Frederick L. Burnham vs. William L. Upton

Massachusetts Supreme Judicial Court1899-10-20

174 Mass. 408

Summary · law.co

Holding. The court affirmed the judgment for the defendant, holding that a broker does not earn his commission by procuring a contract with a person who assumes to contract as owner when the broker knows the person is not the owner and the employer does not know this fact, particularly when that person proves unable to perform within the allowed time.

A real estate broker sued to recover his commission for arranging an exchange of land between the defendant and a third party named Corbin. Although the broker successfully procured a written exchange agreement dated January 6, 1897, the transaction failed because Corbin did not actually own all the land he agreed to convey—it was registered in another person's name—and Corbin's wife refused to sign the deed. Additionally, Corbin became financially insolvent shortly after the agreement was signed and could not perform his obligations by the January 15 deadline.

The trial judge ruled that the broker had not earned his commission because he failed to secure a buyer who was actually capable of performing the contract. The judge found that the broker knew Corbin did not own the property in question and that Corbin lacked financial responsibility, yet presented him to the defendant without disclosing these material facts. The appellate court affirmed this decision, holding that while brokers generally earn commissions upon execution of a binding sales contract, a broker cannot recover when he knowingly brings a person who falsely represents ownership and proves unable or unwilling to perform within the agreed timeframe.

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

Key issues

When does a broker earn his commission in a real estate exchange
Broker's duty to disclose material facts about the other party's ability to perform
Whether a binding contract alone is sufficient to earn commission or whether the counterparty must be capable of performance

Procedural posture

The defendant's exceptions to the trial judge's ruling in favor of the defendant were heard on appeal.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Holmes, C. J.

This is an action by a broker to recover his commission upon an exchange of land. There is no question that the defendant employed the plaintiff or that he made a written agreement for an exchange which was procured by the plaintiff, but it turned out that the other party to the exchange did not own all the land which he agreed to convey, and -was not able to make a title at the appointed time. There was evidence that the defendant relied wholly on the plaintiff, and, although this was contradicted, that the plaintiff told the defendant that Corbin, the other party, owned the land to be conveyed by him, and was all right in the way of pecuniary responsibility. It is certain that Corbin’s agreement, which was dated January 6, 1897, and was to be performed on or before January 15, 1897, and which was drawn by the plaintiff, ran that Corbin “ agrees to deed ” the land which he was to exchange. This language on its face conveys the idea that the title is to come from him.

The case was tried before a judge without a jury, and the judge said: “I do not think that it is enough, in order to enable the plaintiff to recover his commission, that the plaintiff found the person Corbin, who agreed to purchase the plaintiff’s property, and procured the execution of the contract of January 6th, on which the defendant might have maintained an action against him for damages ; but it was, I think, and so rule, necessary for the plaintiff, under his agreement with the defendant, to procure one, a purchaser, who was at least able to perform his contract, Or one who could be compelled to perform the contract specifically. That Corbin was such a person did not appear: the contrary rather appeared. The vacant lot which Corbin agreed in his contract to convey, then stood in the name of one Abbott, which the plaintiff then knew. Corbin’s wife declined to sign the deed, and Corbin, if not then, soon after became financially irresponsible, and early in March, 1897, went into insolvency.” The plaintiff excepted.

In view of the state of the evidence we do not regard this as an abstract, unqualified ruling that in all cases, in order to entitle a broker to his commission, the contract of sale or exchange must be one which could be enforced specifically; we construe it rather as a ruling on the specific facts which the judge expressly or probably found. We think that the judge only meant to say that a broker does not earn his commission by bringing a person to his employer who assumes to contract as owner, when in fact he is not owner, as the broker knows and the employer does not know, and who within the few days allowed for performance turns out unable to perform his contract and irresponsible. See Butler v. Baker, 17 R. I. 582; Greusel v. Dean, 98 Iowa, 405; 4 Am. & Eng. Encyc. of Law, (2d ed.) 972—975, sub v. “ Brokers.” We regard this proposition as correct, and as consistent with the well settled law ■ that, in general, commissions are earned when a binding contract of sale is made. Rice v. Mayo, 107 Mass. 550. Ward v. Cobb, 148 Mass. 518, 521.

Exceptions overruled.