Summary
In Bell v. Dimmerling (1948), 149 Ohio St. 165, 36 O.O. 505, 78 N.E.2d 49, the Ohio Supreme Court found specific language in the contract that indicated an exclusive right to sell and noted that it was the "rule that an agreement of agency for the sale of property should be construed, if possible, to give the owner himself the right to sell his property without incurring liability for the payment of a commission * * *."
Summary of this case from Anderson Hills Pediatrics, Inc. v. PeckOpinion
No. 31182
Decided March 8, 1948.
Contracts — Written instrument giving agent exclusive right to sell realty for stipulated time — Binding on owner upon agent using efforts to sell property — Owner selling property during stipulated time, liable to agent for commission, when.
A written instrument, signed by the owner of real estate and accepted by a licensed real estate agent, which provides in substance that in consideration of the agreement of the agent to use his efforts to find a purchaser for such real estate he shall have the exclusive right for a specified time to sell the same and if the same is sold during such time the owner will pay a stated commission, becomes a contract binding on the owner when the agent does in fact use his efforts to find a purchaser, and if the owner sells the property during the time specified, he is liable to the agent for the payment of the stated commission.
APPEAL from the Court of Appeals for Columbiana county.
On July 11, 1945, Ann Bell filed her petition in the Municipal Court of East Liverpool against Henry Dimmerling and Mary Dimmerling to recover a commission in connection with the sale of defendants' real estate. The petition and the exhibit incorporated therein are as follows:
"Now comes the plaintiff and for her cause of action avers and says that she is duly licensed as a real estate broker by the State of Ohio.
"Plaintiff further says that on or about the 25th day of April, 1945, plaintiff and defendant entered into a written agreement based upon a valuable and sufficient consideration, a copy of which agreement is hereto attached and marked Plaintiff's Exhibit 'A' and included therein as fully as if rewritten herein and in which the plaintiff was appointed as the exclusive agent of the defendants for a period of ninety (90) days from the date thereof to sell real estate of the defendant located on Anderson Blvd., East Liverpool, Ohio, for the sum of Seven thousand five hundred ($7,500) Dollars and defendant agreed to pay the plaintiff a commission of five percent (5%) of the amount received from the sale of said property.
"Plaintiff further says that she made diligent effort to sell said real estate covered by aforesaid written contract and has performed all of the acts which she agreed to perform under the terms of said contract.
"On July 6, 1945, the defendant notified the plaintiff that he had sold the aforesaid real estate and refused to comply with or carry out the terms of his contract with the plaintiff and to pay plaintiff the commission agreed to be paid by defendant.
"Plaintiff says that there is due and owing to her from the defendant by virtue of said agreement aforesaid, and for work and labor the sum of $375 together with interest thereon at the rate of six percent (6%) per annum from the 6th day of July, 1945.
"Wherefore, plaintiff prays judgment against the defendants in the sum of $375 with interest thereon at the rate of six (6%) percent per annum from the 6th day of July, 1945, and costs of suit."
"Exhibit A. "Standard Exclusive Agency Contract "Approved by the State Board "of Real Estate Examiners"In consideration of your agreement to use your efforts in finding a purchaser for my property, I hereby grant you the exclusive right for a period of ninety days from date hereof, to sell property known as Anderson Blvd. and more fully described on reverse side hereof for the sum of $7,500 payable $7,500 cash or at any other price, terms or exchange to which I may consent.
"If you are successful in finding a purchaser for my property, or if the same is sold or exchanged during the term of your exclusive agency, or is sold within three months after the period of this agency to anyone with whom you have negotiated with respect to a sale during the period of this agency and of whom I have notice, I agree to pay commission of 5% upon the price at which same may be sold or exchanged.
"In event of such sale I will give evidence of marketable title to said property and convey with full covenants of warranty and release of dower. This agreement shall be binding on my executors or administrators."
Defendants filed a demurrer to the petition, on the ground that it "does not state facts which show a cause of action."
The Municipal Court sustained the demurrer. Plaintiff declined to plead further, whereupon the petition was dismissed and judgment was entered for the defendants.
On appeal to the Court of Common Pleas of Columbiana county, that court reversed the judgment below and remanded the cause for further proceedings.
The defendants then took an appeal on questions of law to the Court of Appeals which affirmed the judgment of the Court of Common Pleas.
The case is here for determination on its merits, a motion to require the Court of Appeals to certify its record having been allowed.
Messrs. Clark Steele, for appellee.
Messrs. Vodrey, Vodrey, Buzzard Shay, for appellants.
The following two reasons are advanced by counsel for the defendants as to why the judgment of the Court of Appeals should be reversed and final judgment rendered for the defendants:
1. The paper writing relied on by plaintiff is an "exclusive agency contract" and the defendants themselves were at liberty to sell their property at any time without becoming liable to the plaintiff for the payment of a commission.
2. Such paper writing is no more than an offer to enter into a unilateral contract, imposing no obligation on the plaintiff to do anything; mutuality and consideration are therefore lacking and the defendants were not bound in any way prior to the time plaintiff actually produced a qualified purchaser for the property.
We can agree with neither of these propositions.
As to the first, it is a primary rule in the construction of contracts that the form or name the parties may give an instrument will not control its interpretation. 17 Corpus Juris Secundum, "Contracts," 687, Section 294; 12 American Jurisprudence, 776, Section 242.
Notwithstanding the instrument in issue is captioned "Exclusive Agency Contract," it is expressly stipulated in the body thereof that the plaintiff is granted "the exclusive right for a period of ninety days from date hereof, to sell property" and "if the same is sold or exchanged during the term of your exclusive agency * * * I [the owner] agree to pay commission of 5% upon the price at which same may be sold or exchanged." (Italics ours.)
Many of the cases draw a clear-cut distinction between agreements providing merely for "exclusive agencies" to sell property and those which grant the "exclusive right" to sell. Where the particular agreement grants only an exclusive agency to another, the owner may sell his property (to one not produced by the agent) without liability to the agent for the payment of a commission; but where the agreement grants the exclusive right to sell, coupled with a promise to pay a commission in the event a sale is made, the owner may not sell to any person during the life of the agreement, whether produced by the agent or not, without incurring liability to the agent for the payment of the commission stated in the agreement. Walter v. Libby, 72 Cal.App.2d 138, 164 P.2d 21; Harris v. McPherson, 97 Conn. 164, 115 A. 723, 24 A. L. R., 1530; Boggess Realty Co. v. Miller, 227 Ky. 813, 14 S.W.2d 140; Smith v. Preiss, 117 Minn. 392, 136 N.W. 7, Ann. Cas. 1913 D, 820; Martin Realty Co. v. Fletcher, 103 N.J. Law, 294, 136 A. 498; Lewis v. Smith (Tex.Civ.App.), 198 S.W.2d 598; 12 Corpus Juris Secundum, "Brokers," 219, Section 94; 2 Restatement of Agency, 1058, Section 449, comment b.
It is flatly announced in the opinion in the case of Turner v. Baker, 225 Pa. 359, 362, 74 A. 172, 173, that "If an owner of real estate chooses to make a contract with a broker in which it is stipulated that the broker shall have the exclusive right to sell the property within a specified time and that he shall be entitled to receive a certain commission if a sale be made within the time designated, no matter who makes it, he is bound by its terms and cannot be relieved from a bad bargain because his agreement may have been foolish or improvident."
In short, where an agent is given an exclusive right to sell property, as distinguished from an exclusive agency, he is entitled to the agreed commission when a sale is made by the owner, and it is immaterial that he was not the procuring cause thereof.
A number of cases hold that even an exclusive agency granted for a specified time, under which the agent has furnished consideration, will render the owner liable to the agent for a commission, if the owner himself sells the property during the period specified. 8 American Jurisprudence, 1015, Section 57; 1 Williston on Contracts (Revised Ed.), 168, Section 60A, note 2.
Even in face of the rule that an agreement of agency for the sale of property should be construed, if possible, to give the owner himself the right to sell his property without incurring liability for the payment of a commission ( Hedges Co. v. Shanahan, 195 Ia., 1302, 190 N.W. 957; Sunnyside Land Investment Co. v. Bernier, 119 Wn. 386, 205 P. 1041, 20 A.L.R., 1261), we cannot escape the conclusion that the agreement in question here gave plaintiff, for a period of ninety days from the date thereof, not only an "exclusive agency" but the "exclusive right" to sell the defendants' property, and that plaintiff became entitled to the commission stated if the property was sold by anyone during that period, provided there was a sufficient consideration to support the agreement.
This brings us to the second proposition urged by counsel for the defendants.
As a preface to the discussion which follows, it is to be borne in mind that the sole question now before the court is whether the plaintiff has stated a good cause of action in her petition.
The instrument before us begins with the statement, "In consideration of your agreement to use your efforts in finding a purchaser for my property," etc. Plaintiff in her petition alleges that "she made diligent effort to sell said real estate covered by aforesaid written contract and has performed all of the acts which she agreed to perform under the terms of said contract."
With reference to the subject of "Unilateral Contracts," it is stated in 9 Ohio Jurisprudence, 239, Section 5, that "The contract does not come into existence until one party to it has done all that is necessary on his part; it is performance by one party which makes obligatory the promise of the other."
Conceding that at the time the "contract" was signed and accepted it was a mere nudum pactum, when plaintiff exerted her efforts to find a purchaser for the property, consideration was supplied, the promisor became bound by the commitments he had made and a contract came into existence, enforceable by the plaintiff.
Although the reasoning is not always the same, most of the cases dealing with the subject hold that where a real estate agent, under the type of instrument involved in the instant case, has expended time, effort or money in attempting to secure a purchaser for the property, the consideration is supplied to make a binding and enforceable contract. Hughes v. Bickley, 205 Ala. 619, 89 So. 33; Kimmell v. Skelly, 130 Cal. 555, 62 P. 1067; Hayes v. Clark, 95 Conn. 510, 111 A. 781; Harris v. McPherson, supra; Lapham v. Flint, 86 Minn. 376, 90 N.W. 780; Confer Bros., Inc., v. Colbrath, 149 Minn. 259, 183 N.W. 524; Jones v. Hollander, 3 N.J. M., 973, 130 A. 451; Morris v. Bragg, 155 Va. 912, 156 S.E. 381; Gunning v. Muller, 118 Wn. 685, 204 P. 779; Greene v. Minn Billiard Co., 170 Wis. 597, 176 N.W. 239. Compare, 1 Restatement of Contracts, 53, Section 45.
If service only is contracted for and such service is performed, the necessary consideration is furnished to support the contract, irrespective of results. Gonte v. Rosenberg, 221 Mich. 283, 288, 191 N.W. 198, 199.
We believe the above principles to be sound and we are in agreement with them.
Counsel for the defendants in urging their second proposition rely on the cases of Brenner v. Spiegle, 116 Ohio St. 631, 636, 157 N.E. 491, 493, and Bretz v. Union Central Life Ins. Co., 134 Ohio St. 171, 16 N.E.2d 272.
In the former, the writer of the opinion expressed the view by way of dictum that where an owner of land gives a real estate broker a naked authority to sell it within a specified time, no contract is formed and the authority may be revoked at any time before the broker procures a purchaser.
In the latter, a majority of the court determined on the particular facts presented that there was an unaccepted offer to enter into a unilateral contract — that the things done by the offeree were but preparatory to performance "and in no sense constituted fulfillment, substantially or otherwise, of the conditions imposed by the offer."
The two cases last cited are distinguishable from the one at bar. Here, the act required of the plaintiff was to use her "efforts in finding a purchaser for my property." If she actually did that, as she alleges she did, she complied with her promise and the promisor became obligated to comply with his. See 4 Williston on Contracts (Rev. Ed.), 2876-2880, Section 1030A.
Again, it is to be remembered that this decision is based wholly on the sufficiency of the petition as against a general demurrer.
No error appearing in the judgment of the Court of Appeals, such judgment is affirmed.
Judgment affirmed.
WEYGANDT, C.J., TURNER, MATTHIAS, HART, SOHNGEN and STEWART, JJ., concur.