Professional Realty Corp. v. Bender, 750386

• Citation: 216 Va. 737,222 S.E.2d 810
• Decision Date: 05 March 1976
• Docket Number: No. 750386,750386
• Parties: PROFESSIONAL REALTY CORP. v. Walter F. BENDER, Sr., and Patricia G. Bender. Record
• Court: Supreme Court of Virginia

Page 810

222 S.E.2d 810

216 Va. 737

PROFESSIONAL REALTY CORP. v. Walter F. BENDER, Sr., and Patricia G. Bender.

Record No. 750386.

Supreme Court of Virginia.

March 5, 1976.

Grover C. Wright, Jr., Virginia Beach, for plaintiff in error.

Lucian B. Cox, Jr., Lucian B. Cox, III, Cox, Cox & Cox, Norfolk, on brief, for defendants in error.

Before I'ANSON, C.J., and CARRICO, COCHRAN, HARMAN and POFF, JJ.

POFF, Justice.

Professional Realty Corporation (broker) filed a motion for judgment against Walter F. Bender, Sr., and Patricia G. Bender (buyers) alleging that the broker 'had earned a stipulated and agreed commission of $3500.00 by being the procuring cause of a definite contract for the sale' of property owned by Gene S. Meekins and Anna M Meekins (sellers); that the buyers had breached the contract; and that the buyers were liable for the stipulated commission.

The sales contract was executed by all three parties on a printed form containing typewritten interlineations. It provided, Inter alia, that '(t)he Seller agrees to pay the Agent a cash commission for his services' of $3500.00. In the record before us, the contract document is the only evidence concerning the agreement among the parties. There is no evidence to show whether the sellers executed a listing contract with the broker, and there is no evidence that the buyers employed the services of the broker.

At the conclusion of the broker's evidence, the trial court sustained a motion to strike and entered summary judgment for the buyers. As appears from the approved statement of facts, the trial court found that the broker had proven the facts alleged in the motion for judgment, but ruled 'that as a matter of law a broker has no right to sue a defaulting buyer for a commission under a three party contract which imposes on the seller the duty to pay the commission.'

On brief, the broker concedes that the majority view holds 'that the broker would have no right of recovery against the defaulting purchaser in Two party real estate sales contracts, the rationale being that there is no Privity of contract between the broker (a nonparty) and the purchaser (a party).' The broker urges, however, that we adopt a different view grounded upon an 'implied contract theory'. The broker relies, in part, upon language quoted from Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528, 559, 236 A.2d 843, 859 (1967):

'(W)hen a prospective buyer solicits a broker to find or to show him property which he might be interested in buying, and the broker finds property satisfactory to him which the owner agrees to sell at the price offered, and the buyer knows the broker will earn commission for the sale from the owner, the law will imply a promise on the part of the buyer to complete the transaction with the owner. If he fails or refuses to do so without valid reason, and thus prevents the broker from earning the commission from the owner, he becomes liable to the broker for breach of the implied promise. The damages chargeable to him will be measured by the amount of commission the broker would have earned from the owner.'

The rule urged by the broker is that when the buyer is a party to the sales contract and has actual knowledge of the seller's promise to pay a commission, the buyer's promise to purchase implies a promise to pay the commission if he defaults on his contract with the seller. We decline to adopt such a rule. Rather, we hold that where, as here, a real estate broker, a seller, and a buyer join in a sales contract in which the seller promises to pay the broker a commission and the buyer...