W. W. Chambers, Inc. v. Audette

• Decision Date: 29 March 1978
• Docket Number: No. 11193.,11193.
• Citation: 385 A.2d 10
• Parties: W. W. CHAMBERS, INC., Appellant, v. E. A. AUDETTE, t/a Audette Realty Co., and Henry Seay, Appellees.
• Court: D.C. Court of Appeals

385 A.2d 10

W. W. CHAMBERS, INC., Appellant, v. E. A. AUDETTE, t/a Audette Realty Co., and Henry Seay, Appellees.

No. 11193.

District of Columbia Court of Appeals.

Argued January 26, 1978.

Decided March 29, 1978.

COPYRIGHT MATERIAL OMITTED

A. Slater Clark, Bethesda, for appellant.

Harry L. Ryan, Jr., Washington, D. C., for appellees.

Before NEBEKER and FERREN, Associate Judges, and BACON, Associate Judge, Superior Court of the District of Columbia.^*

FERREN, Associate Judge:

Appellees, E. A. Audette and Henry Seay, brought suit against appellant, W. W. Chambers, Inc., for a brokerage commission allegedly due for obtaining a ready, willing, and able purchaser for Chambers' property. After a jury verdict, the trial court entered judgment in favor of the broker-appellees for $18,500. Appellant seeks to set aside the verdict essentially on the ground that the trial court erroneously instructed the jury to disregard the fact that Chambers, as owner, already had sold the property by the time that Messrs. Audette and Seay, brokers, came forward with a buyer and claimed the commission.

Under the circumstances, we affirm the judgment. This case does not concern the usual broker-seller relationship where prior sale of the property might be determinative. In any event, appellant did not give the trial court an adequate basis for instructing the jury on the legal theory advanced on appeal. Thus, perceiving no miscarriage of justice on the record here, we are obliged to leave the judgment undisturbed.

I.

By letter of July 25, 1972, W. W. Chambers, president of W. W. Chambers, Inc., which conducts a funeral business, authorized Henry Seay, a licensed real estate broker, to offer for sale the company's real property located at 3072 M Street, N. W. More specifically, Mr. Chambers entered into a nonexclusive listing arrangement, apprising Mr. Seay that the company would "consider a contract" for $375,000. The parties thereby created the normal brokerage agreement under which the prospective buyer is to make the offer, subject to acceptance by the seller.

Almost a year later, in June, 1973, Ralph Borden, a salesman for E. A. Audette, a real estate broker associated with Mr. Seay, showed the property to Zweites Deutsches Fernsehen (ZDF), a German television corporation. On June 14, Werner Schaefer, a local operations manager for ZDF, sent a letter to Mr. Borden expressing interest in the property. Mr. Borden informed Mr. Chambers of ZDF's interest.

On June 22, 1973, Mr. Chambers wrote a letter to Mr. Borden offering the property to ZDF either for $375,000 in cash or for $360,000 payable over five years at 7½% interest, provided that acceptance by either mode of payment was forthcoming by July 5, 1973.¹

Unbeknownst to Messrs. Borden, Audette, or Seay, the Chambers company had previously contracted, on June 18, 1973, for sale of the very same property to National Savings and Trust (NS&T). That contract was conditional, however, upon certain feasibility studies and approvals.

On July 5, 1973, Mr. Schaefer sent an acceptance on behalf of ZDF to Mr. Chambers both by telegram and by hand-delivered letter.² Thereafter, Mr. Chambers informed ZDF that his company no longer could sell the property because it already had been sold to another party. (NS&T had decided to accept the conditional contract of June 18 and had communicated its firm acceptance on July 2, 1973.)

ZDF sued W. W. Chambers, Inc., for specific performance. During the pendency of that action, however, ZDF acquired the property for $400,000 in settlement of litigation over the property against NS&T. ZDF accordingly modified its claim against the Chambers company to one for damages. The trial judge in the ZDF-Chambers litigation could find no effective acceptance of the Chambers offer in ZDF's July 5 letter and telegram. Accordingly, finding no contract of sale, he entered judgment for defendant W. W. Chambers, Inc.

In September, 1973, Messrs. Audette and Seay commenced the present action against W. W. Chambers, Inc. for the brokerage commission allegedly due for procurement of ZDF.³ The jury returned a verdict for plaintiffs, finding defendant liable for $18,500. Defendant W. W. Chambers, Inc., has appealed.

II.

Although appellant has raised a number of contentions on appeal, only one merits extended discussion.⁴ Appellant Chambers asserts that the July 2 sale of the property to NS&T was an effective termination of its brokerage arrangement with appellees, Audette and Seay, and thus negated the possibility that these brokers could accomplish a sale to ZDF and earn the promised commission. A background discussion of the law applicable to such commission arrangements is therefore required in order to test appellant's argument.

In general, when a seller executes a listing agreement authorizing a broker to make property available for sale on specified terms, the broker accomplishes the task and earns the commission when he or she procures a purchaser ready, willing, and able to buy on those terms. Sorivi v. Baldi, D.C.Mun.App., 48 A.2d 462 (1946); Trimmer v. Ludtke, 105 Ariz. 260, 462 P.2d 809 (1969); Dindo v. Cappelletti, 116 Vt. 403, 77 A.2d 840 (1951); Romine v. Greene, 13 N.J. Super. 261, 80 A.2d 458 (1951); Walsh v. Grant, 256 Mass. 555, 152 N.E. 884 (1926). Once a broker's authority is effectively terminated, however, by express revocation or otherwise, the ability to earn a commission by compliance with the terms of the listing agreement disappears. Thus, the right to a commission depends upon accomplishment of the task before the authority to do so ends. Walsh v. Grant, supra.

Commonly, a broker-seller relationship is terminable by sale of the property directly by the owner or by another broker. Upon such a sale, the determination of "[w]hether or not [the broker-agent's] authority ceases without notice to him, depends upon the previous or contemporary manifestations of the principal. . . .' Restatement of Agency, Second § 106, Comment c (1958). Ordinarily, absent "evidence to the contrary, it is inferred that the agent's authority does not terminate until the agent has notice of the accomplishment of the result." Id. Such evidence to the "contrary," if any, will be found in the nature of the relationship and all other "manifestations of the principal to the agent." Restatement of Agency, Second, supra § 106.

If the agency relationship is general in character (i. e., open-ended, extending to sequential or multiple transactions) and/or runs exclusively to one broker, such characteristics manifest an understanding that notice is required for effective termination of commission rights. Bonn v. Summers, 249 N.C. 357, 106 S.E.2d 470 (1959); Dindo v. Cappelletti, supra; Restatement of Agency, Second, supra. On the other hand, it is widely acknowledged that absent evidence to the contrary, if the agency is nonexclusive and is confined to one transaction, that relationship is terminable, and is in fact terminated, upon sale of the property by the owner or another broker without notice.⁵ Trimmer v. Ludtke, supra; Dindo v. Cappelletti, supra; Kennedy and Kennedy v. Vance, 201 Okl. 80, 202 P.2d 214 (1949); Walsh v. Grant, supra; Hunt v. Judd, 225 Ill.App. 395 (1922); Hennings v. Parsons, 108 Va. 1, 61 S.E. 866 (1908); Restatement of Agency, Second, supra.⁶ "In the open listing situation, the broker assumes the risk of expending his efforts against the chance that when he presents his buyer, the seller may have already revoked the agency by a sale." Trimmer v. Ludtke, supra, 462 P.2d at 811.

Given this doctrinal framework, we turn to the facts of this case.

III.

It would appear that the initial, open listing brokerage arrangement between the appellant and appellees fits neatly within the nonexclusive, limited-agency category of the Trimmer v. Ludtke, supra, line of cases. Ordinarily it would follow, as appellant contends, that the arrangement was terminated (and the right to a commission extinguished) by the July 2 sale to NS&T, despite appellees' ignorance of that sale. On close examination, however, we find that in the other "manifestations of the principal" there is evidence of an intent contrary to that ordinarily inferred in the case of a nonexclusive, limited agency.

When Mr. Chambers notified Audette's salesman, Mr. Borden, on June 22 that the Chambers company would "make available the purchase" to ZDF for $375,000 in cash or $360,000 over time if accepted by July 5, 1973, the company thereby changed the terms of the original brokerage agreement wherein Chambers, as was customary, had merely authorized solicitation of offers which Chambers reserved the right to accept. Appellant Chambers, in fact, itself points out (see note 1, supra) that in the June 22, 1973, letter, Chambers reversed the normal contractual sequence by extending a specific offer to ZDF.

The trial judge essentially based his instructions to the jury on this premise. He thus instructed the jury to focus on the question whether ZDF had been a ready, willing, and able buyer that unconditionally accepted the Chambers offer; if so, appellees satisfied their brokerage duties and as a result, were entitled to a commission. He further instructed, consistent with this premise (and in the absence of any evidence of notice), that the prior sale to NS&T was of no consequence to the determination of Chambers' liability for the brokerage commission.

Prior to submission of the case to the jury, during the colloquy over proposed instructions, appellant's counsel objected to this latter instruction, essentially arguing that it was surplusage detracting from the critical question whether ZDF's acceptance had been unconditional. He did not, however, specifically argue to the trial court that the instruction was invalid on the ground that the prior sale could have revoked the agency without notice. He did not even allude to the revocation issue, let alone ask that the jury be instructed to...