Summary
In Calka v. Donahoe, 173 N.W.2d at 814, the court noted that "prospective purchaser" is used interchangeably with "prospect."
Summary of this case from E E Min., Inc. v. Flying D Group, Inc.Opinion
Docket No. 4,672.
Decided November 25, 1969.
Appeal from Tuscola, James P. Churchill, J. Submitted Division 2 November 5, 1969, at Lansing. (Docket No. 4,672.) Decided November 25, 1969.
Complaint by B.A. Calka against R. Paul Donahoe and Hazel A. Donahoe, husband and wife, to recover a real estate commission from the sale of defendants' farm. Defendants counterclaimed for damages for wrongful attachment of their property. Judgment for plaintiff in the amount of his broker's commission; judgment for defendants on their counterclaim for damages for wrongful attachment. Defendants appeal. Affirmed.
Clinton C. House, for plaintiff.
James J. Epskamp, for defendants.
Before: J.H. GILLIS, P.J., McGREGOR and V.J. BRENNAN, JJ.
This is a suit by a real estate broker for a commission for the sale of a farm, claimed to be due under the terms of a written real estate listing agreement. The farm was sold after the agreement had expired but within 12 months thereafter. The circuit judge who heard the testimony without a jury entered a judgment for plaintiff broker, and defendants appeal.
Defendants owned a farm which they wished to sell. On August 19, 1964, defendants enter into an exclusive listing agreement with plaintiff real estate broker, B.A. Calka. Under the agreement, plaintiff had the exclusive right to sell the farm in the period August 19, 1964 to September 20, 1964. The property was listed at a sale price of $130,000.
The relevant portions of the contract follow:
"(1) In consideration of your undertaking to find a purchaser through the efforts of your office and salesmen, the undersigned does hereby agree that this contract shall remain in effect until 9-20-64 the exclusive right to sell, lease, trade or option property herein described as listing No. 1348 on price and terms acceptable to us. You are authorized to accept a deposit to bind bargain and hold same in escrow pending consummation of deal, and you are given the power herewith to hold all papers of interest until taxes, interest, mortgages and commissions have been fully satisfied and discharged.
"(2) Undersigned offers and agrees to cooperate in effecting sale and to refer any prospective purchaser of whom he has knowledge during the term of this listing to you and in the event of a deal by undersigned during the term of this listing or within 12 months thereafter to any person with whom said Broker negotiated with respect to a deal during the term thereof. Undersigned shall be considered as your agent in effecting such deal." (Emphasis supplied.)
The contract also contained the following handwritten addendum:
"Maximum commission is $5,000.
"At the end of the 30 day listing period B.A. Calka will furnish sellers with a list of prospects (in writing).
"Due to only 30 day listing — paragraph 2 will read 12 months instead of 6 months; on any prospects that B.A. Calka, Realtor or his salesmen have negotiated with during Aug. 19 to Sept. 20, 1964."
After the execution of the contract, plaintiff advertised the sale in newspapers and expended time and effort in an attempt to find a purchaser for the farm. Plaintiff's efforts, however, failed to produce a buyer. The contract expired by its own terms on September 20, 1964.
During the term of the exclusive listing agreement, defendant R. Paul Donahoe was approached by one Carl Vollmar. Vollmar inquired of defendant Donahoe, "Is that your farm listed," and was informed that the farm was for sale and the sale price was $130,000. Vollmar stated in response: "I wouldn't give $130,000 for no farm."
Donahoe was also approached by Albert Vollmar, father of Carl Vollmar, during the term of the agreement. Donahoe was told by Albert Vollmar, "If Calka don't sell your farm, let us know." The evidence tended to show that on either of the above occasions, or at some other time during the term, Donahoe informed the Vollmars that the listing expired on September 20, 1964. The record further discloses that defendant Donahoe never informed plaintiff of his contacts with the Vollmars.
On September 21, 1964, defendants reached an agreement for the sale of the farm with Carl Vollmar at a purchase price of $110,000. The sale was consummated by execution of a land contract between defendants and Vollmar on September 22, 1964.
Ordinarily, in order for a real estate broker to recover a commission where he has an express written contract, he must produce a purchaser ready, willing, and able to purchase the property on the terms of the contract. See McDonald v. Boeing (1880), 43 Mich. 394; Gilmore v. Bolio (1911), 165 Mich. 633; Crawford v. Cicotte (1915), 186 Mich. 269; Pittelkow v. Jefferson Park Land Co., Ltd. (1938), 283 Mich. 374. In certain situations, however, a broker can recover his commission, notwithstanding a failure to produce a willing purchaser.
"[W]here the language of the agreement granted what we construe to be exclusive sale rights for a specified period and there was specific language which purported to assure a commission to the broker even if the owner made an unassisted sale, the broker was allowed to recover after the owner sold. Axe v. Tolbert, 179 Mich. 556; DeBoer v. Geib, 255 Mich. 542." Ladd v. Teichman (1960), 359 Mich. 587, 593. (Emphasis supplied.)
See also, Seelye v. Broad (1967), 379 Mich. 289.
Thus, the broker and owner may, if they see fit, agree that the broker is to be paid a commission on a sale by the owner without the broker's cooperation. Such contracts are not to be confused with ordinary contracts of brokerage where compensation is contingent on the broker finding a willing purchaser. Axe v. Tolbert, supra, at 564. The time and effort expended by the broker in attempting to find a purchaser provides "the necessary consideration * * * to support the contract, irrespective of results." Ladd v. Teichman, supra, at 595, quoting Bell v. Dimmerling (1948), 149 Ohio St. 165, 171, 172 ( 78 N.E.2d 49, 52).
In the present case, the agreement is not an ordinary brokerage contract. As we read the contract, Calka is entitled to receive a commission "in the event of a deal by [defendants] during the term of this listing or within 12 months thereafter on any prospects that B.A. Calka, Realtor or his salesmen have negotiated with during Aug. 19 to Sept. 20, 1964." Had plaintiff negotiated with Carl Vollmar during the term of the agreement, it is clear that he would be entitled to his commission.
Much of the record in this case consists of testimony concerning the contacts between defendant R. Paul Donahoe and the Vollmars. Plaintiff contends that by the terms of the agreement Donahoe was required to refer the Vollmars to him. Defendants contend, however, that neither Carl nor Albert Vollmar was a prospective purchaser within the meaning of the contract. It is defendants' position that the term "prospective purchaser" refers only to those willing to purchase at the contract price. Since Carl Vollmar was unwilling to pay $130,000 for the farm, defendants contend that they were not obligated to refer the Vollmars to plaintiff. Furthermore, defendants suggest that the term is at best ambiguous, and we are urged to resolve the ambiguity against plaintiff.
We cannot agree with defendants' contention that the term "prospective purchaser" is ambiguous. It appears from the contract that the terms "prospective purchaser" and "prospect" are used interchangeably. Webster's New International Dictionary (3d ed), p 1821, defines "prospect" as a "potential buyer or customer." Quite obviously, although Carl Vollmar was unwilling to pay $130,000 for the farm, he was nevertheless a potential buyer. Moreover, to restrict prospective purchasers to those willing to pay the contract price would undermine the function of the clause requiring referrals by the owner. The very purpose of the clause is to give the broker an opportunity to effectuate a sale to those who otherwise "* * * wouldn't give $130,000 for no farm" by convincing them of the merits of the property. Cf. Davis-Fisher Co. v. Hall (1914), 182 Mich. 574, 580.
In the context of this agreement, we conclude that the term "prospective purchaser" refers to anyone who shows an interest in the property, notwithstanding an expressed unwillingness to pay the contract price. Cf. Davis-Fisher Co. v. Hall, supra, at 580, 581. Two additional reasons compel this conclusion. First, the contract provides: "Maximum commission is $5,000." In light of this provision, we cannot restrict prospective purchasers to include only those willing to pay the contract price. Such a provision indicates that the parties contemplated a possible sale at a price less than the full contract price. Furthermore, the contract contemplates payment of a commission on any sale to prospects included on the list furnished to defendants by Calka. Such prospects necessarily include those unwilling to purchase the farm at $130,000. To restrict "prospective purchaser" to those willing to pay the contract price would thus enable the owner to avoid payment of a commission otherwise due under the contract. We cannot adopt a construction of "prospective purchasers" which entirely neutralizes an additional provision of the contract. See DeBoer v. Geib, supra, at 544.
We hold that Carl Vollmar was a prospective purchaser within the meaning of the contract.
In entering judgment for the plaintiff, the trial court held that:
"Carl Vollmar was a prospective purchaser during the term of the listing and * * * R. Paul Donahoe, one of [the] defendants, knew it.
"Defendants breached their contract by failing to inform plaintiff of this fact during the term and therefore wrongfully prevented him from negotiating with [the] Vollmars during the term of the listing and wrongfully prevented him from including the Vollmars' names in the list of prospects which was timely furnished."
We agree.
In Doll v. Thornhill (La App, 1942), 6 So.2d 793, a broker commenced suit for a commission, relying in part on the failure of the owner to refer one Bankston to him during the term of an exclusive agency. In affirming a judgment for the broker, the court construed a provision in the brokerage contract requiring the owner "to refer all applicants" to Doll, the broker. The court noted ( 6 So.2d at 795):
"But above and beyond all of these facts we find that Thornhill clearly violated the plain provisions of his contract in not referring Bankston to Doll as soon as the former evidenced any interest in the property. It will not do for him to say that had he done so, no sale would have resulted. A real estate agent is supposedly an expert in his business, and we must presume that he could have accomplished what Thornhill accomplished * * *. At any rate, he was entitled * * * to try. To uphold the contention made here by Thornhill would establish a dangerous rule and would open the door in many cases to the perpetration of fraud upon agents who conscientiously try to carry out their mandates." (Emphasis supplied.)
See also, Coppage v. Woodward (La App, 1958), 105 So.2d 306. We think the court's observations in Doll are likewise relevant in this case. Moreover, the Supreme Court of Michigan has applied a similar rationale in sustaining the recovery of a broker's commission. See Davis-Fisher Co. v. Hall, supra, at 581. Since the amount of the commission due is not questioned on this appeal, we affirm the trial court's holding. Cf. DeBoer v. Geib, supra, at 545.
An additional ground, one not relied on by the trial court, compels us to reach this result. In Roy Annett, Inc. v. Killin (1961) 365 Mich. 389, the Court construed a provision in a listing agreement which required payment of a commission "if said property is sold by the owner within 6 months thereafter to any person with whom said broker negotiated with respect to a sale during the term thereof." The provision is similar to that contained in paragraph two of the present agreement. The Court discussed the purpose of such provisions:
"As we read this agreement, it is * * * designed to protect the real-estate salesman's commission from subterfuge and fraud on the part of the seller." 365 Mich at 394.
In the present case, we believe that the provision requiring defendants to refer prospective purchasers to plaintiff is likewise designed to protect the broker from fraud and subterfuge. However, unlike the situation in Roy Annett, Inc. v. Killin, supra, see 365 Mich at 394, the record in this case "smack[s] of subterfuge." The record would support a finding that defendants' failure to refer the Vollmars to plaintiff was in bad faith and for the purpose of avoiding payment of a commission.
A final issue on this appeal is whether defendants are entitled to damages for plaintiff's allegedly wrongful attachment of defendants' property at the commencement of this action. In his affidavit for a writ of attachment, plaintiff asserted that he had good reason to believe defendants were about to remove their property from the State with intent to defraud their creditors. The trial judge found:
"The facts did not justify plaintiff in concluding that defendants intended to defraud him. They merely justified a conclusion that defendants disagreed with plaintiff concerning their obligation to pay a commission and that they were going to Florida for causes wholly unrelated to the existence of plaintiff's disputed claim."
We are satisfied that the trial court's findings on this point are not clearly erroneous. GCR 1963, 517.1; Tann v. Allied Van Lines, Inc. (1966), 5 Mich. App. 309.
Affirmed. Costs to plaintiff-appellee.
All concurred.