Summary
explaining that delay in performance justifies rescission of the contract only when time is of the essence
Summary of this case from GQ Sand, LLC v. Conley Bulk Servs., LLCOpinion
January 5, 1959 —
February 3, 1959.
APPEAL from an order of the circuit court for Milwaukee county: WILLIAM I. O'NEILL, Circuit Judge. Affirmed.
For the appellants there was a brief by Stephen J. Hajduch and Claude L. Kordus, both of Milwaukee, and oral argument by Mr. Hajduch.
For the respondent there was a brief by William F. Scholl and Mark M. Camp, both of Milwaukee, and oral argument by Mr. Camp.
This is an appeal from an order denying the petition of the defendants to reopen and set aside a summary judgment.
This action was commenced by Wauwatosa Realty Company, a licensed broker, as plaintiff, against J. Henry Bishop and Alice Bishop, as defendants, for the recovery of real-estate broker's commission in the amount of $3,025, upon a written listing contract. The plaintiff broker obtained a buyer for a business property known as the Charleston Hotel located on East Layton avenue in the city of Cudahy, county of Milwaukee, state of Wisconsin.
A written contract was entered into on February 7, 1955, whereby the purchasers agreed to pay $60,500 for the property, of which $35,000 was to be financed by a first mortgage. The purchase contract was contingent upon the purchasers being able to qualify for such $35,000 first mortgage. The closing date was March 15, 1955.
The defendants set forth in their answer upon information and belief that the purchasers were unable to secure a first mortgage in the amount of $35,000, and that the defendants were requested by the plaintiff corporation, Wauwatosa Realty Company, to change the terms of the agreement and to accept cash in the amount of $30,000 and a $5,000 second mortgage.
The defendants informed the plaintiff that the listing contract did not expire until May 22, 1955.
As a further defense, the defendants set up that the sale was to be consummated on or before March 15, 1955, and that such sale was never consummated, and that the defendants were never advised of a closing date, although they held themselves ready, willing, and able to proceed and convey the real estate set forth in the listing contract.
Subsequently a pretrial was held November 5, 1956. At the pretrial, a stipulation was entered into between the parties and an order entered thereon, providing in part: "1. That there shall be no amendments to pleadings."
That on January 18, 1957, the plaintiff next moved for summary judgment based upon an affidavit of Clement Winzenburg, one of the officers of the plaintiff corporation, and also an affidavit of Albert Tratnik, treasurer of the Security Savings Loan Association, the latter affidavit reciting that the $35,000 loan had been approved prior to March 15, 1955.
One of the defendants, J. Henry Bishop, filed an affidavit on behalf of the defendants opposing the plaintiff's motion for summary judgment. The affidavit failed to deny the facts related in the affidavit of the officer of the plaintiff corporation.
On March 8, 1957, a hearing was held based upon an order to show cause requesting relief from that portion of the pretrial order based upon a stipulation, "that there will be no amendments to pleadings," and by adding affirmative defenses to the defendants' answer to set up fraud and misrepresentation. The trial court in its decision said:
"The portion of the proposed affirmative defense of the defendants which has any relation whatsoever to fraud and misrepresentation reads as follows:
"`. . . the agents of Wauwatosa Realty Company (by name James L. Jones and other agent) represented to the affiant that it was impossible to obtain the Thirty-Five Thousand ($35,000) Dollar mortgage provided for in said contract, and said agents attempted to induce defendants to change the provisions of said agreement to exchange property by requesting defendants to increase a second mortgage.'
"Assuming that the aforesaid representation was false and that the agent of the plaintiff knew it to be false, the proposed defense fails to meet at least three . . . prerequisites to establish fraudulent misrepresentation; namely:
"(1) That the representations were made to induce the defendants to act; and
"(2) That such representations were believed to be true by such defendants; and
"(3) That such defendants did, in fact, act upon the representations without any absence of due care on their part and to the damage of such defendants.
"It was further set forth in the suggested proposed amendment to the defendants' answer: `. . . At no time during the negotiations and the life of the broker's contract did the agents of Wauwatosa Realty Company advise the defendants of the fact that any such loan could be or was procured.' . . .
"The mere allegations that the agents of the plaintiff had failed to advise the defendants relating to the loan referred to in the proposed amended answer of the defendants does not support an allegation of fraud."
It further appears by affidavit dated November 30, 1956, of Clement Winzenburg, an officer of the plaintiff corporation, that on March 30, 1955, by prearrangement he, on behalf of the plaintiff corporation, met with the purchasers, their attorney, and the attorney for the defendant owners. That at said meeting the sellers, through their attorney, stated that they refused to go through with the sale claiming that the contract was breached because the sale was not closed by the 15th day of March, 1955. Then the attorney for the sellers advised the buyer and his attorney, and the affiant as representative of the plaintiff corporation, not to appear at the scheduled closing set for the next day. That at said time the attorney for the buyers, Nino T. Magestro and Nicoletta Magestro, his wife, stated to the affiant, officer of the plaintiff corporation, and to the attorney for the sellers, "that his clients would go through with the deal."
One of the plaintiff's supporting affidavits by Albert Tratnik, treasurer of the Security Savings Loan Association, on its motion for summary judgment set forth that the purchasers had qualified for the $35,000 first mortgage prior to the March 15, 1955, meeting. This is not disputed. The closing of the transaction in question was scheduled for closing at the Security Savings Loan Association in Milwaukee on March 31, 1955, at which place the purchasers were to secure the mortgage provided for in the agreement between the parties.
The opposing affidavit by the defendant, J. Henry Bishop, states, among other things, that the agreement of February 7, 1955, relating to the sale and purchase of the defendants' property in question, was conditioned upon the purchaser obtaining a first mortgage of $35,000, and that the agent of the plaintiff corporation had represented to such defendants that it was impossible to obtain a $35,000 mortgage and attempted to induce the defendants to increase the second mortgage provided for in the contract of sale and purchase, and that at no time during the negotiations did the agents of the Wauwatosa Realty Company advise the defendants of the fact that such loan could be procured or was procured.
The court in its opinion stated that based upon the unrefuted affidavit of the plaintiff, such plaintiff had produced a buyer ready, willing, and able to purchase the property of the defendants, within the terms and provisions of the contract and agreement entered into by plaintiff and the defendants. The court, in accordance with its written decision of June 25, 1957, signed its order granting summary judgment on the 10th day of July, 1957, and which was entered on the 2d day of August, 1957.
Pursuant to an affidavit and an order to show cause, a hearing was held before the lower court on the 20th day of September, 1957, on the defendant vendors' motion to set aside and reopen the summary judgment; requesting relief from that portion of the pretrial order dated November 5, 1956, which was made pursuant to a stipulation "that there shall be no amendments to pleadings;" and for leave to amend the answer. The new answer attempts to set up that fraudulent representations on the part of the agent and plaintiff induced the defendants not to complete the sale. Another defense is the failure of the purchaser to consummate the sale on or before March 15, 1955. The court in its review of the record points out the admitted essential facts:
"(1) That the plaintiff was requested to obtain a purchaser for the premises located at 3465-67 East Layton avenue in the city of Cudahy, county of Milwaukee, state of Wisconsin, for the agreed price of $60,500; said purchase price to be paid by the proposed purchasers in the form of cash and real estate to be transferred to the defendants; and that pursuant to such request the plaintiff corporation and the defendants entered into an exclusive written listing contract.
"(2) That during the life of such listing contract the plaintiff did produce a purchaser and the defendants did enter into a contract in writing with such purchasers, and that such contract set forth the manner in which the sale price was to be paid and that the date of the closing was to be on or before the 15th day of March, 1955."
It appears from the pleadings as of the 7th day of February, 1955, that the plaintiff had furnished a buyer within the terms of its contract.
Another defense set up in the proposed answer was the failure of the purchasers to consummate the sale on or before March 15, 1955. Nothing in the proposed answer indicates that time was of the essence of the contract between the defendants and the prospective purchasers. The court denied the motion of the defendants to set aside the judgment and for leave to file an amended answer.
Defendants in their motion to reopen the summary judgment filed a proposed answer in which they set forth that an officer of the plaintiff corporation had fraudulently and falsely represented to the defendants between March 1 and March 10, 1955, that the purchasers had not been able to qualify for the first mortgage and that relying upon said false and fraudulent representations of one of the agents of plaintiff corporation, the defendants refused to close the transaction on any other terms except those in the agreement, and were thereby induced to break the contract.
We conclude that the plaintiff had furnished a buyer within the provisions of its contract. Kruger v. Wesner (1956), 274 Wis. 40, 79 N.W.2d 354. We agree with the trial court that the affidavit of the defendants failed to contain any statement denying those set forth in the affidavit of Clement Winzenburg, secretary of the plaintiff corporation. Laughnan v. Griffiths (1955), 271 Wis. 247, 251, 73 N.W.2d 587.
The rule as to imputation of attorney's knowledge to his client is stated in 5 Am. Jur., Attorneys at Law, p. 302, sec. 74:
"The well-established general rule that notice or knowledge of an agent, while the agency exists and while he is acting within the scope of his authority, is imputed to his principal is applicable to the relation of attorney and client; notice to the attorney is notice to his client, at least where the attorney receives such notice in the course of the transaction in which he is acting for his client, and where it comes in such a manner that he may communicate it to the client or act on it without any violation of duty. The test is whether the information is of a character which it is the duty of the attorney to communicate."
It was said in Melms v. Pabst Brewing Co. (1896), 93 Wis. 153, 168, 66 N.W. 518, that:
"The rule itself is based upon the duty of the attorney or agent to disclose to his client or principal all knowledge and information he possessed at the time, in relation to the subject matter of the employment or agency, and the presumption is that he communicates it accordingly; . . ." See also Anno. 4 A.L.R. 1592, and Anno. 38 A.L.R. 820.
The trial court in its opinion said:
"The record does not disclose the attorney who represented the defendants at the afore-mentioned conference. However, it is evident that the subject matter of the discussion as appears from the affidavit in support of the plaintiff's motion for summary judgment related, at least in part, to the mortgage offered by the Security Savings Loan Association. Under such circumstances the client is chargeable with knowledge possessed by his attorney even though the client may not have acquired actual knowledge or information of all the facts and circumstances surrounding the transaction for which the attorney was retained to aid in the completion thereof. While it is suggested fraudulent representations on the part of the agent of the plaintiff induced the defendants not to complete the sale, the record indicates, as appears at least from the affidavit of Clement Winzenburg, that the attorney who represented the defendants had knowledge of an existing loan approved by the Security Savings Loan Association. This knowledge is imputed to the defendants."
In considering the question of failure of the purchasers to consummate the sale on or before March 15, 1955, the proposed answer failed to indicate that time was of the essence in the contract between the defendants and the prospective purchasers.
"The importance of time of performance depends upon the terms in the contract and the circumstances appearing from the acts of the parties. . . . One may not precipitately rescind a contract because of a mere delay and certainly not when he does it to avoid discharging an obligation in an executory contract which he has assumed and failed to meet; and which is the very object concerning which the contract was entered into. There are cases, and this is one, where the right to rescind and impose a penalty does not exist unless the rescinding party would be entitled to specific performance." Zuelke v. Gergo (1951), 258 Wis. 267, 271, 45 N.W.2d 690.
We find no abuse of discretion on the part of the trial court in refusing to reopen the summary judgment.
By the Court. — Order affirmed.