The mere employment of a broker as such only authorizes him to act as an intermediary to bring the parties together, and gives him no authority to sign a contract. But authority to sign a contract may be given him. (Sec. 28-41.)
In some jurisdictions an agent's authority to execute a contract for the sale of lands may be oral; while in other jurisdictions the authority must be in writing. (Sec.31-41.)
A subsequent ratification is equally effectual as an original authority. (Sec. 42.)
Authority to make a contract does not include authority to cancel or surrender it. (Sec. 45.)
In order to determine when a real estate agent has authority to sign a contract and when he has not such authority, we must necessarily look to the circumstances attending the placing of the property with him, unless the authority is alleged to have been given prior or subsequent to that time. Mere brokers or middlemen, acting for both parties, and whose duty is ordinarily limited to bringing together the parties upon an agreement, are without power to execute a contract of sale, but an agent authorized to sell real estate may enter into a contract within the terms of his authority, which will bind his principal, and this, it has been held, is of the very essence of the authority given, viz., an authority to sell.1 One who deals with an agent, knowing him to be such, is bound to know the limitations placed upon his authority.2
Ordinarily when a person places property with a real estate agent he instructs him to "sell the property." He really means that the agent is to find a purchaser.3 Yet no such fine distinction of words is ever indulged in at such times, and from our own experience, we are satisfied that any ordinary landowner may, without difficulty, be made to say that he gave the broker authority "to sell" the property. We have found, however, that juries will usually give the same meaning to the words as the landowner did, and conclude that the broker was authorized merely to find a purchaser.4
We could easily dismiss the subject by stating generally that it must resolve itself into a question of intention, but a more definite and satisfactory answer may naturally be expected. The situation is sometimes a serious one for the landowner, since he may at any time find a jury or a court informing him against his own belief and intention that he gave an agent authority to sign a contract for him, and it may be equally embarrassing for the broker, since he may sign a contract for the owner in good faith and then be shocked into no pleasant mood by a verdict that he had no such authority. Such a situation may subject a responsible broker to considerable loss, as we shall see later.5
1 Ha.ydock v. Stow, 40 N. T. 368 (1869). See the more extended discussion and citation of authorities in sections following.
² Commonwealth Trust Co. v. Young. 122 App. Div. 502 (N. T. 1907) ; Dayton v. Bufod. 18 Minn. 120. 132 (1871); Kramer v. Blair, 88 Va. 462 (1891); Milne v. Kleb. 44 N. J. Eq. 381 (1888).
3 See Bacon v. Davis, 98 Pac. Rep. 71 (Cal. 1908). On the words, "I will sell," see Bosseau v. O'Brien. 4 Biss. 395 (U. S. 1869).
4 See Sec. 39-41 infra.
5 Sec. 38-41, 272-276 infra.