Prince Georges Properties, Inc. v. Rogers

O’Donnell, J., delivered the opinion of the Court. This is another action by a real estate broker, Prince Georges Properties, Inc., the appellant, for a commission from the seller, Harry L. Rogers, the appellee, under a contract for the sale of real estate where the sale was never consummated. On February 28, 1973 Tyrone H. Brown and his wife, Barbara (the Browns), submitted a written offer to purchase for $31,000 a dwelling house located at 2408 Fairhill Drive in Suitland, Maryland, owned solely by Harry L. Rogers. On March 3, 1973 Rogers accepted the proposal submitted by them and executed a contract under which the premises, except for the inclusion of certain unrelated items, was to be sold “AS IS.” The clauses of the contract, on a printed form used by Mike Casey Realty, which are pertinent to the present controversy are: “10.

SETTLEMENT. Within 30 days from date of acceptance hereof by the Seller, .... If the ⁵⁸⁴ Purchaser shall fail to make full settlement, the deposit herein provided for may be forfeited at the option of the Seller, in which event the Purchaser shall be relieved from further liability hereunder unless the Seller notifies the Purchaser and the Agent(s) in writing within 30 days from the date scheduled for settlement of his election to avail himself of any legal or equitable rights, other than the said forfeiture, which he may have under this contract. In the event of the forfeiture of the deposit, the Seller shall allow the Agent(s) one-half thereof as a compensation for his services, said amount not to exceed the amount of the full brokerage fee. . . .” (Emphasis supplied.) “22.

AGENCY. The Seller recognizes Mike Casey, Realtor, and P.G.P. 50/50 as the Agent(s) negotiating this contract and agrees to pay a brokerage fee for services rendered amount [sic] to “6%” of the sale price. This fee is earned when this contract becomes binding upon the Purchaser and Seller. Failure or inability of the Seller to perform shall not release the Seller from liability for the brokerage fee.

The party making settlement is hereby authorized and directed to deduct the aforesaid brokerage fee from the proceeds of the sale and pay the same to the agent(s). The entire deposit shall be held by Mike Casey and shall be placed in an escrow account in accordance with the real estate license law.” (Emphasis supplied.) 1 By the terms of the agreement, a $3,000 earnest money deposit made by the Browns was to be held by Mike Casey [Realty] “to be applied as part payment of the purchase or settlement.” Receipt of the deposit was acknowledged by a salesman for “Mike Casey Realty.” ⁵⁸⁵ In connection with the completion of the transaction the Browns made a loan application to Cameron-Brown Company for a first deed of trust in the amount of $27,900 which was approved conditioned upon the completion of certain repairs to the premises, including electrical work (apparently to comply with provisions in the Prince George’s County Code). When the parties arrived for the scheduled settlement on April 27, 1973 a dispute arose concerning the responsibility for the repairs specified as conditions for the loan authorization. The Browns refused to go through with the settlement unless Rogers would pay for the designated repairs.

Since the property had been sold “AS IS” Rogers individually and through his counsel refused to pay for the specified work. Over a period of several hours the Browns and Rogers, without compromising, firmly adhered to their respective positions and the settlement was never held. On December 27, 1973, Prince Georges Properties, Inc., in its own name filed suit in the District Court against Rogers. It claimed $1,860 (six per cent of $31,000), alleging that to be the real estate commission earned by it and “Mike Casey Realty.” 2 Rogers, in accordance with Maryland District Rule 302, filed his Notice of Intention to Defend and pursuant to District Rule 343 c filed an Election of Jury Trial.

The District Court was thereby deprived of jurisdiction and the case was transferred to the Circuit Court for Prince George’s County for trial. See Maryland Code (1974), Courts and Judicial Proceedings Article § 4-302. When the case came on for trial before a jury (Judge William B. Bowie presiding) the appellee, Rogers, testified that he had taken no action to forfeit the deposit made by ⁵⁸⁶ the Browns nor had he ever instituted any proceedings against them. At the conclusion of all the evidence in the case and upon a renewal of Rogers’ Motion for Directed Verdict (see Maryland Rule 552) the trial court, out of the presence of the jury, in a dialogue with counsel made inquiry as to “whatever happened to the $3,000?” Counsel for Rogers responded that he had “no idea;” counsel for the appellant stated that “[a]s a result of the seller’s failure to go through with the settlement, the deposit was returned to the purchasers who filed suit, obtained a judgment which is now under appeal, for damages because the seller wouldn’t go through with the settlement at that time.

The entire deposit, since it was not forfeited by the seller, was returned in toto in its entirety to the purchasers.” Counsel agreed with the court that the “only real issue in the case was whether the broker had waived his right to sue the seller for his commission by returning the deposit to the purchaser,” that upon the undisputed facts there was no issue to be resolved by the jury and that the case had devolved into an issue of law. Judge Bowie then discharged the jury and requested memoranda from counsel. Thereafter in an opinion and order of court Judge Bowie held that the trial court was not bound by a lower court decision giving judgment in favor of the Browns against Rogers for a breach of the contract, since that decision was on appeal. Upon an “independent study of the evidence” the court found that since the premises were sold “AS IS,” there was no requirement on the part of the seller to pay for the electrical work demanded, that it was the responsibility of the purchaser to pay such charges, and found as a matter of law that “the failure to go forward with the settlement was the fault of the purchaser.” The trial court ruled that since the settlement failed “due to the fault of the purchaser” Clause 10 of the agreement was applicable and that Clause 22, which was controlling when settlement was successful, or unsuccessful “because of the seller’s inability to perform,” was upon the facts inapplicable. ⁵⁸⁷ Upon the authority of Goss v. Hill, 219 Md. 304 , 149 A. 2d 10 (1959) the trial court found that the plaintiff-appellant had returned the $3,000 deposit to the purchaser without the consent of the owner which eliminated the source of the commission and “constituted a waiver of the right to demand a commission from the defendant (appellee).” From a judgment in favor of the appellee, Rogers, for costs, Prince Georges Properties, Inc. in its direct appeal here urges that we overturn the result.

It contends that the trial court was in error in granting the Motion for Directed Verdict “upon information not in evidence” and that under the terms of the contract as well as under the provisions of Code (1957, 1973 Repl. Vol.) Art. 21, § 14-105, 3 it was entitled to the full commission claimed. In Salisbury Beauty Schools v. State Board of Cosmetologists, 268 Md. 32 , 300 A. 2d 367 (1973), in connection with an affirmative representation by appellants’ counsel in the trial court that there was “no dispute as to any material facts,” we stated: “The actions of an attorney within the scope of his employment are binding upon his client under the ordinary principles of agency. McGinnis v. Chance, 247 Md. 393, 399-400 , 231 A. 2d 63, 67 (1967); Bob Holding Corp. v. Normal Corp., 223 Md. 260 , 164 A. 2d 457 (1960); 7 C.J.S., Attorney and Client, § 79 (1937); and 7 Am.Jur.2d, Attomeys-at-Law, § 100 (1963).

This is particularly true concerning the stipulation of counsel in open court. See Posko v. Climatic Control Corp., 198 Md. 578 , 84 A. 2d 906 (1951); citing Bloom v. Graff, 191 Md. 733, 737 , 63 A. 2d 313, 315 (1949); 9 Wigmore, Evidence (3d ed.), § 2594; 2 Jones, Evidence (2d ed.), pp. 1759, 1761.”' 268 Md. at 45-46 ; 300 A. 2d at 376 . Such an admission by counsel becomes a substitute for ⁵⁸⁸ evidence. See 9 J. Wigmore, Evidence §§ 2588-90 (3d ed. 1940).

The appellant, in urging error, seeks solace from the language in the lower court opinion that “[although not in the record, it was related to the court by plaintiffs attorney that the plaintiff returned the deposit to the purchasers without the consent of the defendant as provided for in paragraph 10. The plaintiff objects on the grounds that this is not in evidence.” It overlooks, however, the further statement by the lower court that “it would order further testimony to substantiate this representation” if it felt necessary but that “any additional evidence would merely confirm the statement of counsel” and that “[i]n the absence of such evidence, the Court could take the inferences posed in the defendant’s reply memorandum; namely, the fact that a contract was signed and a deposit was given to the realtor leads to the conclusion that the realtor still holds the deposit. Under either interpretation, the realtor's contention is meritless.” 4 Although appellant attempts to draw a distinction semantically between “evidence introduced at the trial, as opposed to facts which were introduced at the trial,” we hold that when appellant’s counsel, in a dialogue with the court, upon inquiry as to the status of the $3,000 deposit, stated unqualifiedly that it was in its entirety returned to the purchasers, this fact became binding upon it the same as if it had been elicited by testimony. In Goss v. Hill, supra, the contract, in language similar to that contained in the one here involved, provided that the commission shall “be due and payable upon the signing of this contract;” it similarly provided as does the subject agreement that the deposit should be held until “settlement hereunder is made” and that it would be “forfeited” if the purchaser fails to make settlement in accordance with the terms of the agreement; the broker, the seller’s agent, returned the deposit to the purchasers without any ⁵⁸⁹ instructions from the sellers to do so — in fact, after the seller declined to forfeit.

In that case, Judge Prescott, for the Court stated: “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 contracttherefore, Code (1957), Article 2, Section 17 has no bearing on the decision 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.” 219 Md. at 307-08 , 149 A. 2d at 11-12 . “[T]he broker, the sellers’ agent, deliberately returned to the purchaser a forfeited deposit without any instruction from the sellers to do so. In addition, the broker knew that the sellers were claiming (although erroneously) a portion of the deposit, without liability for the broker’s commission. This conduct on the part of the broker was most unusual and cannot be sustained as an exercise of good faith and discretion.

The Restatement, Agency 2d, Section 402 (1) (e), states, ‘[a]n agent is subject to liability to the principal for the value of * * * money which he holds for the principal and to the immediate possession of which the principal is entitled * * * if the agent * * * makes delivery of it to a person to whom he is not authorized to deliver it * * *.’ We cite the above to emphasize the unusual conduct of the broker in returning to the purchaser the very fund out of which she could have collected her commission, and, yet demanding that the sellers pay the same. “We reach the conclusion, as did the Court in Huttlinger v. Far West Enterprises, 281 P. 2d 554 ⁵⁹⁰ (Cal., 1955), that the broker’s returning of the deposit to the purchaser constituted a waiver of her right to demand her commission from the sellers____” 219 Md. at 308-09 , 149 A. 2d at 12 . In Chasanow v. Willcox, 220 Md. 171 , 151 A. 2d 748 (1959) the agreement, like the one here under consideration, provided that the seller would pay the broker a commission to be deducted from the proceeds of sale; in the event the purchaser should default it was provided, as does the agreement here, that the seller would allow the broker one-half of the deposit as compensation for his services to the seller. Before the scheduled settlement the premises being sold under the contract was damaged by fire and because of a “psychological block” against living in property previously damaged by fire, the purchaser refused to consummate the transaction and requested a return of the deposit. The seller refused unless the broker would waive or release his claim for commission.

The broker, insisting that the commission had been earned, refused to waive it and requested the seller to forfeit the deposit, but the seller declined. When the purchaser filed a complaint with the Real Estate Commission, the executive secretary “persuaded” the broker that the partial destruction of the house by fire entitled the purchaser to a refund of the deposit and that the consent of the seller was not required. In holding that the broker, by the return of the deposit, without the consent of the seller, had forfeited his right to the commission, Judge Horney, who delivered the opinion for the Court, seated: “The purchaser having defaulted, there were no proceeds óf sale out of which the broker could recover a commission. The only fund,