caused the same to be filed for record in the recorder's office of the county wherein the property described is located. The court found the allegation as to the misrepresentation of the value of the property to be true, but also found that plaintiff at the time she placed her executed deed in the hands of Bunch was aware of the true value of said property. For this reason it found, as a conclusion of law, that plaintiff waived the alleged fraud due to false representation as to the value of the property.

Appellants insist that by reason of this finding the allegation of misrepresentation as to the value of the property must be disregarded and the sufficiency of the complaint considered as based upon the allegations with reference to the false statements as to title and lease. Upon this and other grounds hereinafter noticed they urge that their general demurrer interposed should have been sustained. The sufficiency of a complaint tested by a general demurrer must be determined by the alleged facts contained therein, the truth of which, for the purposes of the demurrer, is admitted. Whether an alleged fact be true or false is immaterial in the determination of the question raised by the demurrer. Hence, if it be assumed that the allegations regarding misrepresentation as to the lease and title are, standing alone, insufficient to constitute a good complaint, we must, nevertheless, hold the complaint not obnoxious to a general demurrer, for the reason that it stated a cause of action by reason of the allegation as to false representation as to value of the property.

It is further urged that the demurrer should have been sustained as to defendant Boyd for the reason that it appears from the complaint that the false representations upon which plaintiff relied were made by defendant Bunch, and hence, there was no cause of action stated against the defendant Boyd. It clearly appears from the complaint that Bunch acted in the transaction as the agent of Boyd, and she will not be heard to disclaim responsibility for his acts and at the same time retain the benefits accruing therefrom. It is fundamental law that a principal is bound by the acts of his agent so far as he acts within the scope of the agency.

Boyd's deed of conveyance passed to plaintiff, and it is claimed by reason thereof plaintiff's cause of action was on the deed covenants for damages, unless the insolvency of defendants be alleged; in other words, that by successfully perpetrating the fraud to the extent of delivering a deed to plaintiff she was thereby deprived of maintaining an action for fraud, but must rely upon the covenants contained in the contract fraudulently imposed upon her. Conceding, however, that plaintiff had an adequate remedy at law, such fact does not deprive her of the remedy afforded by rescission. Section 1689 of the

contract may rescind the same if the consent of the party rescinding * obtained through

was fraud

(1)

exercised by or with the connivance of the party as to whom he rescinds, or of any other party to the contract jointly interested with such party." This section does not limit the right to maintain such action to cases where the insolvency of the defendant is alleged. Where the assent of a party to a contract has been procured by means of fraud, such party, acting promptly upon obtaining knowledge thereof, and in the absence of any acts constituting a waiver of such fraud, may either rescind or complete the contract on his part and sue upon the covenants for damages. Fountain v. SemiTropic Land & Water Co., 99 Cal. 677, 34 Pac. 497; Schmidt v. Mesmer, 116 Cal. 267, 48 Pac. 54.

It is unnecessary to discuss other points urged in support of appellants' claim that the complaint fails to state a cause of action. Suffice it to say that, while it may be objectionable in form, it is not subject to the general demurrer interposed.

It is contended that the findings do not support the judgment. As to the lease, the court finds the representations were made as alleged, and that they were knowingly false and were intended to deceive plaintiff and induced her to make the exchange and were the procuring causes of the transaction. It is also found that the property was misrepresented as being free and clear of incumbrances, except as stated; whereas, in fact, there were other incumbrances against the properey to the extent of $100, which fact was known by defendants, but they fraudulently, with intent to deceive, concealed from plaintiff the fact that said property was subject to an additional incumbrance of $100. Counsel insists that these findings show the breach to be one of minor importance and such as can be readily compensated in damages. In support of this position he cites Fountain v. Semi-Tropic L. & W. Co., supra. That case bears no analogy to this. It was there sought to rescind for failure, in part, of the consideration due to a breach of covenant on the part of the defendant to pipe water to land. There was no element of fraud in the case at all. The action at bar is not one for breach of covenant, but one whereby plaintiff seeks to be freed from the obligation of covenants obtained from her by means of fraud. Counsel's argument is based upon an erroneous theory that the action should be upon the covenants contained in the deed, which plaintiff seeks to have canceled. "The fraud is the essential thing, and while it must be coupled with loss, injury, damage, the precise amount of such damage is of secondary importance." Wainscott v. Occidental, etc., Association, 98 Cal. 253, 33 Pac. 88. The judgment is affirmed.

BACON v. DAVIS et al. (Civ. 491.) (Court of Appeal, Third District, California. Sept. 22, 1908. Rehearing Denied by Supreme Court Nov. 19, 1908.)

CONVEY

1. FRAUDS, STATUTE OF (§ 115*) · ANCES OF REAL ESTATE-SUFFICIENCY OF INSTRUMENT "THEREUNTO.'

Civ. Code, § 1741, provides that no agreement for the sale of real estate is valid unless in writing, subscribed by the party to be charged. "or his agent thereunto authorized in writing." and validates any agreement for the sale of real estate which is either subscribed by the owner or his agent, authorized in writing; the word "thereunto" being an elliptical form of expression for the phrase "to do that.”

[Ed. Note. For other cases, see Frauds, Statute of, Cent. Dig. § 242; Dec. Dig. § 115.*] 2. BROKERS (§ 14*) CONTRACT OF EMPLOYMENT-CONSTRUCTION.

5. BROKERS (§ 14*)

CONTRACT OF EMPLOYMENT-CONSTRUCTION-TO SELL." Though the expression "to sell" is sometimes used in the sense of an executed contract of sale, or an agreement to sell as defined by Civ. Code. § 1727, the expression, when used in a contract giving a real estate broker the exclusive right "to sell" real estate, has acquired a restrictive meaning, and standing alone the werd "to sell" are not sufficient to authorize the broker to enter into a contract of sale binding the owner.

[Ed. Note.-For other cases, see Brokers, Cent. Dig. § 13; Dec. Dig. § 14.*

For other definitions, see Words and Phrases, vol. 7, pp. 6406, 6407.]

6. BROKERS (§ 14*)-EMPLOYMENT-AUTHORIITY OF BROKER.

The ordinary authority of a real estate broker deputed to sell real estate is simply to find a purchaser, and he has no power to bind his principal by a contract of sale, unless it was intended to confer such additional authority.

[Ed. Note.-For other cases, see Brokers, Cent. Dig. 13; Dec. Dig. § 14.*]

7. BROKERS (8 14*)-EMPLOYMENT-AUTHORITY OF BROKER-SALE.”

Under Code, §§ 1721, 1727, defining a "sale" as a contract by which one engages for a price to transfer to another a certain thing, etc., an instrument executed by an owner employing a

broker to procure a purchaser of real estate, which recites that, in consideration of the services of the broker, the owner authorizes him "to sell for me in my name and receipt for deposit thereon," for a specified time, the property described, for a price fixed, and agrees "to sell and convey by a good * grant," etc., gives the broker authority to contract for the sale to a purchaser procured by him.

[Ed. Note.-For other cases, see Brokers, Cent. Dig. § 13; Dec. Dig. § 14.*

For other definitions, see Words and Phrases, vol. 7, pp. 6291-6306; vol. 8, p. 7793.]

MENT.

Where an owner contracted to convey to any purchaser secured by a broker employed to procure a purchaser, the contract was for the benefit of a purchaser procured by the broker, within Civ. Code, § 1559, providing that a contract, made for the benefit of a third person, may be enforced by him.

[Ed. Note.-For other cases, see Brokers, Cent Dig. § 149; Dec. Dig. § 106.*]

10. CONTRACTS (§ 187*) — RIGHTS OF THIRD PERSONS.

It is not necessary that the parties for whose benefit a contract has been made should be named therein. It must appear by direct terms of the contract that it was made for their benefit.

[Ed. Note.-For other cases, see Contracts, Cent. Dig. § 798; Dec. Dig. § 187.*]

Appeal from Superior Court, Alameda County; W. H. Waste, Judge.

Action by F. P. Bacon against E. B. Davis and others. From a judgment for plaintiff, defendant E. B. Davis appeals. Reversed.

A. A. Sanderson and Reid, Black & Reid (John Garber, of counsel), for appellant. Powell & Dow (Snook & Church, of counsel), for respondent.

BURNETT, J. The importance of the principle and the value of the property involved justify a somewhat extended consideration of the transaction out of which has grown this litigation. The action was brought to determine the validity of an adverse claim, made by the appellant, defendant Davis, to certain real property on Broadway street, in the city of Oakland. Davis claims to have purchased the property, and in his amended answer and cross-complaint he sets forth the basis of this claim as resting in: First, a contract between plaintiff and the Laymance Real Estate Company, by which the said company was authorized to sell the property; and, secondly, a contract of sale made by said company with the defendant. The prayer is that plaintiff take nothing by the action, and that defendant have a decree of specific performance of said contract, and for general relief. The plaintiff interposed a general demurrer to the

amended answer and the amended crosscomplaint. Each demurrer was sustained, and thereupon, in due time, a judgment was entered for plaintiff as prayed for in the complaint, quieting his title as against any claim of said defendant. From this judgment the appeal is taken.

one

The said contract between the plaintiff and the Laymance Real Estate Company, as far as material to the present inquiry, is as follows: "Oakland, Cal., March 31, 1905. In consideration of securing the services of Laymance Real Estate Company, a corporation, and efforts on its part, and at its expense to obtain for me a purchaser for the property hereinbelow described, I hereby authorize said Laymance Real Estate Company exclusive right to sell for me, in my name and receipt for deposit thereon, for a term of sixty days from date hereof and until I give said corporation ten days' notice in writing to cancel this authorization, the following described property,-[describing it] for the sum of $135,000.00 net to me on the following terms, to wit, 20 per cent. cash on the delivery by me of a good and sufficient deed; balance to be paid as follows: note for $72,000.00 payable in one year after date, with interest at 7% per annum secured by a trust deed to the 151 feet on Broadway by uniform depth of 100 feet; one note for $36,000, payable one year after date with interest at 7% per annum, secured by a trust deed to all the balance of the land in said block 261 above described in the name of the Bacon Land and Loan Company. And I hereby agree to sell and convey by a good and sufficient grant, bargain and sale deed of conveyance and give the usual covenants therein to any purchaser obtained by said Laymance Real Estate Company, a corporation, and if sale is made, 15 days to be allowed to search title to said property. And I hereby agree that said Laymance Real Estate Company, a corporation, may retain all over said net sum for which they may sell said property as its expenses and said commission for services rendered. [Signed] F. P. Bacon. Witnessed by M. J. Laymance." The contract between the Laymance Real Estate Company and defendant Davis provided as follows: "Know all men by these presents: For a valuable consideration the receipt of which is hereby acknowledged by the Laymance Real Estate Company, a corporation, the duly accredited agent and on behalf of F. P. Bacon, the owner of the property hereinafter described, Elliott B. Davis hereby buys and the said F. P. Bacon by his duly accredited agent, the said Laymance Real Estate Company, hereby sells to said Davis, the said real property for the sum of $135,000.00, and the said Davis hereby deposits on account of said purchase price the sum of $5,000.00; the said sum of $135,000 to be paid as follows: [The terms here set out are the same as in the said contract

tate Company.] This agreement of sale is made in accordance with that certain written authorization dated Oakland, California, March 31, 1905, and signed and executed by said F. P. Bacon, authorizing the said Laymance Real Estate Company, a corporation, to sell said land for and in the name of said Bacon and to receipt for a deposit thereon and which said written authorization is recorded this first day of December, 1905, in the office of the county recorder of the county of Alameda, and to which said authorization and the record thereof in said recorder's office reference is hereby made for a more particular statement of the matters and things set forth therein." Then follow the description of the property and the signature of the parties. There is no claim by appellant of ratification of said sale by plaintiff. On the contrary, it is alleged in the answer that, when said plaintiff was informed of said sale, he repudiated it, "and still repudiates the said contract and agreement for the sale and purchase of said property, and has ever declined, and still declines, to perform the covenants and provisions of said contract for the purchase and sale of said property, or any of them."

The whole case, it will be seen, therefore, virtually hinges upon the construction of the terms of the said contract between Bacon and the Laymance Real Estate Company. It is not disputed that the agent had no authority to sell the property so as to bind the owner, unless the authority is found in the terms of said written authorization. Indeed both parties cite and rely upon section 1971, Code Civ. Proc., and section 1741, Civ. Code, to fortify their claims. It is sufficient to quote the latter, which provides that: "No agreement for the sale of real property, or of any interest therein, is valid unless the same, or some note or memorandum thereof, be in writing and subscribed by the party to be charged, or his agent thereunto authorized in writing." Some verbal criticism of the word "thereunto" is indulged by counsel, but its meaning seems altogether free from doubt. In simple language the section provides substantially that any agreement for the sale of real property to be valid and binding must be subscribed, either by the owner of the property, or by his agent who has been authorized in writing by said owner to enter into such an agreement. The word "thereunto" has its ordinary signification of "to that," and is obviously an elliptical form of expression for the phrase "to do that." Hence, as far as the agent is concerned, he must be authorized in writing "to do that," in other words, to execute an agreement of sale, to make it binding and operative. There is no escape from the proposition that, in order to determine the extent of the agent's authority, we must look to the terms of the instrument as they have been employed by the parties thereunto. Unless the Lay

ment of March 31, 1905, was expressly authorized to enter into a contract of sale of said property, then the owner had the right to repudiate as unwarranted the contract between said agent and the defendant Davis of December 1, 1905. It is not a question of express or implied authority. The fair import of the terms used, measured according to the established rules of interpretation, must clearly reveal the intention of the owner specifically to empower the agent to enter into a contract of sale of the property, in the ordinary acceptation of that term, or else the case of the defendant must fail. Of course no one could reasonably contend that any particular formula of words is required to convey such authority-that the owner must say, for instance, in hæc verba, "I authorize you as my agent to enter into an executory contract of sale"-but the language used must reach the same measure of potency when tried by the recognized standards, ⚫ and must positively authorize that very act.

It is not denied that, in our efforts to reach the intention of the parties to said instrument, we must invoke the ordinary rules for the interpretation of contracts. For instance, "The language of a contract is to govern its interpretation if the language is clear and explicit and does not involve an absurdity.” Section 1638, Civ. Code. "The whole of a contract is to be taken together so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other." Section 1641, Civ. Code. "The words of a contract are to be understood in their ordinary and popular sense rather than according to their strict legal meaning, unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed." Section 1644, Civ. Code. Taking up, then, the contract in question "by the four corners," and viewing it in the light of these familiar rules of interpretation, what authority is conferred upon the Laymance Real Estate Company in relation to the property therein described? In the first place, it must be obvious that, if the words are to be understood in their ordinary and popular sense, and if effect is to be given to all of them, the said realty company did not exceed its authority in entering into a contract of sale. There can be no doubt what the average man would understand from this language: "I hereby authorize said Laymance Real Estate Company exclusive right to sell for me in my name, and I hereby agree to sell and convey by a good and sufficient grant, bargain and sale deed of conveyance and give the usual covenants therein to any purchaser obtained by said Laymance Real Estate Company." It would be difficult to select more apt words, if their ordinary signification is to be regarded, to clothe the agent with ample authority to do what was done here. This is apparent from the definition in the

ponding noun "sale" is defined in section 1721 as follows: "Sale is a contract by which, for a pecuniary consideration, called a price, one transfers to another an interest in property"—and what is meant by the verb is disclosed in section 1727, wherein it is provided that: "An agreement to sell is a contract by which one engages for a price to transfer to another the title to a certain thing." Therefore, in the code sense, it is clear that Mr. Bacon's language imports this: I hereby authorize said Laymance Real Estate Company exclusive right "to transfer to another the title" to said property. But the expression "to sell" is sometimes used in the sense of an executed contract of sale, or an agreement to sell as defined by the Code. Barber Asphalt Paving Co. v. Standard Co., 39 App. Div. 617, 58 N. Y. Supp. 408; Rice v. Mayo, 107 Mass. 550. It has also a peculiar and restricted meaning acquired by usage, wherein it signifies to obtain a purchaser ready, willing, and able to buy, and it is the contention of respondent that in this last sense the term was used by the parties to said contract of March 31, 1905. It is urged that "the language is that usually found in contracts between owners of property and real estate agents, when the former list property with the latter for sale, and there is nothing to indicate that the parties to the contract in question intended anything further than that the real estate broker was given the exclusive privilege, for a limited period, of finding for plaintiff a purchaser. At the very outset of the authorization it is stated that the broker is to make efforts 'to obtain for me [plaintiff] a purchaser'; that is to say, the service of the broker was to consist in obtaining a purchaser, not in disposing of the property. When the defendant contends that the broker's authority 'to sell' carries with it the power of making a contract of sale enforceable by a proposed purchaser, he overlooks the code provisions of this state, and ‘also decisions of the courts of last resort, not only in California, but also in other states.""

We have already noted the code provisions to which he refers. We proceed to the consideration of some of the cases, as typical of the long list which is cited, illustrating this special and restricted use of the term "sale."

In Brandrup v. Britten, 11 N. D. 376, 92 N. W. 453, the court said: "The trial court held that, as a matter of law, the real estate brokers had not authority to sign the contract of sale, and that the defendant [owner of the property] is not bound thereby. This conclusion is sound, and must be sustained. In this state it is essential to the validity of a written contract for the real of real property signed by an agent that the authority of the agent to sign the same shall be embodied in a writing subscribed by the principal"— citing, as said by respondent, section 3887, Rev. Code, which is the same as subdivision 5. § 1624, Civ. Code, and said section 3960,

section 1741, Civ. Code. "It is well settled that the agency of such persons is limited to finding purchasers who are acceptable to vendors, * * and in the absence of express authority does not extend to signing contracts of sale in behalf of the principals. * A real estate broker may be given authority to execute contracts for his principal, but it is an additional authority. The instrument under consideration does not confer any such additional authority. It merely grants to the real estate broker 'the sale' or the selling of the land for a limited period, and for the guidance of such brokers it states the total net sum which the principal will accept, and the amount of cash payment which he will exact in case of a sale.

As will be seen by an examination of the instrument, the details essential to the consummation of a sale are omitted. It does not provide the length of time the deferred payments are to run, or how they are to be divided, or as to the rate of interest to be charged, or as to whether a deed shall be given to the purchaser and a mortgage to secure the deferred payments, or as to whether any deed shall be executed prior to the full payment of the purchase price. These omissions tend strongly to show that it was the intention of the parties to the instrument that the sale was to be approved, and the contract of sale executed, by the principal, and not by the broker."

A leading case upon the question, cited with approval by many courts, is Duffy v. Hobson, 40 Cal. 240, 6 Am. Rep. 617. It appears that the contract of sale there was executed by one Atkins as agent of Hobson, and in the name of the latter, the owner of the property. The only testimony as to the authority of the agent was his testimony that Hobson had told him to sell the lots for $2,000. He accordingly sold them to plaintiff for that price, and executed in the name of Hobson a contract in writing to convey. The agent then set a telegram to Hobson informing him of what he (the agent) had done. Hobson disavowed the transaction, and suit was brought for specific performance. The court held that the authority of Atkins to sell the property was not sufficient to authorize him to execute the contract of sale to Duffy, but was a mere authority from Hobson to obtain a purchaser at the price of $2,000. At that time the present statute of frauds was not in force, and hence the verbal authority was of equal force to a similar written one now. In the discussion it is said: "This is the settled construction put upon employment of professional brokers to sell' or 'to close a bargain' concerning real estate, and we know of no reason why the same language employed to express the authority of any other agent 'to sell' should have a more extended meaning. Besides, a sale of real estate involves the adjustment of many matters in addition to fixing the price at which the prop

willing to deal with a particular proposed purchaser on any terms. He may consider him pecuniarily unable to comply with the contract, even if the title prove satisfactory, and he may decline to bind himself to convey to such purchaser at the end of the time necessary to examine the title, because he might thereby in the meantime lose an opportunity to sell to some other person who might desire to purchase, and in whose good faith and ability to pay he reposed entire confidence. All these and many other like considerations might, and usually do, arise in the mind of the vendor. Now a mere authority to sell can hardly confer power upon the agent to determine all these matters for his principal, so as to bind him by his determination." The court concludes that "while it is true that a power to sign the name of a principal to the contract may be given verbally, we think that the words used for the purpose should be distinct and clear in their meaning and import, and should, with a requisite degree of certainty, manifest the intention of the principal to do something more than merely to employ a broker."

In Armstrong v. Lowe, 76 Cal. 616, 18 Pac. 758, the language used was: "You are hereby authorized to sell my property and receive deposit on same [describing it] for the sum of $200.00 per acre cash. I hereby agree to pay you the sum of 5 per cent. for your services in case you effect a sale, or find a purchaser for same, or will pay you 21⁄2 per cent. of above commission should I sell the same myself, or through any other agent." The court said: "The sole question in this case is whether the real estate brokers whom the defendant employed 'to sell' certain real property had authority to execute a contract to convey. We think that, upon the authority of Duffy v. Hobson, 40 Cal. 244, 6 Am. Rep. 617, it must be held that they had not, and that the case of Rutenberg v. Main, 47 Cal. 219, is not in point."

In Grant v. Ede, 85 Cal. 418, 24 Pac. 890, 20 Am. St. Rep. 237, the authority of the agent was contained in the following entry: "San Francisco, Aug. 3, 1877. Mr. Wheeler Martin: As you stated you could get $30,000.00 for the place you occupy on Market street, if you can, we will sell at that price any time before the first day of September, 1887, and allow you 2 per cent. on said price, and if no sale is made no expense is made to us. Yours truly, William Ede." Martin sold the property to the plaintiff Grant for the sum of $30,000, and took a deposit from the purchaser of $500. The owner, Ede, refused to make a conveyance, and the action was brought to enforce specific performance. The court decided against plaintiff, and held that Martin was simply authorized to find a purchaser who would pay $30,000, and if he did so, he was entitled to the commission, and that there was nothing in the writing indicating any other intention. It was said