Thompson v. Hudson

1. A contract executed by the owner of property, purporting to bestow upon another the exclusive right to sell for a stipulated commission said property for a consideration and under terms set out in such contract during a stated period of time, said contract not requiring any particular acts or efforts on the part of the other party to sell said property during said stated period of time, is at the time of its execution unilateral and unenforceable, notwithstanding its recital that it is for and in consideration of the services to be performed by the other party.

2. However, where the party to whom such exclusive sales agency is sought to be granted acts upon the contract by incurring the expenses of advertising said property, or by showing the property to prospective purchasers, or by otherwise acting thereon in any manner contemplated by the contract so as to incur injury to himself by reason thereof, the contract becomes bilateral and binding upon both parties.

3. A petition — brought by a licensed business broker against the owner of property for damages for breach of a contract by the terms of which such owner granted such broker for a period of 90 days the exclusive right to sell said property for a stipulated consideration, and in which such owner agreed to pay such broker a stipulated percentage of the purchase-price of said property, if during said 90-day period said property was sold by said broker, or by anyone else, or by or through the instrumentality of said broker, or to anyone with whom such broker was negotiating, or by the owner himself, and further alleging that in violation of the terms of said contract said owner sold said property by himself or through another broker, and thereafter failed to pay the broker the agreed sum, and further alleging that pursuant to said contract said broker incurred advertising expenses and other expenses in showing said property to prospective customers, and praying for damages in the amount agreed to be paid in the event the property was sold in violation of the contract — is not subject to general demurrer.

4. In such a contract, where the parties have agreed what the damages shall be, the same are liquidated, and unless this provision violates some principle of law, the parties are bound thereby. See Code, § 20-1402.

DECIDED MARCH 18, 1948. REHEARING DENIED APRIL 1, 1948. A. S. Thompson, trading as Southern Business Brokers, filed a petition in the Civil Court of Fulton County against M. L. Hudson, alleging that the defendant is indebted to him in the sum of $3000 upon a written contract. The petition as amended further alleged: that said contract gave him exclusive listing for a period of 90 days for the sale of the defendant's business, known as Hudson Furniture Company, located at 628 Lee Street, S.W., Atlanta, Georgia, the sales price thereon being $30,000; that under the terms of said contract defendant obligated himself to pay 10% of said gross sales price in the event that, during said period of exclusive listing with the plaintiff, the defendant sold said business himself or through any other agency; that during said exclusive listing the defendant sold his said business either by his own efforts or through another agency; the petitioner rendered valuable services to the defendant pursuant to the terms of said contract; that the petitioner, in trying to sell said property, incurred advertising and other expenses, showing the property to prospective purchasers, and performed his services with due and proper diligence. The petition also alleged that the defendant failed to pay the plaintiff the sum specified, and the suit was for this sum, not as commissions, but for the breach of the contract based upon the failure of the defendant to pay said sum. Attached to and made a part of the petition was a contract executed by the defendant, which recites that, "For and in consideration of the services to be performed by them, I hereby give the Southern Business Brokers exclusive sales rights and appoint them as my only authorized agents for 90 days to sell or otherwise negotiate" the property in question. The recited sales price was $30,000 plus 10%. The contract also provided as follows: "I hereby agree to pay Southern Business Brokers 10% gross price as commission or compensation for selling, or otherwise negotiating, the said described proposition; if sold by me (M. L. Hudson) during said period or anyone else, through them or their instrumentality, or if sold to anyone with whom they are negotiating, I agree to pay the Southern Business Brokers the amount of commission named above." This contract was signed, "M. L. Hudson, owner." Endorsed thereon was the acceptance of the plaintiff as follows: "We accept the appointment of the above agency on the terms and conditions therein named, and agree to use our efforts as agents to sell or otherwise negotiate said proposition. Atlanta, Ga., 20th May, 1947. (Signed) Southern Business Brokers-Agents-R. B. Boyd."

The defendant interposed a general demurrer to said petition because, he contends, it fails to set forth any cause of action against him for the following reasons: (a) The petition fails to allege that the plaintiff effected a sale of the defendant's business or that he at any time had a customer willing and able to purchase, in accordance with the alleged contract set forth in paragraph three of the petition. (b) The alleged contract upon which the plaintiff sues is void for lack of mutuality and is unilateral, because nothing was required of the plaintiff under the terms thereof. (c) The petition affirmatively shows that no sale of the defendant's business was effected by or through the plaintiff or his instrumentality, nor that a sale was made to any person with whom the plaintiff had negotiated.

The trial court entered a judgment sustaining the demurrer and dismissing the petition. On this judgment error is assigned. 1. The first headnote of this decision is fully supported by the cases cited by the trial judge in the judgment complained of, and discussed at length in the briefs of counsel for both sides as follows:Garfunkel v. Byck, 28 Ga. App. 651 (113 S.E. 95);Barrington v. Dunwody, 35 Ga. App. 517 (134 S.E. 130);Ocean Lake River Fish Co. v. Dotson, 70 Ga. App. 268 (28 S.E.2d, 319); Irish v. Fisher, 74 Ga. App. 631 (40 S.E.2d, 588).

2-4. The principles of law enunciated in headnotes 2 and 3 of this decision are demanded by the case of Hill v. Horsley,142 Ga. 12 (82 S.E. 225). We quote from that decision, as follows: "On January 27, 1911, defendant, the owner of a certain tract of land, executed to plaintiff a real-estate agent, a written power of attorney to sell the land and certain personalty therewith connected, at a stated amount; defendant agreed to pay plaintiff five percent of the gross amount of the purchase-money, and further agreed `not to cancel this contract before January 1st, 1912, unless I pay him [plaintiff] the full amount of his commissions, same as sale was made;' before the date mentioned defendant, without the consent or fault of plaintiff, canceled the contract and refused to proceed with it; before this was done, plaintiff, in endeavoring to sell the property in accordance with the contract, had incurred expenses and performed services with proper diligence. A case was made by such allegations for the recovery of the amount agreed to be paid in case of cancellation by defendant before the specified date. (a) A consideration is valid if any benefit accrues to him who makes the promise, or any injury to him who receives the promise. Civil Code, § 4242 [20-302]. (b) This was not an action by a real-estate broker to recover commissions earned by reason of having produced a purchaser ready, willing, and able to buy and who actually offered to buy on the terms specified by the owner, but was based on a breach of the written contract not to cancel the authority of the real-estate agent to sell prior to a certain time. (c) The fact that property is placed in the hands of a real-estate broker to sell does not prevent the owner from selling, unless otherwise agreed. In the present case, however, it was agreed otherwise."

The similarity of the instant case to Hill v. Horsley, supra, is striking. There the suit was based on the breach of a written contract not to cancel the authority of the real-estate agent to sell prior to a certain time. Here the suit is based on the breach of a written contract to pay the plaintiff a certain amount if the property was sold by the plaintiff or another over a prescribed period of time during which the plaintiff was to try to sell the same. There the measure of damages in case of a breach of the contract was stipulated in the contract at 5% of the gross amount of the purchase-money. Here the measure of damages in case of a breach of the contract was stipulated in the contract at 10% of the gross amount of the purchase-money. There, before the breach of the contract, the plaintiff, in an effort to sell the property in accordance with the contract, had incurred expenses and performed services with proper diligence. Here the petition alleged that the plaintiff, in an effort to sell the property in accordance with the contract, incurred expenses and performed services with proper diligence.

As pointed out by the court in Hill v. Horsley, supra, "A consideration is valid if any benefit accrues to him who makes the promise, or any injury to him who receives the promise. Civil Code § 4242 [ § 20-302]." The court there also particularly pointed out that the action was not by a real-estate broker to recover commissions earned by reason of having produced a purchaser ready, willing, and able to buy, and who actually offered to buy on the terms specified by the owner, but was based on a breach of the written contract.

While counsel for the defendant insists upon a different construction of the provisions of the contract relating to the obligation of the defendant to pay if the property was sold by himself or another, we think that it means that the owner agreed to pay the broker 10% of the gross price if the property was, during the 90-day period specified in the contract, sold by the owner, or sold by anyone else, or sold through the broker or his instrumentality, or sold to anyone with whom he was negotiating for the sale of said property. Thus construed, we think that the contract was breached by the defendant when he sold either by himself or through another broker, and failed to pay the plaintiff broker the sum agreed in the contract.

The principles of law laid down in Garfunkel v. Byck,Barrington v. Dunwody, Ocean Lake River Fish Co. v.Dotson, and Irish v. Fisher, supra, which follow Code § 4-213, are here recognized. This section provides as follows: "The fact that property is placed in the hands of a broker to sell shall not prevent the owner from selling, unless otherwise agreed. The broker's commissions are earned when, during the agency, he finds a purchaser ready, able, and willing to buy, and who actually offers to buy on the terms stipulated by the owner." HoweverGarfunkel v. Byck, Barrington v. Dunwody, and Irish v.Fisher, supra, are distinguished from Hill v. Horsley, supra, and the instant case, in that nothing in the contract expressly prevented the owner himself from selling the property during the life of the contract purporting to give to the plaintiff the exclusive right to sell, thus recognizing the first principle of law laid down in the quoted Code section. OceanLake River Fish Co. v. Dotson, supra, is a case where the suit was brought for commissions alleged to have been earned and in which it appeared that the broker did not, during the agency, find a purchaser ready, able, and willing to buy, and who actually offered to buy on the terms stipulated by the owner, thus recognizing the second principle of law laid down in the quoted Code section.

In Hill v. Horsley, supra, and in the instant case, it is recognized that the fact that property is placed in the hands of a broker to sell shall not prevent the owner from selling unless otherwise agreed. In that case, as well as in this, it was otherwise agreed by the contracts sued upon.

Hill v. Horsley, supra, being a decision of the Supreme Court, not overruled, controls the decision in this case and is binding upon this court. We have distinguished the cases ofGarfunkel v. Byck, Barrington v. Dunwody, Ocean Lake RiverFish Co. v. Dotson, and Irish v. Fisher, supra, on certain particulars, showing that those cases are not directly in point with the case at bar, as is the Hill case, supra.

The trial court erred in sustaining the general demurrer to the petition.

Judgment reversed. MacIntyre, P. J., and Gardner, J.,concur.