DocketNumber： 75AP-248
Judges： Reilly, Steausbaugh, Whiteside
Filed Date： 12/31/1975
Status： Precedential
Modified Date： 11/12/2024
Being unable to agree with the majority, I must dissent. Much of the majority decision relates to the general rules of liability of a principal to a broker. Under the peculiar facts of this case, most of such authority has no application.
The first problem in this case concerns the question of upon whose behalf plaintiff was acting in connection with the purchase and sale of the subject property. The record is clear that plaintiff was not employed by Alumni Fund, Inc., the assignor of defendant Springtime Company, to sell the subject property. Rather, the record is clear that the president of Alumni Fund declined to list the property for sale with plaintiff as agent when approached and solicited to do so. He did, however, express a willingness to sell the property although declining to employ plaintiff for that purpose.
After this conversation with the president of Alumni Fund (also the president of Springtime Company), plaintiff's agent did approach the eventual purchaser of the property. Plaintiff's agent testified: "* * * I was in investment properties, so I did have people who were interested, you know, in investment properties." She further testified:
"I got in touch with Jeff Heckman and told him where the property was and the price, and we discussed the potential. And he said, ``Draw up an offer'."
This plaintiff's agent did. The offer, signed by Jeff Heckman, starts with the statement: "Through you as agents I hereby propose and agree to purchase the following described real estate * * *." The offer is not clear as to on whose behalf plaintiff acted as agent, the purchaser or the seller. Obviously, a broker may act as agent for the seller, the purchaser, or for both in a transaction. The record is clear, however, that Alumni Fund had not employed plaintiff as its agent to sell the property. However, Alumni Fund did accept the offer.
The offer contains the following provision with respect to the payment of a commission by the purchaser to the plaintiff:
"If I fail within reasonable time to fulfill my above named proposition, or any modification thereof, after the *Page 59 same has been accepted, by both parties hereto, I agree to pay your firm your regular commission of 6%."
The acceptance of the offer duly executed by Alumni Fund constitutes the only possible basis for liability of Alumni Fund to pay a commission to plaintiff. The acceptance reads in its entirety as follows:
"I hereby accept and agree to the above proposition this 24th day of March, 1972, and also agree to pay your firm your regular commission, 6% for securing the herein purchaser for my propertywhen and if property is closed and seller receives cash." (Emphasis added.)
Under the peculiar facts of this case, there is no way that defendant Alumni Fund or its assignee Springtime Company could become liable to pay a commission to plaintiff solely upon the basis of the execution of an enforceable contract by the purchaser. Plaintiff essentially concedes this point in its brief. Plaintiff contends, however, that it is entitled to a commission from defendants by virtue of the fact that the transaction was eventually closed and defendants received sufficient cash from the purchaser to pay the commission albeit that an action in specific performance was necessary to be brought against the purchaser before the sale was consummated.
There can be no question that plaintiff was entitled to be paid its commission of 6% in connection with this transaction pursuant to the purchase agreement. The basic issue is whether, under the facts and circumstances of this case, plaintiff was entitled to recover the commission from the purchaser or from the seller. With regard to the purchaser's obligation to pay the commission, the trial court specifically found as follows:
"The contract further provided that buyer agreed to pay the real estate broker's commission if he failed to fulfill his obligation under the contract within a reasonable time.
"The buyer did fail to fulfill his obligations under the contract within a reasonable time. * * *"
As a conclusion of law, however, the trial court found that:
"Defendant Springtime Company by forcing defendant *Page 60 Heckman to specifically perform the contract, relieved defendant Heckman of his obligations to plaintiff. * * *"
The issues are complicated by the specific performance action. The record does indicate that plaintiff was joined as a party to such action. Since plaintiff was joined as a party in such specific performance action, it was required to plead its claim for the commission as a compulsory counterclaim pursuant to Civ. R. 13(A). The record indicates, however, that instead of pleading its claim for the commission as a compulsory counterclaim, at its request and by agreement of the parties, plaintiff was dismissed as a party to the specific performance action under a court order to deposit the $3,000 made with it by plaintiff with the clerk of courts. The original judgment entry in the specific performance action specifically stated: "It is further ordered that no commission be paid to Harley E. Rouda Co. for the purchase of the property in question."
The record indicates, however, that subsequently plaintiff made a motion for relief from that order, pursuant to Civ. R. 60, which was sustained by the court in which the specific performance decree was entered. That court in its order stated, in pertinent part:
"The words ``it is further ordered that no commission be paid to Harley E. Rouda Co. for the purchase of the property in question' are hereby stricken from the journal entry of August 25, 1972, and the parties are left to pursue appropriateremedies based on the law and the facts surrounding thiscommission." (Emphasis added.)
The issue of failure to make a compulsory counterclaim should have been raised in connection with the specific performance action in opposition to plaintiff's motion for relief from judgment. Since it was not raised in connection therewith, it has been waived. Furthermore, the judgment entry granting plaintiff relief from judgment in the specific performance action specifically provides that the parties are free to litigate the issues concerning the payment of a commission to plaintiff by other appropriate action. That judgment is now binding on all the parties, including plaintiff, defendants Alumni Fund and Springtime Company, and third-party defendant Jeffrey Heckman, the purchaser *Page 61 of the property. In other words, by virtue of the modification of the judgment entry upon plaintiff's motion for relief from judgment, none of the issues concerning payment of the broker commission have been resolved by the specific performance action. Accordingly, none of the parties hereto may rely upon the specific performance action as being dispositive of any issue concerning the broker commission.
Ordinarily, a broker, acting as agent for the seller, cannot recover a commission from a defaulting purchaser, although the seller may recover any commission he is required to pay to the broker from the purchaser as damages resulting from his default.Olesick v. Myers (1960),
The trial court made an express factual finding that the purchaser, third-party defendant Heckman, breached the purchase agreement by failing to close within a reasonable time. Accordingly, under the terms of the agreement, by such failure to close within a reasonable time, the purchaser became liable to plaintiff for the broker commission. The trial court, however, further found, as a conclusion of law, that defendant Springtime Company relieved defendant Heckman of his obligation to plaintiff, by forcing Heckman to specifically perform the contract by the action in the Court of Common Pleas.
Such a finding cannot be made as a matter of law. Rather, *Page 62 the Court of Common Pleas ordered Heckman to specifically perform the contract. Such an order would ordinarily require performance by the purchaser of all his obligations under the contract including the obligation to pay the commission to the broker upon his failure to close within a reasonable time. In this case, a recovery of the broker commission from the purchaser was not a matter of damages flowing from his breach of the purchase agreement, but was a matter specified and fixed by the agreement itself — the agreement imposing an obligation upon the purchaser to pay the commission when he failed to close within a reasonable time. As indicated above, however, the Court of Common Pleas, in the modified decree, specifically left the matter of the payment of the commission to be resolved by further action between the parties.
By virtue of the terms of the agreement, plaintiff was entitled to a commission, to be paid by the seller when and if the transaction was closed in accordance with its terms and the seller received cash, or to be paid by the purchaser if the purchaser failed within a reasonable time to fulfill his obligations under the agreement. As to the time of closing, the agreement specifically provided that the sale would be closed within 30 days after acceptance or as soon thereafter as possible, but stated further that "under no circumstances shall this closing be delayed beyond an additional 30 days without the written consent of buyer and seller." There is no evidence of written consent of the seller to a delay in the closing; rather, the seller brought an action in specific performance to compel fulfillment by the purchaser of his obligations. Accordingly, by the very terms of the agreement itself, the obligation to pay the commission shifted from the seller to the purchaser upon the purchaser's failure to fulfill his obligations under the agreement within a reasonable time. There is no evidence of a waiver by defendants of this obligation of the third-party defendant, nor was waiver pleaded by the third-party defendant as an affirmative defense as required by Civ. R. 8(C).
Furthermore, there was no closing of the agreement within the contemplation of the agreement itself. The only *Page 63 "closing" that took place was pursuant to a specific performance order of the Common Pleas Court, enforcing the agreement. The agreement contemplated a closing which would be held no later than 60 days after acceptance unless the seller consented in writing to an additional delay. There is no evidence of any such written consent by the seller. The agreement herein was in essence a three-party agreement with the broker being a party thereto. The agreement must be read as an entirety and one provision thereof read in conjunction with other provisions. The agreement of the seller to pay the broker a commission "when and if property is closed" must be read in connection with the provision of the agreement for closing as set forth above. As to the further condition that the seller would be obligated to pay plaintiff a commission only when the seller receives cash, again reference must be made to the entire agreement. The agreement does contain an express provision for the complicated financing whereby the seller agreed to loan the purchaser an amount in excess of the purchase price. However, immediately preceding the financial arrangements, there appears the statement: "Buyer to pay seller cash upon transfer of general warranty deed." The evidence also indicates that the seller has received cash from the purchaser in excess of the amount of the commission. The agreement, read together as an entirety, does not justify defendants' contention that the payment of the commission to plaintiff must await repayment of the loan that seller made to purchaser as part of the agreement. Although as a practical matter, the transaction may not have occurred in this fashion, the agreement contemplated that seller would lend the purchaser $127,000, $70,000 of which purchaser would use to "pay seller cash upon transfer of general warranty deed." As a practical matter, this exchange of cash did not occur, but, instead, the amount of the loan was increased by the purchase price, the purchaser receiving only the balance as a loan.
Unfortunately, none of the reported cases involving broker commissions cited by the parties, or located by the court, involve a transaction similar to the one herein involved. *Page 64 This case must be determined upon its own peculiar facts, which present an issue of first impression, despite the multitude of litigation concerning broker commissions. Unfortunately, the broker commission issue was not litigated in the specific performance action where it should have been. As indicated above, with respect to that action, the modified decree left the issue of commission to be resolved by further litigation between the parties. This case constitutes that litigation.
Neither the agreement nor the evidence is completely clear as to whether plaintiff acted solely as agent of the purchasers in connection with this transaction or acted as agent for both the seller and the purchaser. Before a proper determination of who is liable to pay the commission due plaintiff can be made, it is necessary to resolve this factual issue. If plaintiff acted as agent for both seller and purchaser in connection with the transaction, they may well be jointly liable to share in the commission as contended, in the alternative, by the third assignment of error. In any event, it is clear that plaintiff is entitled to a single commission, to be paid either by defendant or by the third-party defendant, or to be shared by them. It is my conclusion that the trial court erred in dismissing the third-party defendant and in finding defendant liable for the commission as a matter of law.
Accordingly, I would sustain the first three assignments of error, but would overrule the fourth assignment of error, and would reverse the judgment of the Municipal Court, and remand the cause to that court for further proceedings, in accordance with law. *Page 65