H. G. Smithy Co. v. Washington Medical Ctr.

• Decision Date: 09 June 1977
• Docket Number: No. 9852.,9852.
• Parties: H. G. SMITHY COMPANY, Appellant, v. WASHINGTON MEDICAL CENTER, INC., Appellee.
• Court: D.C. Court of Appeals

Page 891

374 A.2d 891

H. G. SMITHY COMPANY, Appellant, v. WASHINGTON MEDICAL CENTER, INC., Appellee.

No. 9852.

District of Columbia Court of Appeals.

Argued June 22, 1976.

Decided June 9, 1977.

Charles J. Steele, Washington, D.C., with whom James Edward Ablard, Washington, D.C., was on the brief, for appellant.

Jacqueline Marie Saue, Washington, D.C., entered an appearance for appellant.

George H. Clark, Washington, D.C., with whom William E. Constable, and Michael B. McGovern, Washington, D.C., were on the brief, for appellee.

Before GALLAGHER, NEBEKER and MACK, Associate Judges.

NEBEKER, Associate Judge:

Appellant, H. G. Smithy Company (Smithy), appeals from a judgment of the trial court after a nonjury trial holding that it is not entitled to a commission for procuring a tenant for a building owned by the appellee, Washington Medical Center (Medical Center). Because we agree that the trial court did not err in finding that Medical Center never agreed, either explicitly or implicitly, to hire Smithy as its broker, we affirm.

In 1967, Leo Bernstein, President of the District of Columbia National Bank (DCNB), authorized F. Edward Cavin, then a Vice President of Smithy, to procure a buyer for the DCNB building located at 1812 K Street, N.W., and to acquire new offices for branch locations. Medical Center, a Virginia corporation established for the purpose of buying and selling real estate, owned most of the parcels of land comprising the block in which the DCNB building was located. Consequently, Medical Center mailed a letter to DCNB, in care of Smithy, expressing its interest in the building. Meanwhile, Bernstein suggested to Cavin that he attempt to obtain space for a DCNB branch at the intersection of 18th and K Streets, N.W. Cavin thus sought space for a branch in a building planned for the northwest corner of that intersection. The owner of this building at 1801 K Street was Medical Center. Since Medical Center had not yet appointed a rental agent for the building, Cavin communicated directly with Arthur Morris, the Treasurer and Chairman of the Finance Committee for Medical Center. Negotiations between the two parties, using Smithy as an intermediary, commenced. The first proposed sales contract, dated March 1, 1968, stipulated that DCNB could cancel the sale if DCNB and Medical Center failed to reach an agreement on the terms for the leasing of space in 1801 K Street to DCNB. A second proposed sales contract, dated September 9, 1968, contained two significant provisions: (1) it made the leasing of space in 1801 K Street to DCNB a condition of the sale; and (2) it provided that DCNB would pay a commission to Smithy for Smithy's services.

On January 28, 1969, the President of Smithy wrote Arthur Morris a letter claiming a 2% cash commission for Smithy's efforts leading to the leasing of space in 1801 K Street to DCNB. This letter represented the first attempt by Smithy to put Medical Center on notice that it expected a commission from Medical Center. Arthur Morris responded to this claim by requesting a clarification of Smithy's meaning of a "2% cash commission". In April, 1969, Smithy again demanded a 2% commission from Medical Center. On June 11, 1969, Medical Center and DCNB executed a sales contract for 1812 K Street and a lease agreement for 1801 K Street. At the settlement in September, 1969, Cavin handed to the President of Medical Center a third demand for a 2% commission. With the exception of Arthur Morris' letter requesting clarification of the meaning of a "2% cash commission", Medical Center did not respond to any of these demands and, in fact, refrained from any written communication with Smithy concerning negotiations between itself and DCNB from the date of the first demand until completion of the transaction.

At trial, two facts hampered Smithy's attempt to show its entitlement to a commission. First, there was no written agreement setting forth any agency relationship between Smithy and Medical Center. Second, Cavin, who acted for Smithy in most of its dealings with Medical Center and who therefore would have been privy to any oral agreement between the parties, died before suit was filed. Consequently Smithy was forced to rely at trial upon a large number of documents to show the creation of an implied agency. The trial judge determined that no such agency came into being and thus he found that Smithy was not entitled to a commission.

In this jurisdiction, the burden of proving an agency relationship rests with the party asserting the relationship. Goldberg v. Barta, D.C.Mun.App., 109 A.2d 779 (1954); McDonald v. Stone, D.C.Mun.App., 86 A.2d 624 (1952). Furthermore, a broker alleging such relationship must be able to show that the purported principal authorized the broker to act as its agent. Otherwise, the broker is not entitled to a commission even if he procures the party who buys or leases the property in question. Absent authorization, a broker acts as a mere volunteer. Apostolides v. Colecchia, D.C.App., 221 A.2d 437 (1966); Eggleton v. Vaughn, D.C.Mun.App., 45 A.2d 362 (1946); Riskin v. Baltimore & Ohio R. R., 234 F.Supp. 979 (D.D.C. 1964).

Since Smithy could not prove the existence of a written or oral contract, it was forced to rely on the theory that an implied-in-fact contract arose between the parties.¹ In Bloomgarden v. Coyer, 156 U.S.App.D.C. 109, 479 F.2d 201 (1973), the United States Court of Appeals for this circuit succinctly stated the elements which a broker must prove to demonstrate the existence of an implied-in-fact contract for services. First, the party seeking payment must show that the services were carried out under such circumstances as to give the recipient reason to understand that the services were rendered for the recipient and not for some other person. Second, the party must demonstrate the existence of such circumstances as to put the recipient on notice that the services were not rendered gratuitously. Finally, the party must prove that the services were beneficial to the recipient. We find the reasoning of that decision persuasive and adopt it.

An analysis of the record before this court compels us to agree that the trial court did not err in holding that Smithy failed to prove satisfactorily the existence of those elements. Smithy's inability to prove those elements largely arises from the ambiguous circumstances surrounding the negotiations leading to the procuring of DCNB as a tenant. These circumstances were deemed by the trial court to be insufficient to put Medical Center on notice either that Smithy considered itself to be an agent of Medical Center or that Smithy expected a commission. Furthermore, it could be inferred that Medical Center in fact did not benefit from Smithy's efforts.

Significantly, Smithy began the transactions between Medical Center and DCNB in the role of DCNB's agent. Medical Center knew this since its correspondence with...