Ritch v. Robertson

The contract did not give the plaintiff the exclusive right of sale. To have this effect the right must be given to the broker in unequivocal terms or by necessary implication. Hungerford v. Hacks, 39 Conn. 259; 4 R. C. L. 259; 44 L.R.A. 344 n; 24 L.R.A. (N.S.) 279 n. This court has many times stated what is necessary to entitle a broker to his commission. In the recent case of Butler v. Ouwelant, 90 Conn. 434,97 A. 310, the court, citing a number of earlier cases, said (p. 438): "To entitle the plaintiffs, as brokers, to the compensation which they claim to recover in this action, it should appear that they produced a person who was ready, able and willing, both to accept and live up to the terms offered by the defendant."

It is also well settled that a broker cannot put himself in a position antagonistic to his principal's interest.Ebert v. Haskell, 217 Mass. 209, 211, 104 N.E. 556;Veasey v. Carson, 177 Mass. 117, 58 N.E. 177, 53 L.R.A. 241, and note.

The appeal turns, substantially, upon the answer to the question, Was the plaintiff the procuring cause of the sale? The trial court found, as a conclusion of fact from subordinate facts set forth in the finding, that the plaintiff was the procuring cause. This conclusion may be reviewed on appeal. Hoadley v. SavingsBank of Danbury, 71 Conn. 599, 42 A. 667, 44 L.R.A. 321; Seward v. Seward Son Co., 91 Conn. 190,99 A. 887. Robertson appears to have been the only person with whom the plaintiff had negotiations. After twice failing to sell to him, the plaintiff and the defendant agreed that the defendant should be introduced to Robertson, and that if she succeeded in effecting a sale to him the plaintiff should have his commission. The defendant also failed to make the sale to Robertson, and negotiations with Robertson were at a standstill. It appears, however, that Robertson really wanted the property, and, entirely without the knowledge of either the plaintiff or defendant, put up a scheme by which he hoped ultimately to get the property at a less price than that for which he could buy it directly. He agreed with one Ehlers, hitherto unknown to both plaintiff and defendant as a possible purchaser, that Ehlers should buy the property, if possible, at a price as an original, independent purchaser, and then convey to him. Ehlers offered $5,750, but the defendant, with the utmost good faith, both to the plaintiff and to Robertson called up Robertson before closing with Ehlers and again offered him the property for $5,800. He declined to buy. The defendant's good faith to the plaintiff is clear when it is observed that a sale to Robertson for $5,800, less commission, would have meant a loss to the defendant of $95 as against the sale to Ehlers with no commission. Upon the refusal of Robertson to buy, the defendant made her contract with Ehlers, and became bound to convey to him. If bound to Ehlers, information subsequently obtained by her to Robertson's scheme is immaterial. She had no contract with Robertson. Knowing that Ehlers had made her an offer, Robertson had expressly declined to buy upon notice from the defendant and upon her offer still to sell to him before closing with Ehlers. Upon the plainest principles of estoppel, Robertson could not thereafter, as against the defendant, insist that he was the real principal. East Haddam Bank v. Shailor, 20 Conn. 18; 31 Cyc. 1234.

Yet the plaintiff claims that because pursuant to the secret agreement between Ehlers and Robertson the property was immediately conveyed by Ehlers to Robertson, the defendant should be held liable for commission as upon a sale by her to Robertson under the modified agreement. The finding is clear that the plaintiff did not in fact procure Ehlers as a purchaser. The plaintiff in no way intervened so as to bring Ehlers' attention to the property. But the plaintiff claims that because he had been in negotiations with Robertson and Robertson made the contract with Ehlers to buy, therefore the plaintiff was the procuring cause of Ehlers' purchase. The plaintiff had nothing to do with the sale in fact made, nor did he know of it until after the sale had been consummated. Neither the plaintiff nor Robertson introduced Ehlers to the defendant. Ehlers approached the defendant entirely as an original, independent purchaser and secured his contract in that guise. The general rule is stated in 9 Corpus Juris, 614, in this way: "The facts that a person with whom the broker unsuccessfully negotiated for a sale called the attention of another to the property, and that the other finally bought it, do not give the broker a right to a commission." This rule is based upon the well-established distinction between what the books call thecausa causans and the causa sine qua non. The cases are numerous. We mention Burchell v. Gowrie andBlockhouse Collieries, L. R. (1910) App. Cas. 614, 624;Imrie v. Wilson, 3 Dominion L. R. 826. In Gleason v.Nelson, 162 Mass. 245, 249, 38 N.E. 497, it is said: "Where there has been no direct communication between the broker and the purchaser, it must be shown affirmatively that the latter was induced to enter into the negotiations which resulted in the purchase through the means employed by the broker for that purpose." We also cite Johnson v. Seidel, 150 Pa. 396,24 A. 687; Baumgartel v. Hoyne, 54 Ill. App. 496. See also the citations in note d, 44 L.R.A. 333.

Perhaps we should here notice our own case ofLincoln v. McClatchie, 36 Conn. 136. Here the broker had been engaged to sell. Burdick was looking for a house. His friend Goodwin, knowing this, and seeing the broker's advertisement, interviewed the broker and reported to Burdick who requested Goodwin to examine the house and report to him. Goodwin did so and Burdick then examined the house, negotiated directly with the owner, and bought the property without any personal interview or dealing with the broker. Before his purchase Burdick was informed by Goodwin that the broker had the property for sale. In the Superior Court JUDGE LOOMIS decided for the defendant. On appeal this court held that the broker was entitled to his commission, on the ground that on these facts the principle qui facit per alium facit per se, applied, and that Burdick obtained his information from the plaintiff through Goodwin who was in fact the messenger and agent of Burdick. The facts clearly warranted the assumption of such an agency. The felt necessity of invoking the doctrine of agency, but confirms the general rule stated above. Butler v. Ouwelant, 90 Conn. 434,97 A. 310, is decided upon the theory that the defendant, with knowledge of what the plaintiff broker had done, combined with a third party in the attempt unjustly to deprive the plaintiff of his commission. There is nothing in the present case to suggest in the slightest degree that the defendant desired or planned to avoid paying a commission. Directly the contrary is true.

The complaint is based upon a sale by the defendant to Robertson, and the finding shows the final arrangement between the plaintiff and defendant was based on the possible ability of the defendant to effect a sale to Robertson.

The plaintiff argues that the facts show that Ehlers was the undisclosed agent of Robertson. Whether the arrangement made between Robertson and Ehlers was a contract of purchase and sale, or a contract of agency, it is not necessary now to decide. If it was a contract of purchase and sale, then clearly the plaintiff would not be entitled to recover, for the sale would have been to Ehlers and not to Robertson. If, on the contrary, Ehlers was in fact the undisclosed agent of Robertson, still the plaintiff cannot recover. The case is not one of agent for an undisclosed principal, that is, where the seller is aware that he is dealing with one who is acting as an agent, only the principal being undisclosed. In such case the law seems clear that either the agent or the principal may sue upon the contract. Rhoades v.Blackiston, 106 Mass. 334, a case where the agent confessedly acted as such to the knowledge of the vendee, so states the general rule. In the present case the fact of the agency was not only undisclosed, but the defendant upon particular inquiry was, by the very person now claimed to have been the principal, justifiably led to believe there was no agency in fact, and thereupon made her sale, as she rightfully supposed, to a third person free of liability for commission which she would have had to pay had she sold, as in truth she unsuccessfully attempted, to Robertson himself.

This, however, is not a case of one acting as agent, but not disclosing the principal. If we assume that as between Ehlers and Robertson the relation of principal and agent existed, not only was this fact not known to the defendant, but was purposely concealed from her by both Ehlers and Robertson. So that the most that the plaintiff can claim is that this is a case of undisclosed agency. The difference between these two situations must be kept in mind in determining the liability and rights of the vendor. Furthermore, we are not now deciding the rights of Robertson against Ehlers. The rule of law as frequently stated with reference to the rights of an undisclosed principal against the vendee, must be critically examined to determine whether the rule as stated is applied with reference to an undisclosed agency, or to a case of disclosed agency but undisclosed principal. Rhoades v. Blackiston,106 Mass. 334, is an illustration. While it is generally true that a principal of an undisclosed agent may appear in his true character and claim all the benefits of the contract from the other contracting party, yet this rule is never applied when to follow it would work an injury to the other contracting party. In Barry v.Page, 76 Mass. (10 Gray) 398, cited with approval inSullivan v. Shailor, 70 Conn. 733, 737, 40 A. 1054, it is said: "As the contract of an agent is in law the contract of the principal, the latter may come forward and sue thereon, although at the time the contract was made the agent acted as and appeared to be the principal. There is a qualification of the rule, by which it is held that when a contract has been made for an undisclosed principal, who permits his agent to act as apparent principal in the transaction, the right of the former to intervene and bring suit in his own name is not allowed in any way to affect or impair the right of the other contracting party, but he will in such case be let in to all the equities, set-offs and other defenses to which he would have been entitled, if the action had been brought in the name of the agent." As stated in 21 R. C. L. 898, the principal's right to claim the benefits of the contract is recognized "so far as he can do so without injury to that other by the substitution of himself for his agent." Numerous cases are cited in the note. It needs no argument to show that if Robertson were permitted to substitute himself for his assumed agent under the circumstances of this case, thereby making the sale one from the defendant direct to him and to bring the case within the allegations of the complaint and within the terms of the final brokerage contract between the plaintiff and defendant, this would be to the harm of the defendant to the extent of the commission on the sale. The defendant was thus under no obligation to Robertson under her contract with Ehlers, and Robertson could not have enforced Ehlers' contract with the defendant as his own. It is said in Mechem on Agency (2d Ed.) § 2070, if the vendor has "dealt with the agent as in fact the principal and upon terms in a written contract which exclude the existence of any other principal," the undisclosed principal is not a party to the contract and cannot enforce it. To do so would contradict the writing. The finding does not set out the terms of the written contract, but does show there was such a contract, and the circumstances irresistibly point to the conclusion that no agency was suggested and by Robertson's own statement that certainly he was not connected with it. It is, then, clear that upon the settled principles of undisclosed agency the sale was not to Robertson, and that the plaintiff cannot recover on the theory that he was the procuring cause of a sale to Robertson.

There is another point of view which shows that the plaintiff cannot recover. Should it still be held that the defendant in law, though certainly not in fact, sold to Robertson because Robertson subsequently obtained title to the property, the plaintiff must, as matter of law, be held to have adopted the method by which Robertson subsequently obtained title. This method was, as we have seen, by secretly putting forward a third party as a purchaser in opposition to Robertson, to obtain the property at a less price than Robertson believed he could buy it for, and by adopting Robertson's statement to the defendant upon specific inquiry by the defendant if he still wanted the property, that he did not want to buy. To be sure the plaintiff did not in fact do this, but he must adopt this conduct, antagonistic to the interest of his client, to establish that he was the procuring cause of the sale the defendant in fact made. This he will not be allowed to do. To compel the defendant to pay commission on a sale so obtained, when she, though unsuccessfully, took every possible means to make a sale, as she supposed, which would entitle the plaintiff to his commission, would inflict an undeserved loss upon her. The sale in fact was made through concealing the identity of the real purchaser and so leading the defendant to sell at a less price. Veasey v. Carson,177 Mass. 117, 58 N.E. 177, 53 L.R.A. 241; Pratt v. Patterson,112 Pa. 475, 3 A. 858; Alvord v. Cook,174 Mass. 120, 54 N.E. 499. The plaintiff cannot benefit by an imposition practiced upon the defendant by the very person whose conduct he must adopt to show any sale whatever.

Perhaps it is not irrelevant to call attention to Gormley v. Dangel, 214 Mass. 5, 100 N.E. 1084, a substantially parallel case. The plaintiff was generally authorized to find a purchaser, and negotiated with the defendant for a sale at $6,000, the lowest price the owner would take. The defendant ceased to negotiate with the plaintiff, posed as broker and effected a sale by the owner to one Ross who was, secretly, a dummy purchaser for the defendant. The defendant as an independent broker collected a commission from the owner, thereby getting the property from the owner really at the owner's price less commission. The court held that this conduct of the defendant was fraudulent to the plaintiff broker, and allowed the broker to recover his commission from the defendant. It appeared that the owner in good faith supposed Ross was the real purchaser and the defendant a broker in fact. As to the bearing of good faith on the part of the owner, the court says (p. 7): "If the owner, knowing that Ross was merely the tool or agent of the defendant, had made the conveyance to him, the plaintiff could have recovered his commission from the owner." The possible liability of the owner for commission is thus based on the assumption of her lack of good faith. But in that case, as in the present, the owner's good faith in supposing that she was actually selling to a third party, was apparently unquestioned. In that case, too, the good faith of the owner in paying a commission to the one she innocently supposed was a disinterested broker, is the same in effect as the good faith of the defendant in selling to a third party at a less price than she would have sold if she had become obligated to pay a commission. For various somewhat analogous situations see Quist v. Goodfellow, 99 Minn. 509,110 N.W. 65, 8 L.R.A. (N.S.) 153, and cases collected in the note.

We agree with the plaintiff's claim, that the defendant was not released from the obligation to pay a commission merely from the fact that she sold for a less price than that to which the broker was limited; nor was she released by the mere fact that she in person made the sale; but we hold that the defendant did not as matter of fact sell to Robertson, and that, under the settled rules of agency, the plaintiff was not the procuring cause of the sale to Ehlers in any such sense as will entitle him to a commission.

There is error, the judgment is reversed and the cause remanded with directions to enter a judgment for the defendant.

In this opinion the other judges concurred.