Eastburn v. Joseph Espalla, Jr., & Co.

• Decision Date: 07 April 1927
• Docket Number: 1 Div. 444
• Citation: 112 So. 232,215 Ala. 650
• Parties: EASTBURN v. JOSEPH ESPALLA, JR., & CO.
• Court: Alabama Supreme Court

112 So. 232

215 Ala. 650

EASTBURN v. JOSEPH ESPALLA, JR., & CO.

1 Div. 444

Supreme Court of Alabama

April 7, 1927

Appeal from Circuit Court, Mobile County; Saffold Berney, Judge.

Action to recover commissions by Joseph Espalla, Jr., & Co. against Joseph R. Eastburn. From a judgment for plaintiffs, defendant appeals. Transferred from Court of Appeals under Code 1923, § 7326. Reversed and remanded.

Hogan &amp Mitchell, of Mobile, for appellant.

Foster K. Hale, Jr., of Mobile, for appellees.

BOULDIN J.

The suit is by a real estate broker to recover commissions due as per contract with the owner. The broker obtained a purchaser able and willing to buy, who submitted a proposition in writing which was accepted in writing by the owner.

The defense was that the plaintiff firm forfeited all claim to commissions because of bad faith in promoting the offer and acceptance at a price known by the broker to be greatly less than the true value of the property.

The broker occupies a fiduciary relation to the owner he represents in the sale of the property, owes full fidelity in the service he undertakes, and upon his faithfulness depends his right to compensation. The rule has been stated in strong terms and vigorously applied in numerous cases in this court. Alexander v. Smith, 180 Ala. 541, 61 So. 68; Berry v. Marx, 206 Ala. 619, 91 So. 583; Clay v Cummins, 201 Ala. 34, 77 So. 328; Dean v Roberts, 182 Ala. 221, 62 So. 44; Jackson v. Berry-Snellings Realty Co., 211 Ala. 174, 100 So. 111; Clifford v. Armstrong, 176 Ala. 441, 58 So. 430; Alford v. Creagh, 7 Ala.App. 358, 62 So. 254; Henderson v. Vincent, 84 Ala. 99, 4 So. 180.

When the broker contracts to sell the property at not less than a price named, and thereafter the property has enhanced in value to a point greatly in excess of such minimum, a fact known to the broker and known by him to be unknown to the owner, the broker owes the duty to inform the owner of the increased value. This applies to enhancement due to general causes, or to special conditions, such as discovery of valuable minerals thereon, or proximity to recently discovered oil fields, etc. Hall v. Gambrill (C.C.A.) 92 F. 32; Hegenmyer v. Marks, 37 Minn. 6, 32 N.W. 785, 5 Am.St.Rep. 808; Wadsworth v. Adams, 138 U.S. 380, 11 S.Ct. 303, 34 L.Ed. 984; Snell v. Goodlander, 90 Minn. 533, 97 N.W. 421.

The general rule is that, where the owner, dealing at arm's length in entering into the relation, has fixed a stated price and terms of sale, when the broker finds and presents a purchaser ready, able, and willing to take the property at such price and on such terms, the commissions are due. In the absence of special circumstances, he need not seek a purchaser at a higher price.

In the case before us, the price was fixed in the contract at $2,000, terms, cash. More than a year thereafter, while the contract was in force, plaintiff obtained and submitted to defendant an offer of $1,350, which was accepted.

There was evidence that the broker advised the owner to accept the offer, that it was well sold at the price, and evidence that in fact there was a real estate boom in that vicinity, and the actual value at the time was about $3,500. For the purpose of showing the broker knew of the enhanced value. Mr Crabtree, member of plaintiff firm, was asked, on...