Opinion
No. 75-472
Decided January 6, 1977.
From a judgment for real estate broker, for reasonable value of its services, party who attempted sale of property appealed.
Reversed
1. BROKERS — No Entitlement to Commission — Sale Not Completed — Cause — Defect of Title — Other Contingency — Known to Broker. A real estate broker is not entitled to a commission when no sale was completed as provided in a listing agreement because of a defect in title or other contingency of which the broker knew when he was employed; accordingly, where a party operated a business establishment under a contract of purchase which provided that the rights of such party were not assignable unless prior written consent of the owner was obtained, and the party concluded a sale without such prior consent while an exclusive sales listing was in effect with a broker who knew of the party's limited interest, the broker was not entitled to a commission.
2. Exclusive Sales Listing — Requires Commission — If Qualified Buyer Found — Absent Agreement So Providing — Other Services — Not Compensable. Where a real estate broker who had been accorded an exclusive listing agreement failed to produce a qualified buyer for the land, but nevertheless sought to recover the reasonable value of the services rendered in attempting to effectuate a sale, since the defendant received no benefit from the broker's services and there was no evidence of any implied agreement to pay for any "services" beyond that of finding a qualified buyer, there was nothing in the record to justify such an award.
Appeal from the District Court of the County of El Paso, Honorable John F. Gallagher, Judge.
Perkins, Goodbee, Mason Davis, Robert J. Mason, for plaintiff-appellant.
Haney, Howbert Akers, Roger D. Hunt, for third-party plaintiff-appellee.
Plaintiff, Brady, appeals from a judgment in favor of Melrose Realty and Investment Company (Melrose) for "the reasonable value of its services" as a real estate sales agent of Brady. We reverse.
The facts pertinent to this appeal are: Brady was in possession of, and operating, a bowling establishment under a contract of purchase. The contract provided that "the rights of [Brady] are personal and this agreement is not assignable unless the prior written consent of Seller is first obtained, providing, however, that said consent shall not be unreasonably withheld." Brady never obtained any consent, written or otherwise, to assign the contract. Nevertheless, he entered into an exclusive sales listing with Melrose to sell the property. Melrose knew of Brady's limited interest in the property and in the listing agreement Brady was identified as "contract buyer" instead of as "owner."
While the listing was in effect Brady negotiated a sale with one Bishop, who took over the operation of the business. The sale price was $185,000, to be paid $24,200 in cash and the remainder by assumption of the balance due under Brady's purchase contract. The owner of the property, Hoeppner, refused to consent to the assignment and Brady brought this action to determine his right to sell the property. Melrose intervened as a third-party plaintiff to recover a commission for the sale. The trial court determined that consent to the assignment was not unreasonably withheld, that Brady had breached the contract, that the attempted sale was void, and that Hoeppner was entitled to possession of the premises. That judgment was not appealed.
The trial court further found:
"Because the sale by Brady to Bishop was invalid, Melrose is not entitled to recover a real estate commission under its listing agreement, but Melrose is entitled to recover from Brady the reasonable value of its services."
The court determined that 10 percent of the cash payment, $2,420, was fair compensation for Melrose's services to Brady.
[1] Melrose did not produce a qualified buyer, ready, willing and able to buy the property. Under these circumstances, a real estate broker is not entitled to a commission when no sale was completed as provided in the listing agreement. Norris v. Walsh, 71 Colo. 185, 205 P. 276. Where, as here, a sale fails because of a defect of title or a contingency of which the broker knew when he was employed, the broker is not entitled to a commission. See Boggs v. Lumbar, 75 Colo. 212, 225 P. 266. Thus the trial court was correct in its determination that Melrose was not entitled to a commission under its listing contract.
[2] However, there is nothing in the record to justify an award for the reasonable value of Melrose's services. The only contract before the court is the listing agreement, there is no evidence of any implied contract. As was stated in John T. Burns Sons, Inc. v. Brasco, 327 Mass. 261, 98 N.E.2d 262, the plaintiff "never expressly or impliedly promised to pay the [broker] the `fair value' of any `services,' and he has received nothing of value from any 'services rendered'. . . . Either the [plaintiff] was liable for a commission or he was not liable at all." Since Brady received no benefit from Melrose's services, that rule is applicable here. See Survey Engineers, Inc. v. Zoline Foundation, 190 Colo. 352, 546 P.2d 1257.
The judgment is reversed.
JUDGE ENOCH and JUDGE STERNBERG concur.