Turnpike Motors, Inc. v. Newbury Group, Inc.
Decision Date | 06 October 1988 |
Citation | 403 Mass. 291,528 N.E.2d 1176 |
Parties | TURNPIKE MOTORS, INC., et al. 1 v. NEWBURY GROUP, INC., et al. 2 |
Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Nicholas A. Abraham, Boston, for defendants.
Gary R. Greenberg (Louis J. Scerra, Jr., Boston, with him), for plaintiffs.
Before HENNESSEY, C.J., and WILKINS, LIACOS, ABRAMS and O'CONNOR, JJ.
We conclude first that, on the sale of a business, a person not licensed as a real estate broker may recover an agreed-upon commission on the sale price of the personal property even if that person may not recover a commission on the sale price of the real estate. We next decide that the sellers were not entitled to summary judgment on the broker's claim that the sellers were estopped to deny the broker a commission on the sale price of the entire business. The broker claimed that the sellers told it that they planned to sell corporate stock, rather than assets, and that the broker would not need a real estate license. We accept that the sellers would have owed the full commission of ten per cent, based on written commission agreements, if corporate stock (and not assets) had been sold.
This case involves the sale of two automobile dealerships, one in Boston and one in Cambridge. The assets to be sold included, in each instance, an interest in real estate and both tangible and intangible personal property. The sellers commenced this action in May, 1984, seeking to enjoin the broker from interfering with the sale of the two dealerships pursuant to purchase and sale agreements entered into in March and April of 1984, respectively, and seeking a declaration that, under G.L. c. 112, § 87RR (1986 ed.), the broker was not entitled to any commission on either sale. The sellers obtained a preliminary injunction barring the broker from interfering with the sales. Somewhat later, a judge of the Superior Court allowed the sellers' motion for summary judgment, ruling that because the broker was not licensed as a real estate broker it could not recover "a commission for the sale of properties involving real estate." 3 The broker has appealed arguing that entry of summary judgment for the sellers was error. We transferred the appeal here.
The sellers argue that G.L. c. 112, §§ 87PP and 87RR (1986 ed.), each of which was inserted by St. 1957, c. 726, § 2, bar the broker from recovering any commissions in this case. Section 87RR provides that one who acts as a real estate broker "directly or indirectly, either temporarily or as an incident to any other transaction, or otherwise" must be licensed and that no one shall recover in any action "for compensation for services as a [real estate] broker within the commonwealth unless he was a duly licensed broker at the time services were performed." There is no doubt that the commission agreements on which the broker relies contemplate the payment of commissions on the sale of interests in real estate. For the purpose of this case, we accept the sellers' argument that the broker's efforts in seeking to sell the real estate interests made it a real estate broker for the purposes of § 87RR and that § 87RR bars the broker from recovering on the sale price of interests in real estate. 4 Because before us the broker rests its claim to a commission on the sale price of the real estate solely on a theory of estoppel, we need not decide whether, in the normal course, a broker must be licensed if he is to receive a commission on the full sale price of a business when the assets include an interest in real estate. 5 1. The broker argues that it is at least entitled to a commission on the sale prices of the personal property involved in each transaction. There is no difficulty in determining those sale prices. 6 The broker's argument is that, even if the statute bars it from collecting a commission on the real estate, it is entitled to recover a commission on the personal property. In deciding this issue we receive little assistance from other jurisdictions because of the differences in the applicable statutes, the peculiar facts of given cases, and the lack of uniformity of the results. 7
In selling the personal property of the dealerships, the broker was not acting as a real estate broker. Section 87RR forbids the collection by one without a license of a fee for services as a real estate broker, that is, for services in selling an interest in real estate. The fact that a sale of real estate is only an incidental part of some other transaction does not matter under § 87RR. An unlicensed broker still is not entitled to collect a commission on the real estate. But § 87RR does not bar the collection of a commission on the sale of personal property. The broker was entitled to go to trial on the question whether it was entitled to a commission on the sale price of the personal property.
This is not a case in which whatever illegality there may have been in the broker's failure to be licensed as a real estate broker should taint the broker's claim to a commission on the sale of the personal property. The broker's omission was relatively minor in view of the fact that it could have easily obtained a license because one of the officers was an attorney. See G.L. c. 112, § 87SS (1986 ed.). The broker's omission had no bearing on performance of the contract, and, if collection of the entire commission is barred, the forfeiture by the broker and windfall to the sellers would be substantial. These are relevant factors in considering the consequences that should attach to nonlicensure. See Town Planning & Eng'g Assocs. v. Amesbury Specialty Co., 369 Mass. 737, 745, 342 N.E.2d 706 (1976).
2. We come then to the broker's claim that the sellers should be estopped to deny the broker's right to recover a full commission. The broker's claim is based on its assertion that, when it told a representative of the sellers that it was not a real estate broker, the sellers' representative answered that the absence of a license would not be a problem. The broker claims that the sellers agreed that the sales of the two businesses would be in the form of sales of corporate stock. It further claims that it easily could have obtained, as it now has, a real estate broker's license if it had known one would be needed and that the sellers restructured the sales as sales of assets rather than of stock for the purpose of defeating the broker's commissions.
If the facts are as the broker claims, the sellers would be estopped to deny the broker a full commission. There is, of course, the question whether the broker reasonably relied on the sellers' representations. See O'Blenes v. Zoning Bd. of Appeals of Lynn, 397 Mass. 555, 558, 492 N.E.2d 354 (1986), and cases cited. But we cannot fairly say that, as a matter of law, on the broker's evidence, the broker's reliance was unreasonable. Our unwillingness to permit § 87RR to bar full recovery of a commission if the broker reasonably relied on the sellers' representations (that the sales would be of corporate stock and that obtaining a real estate broker's license would be unnecessary) is consistent with our view of other statutory provisions in similar circumstances. Thus, in certain circumstances, one who has caused a plaintiff to delay in bringing an action is estopped to rely on the statute of limitations to bar recovery. See LaBonte v. New York, N.H. & H.R.R., 341 Mass. 127, 131, 167 N.E.2d 629 (1960); MacKeen v. Kasinskas, 333 Mass. 695, 698, 132 N.E.2d 732 (1956).
The broker's estoppel claim depends, of course, on its right to collect a full commission if the sales had been of corporate stock. Section 87QQ makes § 87RR inapplicable to one who buys, sells, or otherwise deals in stock. Thus § 87RR's restriction on an unlicensed broker's right to recover a commission on the sale of real estate is inapplicable to an unlicensed business broker's claim for a commission on the sale of stock in a corporation owning an interest in land (as almost all operating corporations must). We observed earlier (see note 5) that the provision in § 87QQ concerning the inapplicability of § 87RR to sales of stock may have been intended to make clear that for the purposes of obtaining a commission the sale of any or all of the stock in a corporation is not a sale of an interest in land.
3. The summary judgment for the plaintiff sellers is vacated, and the case is remanded to the Superior Court for further consideration.
SO ORDERED.
This case presents the issue whether the defendants, not licensed as real estate brokers, may recover commissions for brokering two transactions. One of the transactions is the sale of an automobile dealership in Cambridge (Agreement I), and the other is the sale of an automobile dealership in Boston (Agreement II). The parties to Agreement I are the plaintiffs Gene's Foreign Car Service, Inc., Eugene F. Looney, John A. Ryan, and James B. Ryan, as sellers, and Nai Nan Ko, as buyer. Agreement I provides for the sale of certain tangible and intangible personal property. It also provides that, at the closing, the individual plaintiffs and the buyer will execute and deliver a lease and option to purchase agreement in specified form covering the real estate on which the dealership is located. The individual plaintiffs are the sole owners of that real estate. Paragraph 7(c) of Agreement I expressly conditions the buyer's obligation to consummate the transaction on the individual plaintiffs' compliance with their promise to deliver the lease and option agreement.
The parties to Agreement II are the plaintiff, Turnpike Motors, Inc., as seller, and HLT, Inc., as buyer. Both parties' obligations are expressly conditioned on the seller and the buyer's nominee, on or before the closing date, having executed an irrevocable purchase and sale agreement for the real estate on which the dealership is located. A second condition...
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