Dancy v. Baker , 206 Ala. 236 ( 1921 )

In Stevens v. Bailey, 149 Ala. 256, 42 So. 740, it was said:

"No one, it would seem, on sound principle, has the legal right to charge another for services rendered, unless he had been employed by that other, by contract, express or implied, that he would compensate him therefor."

Under the evidence before the trial court, it is clear that the jury would have been warranted in finding that defendants agreed with plaintiff, in September, 1917, to pay him a commission of 5 per cent., or at least a reasonable commission, for finding and producing a purchaser for their land who would be able, ready, and willing to buy it on defendants' terms, viz. $150,000 in cash.

So, also, there was evidence to support a finding by the jury that plaintiff was an efficient procuring cause of the purchase by Bond Bros.

But the undisputed evidence shows that Bond Bros. purchased through a direct personal transaction with defendants, for the price of $130,000, of which $10,000 was paid in cash, and the balance in 60 days; that the negotiations between plaintiff and Bond Bros. on the basis of $150,000, of which defendants were informed in September, 1917, were broken off by the refusal of Bond Bros. to pay that price, and the refusal of defendants to take less; that Bond Bros. had never been ready and willing to pay any price approximating defendants' demand, nor, indeed, to pay any more than was actually paid; and that defendants were not only not informed by plaintiff that he was still attempting to lead Bond Bros. up to a purchase, but that they were in fact informed by Bond Bros. that they came direct to defendants to discuss a deal for the land, at the instigation of their relative, W. F. Garth.

On elementary principles of law, a broker who undertakes to find a purchaser at a stipulated price earns his commission when he procures and produces to his principal a person who is able, ready, and willing to buy at that price. Randley v. Shaffer, 177 Ala. 636, 651, 59 So. 286; Henderson v. Vincent, 84 Ala. 99, 4 So. 180; Bailey v. Smith, 103 Ala. 641,15 So. 900; Cook v. Forst, 116 Ala. 395, 22 So. 540; Stevens v. Bailey, 149 Ala. 256, 261, 42 So. 740. And, conversely he does not earn his commission if he fails to produce such a purchaser.

But the general rule is subject to an important qualification. Courts are not disposed to allow a broker's undertaking, in process of accomplishment, to be defeated by any fraud or inequitable conduct on the part of his principal, whereby the principal would profit by the broker's service and at the same time evade a just liability to make due compensation.

"If a broker has brought the parties together, and as a result they conclude a contract, he is not deprived of his right to a commission by the fact that the contract so concluded differs in terms from the one which he was authorized to negotiate, particularly where the customer procured is able, ready, and willing to enter into a contract on the terms mentioned in the broker's authorization." 9 Corp. Jur. 600, § 89.

"However, to entitle a broker to a commission, where the contract concluded differs from that which the broker was authorized to negotiate, the negotiations commenced by the broker must have continued uninterruptedly, and he must have been actively instrumental in causing the parties to consummate the transaction. So, if the principal and customer introduced by the broker cannot agree on the terms of a sale, and the broker or his customer drops the negotiations, * * * the broker is not entitled to a commission on a sale being subsequently made by the principal, acting either independently or through another broker, to the same customer on different terms." Id. 602.

In the application of the general rule to particular cases the decisions of the various courts have not always been consistent in the results attained.

If the broker has found and begun negotiations with a prospective purchaser, the principal cannot interfere, and, either revoking the broker's authority or proceeding without his aid or participation, himself effect a sale either at the stipulated price, or at a lower price, and thereby evade his liability for a commission. Henderson v. Vincent, 84 Ala. 99,100, 4 So. 180. But, if the broker fails after a reasonable time to induce his customer to purchase, then the principal may proceed to a sale himself without liability to the broker. Hutto v. Stough, 157 Ala. 566, 571, 47 So. 1031; Smith v. Sharpe, 162 Ala. 433, 439, 50 So. 381, 136 Am. St. Rep. 52. But in such a case it is said that fair dealing would require notice from the principal to the broker of the former's intention. Cook v. Forst, 116 Ala. 395, 22 So. 540; Henderson v. Vincent, 84 Ala. 99, 100, 4 So. 180.

Where the principal has thus interrupted negotiations between the broker and his customer and has himself effected a sale at a lower price than the broker was authorized to negotiate for, the principal is held liable for the broker's commission on the theory that the principal, by his interruption, has deprived the broker of the opportunity to bring his customer up to the authorized price, and hence that he has waived that requirement of the broker. Smith v. Sharpe, 162 Ala. 433, 439, 50 So. 381, 136 Am. St. Rep. 52; Paschall v. Gilliss, 113 Va. 643,75 S.E. 220, Ann. Cas. 1913E, 778, and note, 784; Ball v. Dolan, 21 S.D. 619, 114 N.W. 998, 15 L.R.A. (N.S.) 272, note.

And again:

"Where a broker, instead of procuring a person who is ready, able, and willing to accept the terms his principal authorized him to offer at the time of his employment, procures one who makes a counter offer more or less at variance with that of his employer, the latter is at perfect liberty either to accept the proposed party upon the altered terms or to decline to do so. If he accepts, he is legally obligated to compensate the broker for the services rendered; but, if he refuses, he incurs no liability whatever." 4 R. C. L. 313, § 52.

The evidence in the case before us does not bring it within either of the rules above enunciated.

Defendants did not interrupt the negotiations between plaintiff and Bond Bros., which had terminated unsuccessfully in September, 1917, nearly four months before Bond Bros. came to them for direct negotiations in January, and which, so far as they knew or had cause to believe, had not been renewed between them. Bond Bros. had never made a counter offer as to price, and had never entertained a purpose or willingness to buy at defendants' authorized price, nor at any reasonable approximation of that price; and, ostensibly, plaintiff's efforts to meet defendants' price requirement had completely failed.

Conceding, therefore, that plaintiff was the efficient procuring cause of Bond Bros.' resumption of negotiations and final purchase in January, 1918, at the price of $130,000, the final and decisive inquiry is whether or not defendants knew or had notice of the fact that Bond Bros. came to negotiate and bid for the land by reason of the renewal of plaintiff's efforts in that behalf, and, if not, whether it was plaintiff's duty to so inform them before they concluded a sale for a substantially smaller consideration.

Upon a careful review of the evidence, we are of the opinion that it is without any tendency to show such knowledge by or notice to defendants. On the contrary, the only information defendants had as to the origin of Bond. Bros.' renewed activity was their own direct and specific statement that they had just been discussing the matter with defendants' kinsman, Garth, and that he had sent them to defendants on this occasion. Having heard nothing from or of plaintiff in this connection for more than three months, they had a right to rely upon this statement by Bond Bros., and were under no duty to inquire as to plaintiff's possible activity in bringing about that result.

Under these circumstances we think it was the duty of plaintiff to inform defendants that he had resumed negotiations with Bond Bros., and was sending them as his customer on this occasion. Handley v. Shaffer, 177 Ala. 636, 652, 654, 59 So. 286; Skinner Mfg. Co. v. Douville, 57 Fla. 180, 49 So. 125; Quist v. Goodfellow, 99 Minn. 510, 110 N.W. 65, 8 L.R.A. (N.S.) 153, 9 Ann. Cas. 431. Failing to do so, defendants could be and were misled as to their obligations in the matter; and, without warning as to plaintiff's activity or claim of a commission, they reduced the purchase price to a figure very substantially lower than anything previously considered by them as satisfactory.

We do not overlook the rule recognized in Handley v. Shaffer, supra, that where a broker is employed merely to find a purchaser, with whom his principal is to negotiate a sale upon whatever terms may be agreed upon as satisfactory, the broker's right to a commission does not depend upon his principal's knowledge of the fact that a purchaser to whom he has thus sold was sent to him by the broker. That rule of liability seems to be well settled. But where the broker is authorized to find and produce a purchaser only at a specified price and on specified terms, his commission being expressly made dependent upon a sale at that price (as is here the case), that rule of liability cannot be justly applied, unless the purchaser who presents himself to the principal is able and ready and offers to buy at the price and on the terms specified. Such an offer would be sufficient notice of the source of the purchaser, if notice were required; and, in any event, the absence of notice or knowledge could not prejudice the principal.

In Henderson v. Vincent, 84 Ala. 99, 101, 4 So. 180, wherein most of the material factors upon which liability for a commission was asserted were like those here presented, the court said:

"It may be conceded that the real purchaser was procured by the efforts of the plaintiffs, and, if the property had been sold to him for the sum fixed by the contract under which plaintiffs were employed, the defendant would have been liable to them for commissions. The defendant cannot be held to have waived the stipulation of the contract as to price, when he had no knowledge, and no reason to believe, that Hibart [the purchaser] would pay the stipulated price."

The instant case is stronger for defendants in that they knew that the purchaser had refused to pay the authorized price. See, also, Bailey v. Smith, 103 Ala. 641, 15 So. 900, wherein this factor is discussed, and its presence given controlling effect.

It is the doctrine of a number of well-considered cases that, where the broker has failed to bring his customer up to the price fixed by his principal, and the customer has refused to pay that price, and negotiations have ceased, the principal may himself sell to that customer at a lower price without liability to the broker for a commission. Ball v. Dolan, 21 S.D. 619, 114 N.W. 998, 15 L.R.A. (N.S.) 272; Johnson v. Wright, 124 Iowa, 61, 99 N.W. 103; Childs v. Ptomey,17 Mont. 502, 43 P. 714; McArthur v. Slauson, 53 Wis. 41,9 N.W. 784; Schano v. Storch, 56 Misc. Rep. 484,107 N.Y. Supp. 26.

Where the evidence is in conflict, or may support an inference of fraud or bad faith, that issue is, of course, to be submitted to the jury. But we can discover nothing in the evidence before us which would warrant a jury in finding that defendants' sale to Bond Bros. was infected by fraud or bad faith with respect to their known obligation to plaintiff — nothing, in short, to show a purpose to interfere with his operations, or to prevent the fruition of a sale in accordance with the terms upon which alone they were obligated to pay him a commission. The circumstances, as testified to by Bond, that while they were closing the trade with defendants he asked one of them if Mr. Baker (the plaintiff) "would be taken care of," is without weight in that aspect, in view of her ignorance of any recent negotiations between Baker and Bond Bros., and her reply that "Baker had nothing to do with it."

Our conclusion is that upon the whole evidence plaintiff showed no right to recover any commission on the sale as made by defendants, and that the trial court erred in refusing to give for defendants the general affirmative charge as requested by them in writing.

The judgment will therefore be reversed, and the cause remanded for another trial.

Reversed and remanded.

ANDERSON, C. J., and McCLELLAN and THOMAS, JJ., concur.