Edwards v. Cragg
| Decision Date | 22 November 1948 |
| Docket Number | Record No. 3392. |
| Court | Virginia Supreme Court |
| Parties | NELLIE M. EDWARDS, TRADING AND DOING BUSINESS AS EDWARDS REALTY COMPANY AND THOMAS E. EDWARDS, INDIVIDUALLY AND AS AGENT OF EDWARDS REALTY COMPANY v. ROBERT M. CRAGG. |
Present, Hudgins, C.J., and Gregory, Eggleston, Spratley, Buchanan and Miller, JJ.
1. BROKERS — Compensation — Broker Must Perform Special Contract Before Entitled to Commission — Case at Bar. — The instant case was an action to recover money claimed by plaintiff to be improperly retained by defendants as commission on the sale of real estate belonging to him. The stipulated facts were that plaintiff authorized defendants to sell certain real estate for cash on commission. Defendants produced purchasers for terms other than cash and upon plaintiff's rejection of this contract agreed to finance the transaction so that plaintiff would in fact receive cash. Plaintiff assented to this arrangement and the purchasers made a deposit with defendants on the new agreement. Defendants failed to perform the agreement in spite of repeated demands by plaintiff and the latter finally terminated the contract. Thereafter he and the purchasers made a new contract by which they purchased the property on less favorable terms, giving a purchase money mortgage for part of the purchase price and subrogating plaintiff to their right to the return of the deposit held by defendants. In support of their claim for commissions, defendants contended that they were the procuring cause of the sale and that by selling the property to the purchasers plaintiff waived performance of their financing agreement and should be estopped to assert their default.
Held: Defendants sought to bring themselves within the rule that when the owner of property who has placed it with a broker for sale at a certain price, sells the property to the broker's customer at a reduced price, he is liable to the broker for his commissions, but the agreed facts prevented the application of that rule and brought the case within an exception to the rule, as well established as the rule itself, that if the broker makes a special contract, such as expressly making the payment of commissions depend upon obtaining a certain price for property, or upon securing certain terms of sale, he cannot recover commissions if he fails to perform that special contract.
2. BROKERS — Compensation — Broker Entitled to Commission When He Is Procuring Cause of Sale. — The rule is well established that if property is placed in the hands of a real estate broker for sale at a certain price or upon certain terms, and a sale is brought about through the broker as a procuring cause, he is entitled to commissions on the sale even though the final negotiations are conducted through the owner, who in order to make a sale accepts a price less than that stipulated to the broker or terms more liberal than those the latter was authorized to accept.
3. BROKERS — Compensation — Failure of Broker to Perform Special Contract — Case at Bar. — The instant case was an action to recover money claimed by plaintiff to be improperly retained by defendants as commission on the sale of real estate belonging to him. The stipulated facts were that plaintiff authorized defendants to sell certain real estate for cash on commission. Defendants produced purchasers for terms other than cash and upon plaintiff's rejection of this contract agreed to finance the transaction so that plaintiff would in fact receive cash. Plaintiff assented to this arrangement and the purchasers made a deposit with defendants on the new agreement. Defendants failed to perform the agreement in spite of repeated demands by plaintiff and the latter finally terminated the contract. Thereafter he and the purchasers made a new contract by which they purchased the property on less favorable terms, giving a purchase money mortgage for part of the purchase price and subrogating plaintiff to their right to the return of the deposit held by defendants. In support of their claim for commissions, defendants contended that they were the procuring cause of the sale and that by selling the property to the purchasers plaintiff waived performance of their financing agreement and should be estopped to assert their default.
Held: The defendants failed to procure a purchaser who would buy on plaintiff's terms. To effect the sale they specifically agreed to finance the transaction to meet those terms. They failed to perform and their authority was terminated fairly and in good faith. The procuring cause doctrine could not be stretched so far that plaintiff must still pay them commissions because he afterwards sold to their original customer on terms substantially less favorable than those they had contracted to supply, but which they had failed to supply after repeated demands. There was no waiver by plaintiff of defendants' default, and it was because of that default that he had to take the matter in his own hands and, in making the sale, accept a mortgage instead of the cash defendants contracted to give him.
4. BROKERS — Compensation — Not Entitled to Commission under Special Contract for Merely Introducing Buyer and Seller. — Upon a general contract of employment the owner may make concessions to a purchaser without loss of the commission to the broker, but there is a distinction, in fact recognized by the authorities, between a general and special contract of employment in a matter of this kind. Where the broker has undertaken a special task by his contract of employment, and fails to perform it, the fact of having first introduced the buyer and seller will not entitle him to recover.
Error to a judgment of the Circuit Court of Arlington county. Hon. Walter T. McCarthy, judge presiding.
The opinion states the case.
Samuel B. Brown, for the plaintiffs in error.
Oren R. Lewis and J. Randall Caton, Jr., for the defendant in error.
Robert M. Cragg brought this suit against the defendants below, who are plaintiffs in error here, to recover $1,000 which he claimed they had improperly retained as commission on the sale of real estate belonging to the plaintiff. On agreed facts the court tried the case without a jury and rendered a judgment for the plaintiff, which the defendants now seek to reverse.
The stipulated facts were in substance these: Prior to April 24, 1946, Cragg authorized the defendants, real estate brokers, to sell for him certain property in Alexandria at the specified price of $21,000, with the express understanding that the entire sum be paid in cash. For doing so the defendants were to have a commission of five per cent.
On April 24, 1946, the defendants presented to Cragg a contract of sale to Richard G. and Martha W. Waugh on terms other than cash. Cragg rejected this contract, and thereupon the defendants agreed to finance the transaction so that Cragg would in fact receive the $21,000 in cash. Cragg accepted this contract and the Waughs deposited with the defendants $1,000 and agreed to comply with the terms of sale in twenty days.
Shortly after the execution of the contract the defendants requested Cragg to give the Waughs immediate possession of the property and Cragg consented to do this on the assurance of the defendants that the financing which they had undertaken had been arranged so that Cragg would receive the full purchase price in cash on the agreed settlement date.
However, on the designated settlement date the defendants admitted they were not then able to perform their obligation under the contract and requested a few additional days to complete the arrangements.
On June 14, 1946, the defendants not having then performed, Cragg notified them by letter that he would terminate the contract unless they performed within five days.
On July 16, 1946, Cragg's attorney wrote the defendants that the settlement had been hanging fire for over three months, and that unless they fulfilled their agreement within five days from July 17, Cragg and the purchasers would...
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