It is not unusual for persons to list property with brokers and fix a net sale price, the brokers to retain as their compensation all they can secure in excess of this net price. When such an arrangement is entered into, it should not be allowed to rest on a mere understanding or oral agreement between the owner and the broker. On the contrary, an explicit agreement should be entered into, showing conclusively that the broker is to receive for Ms compensation all he gets above a certain price, as distinguished from the not uncommon arrangement under which a broker is merely authorized to sell at a price not less than a fixed sum. The difference, which is material, is discussed in the following section.
5 Dal v. Fischer, 107 N. W. 534 (S. D. 1906). 6 Schultz v. Zelman, 111 S. W. 776 (Tex. 1908). 7 Deford v. Shepard, 6 Kans. App. 428 (1897).
Commission agreements for "all in excess of a fixed price" should, as stated, be as explicit as possible. Losses to the broker or to the vendor may result from disregard of this caution.
If the intention is to permit the broker to have all in excess of a fixed sale price as his compensation, and this is not clearly expressed, the courts may adopt a construction of the agreement quite fatal to the broker. For example, in an Arkansas case where the owner of land authorized a broker to sell her property at "$3 per acre net to her," it was held that this would not entitle the broker to all he could get in excess of the specified amount, but that it meant that the land must bring to the owner $3 per acre over and above all expenses and deductions; that the specification of the amount was only a limitation of the broker's power to sell; that it was still his duty to sell the land for the highest price obtainable and to account to the owner for the proceeds, less a compensation not greater than the excess of the purchase money over $3 per acre net, and at the same time not exceeding a reasonable compensation. 8
The same ruling has been applied in other jurisdictions. Thus, where property was listed with a broker at a fixed sum net to the vendor, the intention was held to be that the property should bring him the fixed amount free of all expenses, and not that the brokers should receive as compensation all the purchase money above the fixed sum. In this case,9 the court said: "We do not mean to hold that if the real estate brokers who are plaintiffs in this case had alleged an express contract that * * * they might have as compensation for their services all that they might sell the property for, above a fixed sum, they would not be entitled to such excess as compensation for their services, in case they procured a purchaser. But where the owner agrees with brokers for them to sell property for a named amount 'net to him' such language will not be held to import by implication a contract to allow the brokers, as a fee or profit, all of the purchase price in excess of the sum so named."
8 Boysen v. Robertson, 70 Ark. 56 (1902); s. c, 68 S. W. 243. 9 Matneney v. Godln, 130 Ga. 713 (1968), (citing Turnley v. Michael, 15 S. W. (Tex.) 912).
On the other hand, if it is merely intended to give the broker a net price which is to be the lowest selling price, it is equally fatal to the land owner if the language used may be construed to mean that the broker may retain as his compensation all above the net price. Agreements of the latter nature are, as already said, legitimate, and as will be seen, enforced. The intention should therefore be expressed so clearly that no adverse construction is possible.