Hutson v. Stone

• Decision Date: 11 April 1922
• Docket Number: 10847.
• Citation: 112 S.E. 39,119 S.C. 259
• Parties: HUTSON v. STONE ET AL.
• Court: South Carolina Supreme Court

112 S.E. 39

119 S.C. 259

HUTSON v. STONE ET AL.

No. 10847.

Supreme Court of South Carolina

April 11, 1922

Appeal from Common Pleas Circuit Court of Aiken County; T. J Mauldin, Judge.

Action by O. B. Hutson against T. C. Stone and others. From judgment for defendants on order of nonsuit, plaintiff appeals. Reversed and remanded.

Fraser J., dissenting.

John F Williams, of Aiken, for appellant.

R. L. Gunter and J. B. Salley, both of Aiken, for respondents.

MARION J.

The appeal is from judgment on order of nonsuit in action by plaintiff, to recover the sum of $1,000 as compensation for services as a real estate broker, in negotiating a sale of the Olwell Hotel property in the city of Aiken.

One of the defendants, Dr. T. C. Stone, of Greenville, S. C., for himself and the other owners, listed this property for sale with three independent real estate brokers, namely, S. J. Brooks, Mrs. Eulalie Salley, and the plaintiff, O. B. Hutson. No exclusive agency was given either of the brokers, a fact of which plaintiff had full notice. The sale price fixed was $30,000 net to owners, with certain reservations as to furniture and fixtures, which will be hereafter more particularly referred to. The terms of sale provided that compensation of the successful agent should be whatever amount might be secured for the property above the owners' net price of $30,000. On the morning of December 2, 1919, Mrs. Salley, one of the agents authorized to sell the property, wired Dr. Stone, at Greenville, that she had closed deal at $30,000. During the evening of the same day, about 8 or 9 o'clock, plaintiff closed trade with M. E. and B. F. Holley for a sale at $31,000, and wired Dr. Stone accordingly. (For purposes of discussion, the transactions of the two brokers referred to will hereinafter be called "sales.") Dr. Stone came to Aiken a few days afterwards, and, with full knowledge of plaintiff's claims, confirmed the sale made by Mrs. Salley to F. Summeral. The Holleys, who had traded with plaintiff, then purchased Summeral's contract, and the property was subsequently conveyed by the owners to the Holleys for a consideration of $30,000. Summeral, to whom Mrs. Salley sold, had previously been approached and solicited by plaintiff, and had offered $30,000, which price plaintiff declined to accept. The case thus disclosed is that of a real estate broker, claiming compensation for services rendered in open competition with other agents, equally authorized to negotiate a sale of the same property. Since the particular contentions of fact, upon which the appeal turns, will require a more detailed examination of the evidence, in the light of the principles of law applicable to the case, it is essential that these relevant principles should first be ascertained and stated.

A rule now well settled in this state is that a real estate broker is entitled to compensation, where a sale is effected during the continuance of the broker's agency, as the result of services on his part, which are the efficient or procuring cause of the sale, even though the actual agreement of sale is made by the owner, without the aid of the broker--

"and the broker will be regarded the procuring cause, if his intervention is the foundation upon which the negotiation resulting in the sale is begun." Goldsmith v. Coxe, 80 S.C. 346, 61 S.E. 557; Cleveland v. Butler, 94 S.C. 409, 78 S.E. 81.

But it is apparent that the application of this rule of procuring cause, as between broker and principal, is not determinative of the question presented here. In the absence of controlling authority is this state, other principles relevant, which are deemed well grounded in reason and amply supported by authority elsewhere, will be set out. Thus, where a monopoly to sell is given, there is an implied understanding that the seller will not himself take advantage of the efforts of the agent to deprive him of the fruits of his labor, and that no other is authorized or will be permitted to do so. Vreeland v. Vetterlein, 33 N. J. Law, 247; see Cofield v. Jenkins Motor Co., 89 S.C. 419, 71 S.E. 969. But where a number of agents are openly and avowedly employed, each of whom is aware that he is "subject to the arts and chances of competition," the implied agreement of noninterference extends to the acts of the seller only. Vreeland v. Vetterlein, supra; Dalke v. Sivyer, 56 Wash. 462, 105 P. 1031, 27 L. R. A. (N. S.) 195. Under these competitive conditions, the principle which controls the owner's liability for the broker's compensation is stated by the Arkansas court, in Murray v. Miller, 112 Ark. 233, 166 S.W. 539, Ann. Cas. 1916B, 977, as follows: "Good faith and strict neutrality on the part of the owner as between the rival agents seeking to make the sale is the test of the owner's liability. The authorities are practically unanimous on that proposition"--citing Gross on Real Estate Brokers, §§ 97, 98; Mechem on Agency, § 969; Ward v. Fletcher, 124 Mass. 224; McGuire v. Carlson, 61 Ill.App. 295; Glenn v. Davidson, 37 Md. 365; Glascock v. Vanfleet, 100 Tenn. 603, 46 S.W. 449; Hennings v. Parsons, 108 Va. 1, 61 S.E. 866, 15 Ann. Cas. 765; Sibbald v. Bethlehem Iron Co., 83 N.Y. 378, 38 Am. Rep. 441; Vreeland v. Vetterlein, 33 N. J. Law, 247; Edwards v. Pike, 49 Tex.Civ.App. 30, 107 S.W. 586.

See decisions collated in note to Murray v. Miller, Ann. Cas. 1916B, 978.

Where an owner thus sets two or more agents to the task of finding a purchaser for his property, in an open contest of skill and energy, good faith demands and the law implies that he will comply with his contract to sell through the agent who first fulfils the terms of his employment, by producing the desired buyer. Hence, the well-established general rule that, where the same property is placed for sale with two or more brokers, the owner, provided he remains neutral towards the several brokers, is liable for compensation or commissions only to the one who first completes a sale, or, if the owner has not delegated authority to complete the transaction, to the one who first produces a customer able, ready, and willing to purchase the property, on terms agreeable to the owner. 4 R. C. L. 335. For collation of authorities, see notes to Hennings v. Parsons, 15 Ann. Cas. 765, to Chaffee v. Widman, 139 Am. St. Rep. 220, 251, and to Murray v. Miller, Ann. Cas. 1916B, 978.

Upon that general rule, however, there is a well-recognized limitation that the law will not permit one broker, who has been entrusted with the sale of land and is conducting negotiations with a customer whom he has found, to be deprived of his compensation by the owner selling with knowledge of the facts to the same customer through another agent, for a price less than the first broker was empowered to accept, provided the first broker was, in fact, the procuring cause of the sale. 4 R. C. L. 320; Ann. Cas. 1913E, 788, note collating authorities; Beougher v. Clark, 81 Kan. 250, 106 P. 39, 27 L. R. A. (N. S.) 198; Grove Realty Co. v. Forrest & George Adair, 26 Ga.App. 220, 105 S.E. 735. The so-called limiting principle just stated would seem to be clearly referable to the primary duty of the owner to exercise good faith in the maintenance of an attitude of impartial noninterference, and is merely a legal conclusion that a sale, in the circumstances indicated, would amount to a breach of the principal's duty of neutrality toward the broker so deprived of his commissions.

The application of the foregoing principles to the facts of the case at bar is not free from difficulty. The plaintiff undertook to recover upon a quantum meruit. The issue joined, as stated by the circuit judge, was: "Did this man sell the property, and whet was the value of his services?" He did sell the property to the Holleys, under the terms authorized and under a contract that would have made for him a commission of $1,000. But when he made his sale, the property had already been sold, or a sale negotiated, through Mrs. Salley to Summeral, which sale, with knowledge of plaintiff's claims, was confirmed by Dr. Stone for defendants, and the property finally conveyed for a consideration of $30,000, under the Summeral purchase to the Holleys, as assignees of the Summeral contract.

We are of the opinion that the case turns upon whether the first and prior sale to Summeral by Mrs. Salley was procured as the result of any breach of the owner's duty toward the plaintiff, as a competing broker. When plaintiff undertook to sell defendants' property in open competition with other brokers, a clearly implied condition of his employment was that a prior sale by any one of the other agents, upon the owners' stipulated terms, would revoke his authority and terminate his agency. Smith v. Fowler, 57 Tex.Civ.App. 356, 360, 122 S.W. 598. He assumed the risk of losing the fruits of his labor by having a competitor reach the goal ahead of him. Vreeland v. Vetterlein, supra; Dalke v. Sivyer, supra; Schusterman v. Kraus, 148 A.D 727, 132 N.Y.S. 758. If, therefore, the Salley-Summeral sale was, in so far as plaintiff's rights were concerned, a valid sale, that is, involved no breach of legal obligation owed by defendants to plaintiff, clearly he would not be entitled to recover. It is not necessary to decide whether, under a different form of contract as to commissions, even conceding that the Summeral sale was valid from the owners' standpoint, plaintiff might have sustained a claim for compensation as the procuring cause of the sale by Mrs. Salley to Summeral as his customer. Here the terms of sale provided for no commission or compensation, unless the property was sold for more than the owners' net price of $30,000. Mrs. Salley's sale to Summeral was for $30,000, and there is no evidence that the owners...