Summary
In King v. Dean, 19 Ohio St.2d 17, 48 O.O.2d 10, 249 N.E.2d 45 (1969), there was an exclusive three-month listing contract stating that a commission must be paid if the owner's property was sold or exchanged during the continuance of the contract, or if it was sold or exchanged within three months thereafter "to anyone with whom you had negotiated during the term of the contract."
Summary of this case from Mayo v. Century 21 Action RealtorsOpinion
No. 68-254
Decided June 25, 1969.
Real estate brokers — Exclusive listing contract — Negotiations with prospective purchaser — Broker's duty to report to principal — Sale after expiration of listing period.
A real estate broker acting pursuant to an exclusive listing contract has a duty to report his negotiations with prospective purchasers to his principals, especially where he expects to rely upon those negotiations as a basis for claiming a commission on the sale of their property after the expiration of the exclusive listing period.
APPEAL from the Court of Appeals for Marion County.
On March 14, 1966 the defendants signed the three-month exclusive listing contract of sale form provided them by plaintiff-broker, which is as follows:
"KING SERVICE"707 Mt. Vernon Ave. Marion, Ohio Phone 382-4467
"EXCLUSIVE CONTRACT OF SALE"Marion, Ohio, 3-14 1966
"In consideration of the efforts of your firm to secure a purchaser for the same, I hereby give you for 3 months from this date, the exclusive right of sale of the property described on the reverse side hereof for the sum of thirty-two thousand dollars, payable cash. I agree to pay the established rate of commission out of the first purchase money on such real estate if the property is sold or exchanged by you, by me, or by anyone elese during the continuance of this contract; or if sold or exchanged within three (3) months, thereafter to anyone with whom you had negotiated during the term of this contract, either for the price and terms named or for any other price or terms.
"You are hereby authorized to place a For Sale sign on the property and to remove all other signs from the premises.
"Leroy C. Dean
"Marilyn J. Dean
Owner
"SCHEDULE OF COMMISSION
"Residence, commercial, industrial, farm property, lots small acreage — 6%. Business stocks of merchandise — 10%. Minimum commission — $100."
On June 4, 1966 plaintiff showed defendants' home to a Mr. and Mrs. Ghearing. On June 14, 1966 the listing contract expired. On July 20, 1966 another realtor showed the property to the Ghearings. Subsequently the defendants and the Ghearings signed a contract of sale, and on August 12, 1966 the property was transferred by deed.
Plaintiff brought this action in the Marion Municipal Court to recover a commission pursuant to the exclusive listing contract's three-month extender clause for sales to persons with whom he had "negotiated" during the exclusive listing period. A judgment for plaintiff was affirmed upon appeal to the Court of Appeals ( 15 Ohio App.2d 15, 238 N.E.2d 828).
The cause is now before this court upon appeal from the judgment of the Court of Appeals.
Mr. John W. Watters, for appellee.
Messrs. Moore, Myers Parsell and Mr. Charlton Myers, for appellants.
Even if the question, as to whether plaintiff had "negotiated" with the Ghearings, could be considered one of fact, the plaintiff should still fail in this action. Pursuant to the exclusive listing contract executed between the plaintiff and defendants, the plaintiff was their agent for the purpose of obtaining offers and to facilitate the sale. The law imposes upon such an agent a duty to report his negotiations with prospective purchasers to his principals, especially where he expects to rely upon those negotiations as a basis for claiming a commission on the sale of their property after the expiration of the exclusive listing period. See annotation, "Real-estate Broker's Right to Commissions * * *," 142 A.L.R. 275, 290. This duty is imposed upon an agent to avoid unfairness of the kind exhibited in this case.
Here, the owners of the property in question were not informed that the broker had engaged in any discussion with the Ghearings about the sale of their property. Plaintiff admitted this on direct examination. Since defendants were not so informed, they had no reason to suspect that plaintiff might claim a commission for selling their property even though they became obligated to pay a commission to another broker for selling it. In failing to notify his principals that he had "negotiated" with the Ghearings for the sale of defendants' property, the plaintiff breached the very contract upon which he relies, and his recovery thereunder should have been denied.
Therefore, the judgment of the Court of Appeals is reversed.
Judgment reversed.
O'NEILL, SCHNEIDER and HERBERT, JJ., concur.
This decision was made after the death of JUSTICE ZIMMERMAN and before the appointment of a successor.
MATTHIAS and DUNCAN, JJ., dissent.
The judgment of the Court of Appeals should be affirmed for the reasons stated in the opinion by Cole, J., in this cause when it was before the Court of Appeals for Marion County. King v. Dean, 15 Ohio App.2d 15.
DUNCAN, J., concurs in the foregoing dissenting opinion.