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the said corporation to be organized, and to pay to the defendant for the said property five hundred thousand dollars in cash, one million dollars in the first mortgage bonds, and one hundred thousand dollars in the stock, of the said company, all of which is set forth in the said agreement, which is hereby referred to, and, as Exhibit C, hereto attached and made a part hereof for greater particularity and exactness."
The plaintiff, therefore, bases his right to recover on the fact that he procured Mann to make a contract with the defendant on November 16, 1899. The claim is that the plaintiff is entitled to the commissions sued for, because he procured Mann to make this contract. If his contention is well founded, his right to the commissions accrued as soon as the contract was made. There is no averment as to what followed the making of the contract. The case made by the declaration ends with the signing of the contract. It is not alleged otherwise that Mann became the purchaser of the property. The agreement is made a part of the declaration. Reading it, we find that it is clearly binding on Sullivan to sell if Mann finally agrees to buy. But it clearly does not bind Mann unconditionally to purchase. Mann agrees "forthwith to select some one or more persons to go upon said lands and wharf and examine the same, and to make a report as to the amount of timber upon said lands, and the value thereof. *** Upon examination of said report, if it shall appear that the statements set forth in a written memorandum given to the said Mann as to said property are substantially correct," then, and in that event only, Mann agrees to organize a corporation to buy the property on terms stated in the contract. The contract as to Mann is tentative, his acceptance being dependent on the result of an investigation to be made in 60 days. Can it be true that, as soon as this contract was signed, the plaintiff, who was employed to sell the property, was entitled to commissions, whatever the person or persons selected to examine the property might report? If the prospectus was untrue, was he entitled to commissions? Has he earned the commissions, under an employment to sell, by preparing a prospectus showing the great value of the property, and finding a customer who agrees to take the property if the description and estimated values are substantially correct? Did Sullivan, when he signed the contract with Mann, a contract not binding on Mann unless Mann's investigations confirmed Milliken's prospectus, become indebted to Milliken for commissions on the agreed price? Consider the question. in this way: The authority which Sullivan gave Milliken to sell the property, of course, authorized him, as Sullivan's agent, to make a written offer to sell it. Except for the changes as to the terms of sale, he might well have signed as agent for Sullivan the contract with Mann. Now, if he had signed an agreement binding his principal to convey the land to Mann on the terms and at the price named in his authority, and Mann had agreed to buy the land, if, on the report of experts to be appointed to examine it, it was found that the prospectus prepared by Milliken was substantially correct. would Milliken be entitled to commissions, as on a sale. whether Mann completed the purchase or not? Whether the land was examined by the experts or not? Whether the descriptions and esti
mates prepared by Milliken were true or not? We cannot think he would have earned his commissions by making such contract. To so hold would give the agent great advantage of his principal, and would encourage him to exaggerate the value of the property in his dealings with customers. If he was reckless in his descriptions and extravagant in his valuations, he might easily find a customer to contract to buy the property if it was found to be as valuable as the agent said it was. Such performance, surely, would not entitle him to commissions.
To show that the contract is binding on Mann, it is said that Sullivan could recover damages for the failure by Mann to complete the purchase. This proposition need not be examined further than to say it is clear that such damages could not be recovered without alleging and proving that the prospectus prepared by Milliken was substantially correct, or at least that the persons appointed to examine the property reported it so. An action for damages might lie on the averment that it was Mann's duty to appoint persons to examine the property, and that he failed to do so, and that the prospectus was substantially correct. But the declaration in question contains no averment of fact which shows that a recovery could be had in damages by Sullivan in a suit against Mann for a breach of the contract.
It is also said that the contract in this case was one of sale, because it could be specifically enforced. The question on this suggestion here is, could it be specifically enforced against Mann, admitting the averments of the declaration to be true? That it is a contract to sell that could be enforced by Mann against Sullivan, if Mann performed his part of the contract, may be admitted. Sullivan bound himself to convey. But Mann has not bound himself unconditionally to purchase. He stipulates for time to have the property examined, and agrees to purchase only in the event that it is found to conform to the prospectus. When it appears by the contract, in its express terms, that it was intended to be binding upon one of the parties alone, it may be specifically enforced against that party, although the remedy cannot be granted to him against the other party. Pom. Cont. § 169. The declaration in this case does not describe a contract for which Sullivan would have a remedy in equity for specific performance. Mann agreed to buy on condition that the prospectus was shown to be substantially correct, and there is no averment that it is correct. Unless the property met this requirement, there was no "true contract" of sale. Id. § 334. The prospectus not being substantially correct, the contract would not bind Mann, or at least he could revoke it. A court of equity will not enforce specific performance against a party who has the power of revocation. Southern Exp. Co. v. Western North Carolina R. Co., 99 U. S. 191-200, 25 L. Ed. 319. The contract pleaded is not a completed sale, and, on the facts averred in the declaration, it is not a contract that Sullivan could specifically enforce against Mann. Mayer v. McCreery, 119 N. Y. 434, 23 N. E. 1045. The declaration shows nothing done by Milliken to earn a commission, except to procure the making of the contract with Mann. To show a legal
claim to commissions, it must allege a completed sale, or an enforceable agreement for sale. Hammond v. Crawford, 14 C. C. A. 109, 66 Fed. 425; Jacobs v. Shenon, 2 Idaho, 1002, 29 Pac. 44. Securing a preliminary or tentative agreement not shown to have resulted in a complete sale, and not binding on the proposed purchaser, is not sufficient. Hale v. Kumler, 29 C. C. A. 67, 85 Fed. 161. In such cases nothing should be left to conjecture or speculation. "There should have been as much certainty on the one side of the contract as upon the other. ** **The broker must complete the sale (that is, he must find a purchaser in a situation, and ready and willing, to complete the purchase on the terms agreed on) before he is entitled to his commissions." McGavock v. Woodlief, 20 How. 221, 227, 15 L. Ed. 884. The declaration states that the plaintiff, at the request of the defendant, “prepared a written memorandum describing the property." The action, however, is not for such service. The declaration, we think, is properly construed in that respect by the learned attorneys for the defendant in error, in their printed argument, when they say this is an action "to recover $100,000 commissions alleged to have been earned by Milliken by selling," etc. We have so considered it. The services were performed under a special employment to sell, and no right to recover on the quantum meruit is asserted.
Tested by these principles and authorities, the declaration does not show a right of action against the plaintiff in error, and the demurrer to it should have been sustained.
The judgment of the circuit court is reversed, and the cause remanded, with instructions to set aside the verdict of the jury, sustain the demurrer to the declaration, and to grant a new trial, proceeding according to law and the views herein expressed. Reversed.
MCCORMICK, Circuit Judge. I agree with my Brethren that the judgment of the circuit court in this case should be reversed, and the cause remanded to that court, with direction to award the defendant a new trial; but I am unable to agree with them in the ground on which they base the decision of the court. I do not construe the thirteenth count in the declaration as an action to recover compensation stipulated for in a written contract. Exhibit A, attached to that count, makes no mention of compensation. It simply authorizes and empowers the plaintiff to sell certain property of the defendant at a price named. Exhibit B shows only some of the services rendered by the plaintiff to the defendant; and Exhibit C helps to show further the services rendered by the plaintiff, and accepted and acted on to the extent therein shown by the defendant. And the count claims that, in pursuance of his employment, the plaintiff procured that the defendant and one W. D. Mann should and did on November 16, 1899, enter into a written contract by which the defendant agreed to convey the property mentioned in the written authority and memorandum set forth as Exhibits A and B, which contract of November 16, 1899, is the Exhibit C attached to the count; and the plaintiff avers that by reason of the premises he became entitled to demand and receive from the defendant, and the
defendant became obliged to pay to the plaintiff, for his services aforesaid, a large sum of money, to wit, the sum of $100,000. How this can be construed as other than demanding the reasonable compensation for the services shown to have been rendered, I confess my inability to understand.
The twenty-fourth error assigned is, in my judgment, well taken. It is thus stated in the record:
"Twenty-Fourth Assignment of Error. After the jury had rendered their verdict, to wit, 'We, the jury, find for the plaintiff in the sum of thirty-one thousand nine hundred and fifty dollars, less six thousand nine hundred and fifty credit, with New York interest,' and after the jury had been polled, and each had said that it was his verdict, and after the said verdict had been read and ordered to be received, and after the other proceedings shown in the bill of exceptions, the court said to the jury: 'Gentlemen of the Jury: In this case you have found for the plaintiff, and you have found against the pleas of the defendant. You have found that the plaintiff has a right to recover. The court charged you that the only testimony,-charged you heretofore, and now I repeat, that the only testimony before you bearing, as I recollect it, upon the question of amount, was the testimony of Mr. Milliken, to the effect that in New York City, where the transaction took place, the customary and usual percentage was from five to ten per cent. on the full face value of the one million six hundred thousand dollars, and that he had agreed to take that amount as his compensation,-the amount of five per cent. You will take the case, gentlemen.' The defendant then and there, before the jury retired, excepted to the said action of the court. This assignment is on the ground that after the jury had rendered their verdict, and said verdict had been received by the court and ordered recorded, the court had no authority to again submit the matter to the said jury, or to charge them concerning their verdict."
And on this ground I concur in the judgment of reversal. Taken in connection with the other proceedings shown by the bill of exceptions to have been had at the time, the instruction was equivalent to the general charge to find for the plaintiff on the merits, and to render their verdict for 5 per cent. commissions on $1,600,000, viz., for $80,000, less the admitted credit. The jury so understood it, and returned their verdict accordingly:
"We, the jury, find for the plaintiff in the sum of $80.000, with interest from the commencement of this suit, less the sum of $6,950, with interest from January 8, 1900."
This shows clearly the taking of the case entirely from the jury, and substituting for their verdict the finding of the court.
(113 Fed. 113.)
MCNAIR et al. v. MCINTYRE et al.
(Circuit Court of Appeals, Fourth Circuit.
February 4, 1902.)
Validity of mortgage given by partnership is not affected by bankruptcy proceedings within four months thereafter against one of the partners alone.
2. SAME-COSTS OF SALE.
The proceeds of property of a bankrupt subject to liens should first be charged with the costs of sale, and the liens be then paid out of the remainder, according to their priority.
A creditor given a mortgage for past indebtedness within four months of bankruptcy proceedings against the debtor may retain the preference, though brought into the proceedings in invitum; no claim being made against the general estate, and the mortgage being executed with no intent to give a preference and no knowledge of the insolvency.
Petition for Revision of Proceedings of the District Court of the United States for the Eastern District of North Carolina, at Wilmington, in Bankruptcy.
E. K. Bryan, for petitioners.
Iredell Meares, for respondents.
Before GOFF and SIMONTON, Circuit Judges, and JACKSON, District Judge.
SIMONTON, Circuit Judge. This case comes up upon a petition to superintend and revise in matter of law proceedings in the district court of the United States for the Eastern district of North Carolina, sitting in bankruptcy. 109 Fed. 857. The facts of the case are these: The firm of McNair & Pearsall were creditors of the firm of Sanderlin & McMillan. On 13th of September, 1900, Sanderlin & McMillan executed to McNair & Pearsall a chattel mortgage to secure a sum of $1,500, of which $1,282.10 was cash then lent, and the remainder an amount then due by Sanderlin & McMillan to the mortgagees on open account. The personalty mortgage was a sawmill plant at McKee's Cut, on the Carolina Central Railroad, in North Carolina. The mortgage was duly recorded. On the same 13th September, 1900, J. B. Sanderlin, one of the firm of Sanderlin & McMillan, executed a chattel mortgage to McNair & Pearsall, securing the sum of $2,500, of which sum $805.52 was cash then advanced to him, and the remainder was the amount of an open account at that date due by Sanderlin to the mortgagees. This also was duly recorded. The firm of Sanderlin & McMillan was dissolved in October, 1900. In January, 1901, within four months of the execution of these mortgages, Sanderlin was adjudged a bankrupt. Stephen McIntyre was made trustee of the estate. The trustee took possession of all the property in which Sanderlin had an interest, including the property covered by these two mortgages, and under proceedings instituted by him in the bankrupt court, to which he made McNair & Pearsall parties, sold the mortgaged property free of all liens. Up to the date of these proceedings McNair & Pearsall had not appeared in the bankruptcy court, and had not made any proof of claim.
The question made is as to the disposition of the proceeds of the sales of the mortgaged property. The property mortgaged by the firm of Sanderlin & McMillan brought $2,308.50. That mortgaged by Sanderlin alone brought $2,605.50. The referee proposed to pay out of the proceeds of the first-named mortgage two small liens in existence at its date held by other parties, and then to apply the remainder to the payment of the chattel mortgage given by Sanderlin & McMillan, which firm has not been adjudicated bankrupt. He also proposes to charge against each lien so paid the proportionate part of the expenses of sale as its amount bears to the total proceeds.