Kostan v. Glasier

337 Mich. 287 (1953) 60 N.W.2d 283

KOSTAN
v.
GLASIER.

Docket No. 2, Calendar No. 44,715.

Supreme Court of Michigan.

Decided October 5, 1953.

Heal, Deeley, LoCicero & Wilke, for plaintiff.

Harold Helper, for defendants.

DETHMERS, C.J.

Plaintiff sued for commission for sale of real estate and from judgment of no cause for action appeals.

Each of the 2 defendants owned an undivided one-half interest in the property in question by the entireties with his wife. Plaintiff, a licensed real-estate broker, obtained authority from defendant Glasier to sell the property and, at the same time, learned from him that there were defects in the title and that the 2 wives had interests as tenants by the entireties. Glasier told plaintiff that he did not know whether the wife of defendant Grossman would agree to sell, that he would see her about it, but that she was interested in keeping the property for income purposes. Later plaintiff presented to Glasier a proposed preliminary purchase agreement signed by a prospective purchaser. At that time Glasier told plaintiff that he did not know whether he could prevail upon Mrs. Grossman to sign, but that he would sign on condition that he could insert in the agreement a provision that he would not be required to pay a commission if the deal were not closed, regardless of whether the failure to close were due to Mrs. Grossman's subsequent refusal to sign or otherwise. Accordingly, a provision was inserted into the purchase agreement by Glasier, with plaintiff's consent, which read as follows:

"Commission payable only when and if deal is finally closed."

Defendants thereupon accepted a $10,000 deposit, signed the agreements, kept 1 copy and gave the other to plaintiff. The agreement fixed the date for closing the deal at 3 months thereafter. When that date arrived plaintiff and the prospective purchaser tendered the balance of the purchase price as fixed in the agreement, but defendants could not convey because defendant Grossman's wife had not consented to sign. Seven months later Mrs. Grossman consented, but then the deal fell through because of a dispute as to whether rent should be adjusted as of that date or of the date 7 months earlier, which had been contemplated by the agreement as the closing date. Such, substantially, are the facts as the trial court found them. From an examination of the entire record, containing some testimony of a contradictory tenor, we cannot say that the evidence clearly preponderates in the opposite direction.

Plaintiff cites Hannan v. Prentis, 124 Mich. 417; McOmber v. Campion, 219 Mich. 604; and Shiffman v. Turner, 253 Mich. 73, for the proposition that a real-estate broker becomes entitled to his commission upon producing a purchaser ready, willing and able to purchase on the terms contained in the agency contract. Plaintiff admits that a broker is not entitled to a commission when the sale fails because of the existence of defects in the seller's title, known to the broker when the agency contract was made, citing Appleby v. Sperling, 194 Mich. 681; Cain v. Masurette, 196 Mich. 7 Gettleson v. Lewis, 206 Mich. 113. Plaintiff, however, urges the exception to that rule recognized in Chapin v. J.E. Bolles Iron & Wire Works, 213 Mich. 514; and Frischkorn Real Estate Co. v. Hoskins, 226 Mich. 30, that the broker's knowledge of defects in seller's title will not bar his right to a commission when the sale fails because of the existence thereof, if, at the time of entering into the brokerage agency contract, it was the mutual understanding between the seller and broker that the seller subsequently would perfect his title in order to be able to perform.

A review of the mentioned cases establishes it as the uniform holding of this Court that the intentions of the parties at the time of entering the agency agreement are controlling. So, when the broker knew of the defects and it was the understanding that he would find a purchaser ready, willing and able to buy subject to the defects, no liability for a commission occurs until such a purchaser is produced. When, on the other hand, both the seller and broker know of defects, but the understanding is that the seller will cure the defects and that the broker will secure a buyer for the premises with title free from defects, then the broker is entitled to a commission when he produces such a purchaser.

What was the intent of the parties here when the agency agreement was made? Plaintiff says that defendant Glasier undertook and agreed to get Mrs. Grossman to join in the conveyance and that this fact is evidenced by the following: (1) The agency agreement provided for a closing date not within the usual 10, 20 or 30 days, but 3 months later; (2) Glasier testified that at the time of entering into the agreement he was not too alarmed about Mrs. Grossman and had said, "I will go to her and talk to her and see what I can do"; (3) the agreement provided that defendants would furnish an abstract showing marketable title and would convey by warranty deed; (4) the fact that Mrs. Grossman was persuaded to join in the conveyance 7 months later; (5) Glasier's admission in testimony that he had preferred to close the deal 7 months after the intended closing date, as that would bring it into a new fiscal year with income tax advantages to him. Defendant Glasier, on the other hand, says that the above-noted cases are authority for the admissibility into evidence of his testimony concerning his conversation with plaintiff at the time of entering into the agency agreement; and that, in the course of that conversation, his statement to plaintiff that he did not know whether Mrs. Grossman would agree to sell or whether he could prevail upon her to sign and that for that reason he would have to insist upon inserting into the agreement the provision that commission should be payable only when and if the deal was finally closed, served to establish that there was no agreement on defendants' part that he would secure Mrs. Grossman's signature or pay plaintiff a commission regardless. Glasier's version of the facts would seem to bring the case within the meaning of Koffman v. Pack, 224 Mich. 102, in which it was held that under such circumstances the broker is not entitled to his commission. The trial court believed and found in accord with Glasier's version. We find nothing in the record requiring disturbance of that finding.

Affirmed, with costs to defendants.

ADAMS, BUTZEL, CARR, BUSHNELL, SHARPE, BOYLES, and REID, JJ., concurred.