Brown v. Grimm

• Decision Date: 24 February 1971
• Citation: 481 P.2d 63,258 Or. 55
• Parties: Winifred G. BROWN, dba Garden Home Real Estate, Appellant, v. Duane E. GRIMM and Helen L. Grimm, husband and wife, Respondents.
• Court: Oregon Supreme Court

Page 63

481 P.2d 63

258 Or. 55

Winifred G. BROWN, dba Garden Home Real Estate, Appellant, v. Duane E. GRIMM and Helen L. Grimm, husband and wife, Respondents.

Supreme Court of Oregon, Department 2.

Argued and Submitted Dec. 3, 1970.

Decided Feb. 24, 1971.

Glenn H. Prohaska, Portland, argued the cause for appellant. With him on the briefs were Carlton R. Reiter, and Reiter, Day, Wall & Bricker, Portland.

Frederick A. Anderson, Tigard, argued the cause for respondents. With him on the brief were Anderson & Dittman, Tigard.

Before O'CONNELL, C.J., ^* and DENECKE, TONGUE, and BRYSON, JJ.

BRYSON, Justice.

This is an action at law by plaintiff, a real estate broker, against defendants, husband and wife, to recover a broker's commission in the amount of $2,000 and attorney fees, based on a Real Estate Broker's Employment Contract signed by defendants and R. Timmins, a real estate saleswoman employed by plaintiff. The commission is claimed to have been earned by plaintiff's procuring, through Timmins, a purchaser for defendants' property listed with plaintiff under an exclusive listing agreement.

Defendants denied the allegations of plaintiff's complaint and affirmatively alleged fraudulent misrepresentation and a breach of fiduciary duties on the part of plaintiff. The case was tried before the court without a jury. Plaintiff appeals from the judgment in favor of the defendants.

The relevant parts of the Real Estate Broker's Employment Contract, on which this action is based, are as follows:

"For value received, you hereby are employed to sell or exchange the property described hereon at the selling price and on the terms noted. [The selling price appears as "$20,000 net "; the terms appear as "cash"]. * * * In the event you * * * shall find a buyer ready and willing to enter into a deal for said price and terms * * * I hereby agree to pay you in cash for your services a commission equal in amount to 10% of the selling price * * * This agreement expires at midnight on November 10, 1968 but I further allow you a reasonable time thereafter to close any deal on which earnest money is then deposited * * *."

The plaintiff's first assignment of error is that "the court erred in failing to find that plaintiff was entitled to a real estate broker's commission," contending that a real estate broker earns a commission when he places the seller and buyer together and an enforceable contract of sale is executed, relying upon Harris v. Coomler, 250 Or. 594, 443 P.2d 637 (1968); Killam v. Tenney, 229 Or. 134, 366 P.2d 739 (1961); and DeHarpport v. Green, 215 Or. 281, 333 P.2d 900 (1959).

The above employment contract provides:

" * * * In the event you * * * shall find a buyer ready and willing to enter into a deal for said price and terms * * * I hereby agree to pay you in cash * * * a commission equal in amount to 10% of said selling price * * *."

In Martin v. Clinton, 239 Or. 541, 542, 398 P.2d 742 (1965), this court held:

" * * *.

"1. Under a written contract executed by the parties, defendant agreed to pay plaintiff a commission for finding a buyer 'ready and willing to enter into a deal for said price and terms, or such other terms and price as I may accept.' We construe this language as an agreement to procure a purchaser ready, willing and able to purchase the property offered for sale."

The official Earnest Money Agreement which plaintiff had defendants and the prospective purchaser, Guillory, execute, provided: "Purchaser to pay cash at closing. This offer is subject to purchaser [Guillory] obtaining zone change, adequate financing and building permits and sewer permits on proposed new construction."

The record in this case is virtually barren of any evidence that the purported purchaser, Guillory, was either able or willing to pay the defendants $22,000 cash for their property during the life of the Broker's Employment Contract. The evidence indicates that Guillory was not willing to pay until January 1969 at the earliest. There was no evidence offered of his financial ability to pay, and Guillory testified that he had obtained only verbal interest in financing the proposed transaction that the defendants' property was to have become part of.

In DeHarpport v. Green, 215 Or. 281, 284, 333 P.2d 900, 902 (1959), this court held:

" * * *.

"Ability to purchase is not shown when a proposed purchaser is depending upon third parties who are in nowise shown to be bound or willing to be bound to furnish the money for the purpose of making the purchase. [Citing cases]"

There was no request for special findings of fact and the court entered the following general Findings of Fact and Conclusions of Law:

"1. The plaintiff as the broker and agent of defendants failed to prove by a preponderance of the evidence that the plaintiff had discharged her fiduciary duties to the defendants to entitle plaintiff to recover a broker's commission from the defendants;

"2. That the evidence adduced in this case preponderates in favor of the defendants and against the plaintiff, and defendants have no duty or obligation to the plaintiff by reason of any relationship between the parties.

"Based on the foregoing Findings of Fact, the court makes its Conclusions of Law

"1. That the plaintiff's complaint should be dismissed;

"2. That defendants are entitled to judgment against the plaintiff for costs and disbursements herein."

and thereafter entered judgment accordingly. There was sufficient evidence to support the foregoing Findings of Fact and Conclusions of Law.

In the recent case of Setser v. Commonwealth, Inc., 90 Or.Adv.Sh. 1463, 470 P.2d 142, 145 (1970), a similar case involving an action to recover a broker's commission for producing a purchaser of property owned by the defendant, this court stated:

"It has been held that even if the seller accepts the offer of the buyer procured by the broker, that in itself is not sufficient to create a legal obligation upon the part of seller to pay the broker's commission. The cases so holding reason that there should be no recovery when the transaction is not consummated as a result of the buyer's failure to complete it. It is felt that the owner of property who employs a broker to procure a purchaser bargains not simply for the presentation of a person who is willing to sign a contract, but one who is able and willing to complete the sale transaction.

"As Denning, L.J., said in Dennis Reed, Ltd. v. Goody (1950) 2 K B 277, 284, 1 All E.R. 919, 923:

" ' * * * The house-owner wants to find a man who will actually buy his house and pay for it. He does not want a man who will only make an offer or sign a contract. He wants a purchaser "able to purchase and able to complete as well." '

The leading case in the United States adopting this point of view is Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528, 236 A.2d 843, 30 A.L.R.3d 1370 (1967). 2

In that case the prospective purchaser had entered into a contract of purchase with the owner but did not complete the contract because he was financially unable to do so. The court said:

" ' * * * In reason and in justice it must be said that the duty to produce a purchaser able in the financial sense to complete the purchase at the time fixed is an incident of the broker's business; so too, with regard to any other material condition of the agreement to purchase which is to be performed at the closing. In a practical world, the true test of a willing buyer is not met when he signs an agreement to purchase; it is demonstrated at the time of closing of title, and if he unjustifiably refuses or is unable financially to perform then, the broker has not produced a willing buyer.' " 50 N.J. at 548, 236 A.2d at 853.

The Court then laid down the following rule:

" ' * * * When a broker is engaged by an owner of property to find a purchaser for it, the broker earns his commission when (a) he produces a purchaser ready, willing and able to buy on the terms fixed by the owner, (b) the purchaser enters into a binding contract with the owner to do so, and (c) the purchaser completes the transaction by closing the title in accordance with the provisions of the contract. If the contract is not consummated because of lack of...