Opinion
October 18, 1949.
HARRINGTON, Chancellor, RICHARDS, C.J. TERRY, PEARSON and LAYTON, J.J., sitting.
Philip Cohen for Defendant Below Appellant.
W.T. Knowles for Plaintiff Below Appellee.
Appeal from a judgment of the Superior Court (Carey, J., sitting without jury) awarding real estate commissions to Plaintiff Below, Appellee. Judgment sustained.
Delaware Apartments, Inc., Defendant Below, appellant, owned two apartment buildings in Wilmington. Johnston was its president and largest stockholder. John J. Monaghan Co., Plaintiff Below, appellee, is a real estate firm also doing business in Wilmington and vicinity.
Johnston employed Rosin, one of Plaintiff's agents, to sell his apartment houses for $100,000. After considerable effort Rosin succeeded in finding purchasers, a Mr. and Mrs. Seidel, who signed a contract of sale for the apartments in question for a figure of $100,000. The contract was as follows:
"John J. Monaghan Co.
"Real Estate, Mortgages and Insurance
"832 Orange Street, Wilmington, Del.
"Contract
"This Agreement, made this first day of June A.D., one thousand nine hundred and forty-six, between John J. Monaghan Co., Agent, a corporation of the State of Delaware, party of the first party and Willard S. Seidel and Gladys E. Seidel (his wife) of the City of Wilmington, County of New Castle and State of Delaware aforesaid, parties of the second part,
Witnesseth as follows, to wit:
"That said party of the first part hereby agrees to sell that certain lot or piece of land, with the buildings thereon erected, situate in the City of Wilmington aforesaid, and now known as 1506-8 Delaware Ave. (complete with furniture of presently-furnished apts.) for the sum of One Hundred Thousand and no/100 . . . . . . . . Dollars, to the said parties of the second part, upon the following terms and conditions:
"The payment of the sum of One Thusand and no/100 . . . . Dollars, upon the execution of this agreement, the receipt of which is hereby acknowledged, and the balance of the purchase price to be paid in cash at the time of settlement.
"Title, when taken by said parties of the second part, to be a good fee simple title, clear of all liens and incumbrances, or the down money hereby acknowledged to have been paid is to be returned.
"Said down money to be forfeited in case said parties of the second part fails to make settlement as herein provided. Time is the essence of this contract.
"Taxes, Rent and Water Rent to be prorated to date of settlement.
"Settlement to be made on or before first day of October, A.D., 1946.
"Said parties of the second part hereby agrees to purchase the above described lands and premises upon the terms and conditions herein above stated.
"This Contract is made subject to the approval of the owner of said property.
"And for the true and faithful performance of every and all covenants and agreements aforesaid, each of the said parties hereto binds himself, his Heirs, Executors, Administrators and Assigns, in the penal sum of One Thousand and no/100 . . . . . Dollars, lawful money of the United States of America, firmly by these presents.
"In Witness Whereof, the said party of the first part hath caused the hand of its President, and its common or corporate seal to be hereunto affixed, and the said parties of the second part have hereunto set their hand and seal the day and year first above written.
"John J. Monaghan Co.,__ *L* Agent, "President__ "Signed and delivered "Attest: in the presence of "Secretary "(s) Bernard D. Rosin "(S) Willard S. Seidel (Seal) "(s) Gladys E. Seidel (Seal) "The above contract is hereby approved and we acknowledge that the sale of the above described property was made through the efforts of John J. Monaghan Co., Agent, and we hereby agree to pay to the said John J. Monaghan Co., Agent, the commission of four per cent on the selling price of this property: "Witness: .....Owner .....Owner"
Rosin then took the contract to Johnston for signature. He refused to sign. Thereafter, Monaghan brought suit for its commissions upon the theory that they had been earned when its Agent procured a willing and able purchaser on the terms specified by Johnston. Judgment was given Plaintiff for the full amount claimed. The findings of fact and conclusions of law of the trial Judge were as follows:
"Facts"1. That there was an oral agency agreement between the plaintiff and defendant which consisted of: (a) authority to the plaintiff to sell the real estate known as No. 1506 and 1508 Delaware Avenue, Wilmington, Delaware, together with the furniture in the furnished apartments; (b) that the sales price was the sum of One Hundred Thousand Dollars ($100,000.00); (c) and that the closing date of a sale should be October 1, 1946.
"2. That the oral contract of agency was in full force and effect on June 1, 1946.
"3. That the offer to buy presented to the defendant by the plaintiff on or about June 1, 1946, was an offer within the terms of the agency agreement.
"4. That Mr. and Mrs. Seidel were willing, ready and able buyers of 1506 and 1508 Delaware Avenue, and remained so for some time after the date fixed for closing.
"5. That the One Thousand Dollars ($1,000.00) downpayment and wording of the offer with respect to it was not in violation of any authority given to the plaintiff, and did not contravene any term of the agency agreement.
"6. That the offer was rejected by the defendant through no fault of the plaintiff.
"7. That the value of the plaintiff's services was the sum of Four Thousand Dollars ($4,000.00).
"Law"I. When one employs another to do work for him, and the employee performs the work in accordance with the terms of the employment, the employee is entitled to receive the stipulated price, if such was agreed upon by the parties, or if no stipulated price was agreed upon, then he is entitled to recover such sum as the work was reasonably worth.
"II. To entitle one to recover commissions on the sale of real estate he must have been the agent of the seller, and he must have effected the sale, or conducted the negotiations to such a stage as to complete the bargain for the sale, so far as it depended upon his action or efforts to accomplish the sale.
"III. When the broker has brought to his employer a purchaser willing and able to purchase at the price and on the terms authorized by the employer, the broker's work is done, and he is entitled to his compensation and the employer's refusal to complete the purchase without the fault of the broker, will not prevent the recovery of his compensation.
"IV. The written offer in this case, had it been executed by the defendant, was such a contract as could have been sued on in equity by the defendant, and the Court of Chancery would have enforced specific performance of the contract. The penal clause in this contract does not defeat an action for specific performance. The seller, the defendant in this clause, would have his election as to whether or not to proceed under the penal clause or to enforce specific performance or to sue for actual damages."
The assignments of error will be considered separately in the opinion.
Supreme Court, No. 4, May Session, 1948.
The law governing the right of real estate brokers to recover commissions for the sale of property is correctly stated by Gross, The Law of Real Estate Brokers, in part II, "Commissions and Their Recovery," Chap. III, Sec. 131 et seq.: "The broker must produce a purchaser ready, willing and able to purchase on the principal's terms."
"In Section 132, the author further speaks as follows:
"Whatever may be the terms and conditions upon which the broker's right to compensation depends, they must be performed as a condition precedent to a right of action for a commission. Where the terms of the sale are all given to the broker in advance, he must produce a purchaser ready, willing and able to purchase on those terms, and the owner may refuse any proposed purchaser who is not willing to purchase on all of those terms.
* * * * * *
"If no terms are laid down before hand by the principal, the broker takes the hazard. In such case the broker cannot recover commissions unless he produces a purchaser ready, willing and able to purchase on the terms, whatever they may be, then stated by the owner."
See also Pugh v. Dollahan, 49 N.M. 213, 160 P.2d 951; Bracher v. Olcott, 130 Misc. 859, 224 N.Y.S. 715; Thompson Co. v. Madison Square Garden Corp., 225 App. Div. 521, 233 N.Y.S. 608; Maier v. Romano, 102 Conn. 556, 129 A. 274.
Defendant contends first that one of the essential terms of the transaction (that is, the closing or settlement date) had not been decided upon at the time the contract of sale was executed by the purchasers and he was within his rights in refusing to accept the contract. But the trial Judge found from the facts, and there is evidence to support the finding, that Rosin was authorized to insert the date of October 1, 1946, for the date of settlement. This contention is untenable.
Next, it is asserted that Rosin had no authority to include the furniture in the apartment house as part of the transaction. Again, the trial Court found to the contrary and there is evidence to support his conclusion in that respect. This contention is dismissed.
Defendant also strongly relies upon the defense that Johnston was justified in refusing to accept the contract because Rosin, completely without authority, inserted a provision for a down payment, or deposit, in the sum of only $1,000. But we are unable to find authority to the effect that, in the absence of an agreement, an advance deposit of cash and the amount thereof, constitute essential terms of a real estate transaction.
Here, admittedly, there was no discussion between the parties as to a down payment or the amount thereof. The form of contract presented by Rosin contains a provision for a deposit in an amount which seems to us surprisingly low in view of the size of the transaction and the lengthy period stipulated for settlement. However, we think the findings indicate that the trial Judge determined that the amount of the deposit was not deemed an essential term either by the plaintiff or the Defendant. There was ample evidence to support this view.
The trial Judge apparently believed Rosin's testimony that Johnston refused to sign the contract of sale because he had secured another purchaser at a higher figure.
Likewise, it appears that the trial Court determined that the provision for an undertaking binding each party in the penal sum of $1,000 was not an essential term. In view of the fourth conclusion of law, which is not assigned as error, it may not now be argued that the undertaking would substantially limit the remedies of defendant in case of default by the purchasers. This contention may be dismissed without further consideration.
Johnston insists that the trial Court erred in finding that the Seidels were ready, able and willing buyers. As we understand the law, unless the contract of sale calls for immediate cash payment, a ready, able and willing purchaser need not have in hand at the signing of the agreement of sale the full amount of cash representing the purchase price. It is sufficient that he have assets from which the purchase price may be realized by the time of settlement. See discussion in 12 C.J.S., Brokers, § 85 (), p. 192 and cases cited.
The trial Court's finding that the purchasers were ready, willing and able buyers is not precluded by Seidel's testimony that he would not have gone through with the deal unless he sold (rather than mortgaged) some of his real property assets in order to raise the purchase price. In the light of other testimony and the evidence of financial ability to respond to a monetary judgment or decree, we refuse to disturb the finding in this respect.
Johnston has also raised the defense that Rosin failed to disclose to him the fact that unless the purchasers sold their Drug store property to provide the cash needed to purchase the apartments they would not go through with the contract of sale for the apartments. In other words, it is charged that Rosin breached his fiduciary relationship with his principal in failing to disclose not only that he was also representing the Seidels in attempting to dispose of some of their properties to raise the cash necessary to buy the apartments, but also in the fact that he knew they would have defaulted had their properties failed of sale. But appellant fails to give weight to the finding of fact by the trial Judge that the Seidels were ready, willing and able purchasers which obviously precludes the defense.
Finally, it is suggested that Johnston had a right to refuse the contract because it contained the following provision: "This contract is made subject to the approval of the owner." From this language it is urged that Johnston was free to withdraw the agent's authority at any time before a sale was consummated or refuse to sign any agreement of sale tendered him.
An examination of the form of contract presented discloses that this provision has an altogether different meaning. The contract purports to be between the plaintiff as agent and the Seidels as purchasers, with a form of approval to be signed by the defendant as owner. The clause, "subject to the approval", is manifestly to make clear to the contract purchasers that execution of the agreement by them and by the agent did not effect a binding contract of sale until approval of the owner had been obtained. The clause has nothing to do with the owner's liability to the agent for commissions. Whether or not the owner approved, it became liable to the agent, if the latter produced a purchaser ready, willing and able to purchase on all essential terms in accordance with the owner's authorization to the agent.
We think that the lower Court's findings are supported by adequate evidence and that they should not be disturbed.