Standard Realty & Development Co. v. Ferrera

STONE, J. pro tem.

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Leroy McEvoy, a real estate broker, was employed by a Mr. Nipper, a representative of the Western Pacific Railroad Company, to purchase real property in Santa Clara County for Standard Realty and Develop

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ment Company, a subsidiary of the Western Pacific Railroad Company. McEvoy approached the defendants who owned the parcel of real property which is the subject of this action. There is a conflict in the evidence as to the representations made by McEvoy to the defendants, but the record is clear that he asked their consent to sell their property, advising them that he thought he could sell it and that he would try. The defendants agreed to pay McEvoy a 5 per cent commission if he sold the property.

This verbal transaction occurred about the 20th of January, 1953, and on the 26th day of January, 1953, McEvoy induced defendants to sign an option agreement whereby they agreed to sell the property for $32,500 to one E. Larsen. McEvoy paid the defendants $500 as consideration for the option. The option recited that the $500 was paid by one E. Larsen, but E. Larsen, who was an employee of a title company, knew nothing about the transaction and did not provide the $500 for the payment. The option also provided that defendants would pay McEvoy a 5 per cent commission. At no time did McEvoy disclose to defendants that he was also acting as agent for Nipper or the plaintiff.

Shortly after executing the option, the defendants learned that the Ford Motor Company was going to build a factory near their property. There was considerable negotiating from that time on between defendants and McEvoy, but E. Larsen, the other party to the option or Standard Realty and Development Company to whom E. Larsen assigned the option after its expiration on March 26, 1953, did not enter into the negotiations. On April 1, 1953, defendants, through their attorney, notified the California Pacific Title Insurance Company, which had been designated as escrow agent, that they were rescinding the contract with E. Larsen, the title company’s employee, and enclosed a check for the $500 consideration originally paid by McEvoy to defendants. Appellant as assignee of E. Larsen then brought this action for specific performance of the option agreement or for alternative relief by way of damages for breach of contract.