Thompson v. Foster, 240 N.C. 315 (1954)

May 19, 1954 · Supreme Court of North Carolina

240 N.C. 315

CARLISLE THOMPSON and ED GALLOWAY v. JAMES B. FOSTER and Wife, JO GRAHAM FOSTER.

(Filed 19 May, 1954.)

1. Brokers § 10—

Plaintiff brokers’ complaint held sufficient to state a cause of action to recover commissions on the theory of quantum meruit upon allegations that defendant owners listed their property for sale at a stipulated price net to them, with the brokers to receive as commissions any amount in excess of the stipulated price which they could obtain for the property, and that plaintiff brokers obtained a prospect willing to pay a sum in excess of tbe stipulated price, but tbat through no fault of their own plaintiffs were prevented from effecting the sale because the owners took negotiations into their own hands and sold to plaintiffs’ prospect for the stipulated price.

2. Pleadings § IS—

Upon demurrer, the allegations set out in the complaint will be taken as true, and liberally construed in favor of the plaintiffs.

Appeal by plaintiffs from Budisill, J., at 1 February, 1954, Regular Civil Term of MeckleNburg.

Civil action by real-estate brokers to recover compensation for services as alleged procuring cause of sale of land, beard below on demurrer to tbe complaint for failure to state facts sufficient to constitute a cause of action.

These in summary are tbe pertinent allegations of tbe complaint:

1. Tbat at tbe times mentioned tbe plaintiffs were duly authorized real-estate brokers, registered as such, in Charlotte, North Carolina.

2 and 3. Tbat at tbe times referred to tbe defendants, husband and wife, owned a certain tract of land located on East Boulevard in tbe City of Charlotte on which is situate a 13-unit apartment bouse.

4. Tbat in tbe latter part of March, 1953, tbe plaintiffs met with tbe defendant James B. Foster, by appointment, at bis home, at which time they were advised by Foster tbat be and bis wife were desirous of selling their apartment property “for tbe sum of $50,000 net to them,” and authorized tbe plaintiffs to procure a purchaser therefor on such basis.

5. Tbat tbe plaintiffs thereupon entered into an extensive advertising-campaign for tbe sale of tbe property and worked diligently to procure a purchaser. They received from one prospect an offer in tbe amount of $48,000. This offer was submitted to and refused by James B. Foster. Thereafter, on 18 May, 1953, one J. D. Crowder came to tbe plaintiffs’ office in response to their advertisement for sale of tbe property in The Charlotte Observer of Sunday, 11 May, 1953. Crowder, after being shown tbe apartment property, stated be bad some property on South Boulevard which Lance, Inc., wanted to purchase but that he thought the long-term capital gain might prevent him from selling this property unless Lance, Inc., could trade some other property to him for it, the gain in such event under the provisions of the Internal Revenue Code not being recognized for income tax purposes.

6. Thereafter the plaintiffs saw Crowder several times with reference to the property.

7. In August, 1953, the plaintiffs talked with James B. Foster and told him the only two prospects to whom the property might be sold were the person whose offer of $48,000 had been refused in May, and J. D. Crowder, “who was quite interested in the purchase of the property but wanted to work out a three-way trade and had not made a cash offer therefor.”

8. On 12 September, 1953, the plaintiff Carlisle Thompson called James B. Foster for an appointment to show the property to a third prospect. At that time Foster “told . . . Thompson ... he had a man who would pay him $55,000 any time he agreed to sell and that he did not know whether he wanted to sell the property or not; . . .” Upon questioning, the defendant Foster told the plaintiff Thompson that the person who would pay $55,000 for the property was J. D. Crowder. Whereupon, the plaintiff Thompson told the defendant James B. Foster again that Crowder was plaintiffs’ prospect, but that he wanted to work out a three-way trade for his South Boulevard property. The plaintiff Thompson further told “James B. Foster at that time that the plaintiffs would expect compensation from the defendants for their services on any sale of the property by the defendants to . . . Crowder.”

.9. That thereafter J. D. Crowder and the defendants agreed upon the sale of the property and in pursuance of the agreement deeds were executed as follows:

(a) On 28 September, 1953, the defendants conveyed to J. D. Crowder the apartment property, and on the same day Crowder and wife conveyed to the defendants the property on South Boulevard. The deeds, as recorded in the Public Registry of Mecklenburg County, show revenue stamps indicating a sale price in each instance of $10,000.

(b) On 29 September, 1953, the defendants by deed recorded in the Public Registry of Mecklenburg County conveyed to Lance, Inc., the property on South Boulevard which they had acquired from Crowder and wife, the revenue stamps on the deed indicating a sale price of $50,000.

10. As a result of the three-way transaction, “the property of the defendants was exchanged for property of . . . J. D. Crowder, and the defendants . . . received $50,000 from the sale of the property which had been conveyed to them by . . . Crowder and wife . . .”

11. That the plaintiffs commenced tbe negotiations with. J. D. Crowder; that pending the negotiations, James B. Foster, unknown to plaintiffs, took the negotiations into his own hands and completed them and agreed with Crowder to enter into a three-way transaction with him and with Lance, Inc.; that in consequence, the defendants exchanged the apartment property with Crowder for the property he owned on South Boulevard and immediately sold the latter to Lance, Inc., thereby procuring $50,000 for their apartment property which had been placed in the hands of the plaintiffs for sale.

12. (Omitted as not being pertinent to decision.)

13. That the defendants had authorized the plaintiffs to sell the apartment property “for $50,000 net to them, agreeing to pay the plaintiffs . . . for their services . . . any sum in excess of $50,000; . . .”

14 and 15. That the plaintiffs were the procuring cause of the defendants’ sale, and their services were worth $2,500, 5 % of the purchase price received by the defendants; that the defendants are indebted to the plaintiffs in that amount, for which demand has been made and payment refused.

The trial court entered judgment sustaining the demurrer and dismissing the action. From the judgment so entered, the plaintiffs appealed.

Henry F. Fisher and Lelia M. Alexander for plaintiffs, appellants.

Kennedy, Kennedy <& Hickman for defendants, appellees.

JOHNSON, J.

The brokerage contract or listing here in suit does not purport to have conferred on the plaintiffs the exclusive right to sell the defendants’ property. Therefore, the legal principles involved will be stated and discussed, and should be interpreted, against that factual background. See 8 Am. Jur., Brokers, Sections 57 and 192.

Ordinarily, where property is listed with a broker for sale at a stipulated price, out of which the broker’s compensation is to be paid, and a sale is effected through the broker as a procuring cause, he is entitled to compensation, even though the final negotiations be conducted by the owner, who in order to make a sale accepts a price not exceeding or less than that stipulated to the broker, the theory being that the owner waives the stipulation regarding the price, and this being so, the law will not allow the owner of property sold to reap the benefits of the broker’s labor without just reward. Therefore, in such case recovery may be had upon quantum meruit. Lindsey v. Speight, 224 N.C. 453, 21 S.E. 2d 371; Trust Co. v. Goode, 164 N.C. 19, 80 S.E. 62; Martin v. Holly, 104 N.C. 36, 10 S.E. 83; 8 Am. Jur., Brokers, Sections 172 and 190; Annotations: 43 A.L.R. 1103, 1104; 128 A.L.R. 430.

However, if tbe broker’s contract provides for a stipulated net price to be paid tbe owner, witb tbe broker’s compensation being contingent upon payment out of whatever sum, if any, be is able to obtain for tbe property over and above tbe fixed sum to be- obtained by tbe owner, tbe broker may not recover when tbe owner sells at tbe stipulated net price, or less, to a person to whom tbe broker first shows tbe property, unless tbe broker is able to show (1) that be was a procuring cause of tbe sale in tbe sense that be first called tbe purchaser’s attention to tbe property and started tbe negotiations which culminated in tbe sale, and (2) that be, tbe broker, was prevented by fault of tbe owner from making a sale at a sum in excess of tbe stipulated net price. See 8 Am. Jur., Brokers, Sec. 190, p. 1102; Annotations: 43 A.L.R. 1103, 1111 et seq., and 9 A.L.R. 1194. See also Mallonee v. Young, 119 N.C. 549, 26 S.E. 141; Holcomb v. Stafford, 102 Minn. 233, 113 N.W. 449; Ball v. Dolan, 21 S.D. 619, 114 N.W. 998; Gilmore v. Bolio, 165 Mich. 633, 131 H.W. 105; Karr v. Moffett, 105 Kan. 692, 185 P. 890.

In Holcomb v. Stafford, supra, tbe broker was to receive as bis compensation all be could obtain for tbe property above $500. Tbe property was afterwards sold by tbe owner to tbe broker’s customer for that sum. On conflicting evidence tbe trial court found that tbe purchaser ,at all times refused to pay more than $500. Tbe Court said: “Here tbe broker was entitled to the excess over and above tbe net price to tbe owner, and be was not entitled to a commission, except on procuring a purchaser ready, able, and willing to pay more than that price.”

In Gilmore v. Bolio, supra, tbe defendant authorized tbe plaintiff to sell property for $1,400 net to defendant, and tbe prospective purchaser introduced by tbe plaintiff broker refused to buy on those terms, but about six weeks later purchased from tbe defendant for $1,300. Held, that tbe plaintiff was not entitled to recover, bis right to compensation being dependent upon bis ability to obtain a purchaser for a greater sum than $1,400.

Similarly, under tbe terms of tbe contract in tbe case at band tbe plaintiffs’ right to compensation was dependent upon their ability to obtain a purchaser for a sum greater than $50,000. They have alleged in substance that tbe defendants, after being advised that J. D. Crowder was a prospect, took over tbe negotiations with him, and that tbe defendants, after being offered $55,000 by Crowder, nevertheless closed tbe deal witb him at $50,000.

These crucial allegations, witb others set out in tbe complaint, when taken as true and liberally construed in favor of tbe plaintiffs, as is tbe rule on demurrer (Scott v. Veneer Co., ante, 73, top p. 77, 81 S.E. 2d 146), are sufficient to state a cause of action against tbe defendants on the theory that tbe plaintiffs were tbe procuring cause of tbe sale in tbe sense that Crowder was their initial prospect and that they were prevented by fault of the defendants from making a sale at a sum in excess of the stipulated net price of $50,000. This overthrows the demurrer. The judgment below is

Reversed.