R. A. Poff & Co. v. Ottaway, 3707

• Decision Date: 15 January 1951
• Docket Number: No. 3707,3707
• Citation: 191 Va. 779,62 S.E.2d 865
• Court: Virginia Supreme Court
• Parties: R. A. POFF & COMPANY, INCORPORATED v. JAMES E. OTTAWAY AND JACQUELINE L. OTTAWAY. Record

Page 865

62 S.E.2d 865

191 Va. 779

R. A. POFF & COMPANY, INCORPORATED v. JAMES E. OTTAWAY AND JACQUELINE L. OTTAWAY.

Record No. 3707.

Supreme Court of Appeals of Virginia

January 15, 1951.

S. King Funkhouser and T. Keister Greer, for the plaintiff in error.

Walter H. Scott, for the defendants in error.

JUDGE: EGGLESTON

EGGLESTON, J., delivered the opinion of the court.

This is an action at law to recover a brokerage commission which R. A. Poff & Company, Inc., claimed it had earned in effecting the sale of a residence owned by James E. Ottaway and Jacqueline L. Ottaway, his wife. There was a trial by jury which resulted in a verdict for the defendants, and to review the judgment entered on that verdict the present writ has been allowed.

R. A. Poff & Company, Inc., is a real estate brokerage concern operating in the city of Roanoke. In the summer of 1948 George P. Washburn, one of its representatives, noted from a newspaper advertisement that the Ottaways had for sale a house and lot located at 1246 Summitt avenue in Roanoke. Washburn visited the Ottaway home and secured from Mrs. Ottaway a non-exclusive listing of the property for sale at the price of $12,000. No buyer was procured at that price and in the late fall the Ottaways withdrew the property from sale. In January, 1949, the property was again put up for sale at the reduced price of $11,000.

On January 5th Washburn showed the Ottaway house to W. D. Allen and his wife. At that time Mrs. Ottaway told Washburn that if he could secure an offer of $10,750, she thought it would be acceptable. The following day the Allens notified Washburn that they wished to buy and a contract was prepared and signed whereby the Ottaways agreed to sell the property to W. D. Allen, and he in turn agreed to buy, at the sum of $10,750 cash. The contract also provided that Allen was to make an initial payment of $250, and that the transaction would be closed within sixty days. A broker's commission of $450, to be paid by the Ottaways to Poff & Company, Inc., was agreed on.

R. A. Poff, the president of the brokerage concern, and Washburn first presented the contract to Allen for his signature. Allen says that before signing the contract he told both Poff and Washburn that he did not have the necessary funds to consummate the purchase unless and until he had sold his own house on Williamson road. He further said that Poff assured him that he would have no difficulty in selling the Allen house and accordingly suggested that sixty days be allowed for consummating the purchase of the Ottaway property in order that the Allen house might be sold in the meantime.

Furthermore, Allen testified, he and Washburn were quite intimate socially and Washburn knew that he (Allen) did not have sufficient means to consummate the purchase of the Ottaway property until his (Allen's) house had been sold.

Both Poff and Washburn denied that Allen made any such statement to them, or either of them, that his (Allen's) ability to consummate the Ottaway deal was conditioned upon the sale of the Allen house. Washburn admitted that he knew that Allen had only a small equity of around $500 in his house, but other than that, he said, he knew nothing of Allen's financial condition.

After Allen had signed the contract, Poff and Washburn called upon Mrs. Ottaway for the purpose of procuring her signature. Mrs. Ottaway testified that neither she nor her husband knew the Allens, but that Poff told her that the Allens 'were very well off financially,' and that during the conversation Poff left her 'with the impression' that Allen had $5,000 in cash.

Mrs. Ottaway says that in the presence of Poff and Washburn she then called her husband over the telephone and told him that she had signed the contract because of these representations.

After Mrs. Ottaway had signed the contract Poff and Washburn called upon Ottaway at his place of business. Ottaway testified that, 'Mr. Poff told me Mr. Allen was financially able to take care of his obligations; that he was in business in Roanoke and he knew him and he could take care of the cash balance.' Upon the basis of these representations, Ottaway said, he signed the contract.

Again both Poff and Washburn denied that any representations or statements whatsoever were made by either of them to Ottaway or Mrs. Ottaway with respect to Allen's financial situation. They also denied having heard Mrs. Ottaway telephone her husband as to the representations which she said they had made to her.

After the contract had been signed, Allen listed his house for sale with R. A. Poff & Company, Inc., and other brokers for $10,750, the same price which he had agreed to pay for the Ottaway property.

Allen failed to consummate the purchase of the Ottaway property within the sixty days specified in the contract. Early in March, Ottaway tendered him a deed and Allen refused to accept it, claiming that he was not financially able to go through with the transaction. Ottaway reported this situation to Poff who suggested that Ottaway bring suit to compel Allen to comply with the contract. Ottaway consulted Walter H. Scott, a member of the local bar, and at the latter's instance Allen was called into conference.

On March 9, upon Scott's advice, Ottaway wrote Poff & Company, Inc., revoking its authority to sell the property, 'due to the fact that he (Allen) did not have the cash to pay for the same, which you represented to me that he had at the time you procured my signature upon the contract of sale.' In this letter Ottaway also informed the broker that he did not intend to pay the agreed commission.

On March 11, the Ottaways and Allen executed a new contract with respect to the sale and purchase of the property. The contract itself was not admitted in evidence, but oral testimony was admitted as to its provisions. ¹

The evidence is not entirely clear as to the detailed provisions of the contract, but the briefs on both sides seem to concede that by its terms Allen was to pay, and did pay, $1,000 in cash, was to assume two mortgages on the Ottaway property for $6,800 and $2,500, respectively, and was to give a note or cash for the balance upon the closing of the transaction.

Under the further provisions of the contract Allen was to endeavor to sell his house and refinance, if possible, the two mortgages on the Ottaway house which he (Allen) had agreed to assume. Fortunately, Allen was successful in both of these undertakings. He sold his own house for the sum of $9,100 net, which after the payment of the mortgage thereon left a small balance in his hands. He refinanced the two mortgages on the Ottaway property and from these two transactions raised a sufficient amount to pay the balance due on the agreed price of $10,750, the sum stipulated in the contract of March 11. By deed dated May 23, 1949, the Ottaways conveyed the property to Allen for a recited consideration of $10,750 cash, and the transaction was closed shortly after June 1.

More than two months before the transaction was closed, namely, on March 24, Poff & Company, Inc., brought the present suit to recover the broker's fee alleged to be due it.

The plaintiff broker says that since its undertaking was to procure a purchaser who was ready, willing and able to buy the property on the vendors' terms, that undertaking was fulfilled and it was entitled to its reward when the vendors accepted the purchaser and entered into a valid and enforceable contract with him.

But this is only a partial statement of the rule, for it is well settled that in such circumstances the vendor's acceptance of the purchaser and entering into a contract with him must not have been induced through the broker's misrepresentation as to the purchaser's financial situation, or by the broker's withholding from the vendor any material information which he (the broker) may have had on the subject....