Libowitz v. Lake Nursing Home, Inc.

• Decision Date: 09 May 1967
• Citation: 35 Wis.2d 74,150 N.W.2d 439
• Parties: Gertrude LIBOWITZ, d/b/a Alden Realty Co., Respondent, v. LAKE NURSING HOME, INC., d/b/a Pauline Nursing Home, Appellant.
• Court: Wisconsin Supreme Court

Page 439

150 N.W.2d 439

35 Wis.2d 74

Gertrude LIBOWITZ, d/b/a Alden Realty Co., Respondent, v. LAKE NURSING HOME, INC., d/b/a Pauline Nursing Home, Appellant.

Supreme Court of Wisconsin.

May 9, 1967.

Rehearing Denied June 30, 1967. See 151 N.W.2d 680.

Gibbs, Roper & Fifield, Milwaukee, for appellant.

Charles L. Goldberg, Francis X. Krembs, Milwaukee, for respondent.

HANLEY, Justice.

The complaint alleges that the plaintiff is a duly licensed real estate broker and that on March 8, 1966, she entered into a listing contract for the nursing home premises owned by the defendant in Milwaukee. The complaint further alleges: That on March 16, 1966, the plaintiff obtained a written offer to purchase the premises 'upon the terms and conditions set forth in the aforesaid listing contract' from Marian A. Mickey and James P. Mickey and that said offer was submitted to the defendant; that the prospective purchasers at the request of the principal officer of the defendant executed an addendum to their offer of purchase; that on March 25, 1966, the prospective purchasers approved the operating statement of the Pauline Nursing Home and on that date resubmitted the aforesaid offer to purchase together with addendum to the defendant; that on March 28, 1966, the principal officer of the defendant rejected the offer 'for the reason that, during the interim, it had received a cash offer from a third party to purchase the subject premises;' and that thereafter the plaintiff demanded and the defendant has refused to pay the sum of $10,500, that sum representing the commission that the plaintiff was to receive pursuant to the listing contract.

Defendant contends: (1) that the Mickey offer submitted by the broker contained material variances from the terms specified in the listing contract; (2) that the listing agreement left the full terms of the proposed land contract indefinite, thus leaving those details open for negotiation and entitling the defendant to break off negotiations without liability to the plaintiff-respondent broker; (3) that the complaint fails to allege that the proposed buyers were able to perform either in accordance with their offer or with the terms of the listing contract.

When this court reviews an order overruling a demurrer made on the ground that the complaint did not state facts sufficient to constitute a cause of action, it gives the complaint a liberal construction in favor of stating a cause of action. Superior Plumbing Co. v. Tefs (1965), 27 Wis.2d 434, 438, 134 N.W.2d 430; Schlicht v. Thesing (1964), 25 Wis.2d 436, 441, 130 N.W.2d 763. The 'allegations of fact in the * * * complaint * * * must be taken as true * * *' Uihlein v. Rosenberg (1949), 255 Wis. 412, 416, 39 N.W.2d 389, and '* * * every reasonable intendment and presumption is to be made in favor of the complaint and the plaintiff is entitled to all reasonable inferences which can be drawn from the facts pleaded. Christenson & Arndt, Inc. v. Wisconsin Telephone Co. (1953), 364 Wis. 238, 243, 58 N.W.2d 682.' Conrad v. Evans (1955), 269 Wis. 387, 390, 69 N.W.2d 478.

The listing contract, reference to which is made in the complaint, provides that 'if * * * a purchaser procured by the Broker * * * at the price and upon the terms specified herein, or at any other terms and price accepted by the undersigned Seller, during the term of this contract * * * the Seller agrees to pay Broker a commission of Six per cent (6%) of the sale price.'

The purchase price was set at $175,000 and the terms specified are:

'On the following terms: Cash: Will accept $20,000.00 Balance Will take back a Land Contract for balance at interest rate from 6% to 6 1/2%, for a period of eight years maximum.'

It is well settled that:

'To entitle a broker to his compensation or commissions, he must accomplish what he undertook to do in his contract of employment, for, as a rule, nothing short of that is sufficient to constitute a performance upon his part. He is never entitled to compensation for unsuccessful efforts under his contract of employment. Accordingly, in every case reference must be had to the terms of that particular employment in order to determine whether or not a broker's duties have been performed, * * *' 12 Am.Jur. (2d), Brokers, pp. 921, 922, sec. 182.

This court follows the generally established rule that:

'A broker employed to 'procure a purchaser' for real estate is entitled to his commission when he produces a person ready, willing and able to purchase upon terms specified by the owner in the brokerage contract. 'To sell' or 'to procure a purchaser' are synonymous terms when used in a real-estate broker's contract. Grinde v. Chipman, 1921, 175 Wis. 376, 378, 185 N.W. 288.' Niske v. Nackman (1956), 273 Wis. 69, 75, 76 N.W.2d 591; Wauwatosa Realty Co. v. Paar (1956), 274 Wis. 7, 14, 79 N.W.2d 125; Levine v. Mueller (1930), 201 Wis. 633, 231 N.W. 182.

See also for statements of this rule 12 Am.Jur.2d, Brokers, p. 922, sec. 183, Procuring person ready, able, and willing to perform; 12 C.J.S. Brokers § 85 Ability, Readiness, and Willingness of Customer to Consummate Transaction, p. 187; Seavey, Law of Agency, Hornbook Series, p. 274, sec. 171.

'It is well settled that if a listing contract specifies all of the terms of sale the broker in order to earn his commission must during the life of the listing contract produce a customer ready, able, and willing to buy upon those terms. * * *' Nordale Realty Co. v. Hanel (1947), 251 Wis. 136, 28 N.W.2d 245.

Undoubtedly, a principal is free to reject, without liability to his broker, an offer that does not conform to the terms that he has previously specified in his listing contract. However, Wisconsin also accepts the rule that:

'* * * Regardless of whether the principal, at the time of his refusal to consummate the transaction, states some grounds or no grounds for such refusal, a particular ground not specified by him at that time is waived and cannot be urged by him when sued for a commission * * *.' 12 C.J.S. Brokers § 95, p. 224.

Moss v. Warns (1944), 245 Wis. 587, 591, 15 N.W.2d 786. An annotation on the Moss v. Warns Case, appearing at Anno. 156 A.L.R. 602, states the general rule in these terms:

'As a general rule, where a landowner who has listed property for sale with a real-estate broker refuses to accept an offer which is substantially in accordance with the listing, he cannot afterwards defend the broker's action fo compensation on a ground not specified when rejecting the offer.'

An important qualification to the Moss v. Warns principle was made by this court in Kleven v. Cities Service Oil Co. (1964), 22 Wis.2d 437, 444, 126 N.W.2d 64. Noting that the reason for holding a principal liable for his broker's commission when he rejects an offer containing variances from the terms of the listing contract without calling these variances to the attention of his broker is 'that fair dealing on the owner's part requires that he point out such variance so that the broker may be afforded an opportunity of correcting it.' ¹ The court went on to state:

'* * * However, where the variance is a substantial one, such as one that is directly in conflict with a material provision of the listing contract, there has been no substantial performance by the broker which would entitle him to his commission, absent acceptance of the offer by the owner. The broker is chargeable with knowledge that such substantial variance exists when he submits the offer, and, therefore, the owner should be under no duty to point this variance out to the broker in rejecting the offer.'

Summarizing these rules as they apply to the case at hand, the complaint would be demurrable on the ground of failing to state a cause of action if, in spite of liberal construction principles, it alleged variations between the terms of the listing contract and the offer that were: 1. Substantial variations, i.e., 'directly in conflict with a material provision of the listing contract;' 2. Insubstantial, but called to the attention of the broker; or, 3. Insubstantial, but of such a nature that they could not have been remedied by the broker anyway.

The only terms specified in the listing agreement were: A purchase price of $175,000; and 'Cash: Will accept $20,000.00 Balance Will take back a Land Contract for balance at interest rate from 6% to 6 1/2%, for a period of eight years maximum.'

The defendant maintains that the following terms of the offer constitute substantial variations from these terms of the listing agreement:

1. The offer specifically split the $175,000 purchase price into $20,000 for stock, good will, fixtures and equipment, and $155,000 for the real estate. With respect to this term of the offer the defendant argues that the division of the sale price could have an adverse effect upon the seller's tax picture. However, the offer was for the total purchase price specified in the listing contract, and the terms of the contract were silent as to any particular allocation of the purchase price between real estate and depreciables. The prospective buyer would have no reason to suspect that such a term was directly in conflict with a material provision.

2. The offer provided that the interest should be computed monthly and 'shall be the same as the interest Seller shall be required to pay on its mortgage. However, Buyers shall not be required to pay more than 6 1/2% per annum. * * *' We believe this term is reconcilable with the provisions in the listing contract that the owner was to 'take back a land contract at 6% to 6 1/2%.'

3. The offer was 'contingent upon the ability of Buyer to obtain all requisite permits and licenses for the operation of a nursing home * * *' This provision in no way conflicts with any express term contained in the listingcontract, nor would it change in any way what or how the...