G. HOWARD LIPPINCOTT, PLAINTIFF-APPELLANT, v. HARRY CONTENT, DEFENDANT-APPELLEE

New Jersey Supreme Court1939-09-22

123 N.J.L. 277

Summary · law.co

Holding. The judgment for the defendant owner was affirmed because the commission agreement required actual closing of title as a condition precedent to the agent's right to payment, and since the sale did not close due to the buyer's termination for title defect, the agent earned no commission.

A real estate agent sued a property owner for a sales commission after the owner engaged the agent to help sell property. The owner and a prospective buyer entered into a purchase agreement, which was later modified to allow the owner to file a lawsuit to establish clear title. When the owner lost that lawsuit and could not cure the title defect, the buyer terminated the contract and the sale never occurred. The agent claimed the commission was earned once a willing buyer was found, arguing that the clause stating commission would be paid "upon closing title" merely set the payment date rather than making payment conditional on the sale completing.

The court examined the specific language in the commission agreement, which required payment "in consideration of services rendered in consummating this sale" and "upon closing title." Interpreting these provisions together with the parties' own conduct and correspondence, the court concluded that closing of title was a condition precedent to earning the commission, not simply a deadline for payment. Because the sale was never consummated and title never passed to the buyer, the agent's right to the commission was never triggered.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

whether commission is earned when a willing buyer is procured or only when title actually closes
construction of contractual language making commission payable 'upon closing title'
effect of parties' conduct and correspondence on interpretation of commission agreement

Procedural posture

The appeal is from a directed verdict entered by the trial court in favor of the defendant property owner in the agent's action for commission.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

The opinion of the court was delivered by

WolfsKeil, J.

This appeal is from a judgment entered on a verdict directed by the trial court for the defendant, as owner of property, in the suit of plaintiff, a real estate agent, for a commission with respect to sale of the property. The controlling facts are not disputed. The case primarily involves construction of phraseology in the agreement relating to the commission.

The original contract between the owner and the proposed purchaser of the property was later modified to arrange for the filing by the owner of a suit in Chancery to quiet title, so as to give assurance of good title if that was possible, with the provision that if the owner was unsuccessful in the suit, the deposit should be returned and the agreement of sale be at an end. A subsequent stipulation further extended the time for closing. The suit to quiet title was decided against the owner, and the decree was affirmed on appeal. Content v. Dalton, 122 N. J. Eq. 425. Through notice by the purchaser of termination because of such uncured defect in the title, the contract thereupon expired, and the sale was not consummated.

The agreement of sale contained the following language concerning the agent’s commission:

“And the Seller hereby agrees to pay to G. Howard Lippincott a commission of 5 % on the purchase price aforesaid, said commission to be paid in consideration of services rendered in consummating this sale; said commission to become due and payable upon closing title.”

The subject of real estate commissions has been considered in numerous cases. The principle is well established that an agent becomes entitled to the commission when he has procured a purchaser able and willing to conclude the transaction on the terms authorized by the owner, and that in such circumstances a clause to the effect that the commission is payable upon closing title merely fixes the time for payment of the commission. Hinds v. Henry, 36 N. J. L. 328; Dermody v. New Jersey Realties, 101 Id. 334; Kram v. Losito, 105 Id. 588; Steinberg v. Mindlin, 96 Id. 206; Feist & Feisl, Inc., v. Taub, 105 Id. 237. Persons, however, are free to insert their own limitations in the contracts they make, subject only to legality of the purpose, and the consideration of public policy. Contractees are necessarily bound by the express conditions they themselves choose to incorporate in a contract. When construction becomes an issue, the significance ascribed by the parties to the mooted language, or plainly to be inferred from their conduct, is strongly influential in determining the meaning which was intended between them, and that course is usually adopted by the court to be binding on the parties, since of their own accord they have made it obligatory on themselves. Albert v. Ford Motor Co., 112 Id. 597; Corn Exchange National Bank v. Taubel, 113 Id. 605; Thomsen v. Riedel, 114 Id. 379.

It would doubtless have been possible in this instance to indicate more clearly that closing of title was a condition precedent to payment of the commission. Though the phrasing does not possess the fullest degree of precision, it nevertheless appears from the reservation in the agreement that the commission was to be paid- — ” for services in consummating this sale” and “upon closing title.” A case in point is Simon v. Garber, 3 N. J. Mis. R. 150, wherein somewhat similar language was used stipulating for payment of the commission on consummating the sale and delivery of the deed, which was held to make payment of the commission contingent on passing of the title. While that case was in the Supreme Court, the ruling is sound, and it is adopted by this court.

By the specific clauses of the contract in the present case the closing of title was made not simply a chronological marking, but constituted a part of requisite performance. That this is the interpretation which the parties themselves placed on the agreement was evidenced by correspondence between them, and by their acts and attitude. Their conduct and the wording of the agreement suffice for the conclusion that the parties intended the commission to be payable only if there were transfer of title to the purchaser. Since actual passing of title to the propert3r was a necessary condition to fulfillment of the right to the commission, omission of that element left the claim of the agent incomplete. Direction of a verdict in favor of the defendant owner was therefore appropriate.

The judgment is accordingly affirmed.

For affirmance — The Chancellor, Ci-iiee Justice, Parker, Case, Bodine, Heher, Perskie, Porter, Heteield, Dear, Wells, WolesKeil, Raeeerty, Hague, JJ. 14.

For reversal — Donges, J. 1.