Opinion
No. 6,759.
Submitted September 10, 1931.
Decided September 19, 1931.
Real Estate Brokers — Breach of Contract of Purchase by Buyer — Action Against Buyer for Damages by Broker not Maintainable. Real Estate — Brokers — Failure of Purchaser to Complete Contract — Recovery of Lost Commissions — Complaint Against Purchaser — Immaterial Objection. 1. The question whether a contract between the owner of realty and a broker under which the latter was to secure a purchaser for the property for a commission to be paid by the seller, was sufficiently definite and certain, i.e., capable of specific performance, or whether it was merely an agreement subsequently to enter into a contract, held of no importance in an action by the broker against the defaulting purchaser to recover lost commissions for the reason stated below. Same — Commissions — Action by Broker Against Defaulting Buyer — Absence of Privity of Contract — General Demurrer to Complaint Lies. 2. A real estate broker, employed by the owner of property to secure a purchaser for a stated commission, has no such interest in the resulting contract between the owner and the intending buyer as will authorize an action by the broker against the latter for recovery of lost commissions upon breach of the contract by the buyer, there being no privity of contract between the two; hence general demurrer to the complaint properly sustained.
Appeal from Yellowstone County; Robert C. Stong, Judge.
ACTION by the Brockway-Mecklenburg Company against Jake Hilderman and wife. From a judgment of dismissal plaintiff appeals. Affirmed.
Mr. M.L. Parcells, for Appellant, submitted a brief and argued the cause orally.
Mr. Wm. V. Beers, for Respondent, submitted a brief, and argued the cause orally.
The commission agreed upon was due to plaintiff when within the time limit it brought the parties together and the customer
2. Right of broker employed by owner as against prospective purchaser who refuses to complete purchase, see note in 20 A.L.R. 214. was accepted by the employer. ( Shober v. Dean, 39 Mont. 255, 102 P. 323; Laux v. Hogl, 45 Mont. 445, at 450, 123 P. 949; Shober v. Blackford, 46 Mont. 194, 127 P. 329; Lingquist v. Loble, 62 Mont. 166, 204 P. 170; Apple v. Henry, 66 Mont. 244, 213 P. 444; Gantt v. Harper, 82 Mont. 393, 267 P. 296; Id., 86 Mont. 69, 281 P. 915; Johnson v. Krier, 59 Cal.App. 330, 210 P. 966; Freeman v. Creelman, 60 Cal.App. 14, 212 P. 56; Contant v. Wallace, 62 Cal.App. 768, 217 P. 1081; Cole v. Low, 81 Cal.App. 633, 254 P. 676.)
This action is brought on the theory that by their wrongfully and without cause refusing to comply with the terms of the contract, which includes the payment by the seller of the five per cent. commission to plaintiff, the defendants have damaged plaintiff to the extent of the commission which it had earned and would have received but for the wrongful refusal of defendants, or had defendants gone ahead and completed the contract in accordance with the terms thereof.
So far as we are able to ascertain, the question presented by this complaint has not been passed upon by this court. However, it has been squarely passed upon by the courts of other states, who unanimously hold in similar cases that the plaintiff is damaged by the wrongful refusal of the defendants to complete the contract, to the extent of the commission which plaintiff would have earned and received had the defendants fulfilled the same, and can recover accordingly. ( Livermore v. Crane, 26 Wn. 529, 57 L.R.A. 401, 67 P. 221; Bishop v. Averill, 17 Wn. 209, 49 P. 237, 50 P. 1024; Littlefield v. Bowen, 90 Wn. 286, Ann. Cas. 1918B, 177, 155 P. 1053; Cavender v. Waddingham, 2 Mo. App. 551; Atkinson v. Pack, 114 N.C. 597, 19 S.E. 628; Eells Brothers v. Parsons, 132 Iowa, 543, 11 Ann. Cas. 475, and note, 109 N.W. 1098.) We believe it will be found that this rule is universal, as we find no authority to the contrary in the limited library to which we have access.
In reply to the ground given by the trial court for its action, that the contract is unenforceable because it is a contract to make a contract, we submit that the contract in this instance is definite and certain to such an extent that it could be enforced if desired by either of the parties thereto, inasmuch as it meets every requirement laid down by this court to the effect that: "The agreement must be entire as to the thing sold, its price, the time of delivery and the terms of payment." ( Long v. Needham, 37 Mont. 408, 96 P. 731.)
This is not an action for the specific performance of the contract, and there is a decided difference under the authorities between the certainty required in such an action of which the cases cited by counsel for defendants are examples and in an action at law for damages. (Pomeroy on Contracts, sec. 159; Durst v. Jolly, 35 Cal.App. 184, 169 P. 449.)
If we were to admit for the sake of this argument that this contract is an agreement to make an agreement, we submit that it is for the making of an agreement of such generally known and accepted conditions as to be enforceable under the rules laid down by this court in the case of Long v. Needham, supra.
We submit that the contract involved in this action meets every requirement which our court or that of any other state has ever seen fit to impose, including that contained in the decision cited by the court as sustaining his position or ruling on the demurrer. ( Peer v. Hughes, 25 Ariz. 105, 213 P. 691.)
Respondents submit that the lower court's ruling in sustaining respondents' demurrer is supported by the authorities cited below, and that the agreement relied upon is too indefinite and uncertain to be enforced specifically or to furnish basis for the action appellant seeks to maintain. ( Shepard v. Carpenter, 54 Minn. 153, 55 N.W. 906; St. Louis S.F.R. Co. v. Gorman, 79 Kan. 643, 28 L.R.A. (n.s.) 637, 100 P. 647; Van Schaick v. Van Buren, 70 Hun (N.Y.), 575, 24 N.Y. Supp. 306; Milliman v. Huntington, 68 Hun (N.Y.), 258, 22 N.Y. Supp. 997; Peer v. Hughes, 25 Ariz. 105, 213 P. 691; Esselstyn v. Meyer Chapman State Bank, 63 Mont. 461, 471, 208 P. 910-913; Holtz v. Olds, 84 Or. 567, 164 P. 583; Clark on Contracts, 3d ed., p. 32; Wineburgh v. Gay, 27 Cal.App. 603, 150 P. 1003, 1005; Sarina v. Pedrotti, 103 Cal.App. 203, 284 P. 472; Donovan v. Bull Mountain Trading Co., 60 Mont. 87, 198 P. 436; Thrasher v. Schreiber, 77 Mont. 221, 250 P. 600; Lewis v. Aronow, 77 Mont. 348, 251 P. 146; Price v. Stipek, 39 Mont. 426-439, 104 P. 195; Dayton v. Stone, 111 Mich. 196, 69 N.W. 515.)
The cases of Livermore v. Crane, 26 Wn. 529, 57 L.R.A. 401, 67 P. 221, Eells Brothers v. Parsons, 132 Iowa, 543, 11 Ann. Cas. 475, 109 N.W. 1098, Bishop v. Averill, 17 Wn. 209, 49 P. 237, 50 P. 1024, cited by appellant, are not in point. They are actions on alleged contracts, either verbal or written, made by the broker and persons sued and do not support appellant's contention and theory in case now before this court. There is no contractual relation between appellant and respondents. Littlefield v. Bowen, 90 Wn. 286, Ann. Cas. 1918B, 177, 155 P. 1053, cited, is distinguishable from the case at bar because the broker, vendor and purchaser of land all signed agreement providing for payment of commission to broker. The broker was agent of vendee and vendor alike, a condition that does not exist in case now before this court. Atkinson v. Pack, 114 N.C. 597, 19 S.E. 628, also cited, is not in point for the reason that the action therein is based on a contract made by the broker with the owner of land and action is against the owner of the land for failing to convey and does not support appellant's theory in its case.
This action was instituted by the plaintiff to recover damages to the extent of $1,050, with interest from December 27, 1929, by reason of the defendants' breach of contract to purchase certain described agricultural lands located in Yellowstone county, belonging to A. Molendyk, Jennie Lena Molendyk, his wife, Peter Molendyk, and James L. Davis, by reason whereof the plaintiff was unable to collect from the owners of the land an agreed brokerage commission of five per cent. of the purchase price which the defendants had agreed to pay for the property. In the complaint it is alleged that the plaintiff is a duly licensed real estate broker, and as such was the duly authorized agent of the owners for the sale of the property described, and that on the twenty-seventh day of December, 1929, the defendants entered into a contract in writing with the owners to make purchase of the property for the sum of $21,000 on terms stated; that the owners were at all times ready and willing to perform the contract and tendered performance, but that the defendants have without just cause or excuse failed, neglected, and refused to carry out their part of the agreement. The contract by reference made a part of the complaint provides that the plaintiffs shall be paid by the owners of the property the sum of five per cent. commission for its services in making the sale, to be retained out of the first proceeds of the sale or forfeit money. A general demurrer to the complaint was sustained by the court. The plaintiff electing not to further plead, judgment was entered dismissing the plaintiff's complaint and in favor of defendants for their costs incurred in the action, from which the plaintiff has appealed.
The only question presented for decision in disposition of this appeal is whether the court erred in sustaining the demurrer to the plaintiff's complaint.
1. Pro and con, counsel have confined their arguments and [1] briefs solely to the question as to whether the contract is sufficiently definite and certain; that is to say, whether it is in itself a contract capable of specific performance or whether it is merely an agreement to subsequently enter into a contract. This question appears to have been paramount in the mind of the trial judge in making his decision as to the contract now before us, as to the sufficiency of the complaint, as the only authority cited and relied upon in the decision of the court is Peer v. Hughes, 25 Ariz. 105, 213 P. 691. There are decisions of this court to the same effect. ( Long v. Needham, 37 Mont. 408, 96 P. 731; Esselstyn v. Meyer Chapman State Bank, 63 Mont. 463, 208 P. 910, 911.) On this point we do not deem it necessary to express opinion. It might arise between the parties to the contract, but is not involved in this action.
2. As we view the case, the outstanding debatable question [2] arising as to the sufficiency of the complaint is whether the plaintiff may recover damages from the intending purchasers of the property, since there is no privity of contract between it and the purchasers, and the sellers having expressly agreed in the contract to pay the brokers a stated commission. There is but little direct authority on the right of a broker to recover from a prospective purchaser who refuses to complete his purchase. In nearly all the reported cases where the sale was not completed, the action has been against the owner on the broker's contract of employment, and not against the prospective purchaser. (Annotation, 20 A.L.R., p. 214.) It is a matter of first impression in this state. The editor to the note on the subject in 20 A.L.R., page 214 et seq., states the rule to be that since there is no privity of contract between the parties no right of recovery exists against the purchaser by the broker. In an exhaustive research we have found the authorities somewhat confusing on the question, but we believe the decisions holding favorably to the broker's right of recovery against the intending purchaser are distinguishable upon the facts in each presented. In our opinion, supported by logic and well-reasoned authorities, a mere selling agent or broker has no such interest in a contract secured by him for the purchase of land belonging to the broker's client as will authorize a recovery of damages by the broker from a prospective purchaser for lost commissions upon breach of the contract by the purchaser. ( LeMaster v. Dalhart Real Estate Agency, 56 Tex. Civ. App. 302, 121 S.W. 185; Tinsely v. Dowell, 87 Tex. 23, 26 S.W. 946; Evrit and Weightman v. Bancroft, 22 Ohio St. 172; Gibson Land Auction Company v. Brittain, 182 N.C. 676, 20 A.L.R. 211, 110 S.E. 82; Messer-Johnson Realty Co. v. Newman, 210 Ala. 340, 98 So. 20; Goff v. Adelson, 229 App. Div. 802, 242 N.Y. Supp. 278.)
Decisions in the cases of Livermore v. Crane, 26 Wn. 529, 57 L.R.A. 401, 67 P. 221, Atkinson v. Pack, 114 N.C. 597, 19 S.E. 628, Eells Brothers v. Parsons, 132 Iowa, 543, 11 Ann. Cas. 475, 109 N.W. 1098, and Cavender v. Waddingham, 2 Mo. App. 551, are not at variance with the views herein expressed for in each of those cases it appears that the intending purchaser was the employer of the broker in consequence of which there was at least an implied contract between them that the purchaser would fulfill his agreement with the land owner so as to enable the broker to earn his commission. In each case there was a contract between the intending purchaser or a request by him for the broker's services; and in each case a recovery was allowed on this contract, or upon an implied contract for services rendered to the defendant, and not upon the contract of purchase, though the loss of commissions may have been fixed as the proper measure of damages. ( Gibson Land Auction Co. v. Brittain, supra.)
The judgment is affirmed.
MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES FORD, ANGSTMAN and MATTHEWS concur.