Klinger v. Realty World Corp.

California Court of Appeal Dec 17, 1987 No. No. G002591Published

Before: Crosby

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Holding. The court held that Realty World was not liable for a commission on a franchise it did not own, but that its conditional offer to pay an undisputed debt did not stop the accrual of prejudgment interest.

Issues

Whether substantial evidence supported the trial court's finding that Realty World was not liable for a commission on the sale of a franchise it did not own.
Whether a conditional tender of payment of an undisputed debt stops the running of prejudgment interest under Civil Code section 1504.

Disposition. modified and affirmed

Quotations verified verbatim against the opinion

“The trial court determined Klinger had an agreement to receive a commission from Wert and R. W. Western, owners of the San Femando Valley franchise, but not from Realty World, which did not own the franchise”

“By coercively tying the two sums together, in the hope that Klinger would forego the disputed claim in exchange for the immediate payment of the concededly valid one, Realty World forfeited the right to-stop interest on the $7,500.”

[1551]Opinion

CROSBY, J. —This is a squabble between a realty company and an agent hired to market one of its franchises. Real estate salesman William Klinger contends the trial court erred in failing to award a commission from Realty World Corporation for the sale of a second franchise. He also challenges the court’s computation of prejudgment interest on the commission due for the sale of the first. Only the latter contention has merit.

Realty World, a nationwide real estate franchiser, sells area licenses to real estate brokers who then subfranchise offices in their regions. William Janeski was president of Realty World in January 1978 when a great deal of money was found to be missing from a client trust account in the Greater Los Angeles/San Fernando Valley regional franchise, owned by R. W. Western, Inc. Gilbert Wert, a 50 percent owner in R. W. Western, was implicated in the misdeed.

In a settlement with the California Department of Real Estate, Realty World guaranteed repayment of the missing funds by Wert and R. W. Western. To compensate Realty World for this and the damage to its reputation, R. W. Western agreed to divide the large scandal-plagued region. It reconveyed a new Los Angeles region to Realty World and retained a San Fernando Valley region. The settlement also required Wert to divest himself of ownership in any Realty World franchises.

William Klinger, then marketing director for R. W. Western, sold individual franchises to real estate brokers in the regions owned by the company. Following the settlement, Janeski enlisted Klinger’s aid to sell the new Los Angeles region, offering him a 10 percent commission for any “Realty World Region or Regions” sold through his efforts. On behalf of R. W. Western, Wert asked Klinger to find a buyer for the San Femando Valley region, authorizing him “to negotiate a sale of same subject to price, terms and conditions acceptable to me.”

Klinger found a buyer interested in purchasing both regions. On February 28, 1978, the principals and Klinger met to negotiate the deals; and the buyer agreed to pay $75,000 for the Los Angeles region and $160,000 for the San Femando Valley region.

On March 8 Klinger sent a mailgram to Wert confirming the “deal [was] materializing” and memorializing Wert’s assent to Klinger’s “remuneration.” On March 9 Janeski acknowledged Realty World’s obligation to pay

Klinger v. Realty World Corp.

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