lender to meet the conditions set out in the defendant's offer, the plaintiff has failed to make a case. It follows that the court erred in denying the defendant's motion for a nonsuit.
This cause should be reversed and remanded. It is so ordered.
BEAN, C.J., BELT and CAMPBELL, JJ., concur.