Henry S. Miller Co. v. Treo Enterprises, 8589

• Court: Texas Civil Court of Appeals
• Writing for the Court: CORNELIUS
• Citation: Henry S. Miller Co. v. Treo Enterprises, 573 S.W.2d 553 (Tex. Ct. App. 1978)
• Decision Date: 19 September 1978
• Docket Number: No. 8589,8589
• Parties: HENRY S. MILLER COMPANY, Appellant, v. TREO ENTERPRISES et al., Appellees.

Page 553

573 S.W.2d 553

HENRY S. MILLER COMPANY, Appellant, v. TREO ENTERPRISES et al., Appellees.

No. 8589.

Court of Civil Appeals of Texas, Texarkana.

Sept. 19, 1978.

Rehearing Denied Oct. 31, 1978.

Daniel J. Sheehan, Jr., Wynne & Jaffe, Dallas, for appellant.

Ben L. Krage, Kasmir, Willingham & Krage, Dallas, for appellees.

CORNELIUS, Chief Justice.

Henry S. Miller Company brought this suit against Treo Enterprises and others to recover the balance due on a promissory note representing a broker's commission on the sale of real estate. Miller is a Texas corporation engaged in the real estate brokerage business. In February of 1975, as a method of obtaining the exclusive right to sell a certain warehouse in Dallas, the Miller Company, as trustee, entered into a contract to purchase the property from the owners. The contract named Jones Lake Company, Inc., as seller, Henry S. Miller Company, trustee, "AND/OR ASSIGNS" as buyer, and Henry S. Miller Company as principal agent. It provided that a broker's commission of $15,000.00 would be payable to Henry S. Miller Company "as principal agent." After execution of the contract, an employee of Miller, Jerry McCutchin, solicited Treo to purchase the property as Miller's assignee. To assist Treo in evaluating the property, McCutchin furnished it an advertising brochure he had prepared which contained a projection of expected annual income the property would produce, a computer printout showing financial information for the preceding five years, a copy of the contract of sale between Jones Lake Company and the Miller Company, and a copy of a lease agreement which was then in effect covering the warehouse. Treo decided to purchase the property and the transaction was closed on April 15, 1975. Treo financed the purchase by assuming an existing $205,000.00 first lien indebtedness and making a new $60,000.00 second lien loan from another source. In order to further reduce the necessary cash outlay, Treo and Miller agreed that Treo could deduct from the sale price the $15,000.00 commission the owners were obligated to pay Miller, and give Miller a promissory note for that amount payable in quarterly installments of $1,250.00 each. Treo executed the note, made three of the payments and then advised Miller that it would not make any further payments. The reason given for its default on the note was that, through McCutchin's advertising brochure, as well as other means, Miller had made material misrepresentations concerning the income producing capability and the tax liability of the warehouse property. Miller then brought suit on the note. Treo defended on grounds that Miller had not complied with the Texas Real Estate License Act ¹ in arranging and handling the sale, and it also filed a counter-claim, based on the alleged misrepresentations, seeking cancellation of the note and recovery of the sums previously paid thereon. The jury found, in effect, that the promissory note represented an assumption by Treo of the seller's obligation to pay the real estate commission to Miller, and it answered the special issues concerning fraud and misrepresentation favorably to Miller. The district court denied recovery to either Miller or Treo, and Miller has appealed.

As it was established that Treo executed the promissory note and that only three payments thereon had been paid, Miller was entitled to judgment for the balance due on the note unless such a recovery was precluded because of a failure to comply with Article 6573a or by reason of some other infirmity in Miller's cause of action.

Section 20(a) of Article 6573a (Supp.1978) provides that:

"A person may not bring or maintain an action for the collection of compensation for the performance in this state of an act set forth in Section 2 of this Act without alleging and proving that the person performing the brokerage services was a duly licensed real estate broker or salesman at the time the alleged services were commenced, or was a duly licensed attorney at law in this state or in any other state."

Treo urges that because Miller failed to either plead or prove that it was a licensed broker, a recovery was not authorized. Miller concedes that it neither pleaded nor proved that it was a licensed broker but argues that because it proved that its employee...