Goss v. Hill

Prescott, J., delivered the opinion of the Court. The plaintiffs below filed an action at law, wherein they requested a declaration of rights concerning a $500 deposit which had been made on a real estate sales agreement and was supposedly held by the defendant as the broker involved in the transaction. The defendant, the real estate broker, answered to the effect that she had returned the $500 deposit to the prospective purchaser under the sales agreement, and she filed a counter-claim against the plaintiffs, the sellers, for her broker’s commission. The trial court held that he could not grant the declaratory relief requested, and that the broker was entitled to her commission.

The facts disclose an unusual series of events under a contract for the sale of realty. The agreement was executed in June, 1955. It recognized the broker as the sellers’ agent and stated the whole deposit was to be retained by the broker until settlement. If the purchaser failed to perform, the deposit was to be forfeited.

On the agreed-upon date of settlement, September 13, 1955, the sellers executed and delivered a deed to the settlement company. The purchaser appeared at the place of settlement much later than the designated time, but refused to go through with the contract. About a month later, the sellers wrote a letter to the purchaser’s lawyer in which they stated that the contract was executed under a mutual mistake of fact as to the quantity of land owned by the sellers, which vitiated the contract; hence, they were instructing the broker to return the deposit and the escrow agency to close its file on the matter. The purchaser refused to accept the return of the deposit and in December of 1955 instituted suit against the sellers for specific performance.

The litigation consumed considerable time, and in May, 1957, the court dismissed the purchaser’s suit. As soon as the equity suit was over, the broker contacted one of the sellers, Earle D. Goss, who handled the entire matter on behalf of the sellers, with reference to the disposi ³⁰⁷ tion to be made of the deposit. She informed him that she felt the deposit had been forfeited, and requested a letter from him to that effect. He stated that he felt they should wait until the appeal period in the equity suit expired, and he would call her later in connection with the deposit.

This he did in early July. She again requested a letter from him declaring that the deposit had been forfeited. He stated that he would give her such a letter, but demanded to know “what was the usual split.” She informed him that in accordance with the terms of the contract, her commission could not exceed $500. He stated that he thought it was the “general policy” under such circumstances for the real estate broker and the seller “to split fifty-fifty” the forfeited deposit; and, unless she agreed to such an arrangement, it would be best to let the courts decide what should be done with the $500.

In the meantime, the broker was being constantly pressed by the purchaser for a return of the deposit to him. On August 1, 1957, she wrote to the sellers demanding payment of her commission; on August 8, she returned the deposit to the purchaser; and on August 10, the sellers wrote the broker and demanded the full deposit for themselves. The broker admits that the sellers did not, at anytime during or after the conversations in July, 1957, direct her to return the deposit to the purchaser. There is no doubt that the trial court was correct in holding that it could not grant declaratory relief.

The only relief requested was an “appropriate order through a declaratory judgment as to the proper disposition of the $500.00 now being held by the defendant.” The answer denied that the defendant had the $500, but the plaintiff made no effort to amend or to add additional parties; consequently, when the court found that the defendant no longer held the deposit, there was nothing it could do, except deny the declaration requested: it would have been futile to make a declaration concerning a non-existent fund. The contract specifically provided that the sellers “agree to pay commission as agreed upon * * *, same to be due and payable upon the signing of this contract”; therefore, Code (1957), Article 2, Section 17 has no bearing on the decision ³⁰⁸ of this case. (Emphasis supplied.) The broker, being entitled to her commission upon the signing of the contract and never having been paid, is still entitled to it unless she has waived her right thereto or estopped herself from asserting the claim. When the broker and the seller, Goss, were discussing the disposition of the