Sanders v. Devereux

Sybert, J., delivered the opinion of the Court. This is an appeal by the sellers of real estate from a judgment of the Circuit Court for Mongtomery County in favor of a real estate broker for a commission in the amount of $3,928.75, which the broker claimed for being the “procuring cause” of the sale involved. ²²⁷ In 1959 Mr. and Mrs. J. Melford Sanders, the defendants below and appellants here, were the owners of Melwood Farm, containing 148 acres, located near Olney in Montgomery County. In the spring of that year they erected a sign on the side of the road in front of their farm, which read “For Sale by Owner” and gave their telephone number and name and an invitation to contact the owner, directly or through brokers. At the same time a brochure and letter were prepared, describing the real estate, which the owners sent to between 100 and 150 brokers in the Washington and Baltimore areas.

The letter stated that the farm was being offered for sale either in its entirety, or on the basis of “prices of $65,000 for the Manor House and 25 surrounding acres with the many buildings thereon plus $775.00 per acre for the balance of the land”, and that a “5% commission will be paid”. According to the testimony of Mr. Sanders, numerous brokers visited the farm in response to the letter and brochure, many of them accompanied by prospective customers. One of these brokers was John R. Devereux, the plaintiff-appellee. He had learned about the property through one of his salesmen, Sidney S. Stabler, Jr., who some time prior to becoming employed by Devereux had received copies of the brochure and letter from the appellants and also had contacts with them which he maintained after his employment.

On May 17, 1959 Devereux and Stabler, pursuant to prior arrangements made by them, met Dr. and Mrs. Mitchell, Dr. Creswell, and two other gentlemen and their wives who were “in some religious sect”, at Melwood Farm, and the entire party inspected all the buildings except the barn. They met Mr. and Mrs. Sanders, and Mr. Sanders showed them through the property. On May 20, 1959 appellants received a letter from Devereux listing Dr. and Mrs. Mitchell and Dr. Creswell as “prospective buyers” of the farm. Mr. Sanders testified that he knew they were the same persons whom Devereux and Stabler had brought out on May 17.

About nine days later, Devereux and Stabler, in accordance with arrangements made at the request of Dr. Mitchell, met Mrs. Mitchell and certain county and state health, fire, zoning and licensing officials on the property for an inspection to determine what ²²⁸ expenditures would be necessary in order to comply with state and county regulations so that the farm could be operated as a rest home. Stabler testified he gave Dr. Mitchell one of the brochures showing the acreage of the property, told him several times about the price, and later gave him drafts of a contract form listing the price and terms. Devereux stated that after the inspection was made, and a report was submitted by an official of the County health department, he drew up a number of contracts in an effort to find one that might be acceptable to Dr. Mitchell. He said he knew one of the contracts was given to Dr. Mitchell, who turned it over to a Mr. Bartley, from whom he expected to get part of his financing.

However, neither this contract nor any of the other proposed contracts was offered in evidence. Devereux testified that in June, 1959, Mr. Sanders called him and told him that he had a contract on the property and had taken it off the market. He said he told the owner to let him “get back in the picture” if anything happened to the contract, and that Mr. Sanders replied, “I will let you back in the picture, because I think the doctors were very interested.” Devereux said that in the middle of August, 1959, Mr. Sanders called and told him the property was again on the market and asked him to “please get after the doctors again and submit the property to them and see if they were still interested”. Immediately thereafter Devereux called Dr. Mitcnell’s office, and, although the doctor was not in, he testified that he informed the doctor’s secretary that the property was again on the market, and requested that she have Dr. Mitchell call him when he returned.

Devereux stated that Mrs. Mitchell, the wife of Dr. Mitchell, called back instead of the doctor. He said he knew Mrs. Mitchell as an independent real estate broker. Although the exact nature of this call was not brought out explicitly in the testimony, Devereux said he waited “a couple of days” for Dr. Mitchell to get in touch with him direct, without result, and he then testified, “* * * I then called Mr. Sanders and I said ‘I have re-presented the property to the doctors, and they haven’t called me back, and I want you to protect me’ and Mr. Sanders told me he had been ²²⁹ in the automobile business a long time and he knew what I was getting at — the fact that they would go around me, or in some way try to eliminate me.” Mr. Sanders himself testified that Devereux told him Mrs. Mitchell was making an effort to get one-half of the commission. In fact, as far as the record extract shows, neither Mr. Sanders nor Mrs. Sanders (who also testified) denied or disputed any of the testimony of Devereux or of Stabler, although Mr. Sanders did state that he never promised to protect Devereux’s commission.

On October 9, 1959 appellants entered into a contract with one Mary Folsom Bacon whereby they agreed to sell 40 acres of their farm for the sum of $78,575.00, which figure appears to have been reached by using the same prices as those indicated in the letter originally circulated to brokers by the appellants. The contract showed on its face that the purchaser, Mary Folsom Bacon, executed it “for a corporation to be designated at the time of settlement”, and provided that settlement was to be within 90 days from October 10, 1959, and that a commission amounting to 5% of the sales price was to be divided equally between Korzendorfer Realty, Inc., a real estate agency on whose printed form the contract was drafted, and Mary A. Mitchell, the wife of Dr. Mitchell. One of the clauses in the contract read: “The brokers and purchasers jointly and severally agree that in the event there is a claim for sales commission by any other broker on account of this sale, the brokers and purchasers agree to defend any action in court or otherwise at no expense to seller, and pay any amount for which seller is held liable, including costs.” Settlement was held on January 6, 1960, at which time the title company which handled the transaction paid one-half of the commission to Korzendorfer Realty, Inc., amounting to $1,964.37, and the other one-half to Mrs. Mitchell, who applied $1,800.00 thereof to the purchase price of the property and received a check for the balance of $164.38. The grantee on the recorded deed was Melwood Farms, Inc., a ²³⁰ Maryland corporation chartered on November 27, 1959.

The officers of the corporation included Dr. Mitchell as president and Dr. Creswell and H. J. Korzendorfer of Korzendorfer Realty, Inc., as vice-presidents. A rest home was established on the property under a license issued to Melwood Farms, Inc., on the application of Dr. Mitchell as president, and Mary Folsom Bacon became its superintendent. There is nothing in the record extract to indicate that Korzendorfer Realty, Inc., took any part in the negotiations leading to the sale of the property involved in this case. Devereux testified that while Mrs. Mitchell was an independent broker at the time of the sale, she had worked for Korzendorfer some years previously.

Because no commission was paid to him, Devereux filed suit against the sellers, claiming that 5% of the purchase money was due him as the procuring cause of the sale. The defendants filed general issue pleas. At the close of the plaintiff’s case and at the close of all the evidence the defendants moved for a directed verdict on the grounds (1) that there had been no showing that the plaintiff was the procuring cause of the sale and (2) that the evidence showed that there were a number of competing brokers and that the sellers merely dealt with the first one who presented an acceptable contract, having remained completely neutral as among all of the brokers. Both motions were denied.

Appellant requested the court to instruct the jury “that an owner who lists property for sale on a non-exclusive basis with two or three real estate brokers may accept the first satisfactory contract presented to him and pay the commission to the broker presenting that contract, so long as the owner has remained neutral as between the competing brokers. In such a situation the owner incurs no liability to other competing brokers.” The request was denied, the trial judge stating that he did not believe the instruction to be the law of this State as he understood it. The jury returned a verdict in favor of the broker against the sellers for an amount equaling 5% of the sale price. On this appeal the appellants contend that the trial court ²³¹ erred in failing to grant their motion for a directed verdict, and in denying the requested instruction.

In Maryland, Code (1957), Art. 2, Sec. 17, lays down the tests which are to be applied in cases such as the one before us. This Court has said that that Section was passed to settle the question as to when, in the absence of a special agreement between an owner and a broker, the broker is entitled to a commission. Brown v. Hogan, 138 Md. 257 , 113 Atl. 756 (1921). The tests so established are whether the broker was employed by the owner and whether he was the procuring cause of the sale.

See Steele v. Seth, 211 Md. 323, 328 , 127 A. 2d 388 (1956), where Sec. 17 is quoted in pertinent part, and cases there cited. With respect to employment, this may be implied from the conduct of the parties, there being no necessity for either an express or a written contract. See Sec. 17, supra; Leimbach v. Nicholson, 219 Md. 440, 446 , 149 A. 2d 411 (1959); Glaser v. Shostack, 213 Md. 383, 387 , 131 A. 2d 724 (1957); Steele v. Seth, supra; Heslop v. Dieudonne, 209 Md. 201, 206 , 120 A. 2d 669 (1956); Brown v. Hogan, supra. The fact that Devereux was employed by the appellants is not in dispute here.

Essentially, in determining whether the trial court properly refused to grant a directed verdict in favor of the appellants, the question is whether there was sufficient evidence from which the jury could find that the appellee was the procuring cause of the sale. In order for a broker to