Childs v. Ragonese

• Decision Date: 01 June 1983
• Docket Number: No. 45,45
• Citation: 296 Md. 130,460 A.2d 1031
• Parties: , 38 A.L.R.4th 160 John C. CHILDS, Sr., et al. v. Frank P. RAGONESE et al.
• Court: Maryland Court of Appeals

Page 130

296 Md. 130

460 A.2d 1031, 38 A.L.R.4th 160

John C. CHILDS, Sr., et al. v. Frank P. RAGONESE et al.

No. 45.

Court of Appeals of Maryland.

June 1, 1983.

Neil Tabor, Baltimore, for appellants.

Nathan Patz, Baltimore (Alan A. Abramowitz, Baltimore, on brief), for appellees.

Argued before MURPHY, C.J., and SMITH, ELDRIDGE, COLE and DAVIDSON, JJ.

ELDRIDGE, Judge.

The question presented in this case is whether, under a contract between a seller of real property and an auctioneer, which provides that the auctioneer be paid a commission if the property is "sold," the auctioneer is entitled to retain his full commission when the successful bidder at the public auction refuses to consummate the sale.

John C. Childs and several partners trading under the title of Paradise Joint Venture (collectively hereinafter referred to as Childs) owned a parcel of land located in Harford County. They entered into an employment contract with an auctioneer, A.J. Billig and Company (Billig), whereby Billig was to "sell" the land at a public or a private sale. The contract, prepared by Billig, provided for the payment of five percent of the sale price to Billig as a commission should the property be "sold." The contract stated (italics added):

"We hereby employ A.J. BILLIG & COMPANY, duly licensed Auctioneers, as Our exclusive Agents to sell either by public or private sale Our property as above described. This exclusive employment is to continue for a period of 30 days. If the said property is sold during the life of this contract by the said Auctioneers or by the Owners, or through any other agency or broker, or if the owner during the life of this contract should withdraw the property prior to its offering, the said owners, in consideration of the acceptance of such employment by said Auctioneers, hereby agree_ to pay said Auctioneers a commission on the amount for which the property is sold, or, if said property be withdrawn from sale, a commission on the above price [$246,000.00] for said property, according to the rates printed on the reverse side hereof, plus all advertising costs not to exceed the sum of $1500.00, which advertising costs shall also be paid by the owners. In the event the property is offered at public auction and is not sold because of an inadequacy of bid or bids, owners shall pay to the Auctioneers for such public auction offering a fee of $750.00, plus such advertising costs. Executed at Baltimore, Md. on 11/8 197."."

Thereafter a public auction was conducted by Billig, and the high bidder was Parkview Construction Company at a bid of $245,775.00. Immediately following the bidding, a written contract of sale was entered into between Parkview and Childs, and a deposit in the amount of $20,000.00 was made by Parkview. The deposit was in the form of a check payable to the order of Frank P. Ragonese, the principal stockholder of Parkview, and endorsed by Ragonese to Billig. The balance of the purchase money was to be paid and settlement was to occur in 60 days. After deducting advertising expenses of $802.38 and a full commission in the amount of $12,228.75 (5 percent of $245,775.00) from the deposit, Billig remitted $6,908.87 to Childs.

Subsequently Parkview refused to close the land transaction and elected to forfeit the deposit because, according to Ragonese, proper financing was not available. Billig refused to return to Childs the $12,228.75 commission, although the auctioneer offered to conduct another auction of the property without charging additional fees or an additional commission. This offer was rejected by the vendors who employed a different auctioneer, Alex Cooper, Inc., to procure a purchaser. ¹

Childs then brought the present action against Billig in the Superior Court of Baltimore City, seeking damages for Billig's refusal to return the commission. Following a trial, the Superior Court entered judgment in favor of Billig. The court determined that an auctioneer "comes within the purview" of Maryland Code (1974, 1981 Repl.Vol.), § 14-105 of the Real Property Article which provides that whenever, in the absence of a special agreement to the contrary, a real estate broker employed to sell real estate procures a purchaser, and the person procured is accepted by the employer, and enters a valid, binding and enforceable written contract of sale in terms acceptable to the employer, the real estate broker shall be deemed to have earned his commission even though the sale is not consummated. Thus, according to the court, Billig earned his commission upon execution of the contract of sale between Childs and Ragonese. The court held that there was no special agreement to the contrary which would render the statute inapplicable.

Childs appealed to the Court of Special Appeals which affirmed the judgment in favor of Billig. Childs v. Ragonese, 51 Md.App. 428, 443 A.2d 665 (1982). The appellate court, however, disagreed with the trial court's reasoning and held that § 14-105 of the Real Property Article was not applicable to auctioneers. 51 Md.App. at 431, 443 A.2d 665. Instead, the Court of Special Appeals based its decision on the holding by courts in some other jurisdictions that an auctioneer is "entitled to commissions if he is the procuring cause of a sale, even if, without his fault, the contract of sale is rescinded or abandoned." Id. at 432, 443 A.2d 665.

We subsequently granted Child's petition for a writ of certiorari, Childs v. Ragonese, 293 Md. 651 (1982).

The parties have presented us with two issues, one of statutory interpretation and one of contract interpretation. Childs contends that § 14-105 of the Real Property Article is inapplicable to auctioneers and that the words "sell" and "sold" in the employment contract denote a consummated sale. Consequently, according to Childs, under the employment contract Billig was required to return the commission when Parkview refused to close the transaction. Billig, on the other hand, argues that § 14-105 does apply to this case, entitling the auctioneer to his full commission upon the execution of the contract of sale with Parkview. Alternatively, Billig maintains that the words "sell" and "sold" in the employment agreement refer to a contract of sale and not a consummated sale.

I.

Section 14-105 of the Real Property Article provides as follows:

" § 14-105. When real estate broker entitled to commission.

In the absence of special agreement to the contrary, if a real estate broker employed to sell, buy, lease, or otherwise negotiate an estate, or a mortgage or loan secured by the property, procures in good faith a purchaser, vendor, lessor, lessee, mortgagor, mortgagee, borrower, or lender, as the case may be, and the person procured is accepted by the employer and enters into a valid, binding, and enforceable written contract, in terms acceptable to the employer, of a sale, purchase, lease, mortgage, loan, or other contract, as the case may be, and the contract is accepted by the employer and signed by him, the broker is deemed to have earned the customary or agreed commission. He has earned the commission regardless of whether or not the contract entered in to is performed, unless the performance of the contract is prevented, hindered, or delayed by any act of the broker."

Although this statute, first enacted by Ch. 178 of the Acts of 1910, has been dealt with in numerous cases, ² this Court has not previously considered whether it is applicable to contracts employing auctioneers to sell real estate.

By its very language, however, the statute does not cover auctioneers. It speaks only of "a real estate broker" and the time such "broker" is deemed to have earned his commission.

Moreover, this Court has consistently refused to extend § 14-105 beyond its literal terms. For example, even though the statute covers the employment of a real estate broker to negotiate mortgages, the Court has held that the statute has no application to a mortgage broker. Bregel v. Cooper, 161 Md. 416, 420, 157 A. 719 (1931); Navarre Realty Co. v. Coale, 122 Md. 494, 501, 89 A. 728 (1914). For other cases declining to apply the statute beyond its literal terms, see, e.g., Wyand v. Patterson Agency, 271 Md. 617, 619-620, 319 A.2d 308 (1974) (statute inapplicable where plaintiff real estate broker, with an exclusive listing, was not the procuring cause of the sale); Mullineaux v. Voltz, 150 Md. 114, 117-118, 132 A. 594 (1926) (where a real estate broker was employed to sell a farm, including both real estate and personal property, and the contract did not show what part of the commission was for real estate and what part was for personalty, the statute was held to be inapplicable); Wood v. Standard Phosphate Co., 140 Md. 654, 657, 118 A. 179 (1922) (indicating that brokerage commissions for the sale of personalty are not governed by the statute).

When the real estate brokers' commission statute, now codified as § 14-105 of the Real Property Article, was first enacted in 1910, the Legislature clearly distinguished real estate brokers from auctioneers. Code (1904), Art. 56, § 7 provided for the licensing of an "auctioneer," and Art. 56, §§ 12-13, provided for the licensing of a "real estate broker." The provisions applicable to each, including the license fee, were different. If the Legislature intended that auctioneers be covered by the real estate brokers' commission statute, it is likely that the word "auctioneer" would have been used.

We agree with the Court of Special Appeals that § 14-105 of the Real Property Article has no application to an auctioneer.

II.

With regard to an agreement entitling an agent to a commission upon the sale, purchase, lease, or other transaction concerning property, it is settled in Maryland, absent statute or an express agreement to the contrary, that words such as "sell," "sold," "sale," "purchase," "lease," refer to a consummated transaction and not merely the execution of a contract to sell, purchase,...