Quality Home Builders of Norfolk, Inc. v. Herrick

• Decision Date: 27 April 1970
• Citation: 210 Va. 723,173 S.E.2d 846
• Parties: QUALITY HOME BUILDERS OF NORFOLK, INCORPORATED v. Henry E. HERRICK, Individually and Trading as Herrick Realty Company.
• Court: Virginia Supreme Court

Page 846

173 S.E.2d 846

210 Va. 723

QUALITY HOME BUILDERS OF NORFOLK, INCORPORATED v. Henry E. HERRICK, Individually and Trading as Herrick Realty Company.

Supreme Court of Appeals of Virginia.

April 27, 1970.

Israel Steingold, Norfolk (Donald C. Grey, Steingold, Steingold & Chovitz, Murphy & McGreein, Norfolk, on the brief), for plaintiff in error.

Alan J. Hofheimer, Thomas F. McPhaul, Norfolk (Hofheimer, Nusbaum & McPhaul, Norfolk, on the brief), for defendant in error.

Before SNEAD, C.J., and I'ANSON, CARRICO, GORDON, HARRISON, COCHRAN and HARMAN, JJ.

HARRISON, Justice.

Henry E. Herrick, Individually and Trading as Herrick Realty Company, a proprietorship, appellee, filed his motion for judgment in the court below to recover $27,300 from appellant, Quality Home Builders of Norfolk, Incorporated. Herrick alleged that appellant engaged him on or about April 10, 1967 to find a buyer ready, willing and able to purchase its real property located in Norfolk, identified as Bayview Manor Apartments. He further alleged that he obtained a prospective purchaser (Carva Food Corporation, trading as Carva Investment Company); that he produced a written offer of $450,000 for the property, which was rejected; and that thereafter appellant discharged him and sold the said property to Carva for $455,000. The amount claimed represents commissions of 6% Of the sales price.

Numerous motions were made and pleadings filed by the respective parties. The issue was submitted to a jury and resulted in a $10,000 verdict for appellee, which was approved by the trial court and final judgment entered. To this action we granted appellant a writ of error.

Several assignments of error are made. In view of our decision, we need only consider the sufficiency of the evidence to sustain the judgment.

There is no substantial controversy over the evidence.

Appellee is properly qualified as a licensed real estate broker under the laws of Virginia, with his principal office in Norfolk. Appellant corporation was the owner of the Bayview Manor Apartments. The officers and stockholders of the corporation are James A. Murphy, Jr. and William C. Bunch. James M. Hill, president of Carva Food Corporation, conducted all negotiations for his company.

In the early part of April, 1967 Carva was interested in purchasing some incomeproducing property in the Norfolk area, and Hill responded to a newspaper advertisement inserted by appellee. Hill met with Herrick, and they viewed numerous properties which were listed with this broker.

At that time, and while making what the parties called 'a windshield inspection' of properties, they drove by the Bayview Manor Apartments. Herrick asked Hill how they would appeal to him, and how he liked the area and the apartments. Hill expressed interest, and Herrick responded that he would see if they could be purchased.

Herrick testified that the apartments were not listed with him and that he did not then have them for sale. Hill testified that Herrick said they were listed with him. This discrepancy in their testimony is not material.

Immediately after returning to his office, Herrick requested an associate, Thomas R. Powell 'to find out if they could be bought, if they were for sale, and, if so, at what price and under what conditions and what were all the statistics pertaining to it'. Powell phoned Murphy (2 or 3 times according to Murphy) and was told that the apartments were for sale at '$500,000 Net to us'. Murphy advised Powell to be discreet, that he did not want any publicity or for the property to be advertised. He also agreed to provide the necessary information about the property, and this was done.

Appellee testified that he showed the apartments to Hill, who expressed interest but felt the sale price was not realistic. While not recalling the exact price he quoted, Herrick admitted using the $500,000 as a basis and adding some commission. Hill stated that he was not given a direct price, but that in response to his question, 'What do you think it really will take to buy (the) buildings?', Herrick replied, 'I think $420,000 will take them'.

Herrick's statement was that Hill eventually called and authorized him to draw up a contract offer of $420,000 which was done.

The contract, designated 'official sales contract,' is dated April 6, 1967, and represents a formal offer by Carva of $420,000 for the Bayview Manor Apartments. No amount was inserted for commissions to the agent.

This written offer, together with Hill's check for $10,000, was taken to Murphy by Herrick, and was promptly rejected. Murphy took the written contract or offer and wrote 'void' on it. He was indignant over the small amount of the offer, and upset that Herrick had disregarded his instructions in showing the property.

At this conference Murphy went into great detail with Herrick as to the amount invested in the property, the amount recently paid to acquire the interest therein of another individual, and the reason for the asking price. During the course of their conversation, Murphy finally reduced the price to $455,000 Net for the property.

Herrick said the only discussion of a commission was when Murphy agreed to accept $455,000 Net, observing: '(If) you want to go out and get $460,000, take $5,000 for yourself, that is okay.' Herrick testified that Murphy did not agree to pay him any commission out of the $455,000.

Murphy's version of this conversation is that Herrick indicated he was insulted by the suggestion of a deal that would give him only $5,000. Murphy said that because of this reaction he then told Herrick: '(T)hat was the end of it as far as I was concerned, * * * and that the property was no longer for sale through Herrick Realty at any price.' He said that Herrick was discharged as of that time.

Herrick testified that he reported back to Hill the sale offer of $455,000 net, to which Hill responded, 'They are not going to sell them right away. Let us think this over'.

Thereafter, on or about the 17th of April, 1967, Herrick prepared another written contract that was signed by Hill, on behalf of Carva, wherein it offered and agreed to pay $450,000 for the Bayview Manor Apartments. Again no amount was inserted for commissions to the agent. This contract was submited to Murphy by Powell. Murphy took it into another room and conferred with his associate, Bunch. He came back after having amended the contract by striking out the words and figures '$450,000' and substituting in lieu thereof '$475,000', and after having amended the commission clause by striking out the word 'seller' and inserting in lieu thereof the word 'buyer'. The effect of this last amendment was to provide that any broker's commission would be paid by the buyer. He gave the contract to Powell, observing, 'Well, this is the way we want it, take it or leave it'.

Murphy resented the fact that Powell came back with the offer after Herrick had been discharged. He concluded that 'the only thing they (referring to Powell and Herrick) were interested in was making a commission'. Murphy said that he and Bunch 'decided that we would get rid of these people once and for all, both Mr. Herrick and Mr. Powell and the buyers, too, so we gave them this counter offer for * * * $475,000 and indicated that the buyer was to pay any commission, and we figured that way they would leave us alone'.

Hill testified that Powell phoned him that his offer of $450,000 had been refused. He learned of the amendments made by Murphy upon picking up the copies of the contract the following day. He regarded the $450,000 offer as a closed issue, it having been made and rejected by Murphy.

Hill then let the matter drop, being 'under the assumption that for some reason we did not get together'. However, he 'never felt right about it' and had the feeling 'that something transpired I didn't know about'.

The only other connection that Herrick had with the transaction was that sometime after the $450,000 offer was rejected, he saw Murphy and said to him: 'Well, Mr. Murphy, we are going up and down like a Yoyo here. Can't we establish something?' He says Murphy responded: 'Look, the sale is off, I am finished and they are not for sale, they are off the market, finished.' Subsequently he spoke to Murphy again and said that Murphy responded, 'The deal is still the same, they are off the market'.

About the middle of July, Hill called Murphy and asked permission to see him. He went to Murphy's office and told him of his feelings and how he 'just wanted to clear the air'. Murphy told him what had transpired with Herrick and Powell. Hill again expressed interest in the property and made an offer of $450,000. Murphy would not sell for less than $455,000, and Hill concluded to pay that sum. A written contract of purchase and sale between Carva and Quality Home Builders was executed by the parties on July 17, 1967. Carva paid $455,000 for the property.

This court has reviewed numerous cases by brokers to recover their commissions for sale of properties. The general rule, and the exception thereto, are set forth in Wilson v. Schmidt & Wilson, Inc., 184 Va. 642, 651, 652, 653, 35 S.E.2d 737, 741, 742 (1945) as follows:

'In 8 Am.Jur., Brokers, section 190, pp. 1101, 1102, it is said: 'The rule is well established that if property is placed in the hands of a real-estate broker for sale at a certain price or upon certain terms, and a sale is brought about through the broker as a procuring cause, he is entitled to commissions on the sale even though the final negotiations are conducted through the owner, who in order to make a sale accepts a price less than that stipulated to the broker or terms more liberal than those the...