Knopf v. Mercantile-Safe Deposit & Trust Co.

Finan, J., delivered the opinion of the Court. This is an action in contract brought by William C. Knopf t/a Free State Properties (appellant), for a real estate commission of $78,455.65 growing out of a sale of a 500 acre farm, known as Oak Hill, in Prince George’s County, Maryland. The sale was made to Maryland Community Developers, Inc. by the Mercantile-Safe Deposit and Trust Company (Mercantile), trustee under the will of W. Seton Belt, deceased. Beneficiaries of the trust were the Episcopal Diocese of Washington and St. Barnabas Episcopal Church.

The spokesmen for these two beneficiaries were the Hon. Oliver Gasch and the Hon. Ralph Powers. Because of the “off again, on again” nature of the transaction, which extended over a period in excess of five years, it becomes necessary to relate in some detail the moves and counter-moves of the parties.

Maryland Community Developers, Inc., through its president, Albert W. Turner, first became interested in Oak Hill around 1949. However, it was not until after Seton Belt’s death in 1959 that Mr. Turner expressed any interest in purchasing the property. In April of 1961 the appellant became acquainted with the Oak Hill farm and wrote a letter to Mercantile requesting an ²⁹⁵ exclusive agency for its sale. This request was received by Mr. William G. Frederick (Frederick), a vice-president of Mercantile and was forwarded to Mr. R. P. Hutchins (Hutchins), a real estate officer in Mercantile’s real estate department.

Mr. Hutchins sent a reply to appellant in which Hutchins indicated that there were legal questions which had to be resolved concerning the Oak Hill property and that appellant would be advised when the farm became available for sale. Appellant was also advised that there would be only an open type of listing of the property and that there would be no exclusive listing. On August 10, 1961, in response to Hutchins’ letter, appellant asked if the farm was then available for sale. By letter dated August 28, 1961, Mr. Hutchins again informed appellant that there were legal questions to be resolved and that appellant would be advised when the farm would be on the open market.

This ended correspondence until January 3, 1964, when appellant wrote to Mercantile asking for an interview to discuss the possibility of selling the farm. Mr. Hutchins replied for Mercantile on January 6, 1964, stating that : “We have no price to quote for this land nor do we plan to actively market it within the near future. If, however, you have any interested parties prepared to make a cash bona fide offer accompanied by a deposit of 10% of their offer, we will be happy to give such an offer consideration.” Appellant replied by letter on January 8, 1964, that he had a client willing to make an offer but that before he would submit the client to Mercantile, appellant desired an agency agreement providing for a 10% commission. Appellant’s client was Albert W. Turner.

Mr. Hutchins replied on January 9, 1964, for Mercantile that: “* * * any property held in the above Estate is not being actively marketed for sale nor do we have any intentions of entering into an Agency Agreement for its sale. If you have anyone interested in the property and are prepared to submit a bona fide cash offer citing all ²⁹⁶ of the terms as to settlement, commissions, etc., we will be glad to> give such an offer consideration and advise you whether it is acceptable or not. Until such time as you can present an offer in this fashion, kindly do not expect us to give any thought or consideration to your inquiries.” Appellant testified that the above statement made him believe that appellee wanted to employ him and that the property was for sale. Shortly after the receipt of the letter of January 9th, the appellant, along with Mr. Dargan, one of appellant’s salesmen, met in Baltimore with Mr. Hutchins, the real estate officer of Mercantile, from whom appellant had received most of the correspondence from appellee.

There was disputed testimony as to what took place at that meeting; however, on the following day appellant did discuss the property with Mr. Turner. Subsequently, appellant and Mr. Turner met with Mr. Hutchins at Mercantile’s office in Baltimore and discussed the possibility of submitting a contract for the purchase of the farm. Shortly thereafter, appellant met with Mr. Turner and his attorney and prepared a contract, dated February 15, 1964, providing for a sales price of $1,800 per acre and 10% commission to appellant. This contract was submitted directly to the Hon.

Oliver Gasch, Chancellor of the Diocese of Washington as one of the beneficiaries of the Belt trust. After a discussion between the beneficiaries and Mercantile’s officer, Mr. Frederick, the contract was rejected. Appellant was informed of such rejection by letter dated March 4, 1964, from Mr. Hutchins of Mercantile. Mr. Hutchins advised appellant that: “If your client has any further interest in the property, we will be happy to give such a proposal consideration, however, I must insist that any dealings which you might have in connection with this Estate be directed strictly to this office and not to any other person whom you feel might be interested in the Estate.” Another contract was prepared by appellant providing for a commission of 7% to be paid to him by Mercantile and a sales price of $2,000.00 per acre.

This contract was submitted March 9, 1964, and after consideration and discussion between the ²⁹⁷ beneficiaries and the officers of Mercantile, it too was rejected. Mr. Hutchins again notified appellant of this rejection by letter dated March 24, 1964. Appellant was further advised: “If your client has any further interest in the property to the extent of an improvement in price and revision of the mortgage terms as discussed by us, we will be happy to give such further interest our prompt consideration. I might also state that the Trustee is unwilling to pay a commission to a Real Estate Broker in excess of 3% of the gross selling price.” After this rejection, appellant, with Mr. Dargan, his salesman, went to Baltimore and met with Mr. Hutchins to determine what would be required to make the contract acceptable.

At this meeting each participant had a copy of the rejected contract and they made notes of the meeting and contract changes in the margins of the rejected contracts. These changes were brought to the attention of Mr. Turner and shortly thereafter appellant and Mr. Turner met in Baltimore with Mr. Hutchins and Mr. Frederick. At this meeting appellant contends they discussed the terms of the contract and that they reached an understanding that $2,500.00 per acre would be an acceptable price. On the other hand, Mr. Frederick contends that at that meeting he advised appellant and Mr. Turner that: “* * * the property is not being offered for sale.

We have no price for thie property, but it is our company policy that if an offer is received, being in a fiduciary relationship — by that I mean handling the property of others — we feel it is our duty to listen to the offer and consider it and give a formal reply. We do that as a matter of courtesy and also as a matter of protection to our trust estates.” Shortly thereafter, appellant submitted another contract dated May 27, 1964, providing for a sales price of $2,500.00 per acre and commissions to be paid by Mercantile to appellant in the amount of Z%. When appellant’s $2,500.00 per acre offer was received, Mr. Frederick met with his superior, Mr. J. K. Brigstocke and it ²⁹⁸ was decided to take the offer directly to the Trust Executive Committee of Mercantile. On June 2, 1964, the Committee, in reviewing the offer of appellant, stated ; “This Company, as Trustee under the Will of W. Seton Belt, owns several farms in Prince Georges County, Maryland.

An unsolicited offer of $2,500. an acre, or $1,452,500., has been received for one of the farms containing about 580 acres and situated about six miles east of the District of Columbia. Mr. Frederick informed the Committee that the Vestry of St. Barnabas Church and the Protestant Episcopal Diocese of Washington, beneficiaries of this trust, have indicated that they feel the time has come to sell these 580 acres. It was the sense of the Committee that the beneficiaries be advised of this offer and that we recommend to them that it be rejected, but, if they still feel the farm should be sold, we recommend that it be offered at public auction in the Fall. It was agreed that, if the beneficiaries request us to accept the present offer, we will do so.” On June 11, 1964, Mercantile officers Messrs.

Frederick and Hutchins, met with the representatives of the beneficiaries, Gasch and Powers, to discuss the offer submitted by appellant. It was determined that the offer should be rejected and Messrs. Gasch and Powers informed Mercantile that they leaned strongly toward a sealed bid offering as opposed to a public auction. The participants at this meeting also decided to decline any offers that should be tendered advising the parties submitting the offers that the property would be offered publicly and sealed bids would be received.

By letter dated June 12, 1964, Mr. Hutchins advised appellant that the offer had been declined. This letter concluded by saying: “Consideration is being given to a general offering of the property, and if this is done, you will be notified.” A similar letter was sent to Disc, Inc. who had on June 10, 1964, offered to purchase the property at $2,650.00 per acre with terms or $2,500.00 per acre cash. The appellant after receiving their letter called Mr. Hutch- ²⁹⁹ ins, who told appellant that Mercantile was going to sell the property on a bid basis, and that appellant would be informed when a brochure was available so that appellant could pass the information on to Mr. Turner. The appellant called Mercantile periodically and was informed that they were in the process of preparing the proposal for the sale of the property.

Mr. Frederick prepared the brochure soliciting offers to purchase the property. The brochure provided in part that: “The bid price shall be net to the Trustee. At the time of executing a Contract of Sale, an indemnity satisfactory to the Trustee shall be executed by the purchaser in which the purchaser shall agree to save the Trustee harmless of all costs, liability and expense (including reasonable counsel fees) arising out of any claim for real estate brokerage commissions or other compensation allegedly payable to any real estate broker or other persons as compensation for bringing about the sale to the purchaser. “This solicitation shall not be construed as employment of any real estate broker by the Trustee. Any real estate broker to whom this solicitation may be sent or who is or may become involved in a sale of the property by reason of this solicitation shall look solely to the purchaser and not to the Trustee for any compensation to which any such real estate broker may become entitled.” Mercantile sent out 1,242 flyers on the property and advertised it a total of twenty-seven times in ten newspapers in New York, Philadelphia, Baltimore and surrounding areas.

As a result of the advertising campaign, Mercantile sent out 284 solicitations of offers to persons who requested them. On March 12, 1965, the appellant received the brochure and a printed form letter from Mercantile. The letter provided: “You will note from Page 3 of this Solicitation that the bid price shall be net to the Trustee, and that the Solicitation shall not be construed as employment of any real estate broker by the Trustee.” ³⁰⁰ Upon the receipt of the brochure and the letter, the appellant immediately called Mr. Frederick and told him that if the property were sold to Mr. Turner, a commission was due appellant from Mercantile. Altogether seven bids were received and they were opened on April 26, 1965.

Maryland Community Developers, of which Mr. Turner was president, was the highest bidder. Mr. Turner had submitted two bids for the property, one for $3,755.00 per acre submitted through Carrollton Enterprises, Inc., one of