Wyand v. Patterson Agency, Inc.

Eldridge, J., delivered the opinion of the Court. The Patterson Agency, Inc., a real estate broker, brought this action against Leo B. Wyand and Viola Wyand, his wife, to recover $8,375.00 allegedly due as a commission on the sale of the Wyands’ farm. From a judgment for this amount in favor of Patterson Agency, Inc., the Wyands take this appeal. Since we agree with the Wyands that Patterson Agency was not entitled to a commission, we reverse. 1 The Wyands, on November 25, 1970, entered into an “Exclusive Sales Listing” agreement for their farm with Patterson Agency.

In return for the Agency’s trying to sell the farm and advertising it at the Agency’s expense, the Wyands agreed to appoint the Agency as their “exclusive agent” for the sale of the farm for 180 days. The Wyands further agreed to pay Patterson Agency a 10% commission if “you procure a buyer, or if the property is sold within said time by ... [the Wyands] or any other broker----” The “sale price” was stated to be $110,000.00. On March 31, 1971, within the 180 day exclusive listing period, the Wyands entered into a contract with one Gale H. Lyon for the sale of the property for $85,000.00. Lyon was not obtained by Patterson Agency but was brought to the Wyands by another broker.

The contract of sale between the ⁶¹⁹ Wyands and Lyon provided for a $500.00 deposit, for settlement on July 15, 1971, for a forfeiture of the deposit if the purchaser failed to make settlement, and, in the event of forfeiture, for the deposit money to be divided among the Wyands (V2), Patterson Agency (V*) and the broker who found the prospective purchaser (V*). The Patterson Agency was not a party to the contract of sale and did not assent to it. Settlement pursuant to the contract with Lyon did not take place on or before July 15, 1971, and the deposit was forfeited. In accordance with the contract of sale, the $500.00 deposit was divided among the Wyands, the broker who negotiated the contract of sale and the Patterson Agency.

The Patterson Agency accepted the $125.00 tendered to it. Thereafter, the Patterson Agency, claiming that it was entitled to a commission of $8,500.00 because of the contract of sale, brought this action for the $8,375.00 difference. In these proceedings, the plaintiff Patterson Agency has advanced essentially three different arguments to support its claim for a full real estate broker’s commission based upon the contract to sell the property to Lyon, even though the sale to Lyon was never consummated. First, in the trial court, Patterson Agency relied on Maryland Code (1973 Repl.

Vol.), Art. 21, § 14-105, formerly Code (1957), Art. 2, § 17, which provides inter alia that whenever, in the absence of a special agreement to the contrary, a real estate broker employed to sell real estate procures a purchaser, and the person procured is accepted by the employer, and enters a valid, binding and enforceable written contract of sale in terms acceptable to the employer, the broker shall be deemed to have earned his commission even though there is no actual sale. Second, the plaintiff also argued in the trial court, as well as before us, that it was entitled to recover under the wording of the exclusive listing agreement. The agreement specified that the Wyands would pay a commission if the property were “sold” by another broker. The plaintiff maintains that the farm was “sold” when the contract of sale was executed.

Third, Patterson Agency argues that this Court’s decisions in McKeever v. ⁶²⁰ Washington Heights Realty Corp., 183 Md. 216 , 37 A. 2d 305 (1944), and Singer Constr. Co. v. Goldsborough, 147 Md. 628 , 128 A. 754 (1925), require’a decision in its favor. In our view none of these arguments is sound. Since the prospective purchaser, Lyon, was not found by Patterson but was procured by another broker, the statute, setting forth the time when a real estate broker’s entitlement to a commission accrues, does not apply here.

In light of the statute’s inapplicability, and the absence of language in the agreement establishing a contrary intent, this Court’s decisions require that the word “sold” in a commission agreement with a real estate broker be construed as meaning a consummated sale, not just the execution of a contract for the sale of the property. Neither McKeever v. Washington Heights Realty Corp., supra, nor Singer Constr. Co. v. Goldsborough, supra, dictate a different result under facts such as we have in this case. Long ago this Court decided that where one employed a real estate broker under an agreement that the broker would be entitled to a commission if there were a “sale” of the property, or if the property were “sold,” or if the broker “procured a purchaser ” or similar language, and the agreement did not more specifically set forth when or at what stage in the sale process the right to a commission accrued, a fully consummated sale had to take place before the broker was entitled to a commission.

Unless the proof showed that the broker’s employer was guilty of fraud or arbitrary or capricious conduct, the mere procurement of a willing buyer, or even the execution of a contract for the sale of the property, was not sufficient. See Carrington v. Graves, 121 Md. 567, 572-573 , 89 A. 237 (1913); Riggs v. Turnbull, 105 Md. 135 , 66 A. 13 (1907); Melvin v. Aldridge. 81 Md. 650, 658 , 32 A. 389 (1895); Jones v. Adler, 34 Md. 440, 443 (1871); Schwartze v. Yearly, 31 Md. 270, 277 (1869); Richards v. Jackson, 31 Md. 250 (1869); Kimberly v. Henderson and Lupton, 29 Md. 512 (1868); Beale v. Creswell, 3 Md. 196, 201 (1852); Keener v. Harrod, 2 Md. 63, 71 (1852). Thus in Kimberly v. Henderson and Lupton, supra, 29 Md. at 512 , a property owner and two real estate brokers agreed ⁶²¹ that if the brokers “succeeded in negotiating a sale,” they would receive the usual commission. The brokers obtained a prospective purchaser who entered into a written contract of sale with the property owner.

The contract of sale provided that if either party should fail to comply, a forfeiture of $1,000 should be paid by the defaulting party to the other. Later, the vendee failed to comply and the property owner received the forfeit money. In holding that the brokers were not entitled to commissions, Judge Alvey stated (id. at 515): “ ... it is manifest that the sale was not so far effected as to entitle the appellees to their commissions as brokers. To be entitled, they should have completed the sale ....

The undertaking to procure a purchaser requires of the party so undertaking, not simply to name or introduce a person who may be willing to make any sort of contract in reference to the property, but to produce a party capable, and who ultimately becomes the purchaser.” (Emphasis supplied.) In Richards v. Jackson, supra, 31 Md. at 250, a property owner employed the broker “to procure a purchaser” for the premises. The broker found one Johnson who entered into a contract of sale for the property. However, Johnson later refused to pay the purchase money and consummate the sale when he was advised by his attorney that the property owner’s title was defective. The property owner did not bring an action for specific performance against Johnson.

However, he later contracted to sell the property to someone else and obtained a judicial determination that he had good title in a suit for specific performance against the second buyer. The broker, receiving no commission, Sought to have the decision in Kimberly v. Henderson and Lupton, supra, overruled. In refusing to overrule Kimberly , and in holding that the broker was not entitled to a commission, our predecessors reiterated “that a broker, employed to sell real estate, must produce a person who ultimately becomes a purchaser, before he is entitled to his commissions.” (Id. at 253.) It was also held that the prop ⁶²² erty owner’s conduct did not constitute such fault as to warrant any different result. (Ibid.) Later, in Riggs v. Turnbull, supra, 105 Md. at 135 , a home owner promised a broker that he would pay the usual commission if the broker “sold the house for him for $38,000.” 2 The broker, already having a prospective purchaser, brought the two parties together.

A contract of sale was entered at the price demanded by the owner, and two payments were made to the owner. Subsequently, because the buyer was having some difficulty meeting one of the conditions of the sales contract, the owner, by his attorney, voluntarily agreed to cancel the contract and, apparently, accept a forfeiture of the payments already made. The broker, in suing for his commission, advanced arguments similar to some made by the broker in the present case. Thus, it was argued in Riggs that the broker did what he was employed to do, that “he sold the property,” that the “contract itself constituted a sale,” and that “the equitable title passed to the vendee.” (Id. at 140-141.) Reliance was placed on cases from the other states, to the effect that a “sale” takes place and the broker is entitled to his commission when a contract of sale is executed.

(Id. at 141-144.) This Court recognized that generally throughout the United States a “sale” for purposes of a real estate broker’s right to a commission is defined as an enforceable contract to sell, and upon the execution of such contract the broker is entitled to his commission. (Id. at 148.) Nevertheless, the Court pointedly said: “But this is not the rule prevailing ... in this State.” The Court in Riggs went on to reaffirm the earlier Maryland decisions and to hold that the broker was not entitled to a commission, as his right to a commission “depends absolutely