Tristram's Landing, Inc. v. Wait

• Decision Date: 02 May 1975
• Parties: TRISTRAM'S LANDING, INC., et al. 1 v. Linda Loring WAIT.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 727

327 N.E.2d 727

367 Mass. 622

TRISTRAM'S LANDING, INC., et al. ¹ v. Linda Loring WAIT.

Supreme Judicial Court of Massachusetts, Nantucket.

Argued Feb. 5, 1975.

Decided May 2, 1975.

Richard Wait, Boston, for defendant.

Anthony E. Battelle, Boston, for plaintiffs.

Before TAURO, C.J., and REARDON, QUIRICO, BRAUCHER and HENNESSEY, JJ.

TAURO, Chief Justice.

This is an action in contract seeking to recover a brokerage commission alleged to be due to the plaintiffs from the defendant. The case was heard by a judge, sitting without a jury, on a stipulation of facts. The judge found for the plaintiffs in the full amount of the commission. The defendant filed exceptions to that finding and appealed.

The facts briefly are these: The plaintiffs are real estate brokers doing business in Nantucket. The defendant owned real estate on the island which she desired to sell. In the past, the plaintiffs acted as brokers for the defendant when she rented the same premises.

The plaintiffs heard that the defendant's property was for sale, and in the spring of 1972 the plaintiff Van der Wolk telephoned the defendant and asked for authority to show it. The defendant agreed that the plaintiffs could act as brokers, although not as exclusive brokers, and told them that the price for the property was $110,000. During this conversation there was no mention of a commission. The defendant knew that the normal brokerage commission in Nantucket was five per cent of the sale price.

In the early months of 1973, Van der Wolk located a prospective buyer, Louise L. Cashman (Cashman), who indicated that she was interested in purchasing the defendant's property. Her written offer of $100,000 dated April 29, was conveyed to the defendant. Shortly thereafter, the defendant's husband and attorney wrote to the plaintiffs that 'a counter-offer of $105,000 with an October 1st closing' should be made to Cashman. Within a few weeks, the counter offer was orally accepted, and a purchase and sale agreement was drawn up by Van der Wolk.

The agreement was executed by Cashman and was returned to the plaintiffs with a check for $10,500, representing a ten per cent down payment. The agreement was then presented by the plaintiffs to the defendant, who signed it after reviewing it with her attorney. The down payment check was thereafter turned over to the defendant.

The purchase and sale agreement signed by the parties called for an October 1, 1973, closing date. On September 22, the defendant signed a fifteen day extension of the closing date, which was communicated to Cashman by the plaintiffs. Cashman did not sign the extension. On October 1, 1973, the defendant appeared at the registry of deeds with a deed to the proeprty. Cashman did not appear for the closing and thereafter refused to go through with the purchase. No formal action has been taken by the defendant to enforce the agreement or to recover damages for its breach, although the defendant has retained the down payment.

Van der Wolk presented the defendant with a bill for commission in the amount of $5,250, five per cent of the agreed sales price. The defendant, through her attorney, refused to pay, stating that '(t)here has been no sale and consequently the 5% commission has not been earned.' The plaintiffs then brought this action to recover the commission. ²

In the course of dealings between the plaintiffs and the defendant there was no mention of commission. The only reference to commission is found in the purchase and sale agreement signed by Cashman and the defendant, which reads as follows: 'It is understood that a broker's commission of five (5) per cent on the said sale is to be paid to . . . (the broker) by the said seller.' The plaintiffs contend that, having produced a buyer who was ready, willing and able to purchase the property, and who was in fact accepted by the seller, they are entitled to their full commission. The defendant argues that no commission was earned because the sale was not consummated. We agree with the defendant, and reverse the finding by the judge below.

1. The general rule regarding whether a broker is entitled to a commission from one attemputing to sell real estate is that, absent special circumstances, the broker 'is entitled to a commission if he produces a customer ready, able, and willing to buy upon the terms and for the price given the broker by the owner.' Gaynor v. Laverdure, --- Mass. ---, ---, ^a 291 N.E.2d 617 (1973), quoting Henderson & Beal, Inc. v. Glen, 329 Mass. 748, 751, 110 N.E.2d 373 (1953). In the past, this rule has been construed to mean that once a customer is produced by the broker and accepted by the seller, the commission is earned, whether or not the sale is actually consummated. Fitzpatrick v. Gilson, 176 Mass. 477, 57 N.E. 1000 (1900). Ripley v. Taft, 253 Mass. 490, 149 N.E. 311 (1925). Spence v. Lawrence, 337 Mass. 355, 149 N.E.2d 606 (1958). Talanian v. Phippen, 357 Mass. 765, 256 N.E.2d 445 (1970). Furthermore, execution of a purchase and sale agreement is usually seen as conclusive evidence of the seller's acceptance of the buyer. Roche v. Smith, 176 Mass. 595, 58 N.E. 152 (1900). Johnson v. Holland, 211 Mass. 363, 97 N.E. 755 (1912). Stone v. Melbourne, 326 Mass. 372, 94 N.E.2d 783 (1950). Richards v. Gilbert, 336 Mass. 617, 146 N.E.2d 921 (1958).

Despite these well established and often cited rules, we have held that '(t)he owner is not helpless' to protect himself from these consequences. 'He may, by appropriate language in his dealings with the broker, limit his liability for payment of a commission to the situation where not only is the broker obligated to find a customer ready, willing and able to purchase on the owner's terms and for his price, but also it is provided that no commission is to become due until the customer actually takes a conveyance and pays therefor.' Gaynor v. Laverdure, supra, at --- - ---, ^b 291 N.E.2d at 622.

In the application of these rules to the instant case, we believe that the broker here is not entitled to a commission. We cannot construe the purchase and sale agreement as an unconditional acceptance by the seller of the buyer, as the agreement itself contained conditional language. The purchase and sale agreement provided that the commission was to be paid 'on the said sale,' and we construe this language as requiring that the said sale be consummated before the commission is earned.

While we recognize that there is a considerable line of cases indicating that language providing for payment of a commission when the agreement is 'carried into effect' or 'when title is passed' does not create a condition precedent, but merely sets a time for payment to be made, Alvord v. Cook, 174 Mass. 120, 121, 54 N.E. 499 (1899); Rosenthal v. Schwartz, 214 Mass. 371, 372, 101 N.E. 1070 (1913); Lord v. Williams, 259 Mass. 278, 156 N.E. 421 (1927); Canton v. Thomas, 264 Mass. 457, 162 N.E. 769 (1928), we do not think the course of events and the choice of language in this case fall within the Alvord case and its progeny. This is not a case like Canton v. Thomas, where a separate agreement was made between the seller and the broker wherein the broker would receive a commision 'in consideration of . . . procuring a purchaser." 264 Mass. at 458, 162 N.E. at 769 (1928). Similarly, Rosenthal v. Schwartz, supra, is distinguishable on its facts, as there the seller himself defaulted, thus depriving the broker of a commission by his own acts. Maher v. Haycock, 301 Mass. 594, 18 N.E.2d 348 (1938), cited by the defendant here and by the court in the Gaynor case, is not necessarily to the contrary, as there the words 'if . . . sold' were construed to require other than the consummation of the sale in order to avoid the prohibition against Sunday contracts, and not merely to determine whether the broker was entitled to a commission. ³

To the extent that there are cases (such as those collected in the Gaynor case), unique on their facts, which may appear inconsistent with this holding and seem to indicate a contrary result, we choose not to follow them.

In light of what we have said, we construe the language 'on the said sale' as providing for a 'special agreement,' GAYNOR V. LAVERDURE, SURPA, AT ---, 291 N.E.2D 617,^C or as creating 'special circumstances,' Henderson & Beal, Inc. v. Glen, 329 Mass. 748, 751, 110 N.E.2d 373 (1953), wherein consummation of the sale became a condition precedent for the broker to earn his commission. Cf. McCarthy v. Daggett, 344 Mass. 577, 579, 183 N.E.2d 502 (1962). ⁴ Accordingly, since the sale was not consummated, the plaintiffs were not entitled to recover the amount specified in the purchase and sale agreement. ⁵

2. Although what we have said to this point is determinative of the rights of the parties, we note that the relationship and obligations of real estate owners and brokers inter se has been the 'subject of frequent litigation,' Hendereson & Beal, Inc. v. Glen, supra, 329 Mass. at 751, 110 N.E.2d 373. See Note 23 Rutgers L.Rev. 83, 85 (1968). In two of the more recent cases where we where we were faced with this issue, we declined to follow the developing trends in this area, holding that the cases presented were inappropriate for that purpose. See LeDonne v. Slade, 355 Mass. 490, 492, 245 N.E.2d 434 (1969); Gaynor v. Laverdure, --- Mass. ---, --- - ---, ^d 291 N.E.2d 617. We believe, however, that it is both appropriate and necessary at this time to clarify the law, and we now join the growing minority of States who have adopted the rule of Ellswroth Dobbs, Inc. v. Johnson, 50 N.J. 528, 236 A.2d 843 (1967). ⁶

In the Ellsworth case, the New Jersey court faced the task of clarifying the law regarding the legal relationship between sellers and brokers in real estate transactions. In order to formulate a just and proper rule, the court examined the realities of such transactions. The court noted that 'ordinarily when an owner of property lists it...