REES v. PELLOW, 97 F. 167

LURTON, Circuit Judge, having made the foregoing statement of facts, delivered the opinion of the court. The agreement between Rees and Pellow, evidenced by the letter of August 5, 1898, has a double aspect, and must be construed accordingly: First, it was an option to join Mitchell, and sell to Pellow at a fixed price; second, this option was coupled with an agency to sell, in conjunction with Mitchell, to others at the same price. So far as it was an option to Pellow himself, it was revocable at any time before acceptance. Stitt v. Huidekopers, 17 Wall. 384-394.

There is no pretense that Pellow ever accepted the offer, or even had any purpose to do so. This aspect of the case may, therefore, be dismissed. ' We come to the proposition as one of agency. There was no consideration for this agency, and no limit upon its duration. It was, therefore, subject to be terminated in good faith at the will of the principal; otherwise, there would be no means of relieving the principal from an authority exercised under it at any length of time after it was made, no matter what the change of circumstances. Stitt v. Huidekopers, supra; Story, Ag. § 403; Hale v. Kumler, 54 U. S.

App. 685-695, 29 C. C. A. 67, and 85 Fed. 161. In Sibbald v. Iron Co., 83 N. Y. 378-384, the rule as to revocation is very admirably stated as follows: “Where no time for the continuance of the contract is fixed by its terms, either party is at liberty to terminate it at will, subject only to the ordinary requirements of good faith. Usually the broker is entitled to a fair and reasonable opportunity to perform his obligation, subject, of course, to the right of the seller to sell independently.

But, that having been granted him, the right of the principal to terminate his authority is absolute and unrestricted, except only that he may not do it in bad faith, and as a mere device to escape the payment of the broker’s commissions.” So far as this option was coupled with an agency, it was terminated by Rees’ letter of November 6, 1896, expressly revoking it. That revocation, as between principal and agent, took effect from the time when it was delivered in due course of mail at the usual place of business and address of the agent.

The letter was addressed to Negaunee, the residence of Pellow, and was duly received at his office, where it lay unopened until his return, November 28, 1896, from a trip to Canada. Rees was unadvised of any change in his address, or of his absence from his residence, and in good faith addressed and mailed his letter of revocation to his only known and usual address. If Pellow neglected to notify Rees of his absence and changed address, or to malee any arrangement to have his mail forwarded, he cannot escape the consequences of his own fault.

Undoubtedly, the general rule is that a revocation only takes effect, as between principal and agent, when it is made known to him. But we are of opinion that, under the facts of this case, he received constructive notice that his agency had terminated. The case is not embarrassed by any acts or conduct of Pellow done in furtherance of his agency between the date when he ought to have received this letter in due course of mail and his actual knowledge of revocation, November 28, 1896. In that interval he did nothing under his authority, and no third person acquired any rights, in ignorance of the revocation.

The sale subsequently made was made by Rees alone, though made to Corrigan, McKinney & Co., with whom Pellow had commenced negotiations immediately upon his employment as agent. • Inasmuch as Pellow did not consummate a sale before Ills authority was revoked, it is clear that lie cannot recover upon the theory that he had made a sale of the property, unless that revocation was in bad faith, and the sale subsequently consummated one which was effected through his agency as the procuring cause. The contract between Rees and Pellow was a peculiar one.

Pellow’s compensation depended entirely upon his being able to make a sale at a price in excess of two dollars per share. If he sold at that price, he would receive no compensation, no matter how valuable his services, nor how large his expenditures. He was to be compensated by receiving for his services all he should receive over the fixed price at which Rees obligated himself to sell the stock through or to Pellow.

It is clear, therefore, that unless Fellow was prevented from consummating a negotiation, which was evidently approaching success, by a revocation made for the purpose of defeating his commissions, and taking’ advantage oí his services without compensation, there can be no recovery. Did Rees capriciously defeat a sale about to be made by Pellow for the purpose of availing himself of his services, and avoiding the payment of the agreed compensation?

The evidence establishes the fact that Pellow began negotiations for a sale to Corrigan, McKinney & Co., and that he diligently prosecuted his efforts to bring the minds of seller and buyer together down to the conclusion oí the conference between Bees and Corrigan at Cleveland in September. The evidence hi also satisfactory that in the Cleveland conferences Pellow, though not personally present and assisting, was represented by his kinsman, Mitchell.

Pellow had. offered the stock at $3.50 per share, a price which would have secured to him a profit of 50 cents on each share if a sale could have then been consummated, subject to a deduction of 23 cents per sisare under the modification made in favor of Rees. The minds of the parties were not brought together at Cleveland. The option contract contemplated a sale for cash. A purchaser ready and willing to buy upon a credit, not satisfactory to Ms principal, was not a fulfillment of his obligation.

Rees was willing to make some concessions in respect to the terms of payment, but held firmly to the determination to act with Mitchell, and make no sale to which Mitchell, as a large shareholder, should not agree. Mitchell was not willing to make as full a concession as Rees seems to have been. The proposed, purchasers were either unwilling or enable to make such cash payment, or otherwise secure deferred pay-men is, as was satisfactory to either Mitchell or Rees. The Cleveland conferences, therefore, ended without any meeting of minds. From that time Pellow ceased to be a factor in the matter.

He went off to Canada, and remained until late in November, and apparently abandoned all further efforts to make a sale. After that Mitchell acted only for himself, and there is not the slightest evidence that lie at any other time or occasion, save during the Cleveland conferences, acted for or represented Pellow as the agent for Rees in making a sale of the property, Efforts were at once resumed to obtain a concession from the lessors of the Blue Iron Mining Company in respect to royalty upon ore taken from the company’s mines.

Efforts were also made to secure a supply of coal before winter set in, by which active mining might be resumed. The correspondence between Bees and Mitchell which followed the conclusion of the Cleveland conferences tends to show that Bees was reluctant to abandon the idea of a sale to Corrigan, McKinney & Co., and that he, from time to time, resumed his negotiations with them, and endeavored to obtain some agreement from Mitchell in respect to a cash payment which would enable him to press that firm up to the point of buying by meeting their wishes in respect to terms of payment.

Mitchell, on the other hand, was much more disposed to hold firmly for a considerable cash payment, and as the prospect of obtaining a concession in the matter of royalty increased he stiffened in his ideas of the value of the stock. So, also, as the prospect of the elevation of William McKinley to the presidency of the United States increased, both Mitchell and Bees deemed the prospect of an advance in iron to improve, until finally Mitchell, upon his confidence in the improved business conditions of the country, raised his price to three dollars per share, and wired Bees to hold firmly for that advance.

On November 6, 1896, the circumstances affecting the value of the subject-matter of this agency had so changed as that neither Mitchell nor Bees was longer willing to part with stock at less than three dollars per share. In this changed condition of things, Bees revoked his option to Pellow. That at that time Corrigan, McKinney & Co. had not accepted the terms upon which Pellow had offered them this stock is not disputed. Those terms were two and one-half dollars per share; one dollar per share to be paid in cash, and the remainder on time, secured by the stock as a collateral.

The price had been satisfactory, but the parties could not agree upon the terms of payment, and this was the situation down to the middle of November. Being at liberty to advance the price, Bees did so by demanding three dollars per share. The terms of payment being also made acceptable, a bargain was struck, and a sale made November 24, 1896. The duty which a broker employed to make a sale assumes is that of bringing the minds of the buyer and the seller together for a sale. This includes the price and the terms of sale. When this has been done he has earned his commission, for his contract has been performed.

McGavock v. Woodlief, 20 How. 221; Kock v. Emmerling, 22 How. 69. There is no possible doubt, upon the evidence in this case, that Pellow never did bring the buyers and sellers to an agreement. They were utterly unable to agree upon the terms of the sale, though not differing as to the price. This was the indisputable condition of the matter when the Cleveland conferences ended, and this was the equally indisputable situation on the 6th day of November, when his authority was revoked, although negotiations had been resumed by Bees between those dates. The efforts of Pellow had been unsuccessful.

He had been unable to procure a purchaser upon terms acceptable to himself and to both the buyer and seller. Down to the date of the revocation the seller was at liberty to advance the price upon Corrigan, McKinney & Co., for the latter had not accepted the terms which. Pellow had been authorized to offer. At that date the circumstances affecting the value oí the stock had changed. Rees was not under any moral or legal obligation to abide longer by Ms proposition to Pellow, and was at full liberty to revoke his option.

There was no sufficient evidence of want of good faith, in then revoking his agency to justify the submission of this question to the jury. For much the same considerations we think it was error to submit the question to the jury as to the reasonable value of Fellow’s services. The agreement of August 5, 1896, was not the ordinary brokerage contract between principal and agent. It was an option for a sale, in conjunction with Mitchell, to Pellow himself, or to one designated by him, at a fixed price.

Fellow’s compensation depended upon his making a sale at something in excess of the fixed price stipulated in the option. Xo matter .how valuable his services, he expressly stipulated that fiis compensation should depend entirely upon a sale, while the option was in force, for a price in excess of two dollars per share. He made no such sale before the revocation, and there was no evidence, as we have already seen, of a sufficiently substantial character to require that the court should submit to the jury the question as to whether Rees acted in good faith in revoking his authority on the 6th of November.

Unless there was evidence which would have reasonably justified, a jury in finding that, when the authority was revoked, a negotiation instituted by Pellow was plainly and obviously approaching success, and that Rees, with a knowledge of this, revoked his authority for the purpose of concluding the sale without his assistance, and of avoiding the payment to him of the price obtained in excess of the price fixed in the option agreement, there was no case for the jury at all.

H the revocation was in bad faith, it might well be said that the due performance of his obligation was prevented for the purpose of concluding the sale himself, and saving the stipulated compensation. In this event the principal would not be porral ¡ted to rely upon the defense that the broker had not performed his contract, in order to defeat a recovery of the stipulated commissions.

But if, on the other hand, Rees acted in good faith, not intending to escape the payment of commissions, but moved only by the changed circumstances, and in Ms own interest, and while the negotiations were unsuccessful or inconclusive, he had the absolute right to terminate the option. After such a revocation he was at perfect liberty to resume or continue efforts to sell to a customer who had been unsuccessfully approached by Fellow, even though he, to some extent, availed himself of the former unsuccessful labors of Pellow. The case of Sibbald v. Iron Co., 83 N. Y. 378-384, and the case of Wylie v. Bank, 61 N.

Y. 415, are well-considered cases supporting the view we have expressed, and meet our approval. The case of Stitt v. Huidekopers, 17 Wall. 384, is also much in point in its facts, and lends support to the conclusion we reach as to the right of revocation in good faith of an option much like that here considered. It is true that that case did not involve the question presented here by the count upon a quantum meruit, and turned alone upon the count for commissions under the contract.

But our view is that, under an option such as that here involved there can be no recovery for services unless the authority was revoked in bad faith, and that in that event the recovery would be under the contract for the full stipulated compensation, the principal not being suffered to rely upon a nonperformance, due to his own wrongful interference for the purpose of making the sale himself and avoiding the agreed commission. Pellow had had from August 5th to November 6th to consummate a sale. Prom October 1st to the latter date he was out of the country, and engaged in no effort whatever.

Mitchell, who was his kinsman and friend, and who had acted for him at Cleveland conferences, did not act for or represent him thereafter, hut, upon the contrary, says he felt entirely free to act for himself, and in his own interest. Neither can we construe the modification secured by Rees in respect to Pellow’s compensation as operating to make Rees his continued agent and representative in further efforts to bring about a sale after the failure of the anticipated sale at Cleveland.

That modification was intended to apply to the then anticipated sale, — a sale which, if made, would be due, as Rees then claimed, to certain outside concessions and promises made by Mm. It did not operate to make Rees Pellow’s agent for the subsequent sale of his own stock for Pellow’s benefit. Our conclusion is that the sole and only ground upon which defendant in error could recover compensation was upon the ground that his agency to sell had been revoked in bad faith, and as a mere device to defeat Pellow’s interest in a sale about to be made.

That failing, there should have been a direction to find for the plaintiff in error. The court erred in submitting to the jury the question of the reasonable value of the services of the defendant, and in the terms of the charge heretofore set out, and in refusing to charge, as requested, that there could he no recovery, upon the facts of the case, under the quantum meruit count of the declaration. The judgment must be reversed, and a new trial awarded.