Creed v. Apog

• Decision Date: 19 May 1978
• Citation: 376 N.E.2d 154,6 Mass.App.Ct. 365
• Parties: David P. CREED et al. 1 v. Krist E. APOG et al. 2
• Court: Appeals Court of Massachusetts

Page 154

376 N.E.2d 154

6 Mass.App.Ct. 365

David P. CREED et al. ¹ v. Krist E. APOG et al. ²

Appeals Court of Massachusetts,Middlesex.

Argued Feb. 14, 1978.

Decided May 19, 1978.

John R. Hally, Boston (Susan F. Brand, Boston, with him), for plaintiffs.

Douglas P. Woodlock, Boston (Joseph L. Cotter, Boston, with him), for defendants.

Before HALE, C. J., and GRANT and ARMSTRONG, JJ.

GRANT, Justice.

The plaintiffs seek to recover from the defendants for services performed in connection with the sale of a large tract of land in Westwood (locus) owned originally by the defendants Apog and Talkowski as trustees of the Imperial Gardens Realty Trust and later by Apog individually. Counts 1 and 2 (brought by Creed) and 5 (brought by Egan, Diehl and Edward Diehl Associates, Inc. (Associates)) of the declaration (complaint) sought recovery pursuant to an express contract between the parties; counts 3 and 4 (brought by Creed) and 6 (brought by Egan, Diehl, and Associates) sought recovery in quantum meruit. All parties moved for directed verdicts at the close of the plaintiffs' evidence. The plaintiffs' motion was denied. The defendants' motion was allowed as to counts 3 and 4 but denied as to the remaining counts. The jury returned verdicts for the defendants on those counts. The plaintiffs have appealed from the ensuing judgments. The defendants have appealed from an order entered after the judgments denying in part their motion for costs.

We summarize the evidence most favorable to the plaintiffs. Creed is a licensed real estate broker; Diehl and Egan are both associated with the plaintiff Associates, a firm providing design, planning, site evaluation and related services; Apog is a real estate owner and developer. In 1967 the Lahey Clinic Foundation (Lahey), a group practice of approximately 100 physicians whose principal facilities were then located in Boston, was considering the purchase of property in a suburb of Boston on which to construct a hospital with outpatient facilities and physicians' offices. Creed learned of Lahey's possible interest and told Diehl, who promised to contact Creed if he found a possible site. A month later, in May of 1967, Diehl contacted Apog to ascertain whether he might be interested in selling the locus to Lahey. Apog was. Diehl informed Creed, and in June of 1967 Creed, with the permission of Apog, showed the locus to the president of Lahey, who indicated an interest in purchasing it.

However, Lahey desired that various studies be made to determine whether the locus would be appropriate for Lahey's purposes. Among other matters to be studied were problems of sewage disposal, the availability of utilities, vehicular access to the locus, and parking. Such studies were performed by Diehl, Egan, and Associates with the understanding that Apog would compensate them for their services. In addition, the locus was zoned for single family residential use, and, although a hospital could be built in such a zone under a special permit, Lahey desired certain changes in the Westwood zoning by-law before it might purchase the locus.

In October of 1968, although the zoning by-law had not yet been changed and Lahey was not yet convinced that the locus would be an appropriate site for its facilities, Lahey was sufficiently interested in the locus that it entered into an agreement with Apog and his co-trustee by which they gave Lahey an option to purchase the locus for a price of $1,200,000. Lahey paid the trustees $15,000 upon the execution of the agreement, which provided that by the payment of additional sums of $15,000 at six-month intervals Lahey could extend the life of the option for a maximum period of three years. ³ Contemporaneously with that agreement Apog entered into a separate written agreement with the plaintiffs (one which the parties agree superseded all previous agreements between them) by which Apog agreed to compensate the plaintiffs for their services in obtaining the option agreement. The relevant provisions of the compensation agreement are set forth in the margin. ⁴

By the middle of 1969 Lahey's negotiations with the town concerning a possible change in the zoning by-law had reached an impasse over the question of the payments Lahey, as a tax-exempt institution, might be willing to make to the town in lieu of property taxes. In September of that year Apog, apparently recognizing the possibility that Lahey might not exercise its option, entered into an agreement with Cabot, Cabot and Forbes Land Company (CC&F) by which Apog gave CC&F an option to purchase the locus free from all encumbrances except the option agreement with Lahey. In November of 1969 the Imperial Gardens Realty Trust was terminated, and title to the locus was transferred to Apog individually. In November of 1969 and again in January of 1970 CC&F contacted Lahey to determine whether it might be interested in developing the locus jointly, both for Lahey's facilities and for commercial purposes. Lahey indicated that it was not interested.

On February 27, 1970, Apog executed an agreement with CC&F for the sale of the locus and certain adjacent properties owned by Apog. CC&F entered into this agreement on behalf of an undisclosed corporate customer, which turned out to be the Gillette Company (Gillette). The agreement provided that the customer (Gillette) could purchase the locus for approximately $1,700,000, together with the adjacent properties for an additional amount. Apog had the option of requiring that the agreed upon consideration be paid in the form of real estate of equivalent value. ⁵ The agreement authorized Gillette "to deal with . . . (Lahey) in (Gillette's) sole discretion in order to acquire the Land Purchase Option ⁶ or to cause it to be terminated or surrendered to (Apog), as (Gillette) chooses." If Gillette's negotiations with Lahey should fail to result in Apog's owning the land free and clear of the option by April 6, 1970, the purchase and sale agreement was to terminate. In addition, the agreement was to terminate if the Lahey option should be exercised by anyone other than Gillette at any time prior to the closing date. Finally, the agreement provided that Apog "agrees to pay the commission to . . . Creed . . . and to . . . Egan . . . Diehl and . . . Associates as provided in an agreement dated October 10, 1968."

Gillette immediately began negotiating with Lahey for the purchase of Lahey's option. On April 9, 1970, Gillette and Lahey entered into an agreement by which Lahey would (and did) assign the option to Gillette for $910,000. On June 15, 1970, Gillette released its rights under the option, and Gillette and Apog agreed on the properties Gillette would acquire and transfer to Apog as the consideration for his conveyance of the locus. Gillette thereafter acquired the agreed upon properties, and they were conveyed to Apog in return for his conveyance of the locus to Gillette.

None of the plaintiffs played any role in any of the negotiations or dealings between or among any of Apog, CC&F, Gillette and Lahey which commenced in September of 1969 and culminated in the conveyance of the locus to Gillette. During the fall of 1969 Apog mentioned to Creed that he was talking to CC&F about the locus. In addition, Egan and Diehl heard reports that someone other than Lahey whose identity was unknown to them (although they suspected that CC& F was somehow involved) was interested in purchasing the locus. Creed, Egan and Diehl all testified that in March of 1970 they had questioned Apog concerning the possibility of a sale of the locus to someone other than Lahey, that Apog had assured them that he would honor his agreement to compensate them for their work, and that he had shown them the provision of his agreement with CC&F to the same effect. Thereafter the plaintiffs continued to seek information from Apog concerning his negotiations to sell the locus to someone other than Lahey, as well as reassurances that they would be compensated for their work. In late April, 1970, Apog advised Creed and Diehl that Gillette was to purchase the locus. Creed and Egan both testified that Apog had continued to assure them that their rights were "fully protected" and that they would be "taken care of." Apog, however, testified that he had not shown any of the plaintiffs any portion of the February agreement between CC&F and himself and that he had never indicated to any of them that they would receive compensation even if the Lahey option should not be exercised.

1. The plaintiffs contend that the trial judge erred in denying such portions of their requests for instructions as would have permitted the jury to find for the plaintiffs on the written compensation agreement if they should find that the plaintiffs had been the "efficient cause" of Apog's eventual sale of the locus to Gillette. The judge did not err in this respect.

It is true, as the plaintiffs argue, that there are cases in which it has been held that a broker may be found to have earned a commission if his activities were the efficient and predominating cause of the sale of the property even though the ultimate purchaser turns out to be someone other than the person with whom the broker dealt. See Thornton v. Forbes, 326 Mass. 308, 309-312, 93 N.E.2d 742 (1950), on which the plaintiffs place their principal reliance. See also Dexter v. Campbell, 137 Mass. 198, 200-201 (1884), and Willard v. Wright, 203 Mass. 406, 408-409, 89 N.E. 559 (1909). But the present is not a case in which the owner made a general offer to pay a commission to a broker if he should produce a customer ready, willing and able to purchase the property. Here Creed or Diehl had already produced Lahey as a possible purchaser by the time the parties entered into the compensation agreement, which expressly provided that the plaintiffs should be compensated "only if, as, and when the (Lahey) option . . . is exercised, title passes thereunder and the full...