In re Halyard Realty Trust
| Decision Date | 30 August 1983 |
| Docket Number | Bankruptcy No. 81-01600-JG,Adv. No. A-82-0129. |
| Citation | 37 BR 260 |
| Parties | In re HALYARD REALTY TRUST, Debtor. Lewis E. BENN, Jr., D/B/A Depot Realty, Plaintiff, v. HALYARD REALTY TRUST, Defendant. |
| Court | U.S. Bankruptcy Court — District of Massachusetts |
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Alan M. Winsor, Hyannis, Mass., for plaintiff.
Peter L. Zimmerman, Silverman & Kudsich, Boston, Mass., for defendant.
The Complaint of the Plaintiff, Lewis E. Benn, Jr., d/b/a Depot Realty ("Depot") seeks to recover $5600 from the debtor, Halyard Realty Trust, ("Halyard") as a broker's commission for the sale of Halyard's real estate and further seeks to impress a lien on the parcels sold.
Based upon the testimony taken and exhibits introduced, the Court finds the following facts in accordance with Bankruptcy Rule 7052.
In September 1980 Mr. Lewis Benn, Sr. ("Benn"), a licensed real estate broker, and the father of the principal of the Plaintiff, contacted Mr. Joseph Petroni, Sr. in response to an advertisement by Petroni for land. Prior to 1980 Frank Walters ("Walters") one of the principals of Halyard, had listed parcels of the debtor's real estate with Depot, and had agreed to pay a commission to Depot on each sale.
After viewing the property with Benn, Mr. Petroni, Sr. on behalf of Coral Estates, Inc., executed an offer to purchase real estate, prepared by Benn, providing that Coral Estates would buy lots "123, 124, 125, 126, 127, 128, 129, Agnus" for $63,000. A purchase and sale was to be executed on or before October 7, 1980, the offer was to expire on October 1, 1980, and a broker's commission of $5600 was to be paid to Depot. Coral Estates paid $500 as a deposit with the offer which was accepted by Halyard. Coral Estates, Inc., by Joseph Petroni, Sr. and Halyard, by Frank Walters, entered into a purchase and sale agreement drafted by Walters on October 16, 1980 for the same lots for $56000. Even though the broker was neither a party to nor mentioned in the agreement, the seller agreed that it would pay $5600 to Depot as a commission. Under the agreement, the closing was to take place in thirty days. Upon entering into the agreement, Petroni, with Halyard's knowledge, began making improvements to the land which over the next year totalled $12,000. The closing did not take place in accordance with the agreement because Halyard was unable to deliver good title to the lots as creditors of Halyard had attached the real estate in the fall of 1980. There was no evidence that either Coral Estates or Petroni was unable or unwilling to perform their obligations under the October 1980 agreement. The reason the sale was not consummated was Halyard's inability to perform by reason of the attachments.
When the time for closing had expired under the October agreement, Benn attempted numerous times to contact Walters by telephone but was unsuccessful. Another Depot broker also attempted to discover the status of the sale from Walters.
In January 1982, the debtor filed with the Bankruptcy Court an Application To Sell lots 123 through 129, and on January 19, 1982 the court issued an order allowing the sale. In addition to terms providing for the payment of taxes, second mortgages, the order provided that the debtor pay "the customary closing costs . . . and broker's commission due and owing not to exceed 10% of the sales price of each lot." Thereafter apparently Benn became aware of the court order because in early February, 1982 he went to Petroni's lawyer's office at which time he was informed by Walters that he would not be paid a commission as the parties had entered into a new transaction. On February 8, 1982, Halyard by Walters, and Petroni & Son Builders, Inc. by Joseph Petroni, Sr. entered into a purchase and sale agreement concerning lots 123 through 129 for $56,000. The agreement, prepared by Walters, did not provide for a broker's commission.
The corporations Petroni & Son Builders, Inc. and Coral Estates, Inc. are owned and controlled by Joseph Petroni, Sr.
The issues presented are: whether Depot is entitled to a broker's commission for the sale of the lots to Petroni & Sons Builders, Inc., and if so, whether Depot is entitled to impress a lien on the real estate.
Under Massachusetts law, a broker is entitled to a commission when (a) he produces a purchaser ready, willing and able to buy on the terms fixed by the owner; (b) the purchaser enters into a binding contract with the owner to do so; and (c) the purchaser completes the transaction by closing title in accordance with the provisions of the contract. "If the contract is not consummated because of the lack of financial ability of the buyer to perform See, Horne v. Vanni, 1 Mass.App. 841, 300 N.E.2d 924 (1973), or because of any other default of his, there is no right to a commission against the seller; however, if the failure of the completion results from a wrongful act or interference of the seller, the broker's claim is valid and must be paid." (Emphasis Added). Tristam's Landing, Inc. v. Wait, 367 Mass. 622, 327 N.E.2d 727 (1975). When a broker finds a buyer who enters into a purchase and sale agreement which is not consummated because of the seller's inability to deliver good title as promised, the broker has earned his commission even though title has not passed. Le Donne v. Slade, 355 Mass. 490, 245 N.E.2d 434 (1969).
The mere introduction of a customer to a seller does not earn the broker a commission. Whitcom v. Bacon, 170 Mass. 479, 49 N.E. 742 (1898). The broker's services must have been the "efficient cause" of bringing about the sale. Bonin v. Chestnut Hill Towers Realty Co. 14 Mass.App. 63, 436 N.E.2d 970 (1982). To prove his case the broker must show these elements: (1) that he was employed; (2) that his customer bought the property on terms not materially different from the requirements of the seller; (3...
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