W. C. Pinkard & Co. v. Castlewood Realty Co.

Eldridge, J., delivered the opinion of the Court. Once again we are called upon to determine the right of a real estate broker to a commission. There is no dispute as to the material facts of the case. The appellee Castlewood Realty Company, Inc., controlled by majority shareholders Walter L. McManus, Sr. and Walter L. McManus, Jr., owned a tract of land situated partly in Baltimore City and partly in Baltimore County.

On May 6, 1965, the McManuses, through another corporation controlled by them, entered into a lease agreement with Food Fair Stores, Inc. Under the lease agreement with Food Fair, the McManuses agreed to construct a shopping center on the tract and to lease a portion of it to Food Fair for a supermarket. Thereafter, the McManuses actively sought a purchaser for the land and entered into negotiations with Food Fair. As a result of these negotiations, Food Fair claimed that the parties had entered into a binding contract whereby Food Fair would purchase the tract of land. When it appeared that the McManuses did not share their view, ⁶⁰⁰ Food Fair sought specific performance of either the agreement to construct a shopping center or the alleged agreement to sell them the property.

While the Food Fair suit was in litigation, the McManuses leased the property, subject to several conditions, to another company, the Padonia Land Company, Inc. The lease between the McManuses and the Padonia Land Company resulted, to a large extent, from the efforts of appellant W. C. Pinkard & Company, Inc., a real estate broker. One of the stipulated conditions before the lease with the Padonia Land Company could become operative, was that the McManuses successfully defend the Food Fair suit. Three months after the execution of the Padonia lease, the appellant W. C. Pinkard & Company and the appellee Castlewood Realty Company entered into a commission agreement, which provided in part: “In accordance with our discussions our commission in connection with this transaction only becomes due when the ground lease becomes operative. In that event you will pay to the W. C. Pinkard & Company TWENTY-FIVE THOUSAND ($25,000) DOLLARS in three equal annual installments.” On September 30, 1970, the Circuit Court of Baltimore City rendered an opinion upholding Food Fair’s contention that it had contracted for the purchase of the tract of. land, and the court ordered specific performance of the contract.

On March 4, 1971, the McManuses and the Padonia Land Company entered into a termination agreement, the terms of which cancelled the lease agreement between them and discharged their respective liabilities under that agreement. The termination agreement resulted from the decision by the McManuses and the Padonia Land Company, after consultation with their attorneys, that the chances of a successful appeal of the Food Fair litigation were minimal. Thereafter, the broker W. C. Pinkard & Company brought this action against Castlewood in the Superior Court of Baltimore City, claiming a right to a $25,000 commission ⁶⁰¹ under the brokerage agreement, even though the ground lease with the Padonia Land Company did not become “operative.” Based on an agreed statement of facts, the trial judge (Carter, J.) concluded that the plaintiff was not entitled to a commission, and judgment was awarded in favor of the defendant Castlewood. Since the broker and