S. V. Thompson Co. v. Goldman

Opinion by Head, J., As the case of the plaintiffs is presented in the pleadings and record, their right to recover the amount of the commission represented by the verdict was rested on their ability to establish two propositions of fact: (a) That the defendant had entered into a contract with them, by the terms of which he obliged himself to pay upon certain conditions the sum sued for; (b) that the conditions necessary to make that undertaking an absolute one had been complied with by them. As to the first proposition they experienced no difficulty be — 214 — cause it was admitted that such a contract had been executed, and as it had been reduced to writing and was offered in evidence, there is no room for dispute as to its terms. By this agreement the plaintiffs were given the right to sell and dispose of certain property of the defendant, to wit: the hotel business he was conducting as a licensed landlord, and furniture, fixtures and personal property in and on the licensed premises, and a lease for years of the real estate itself. The agreement then declared “for their services I agree to pay them a commission of five per cent on the sale of the same,” Now it is an undeniable fact in the record before us that the only sale of the property covered by the agreement actually made and completed was made by the defendant himself to one W. H. Morrow. It is not contended that the plaintiffs had anything whatever to do with this sale. They had never had any negotiations- with Morrow. It was not through their efforts, or by reason of any information derived from them, directly or indirectly, that the purchaser and seller were brought together. This negotiation was begun and completed without the knowledge of the plaintiffs and received .no aid from their efforts. They cannot, therefore, recover the stipulated commission because of anything they did in connection with the actual sale of the property and the transfer of the title from the defendant to Morrow. Numerous decisions in Pennsylvania have construed contracts similar to the one before, us, and an examination of these cases will show that the plaintiffs, under certain conditions, might still recover the amount of the commission claimed notwithstanding the facts already recited. In Keys v. Johnson, 68 Pa. 42, it is said: “A broker becomes entitled to his commissions whenever he procures for his principal a party with whom he is-satisfied, and who actually contracts for the purchase of the property at a price acceptable to the owner. . . . When he — the broker — has commenced a negotiation with a purchaser, the owner cannot, while such negotiation is pending, take the matter into his own hands and complete' it either at or below the price first limited, and then refuse to pay the commissions.” In Middleton v. Thompson, 163 Pa. 112, — 215 — Mr. Justice Mitchell, after reviewing a number of the decisions on the subject, says: “These cases show clearly that a binding contract is not essential where the party produced by the broker stands ready to perform his part of the proposal, and the failure to do so occurs through the fault or inability of the principal.” Was there any evidence, then, in the light of these decisions to warrant the jury in finding that the services contemplated by the agreement had been performed by the plaintiffs? Their contention is that they had negotiated a sale with an entirely different party, to wit: Wilson & Shaffer, of Franklin. In support of this contention they offer in evidence a written agreement entered into between them, acting for their principal, and the said Wilson & Shaffer. An examination of this agreement standing alone would apparently show that when it was made the plaintiffs had wholly misconceived the scope and extent of their own authority, because in that instrument they undertook to sell and convey not merely the hotel business with the personal property, lease, license, etc., which they were authorized to sell, but also to sell and convey in fee simple the real estate itself which they, agreed they had no right to offer. Thus on the face of the paper, introduced by themselves to support their allegation that they had performed their part of the contract, it appeared that they had greatly exceeded their authority and placed their principal in a position he had never intended to assume. To avoid this difficulty the plaintiffs themselves testify that their contract with Wilson & Shaffer did not in fact mean what its written language undeniably imports; that the mistake occurred by reason of the use of a printed form of contract designed for use only in sales of real estate, and that in fact Wilson & Shaffer thoroughly understood that they were agreeing to buy and pay for only the hotel business, etc., which the defendant had authorized the plaintiffs to sell. There was evidence, therefore, from which the jury could find that so far as the plaintiffs are concerned, they did not intend to do anything more than they were authorized to do. It is to be noted, however, that there is no evidence from either Wilson or Shaf — 216 — fer as to what their understanding was, and the learned court' below and the jury could not in the absence of such testimony reach any conclusion binding on them that they had ever contracted to pay the price named for the hotel business and fixtures merely. But passing this difficulty and looking further at the terms of that contract, it appears that Wilson & Shaffer entered into no absolute obligation to buy anything. Their undertaking to purchase whatever might be construed to be the subject-matter of their written contract was conditional on their ability to secure a loan of $7,250, to be repaid in two annual installments. There is no evidence to show whether or not they had the financial ability to borrow such a sum of money and satisfactorily secure its repayment, and the assertion that they could have secured such a loan and thus become bound by an absolute contract to purchase something rests on nothing more than conjecture. It appears then that the plaintiffs were in no way concerned with the sale that was actually made and did nothing in connection with that transaction. It is equally clear that they had commenced no negotiation with the purchaser who actually completed the sale, nor did they produce to their principal a purchaser able and ready to perform his part of the proposal, so that the failure to complete their sale resulted solely through the fault or inability of their principal. As the record now stands, therefore, they have not shown a case where under any of the decisions cited they can successfully assert their right to recover the commission provided for in their agreement. But it does not follow that because the plaintiffs were not in a position to recover in bulk the amount of the commission, 'they were not entitled to maintain their action at all or to recover any sum. In his written agreement with them the defendant had plainly stipulated and agreed that he would “give plaintiffs ten days’ written notice of his intention to withdraw the said business from their agency.” This covenant of his contract the plaintiffs had a right to expect he would perform, as their right to sell was to be exclusive until the defendant — 217 — saw fit to revoke their commission in the manner named. Failing one purchaser, they might have secured another before the defendant could lawfully withdraw his property from their agency. The plaintiffs testify that there was a clear breach of this covenant on the part of the defendant, and their testimony was ample to carry that question to the jury, and, if believed, to warrant a finding in their favor. For a breach of that covenant they would be entitled to recover compensatory damages. In Blackstone v. Buttermore, 53 Pa. 266, it is said: “The interest of the agent was only in his compensation for selling, and without a sale this is not earned. A revocation could not injure him. If he had expended money, time or labor, or all, upon the business intrusted to him, the power itself was a request to do so, and on a revocation would leave the principal liable to him on his implied assumpsit.” In Black v. Pentony, 30 Pa. Superior Ct. 38, Mr. Justice Orlady said: “If they — the principals — -withdrew for a good reason, as explained in Cronin v. Sharp, 16 Pa. Superior Ct. 76, they would be liable for nominal damages only. However, if they did not act in good faith and withdrew from the transaction as a mere subterfuge in order to secure a higher price, or to relieve themselves from the payment of the plaintiff’s claim, he was entitled to proper compensation for his time, labor and expenses incurred in good faith in the defendants’ interest.” In Kifer v. Yoder, 198 Pa. 308, it is said: “It is always incumbent upon a broker seeking to recover a commission, to prove either that a sale was made to the party whom he procured as a purchaser, or that the purchaser was able and willing to buy, and the failure to make an actual sale was through no fault of the broker or his customer. ... A real estate broker is employed as the agent of the vendor, for the purpose of effecting a sale. Until he accomplishes the object of his employment he is not entitled to his commission.” If then, relying on the covenant in their agreement, the plaintiffs had incurred expense by way of advertising the property, seeking purchasers by correspondence or otherwise, or devoted time, labor or money towards the accomplishment of — 218 — the object contemplated by their agreement, they would be entitled to such a verdict as would make good any loss sustained by reason of the breach of the covenant referred to. The case, therefore, was tried upon a mistaken principle and must go back to be retried along the lines indicated in this opinion. If the plaintiffs are to recover the commission named in their contract for a sale of the property, they must show that they had procured for the defendant a party with whom he was satisfied, and who actually contracted for the property at a price acceptable to the owner; or that it was through their efforts that the purchaser was secured to whom the defendant, after he wrongfully took the matter out of their hands, made the sale; or that even if they had not secured any binding contract from a proposed purchaser, they had actually produced to their principal a purchaser able and ready to perform ' his part of the proposal, so that the failure to complete an actual sale resulted alone from the fault or inability of the principal. If they are not thus able to show a state of facts upon which they may rightfully assert that they had done everything contemplated in their contract with the defendant, then their right to recover must be confined to compensatory damages for the alleged breach by the defendant of his covenant not to withdraw the sale of the property from their agency until after ten days’ written notice of his intention so to do. The principle controlling the main question involved in this appeal is thus stated by Mr. Justice Elkin in the recent case of Turner v. Baker, 225 Pa. 359, reported since the foregoing opinion was written: “ It is contended that appellant was constituted the exclusive agent of appellee to sell his hotel property, and that any sale made while the contract of exclusive agency remained in force, either through the efforts of the broker or by the principal, entitles the broker to- recover his commission although he was not instrumental in effecting the sale. In some jurisdictions the rule does seem to be laid down as broadly as above stated, but this is not the law in Pennsylvania. . . . The appellee did constitute appellant his sole agent to sell a hotel property at a stipulated price, and agreed — 219 — to pay him a commission for his services. He further agreed that the broker should have the exclusive right to dispose of the property and that written notice should be given ten days before the withdrawal of the business. The broker did not make a sale, the principal did. The principal did not give the ten days’ withdrawal notice as required by the contract which the broker insists was still in force when the sale was made by the principal. The right to recover the commission under these circumstances is asserted on two grounds, first, that a sale made by any person while the contract remained in force entitled the broker to the stipulated commission, and, second, that the commission was earned by the broker producing a purchaser who was ready, able and willing to buy the property. The first position cannot be sustained for the reasons herein-before stated. The second contention depends upon the facts. If in point of fact the broker had produced a purchaser ready, able and'willing to buy upon the terms of the contract, and while it remained in force, he would clearly be entitled to his commissions under the rule of all the authorities. This is the pinch of the case and it is almost entirely a question of fact.” Judgment reversed, and venire facias de novo awarded.