Brown v. White

Where the right of a real-estate broker to recover commissions from a buyer, under the terms of a contract of sale of real estate, is based on a provision of the sale contract to the effect that the buyer shall be liable to the broker for commissions in the event the buyer "defaults" in the consummation of the contract, there is no liability for commissions on the part of the buyer where the contract of sale is too indefinite to be enforceable, in that it provides that it is conditioned upon the buyer's obtaining a loan of $5400, without providing on what property the loan is to be secured, at what rate of interest, and how the principal should be repaid.

DECIDED FEBRUARY 14, 1946. REHEARING DENIED MARCH 6, 1946. Joe C. Brown, a real-estate broker, sued J. W. White to recover a real-estate commission alleged to be due under the facts alleged. The petition contained the following allegations: "(1) That he, the said Joe C. Brown was on March 7, 1945, a licensed real-estate agent, and as such was, under the laws of the State of Georgia, authorized to conduct the business of representing sellers and buyers of real property, and as such agent to charge and collect compensation therefor. (2) Petitioner shows further that he, as agent for Mrs. Mildred Sagal, was authorized to sell certain improved property in Fulton Country, Georgia, described as being: A lot 300 feet by 450, more or less (app. 3-3/4 acres) fronting on Hershall V. Lee Road, improved, with seven-room stone residence and known as the Sagal (formerly the Wait property), at and for the price of $7,900.00 to be paid — $2,500.00 cash and $5,400.00 with loan to be placed by purchasers. (3) Petitioner shows that such purchaser was secured upon terms stated, by him as agent, in the person of J. W. White, and the contract of sale and purchase was reduced to writing, as will be more particularly shown by reference to said contract, a copy of which is hereto attached and made a part of this petition, the same being marked exhibit ``A.' (4) Petitioner shows that [on] the execution and delivery of the contract, as herein referred to, the said J. W. White delivered to your petitioner a check in the sum of one hundred dollars, payable to petitioner as earnest money, copy of which check is hereto attached, the same being marked exhibit ``B.' (5) Petitioner shows further that the said Mildred Rice Sagal was, at all times at the signing of the contract of sale and purchase, ready alike to comply with the terms of sale. (6) Petitioner shows further that, after the signing by the said J. W. White and after the signing of the same by Mrs. Mildred Rice Sagal and after the delivery of the same and the acceptance of the same by the parties at interest, the said J. W. White refused and failed to comply with the terms of sale and purchase, and did notify the bank, upon whom the check for the payment of one hundred dollars was drawn, not to honor the same, and although requested to perform the terms of purchase, did refuse and still refuses to buy and pay for the property as contracted to be bought upon the terms as therein contracted. (7) Petitioner shows that, under the terms of the contract as entered into and as shown and hereinbefore set forth, it was stipulated that, if the buyer refused to comply with the terms of the purchase that then, and in that event, he obligated himself to pay the real-estate commissions due to petitioner. (8) Petitioner shows that he has fully completed all duties devolving upon him as such real-estate agent, and that the commission due petitioner for the services rendered in the sum of three hundred and ninety-five ($395.00) dollars became due and payable by the said J. W. White." The copy of the contract attached to the petition as exhibit A contains the following provisions: "The undersigned buyer agrees to buy, and the undersigned seller agrees to sell, through Joe C. Brown, agents, all that [certain described property]. The purchase-price of said property shall be Seven Thousand Nine Hundred ($7,900.00) to be paid as follows: $2,500.00 cash; $5,400.00 loans to be placed by purchaser. Buyer has paid to the undersigned Joe C. Brown, agents, receipt whereof is hereby acknowledged by agents, $100.00 as earnest money, to be applied as part payment of the purchase-price of said property at the consummation of this sale; and if sale, due to buyer's default, is not consummated, then one-half of said earnest money shall be applied toward commissions owing agents hereunder, and agents shall pay the balance to seller to be applied toward seller's damages caused by buyer's default. In the event the sale is not consummated for reasons other than the default of buyer, said earnest money is to be returned to buyer. In negotiating this contract, agents have rendered a valuable service, and seller agrees to pay agents commission in accordance with the schedule printed on the reverse side hereof. If sale is not consummated due to default of buyer, seller shall not be obligated to pay commissions, but buyer shall pay said commissions. If this transaction involves an exchange of real estate, commissions shall be paid in respect to the property conveyed by each party to the other, and notice of dual agency is hereby given and accepted by all the parties hereto. Commissions on an exchange shall be calculated, according to said schedule, on the amount at which the property is taken in exchange according to the contracts between the parties; and if no amount is stipulated, then according to reasonable value thereof. Agents may enforce this contract to the extent of their commissions due hereunder against any party liable therefor under the terms hereof. This contract constitutes the sole and entire agreement between parties and no modification hereof shall be binding unless attached hereto and signed by each; and no representations promises, or inducements shall be binding upon either party or agents except as herein stated. The following special stipulations shall, if conflicting with the printed matter control: Insurance and 1945 taxes to be prorated. This contract made subject to purchaser obtaining necessary loan. This instrument shall be regarded as an offer by the buyer or seller who first signs to the other and is open for acceptance by the other until ____ o'clock _.M. on the ____ day of ____ 19__; by which time written acceptance of such offer must have been actually received by agents, who shall promptly notify other party of such acceptance. /s/ J. W. White, buyer. The above proposition is hereby accepted, this 7 day of March 1945, /s/ Mildred Rice Sagal (Mrs. I. A.)." The court sustained the defendant's general demurrer and dismissed the action. The plaintiff excepts. Assuming, but not deciding, that the plaintiff may sue on the contract, we are of the opinion that the sustaining of the demurrer was correct. We think that the only reasonable interpretation of the petition is that it declares upon the written contract attached to the petition. It so states. See paragraph 7 of petition. The petition does not otherwise allege any basis of liability on the part of J. W. White, a purchaser, to pay a broker a commission for a sale made under a contract with a seller. The contract is not one based on the broker's having obtained a purchaser, ready, able, and willing to purchase on terms made by a seller. Simplified, the action is one on the alleged agreement of the buyer to pay the commissions in the event he defaulted in the consummation of the contract of sale. "Default," as used in this contract, means to fail to fulfill a valid and binding obligation. Meadows v. Continental Assurance Co., 89 Fed. 2d, 256; School District of City of Lansing v. Lansing, 260 Mich. 405 (245 N.W.. 449). The word default here does not mean mere inability of the buyer to complete the contract. Early-Foster Co. v. Gottlieb, (Tex.Civ.App.) 214 S.W. 520. If the contract as between the seller and buyer is not a valid and binding contract capable of being enforced by both parties, there could be no breach of the contract by either. We think that the provision in the contract, "This contract made subject to purchaser obtaining necessary loan" of $5,400, renders it too indefinite to be enforceable as between the seller and buyer; and since there could be no default in failing or refusing to carry out an unenforceable contract, the purchaser would not be liable to the broker for "default" in consummating the contract. The buyer's undertaking was not merely to endeavor in good faith to obtain a loan. The condition was absolute that a loan must be obtained before the contract would be carried out. It is not specified in the contract on what security the loan should be obtained, nor at what interest rate, nor when the principal should be due. Neither does it appear that the buyer could have obtained on reasonable terms the necessary loan on the property described in the contract or on other property. We think that the ruling inSoutheastern Realty Co. v. Griffin, 38 Ga. App. 220 (143 S.E. 435), is controlling in this case. The liability here must be determined by the validity of the contract between the seller and the buyer. Adams Loan c. Co. v. Dolvin Realty Co., 48 Ga. App. 183 (172 S.E. 606).

The court did not err in sustaining the general demurrer to the petition, and in dismissing the action.

There being a dissent, the case was passed on by the court as a whole under the provisions of the act of 1945 (Ga. L. 1945, p. 232).

Judgment affirmed. Broyles, C. J., Sutton, P. J., MacIntyre,Felton, and Gardner, JJ., concur.