Sec. 72. General Statement

As a general rule the broker has no authority to sign a contract of sale for his employer. (Sec. 27.)

A broker employed to sell property has no authority, as such, to receive payment therefor. Such authority may, however, be expressly given, or may be implied where the broker has possession of the property, or assignments of it, or other indicia of authority for its transfer. (Sec. 73.)

Where there is no authority for employment of sub-agents, either express or implied, and the broker employs other brokers for his own convenience, no privity of contract arises between the principal and such subagents, but subsequent ratification of the employment of the sub-agent has in some cases been held sufficient to permit a recovery direct from the principal. (Sec. 74.)

A renting agent is usually given authority to rent property, to receive the rent, and give receipts in the name of the landlord, and also to allow deductions from the rent for the expense of minor repairs, janitor service, etc., but has no authority to execute a lease unless such authority is expressly given him.1 (Sec.75.) A renting agency is terminated by the death of the principal. (Sec. 76.)

In New York, the agent of the landlord may institute dispossess proceedings. (Sec. 77.)

Real estate brokers who carry on a general insurance business are usually not the agents of the insurance company, but are regarded as the agents of the insured. (Sec. 78.)

1 See N. Y. Real Prop. Law - Cons. Laws, Ch. 50, Sec. 242, 259.

Sec. 73. Agent's Authority To Receive Payment For Property Sold

"The general doctrine is, that a broker employed to sell has no authority as such to receive payment. Exception is made to this general rule in some cases where the principal is not disclosed." 2

"A factor who has the possession of property, or who has assignments of it, or other indicia of authority to transfer it, has implied power to receive the purchase price for the vendor when he sells and delivers the property, or the title deeds to it.3 But a broker or other agent to sell property who has concluded a contract of sale, which is to be performed by a delivery of the property, or the title deeds to it, and the simultaneous payment of the purchase price at some future time, and who is not intrusted with the possession of the property, or of the conveyance of it, has no implied authority to collect the purchase price, or to extend its time of payment, or to otherwise modify the contract between the vendor and the purchaser." 4

Sec. 74. Broker's Power To Employ Other Brokers

Where a broker is authorized to sell property and engages another broker to help him, and agrees to divide the commissions in case of a sale, the latter cannot recover commissions from the owner of the property, or from the employer of the first broker, but must look to the broker who gave him the property for sale.5 This, some authorities say, is so, because an agent in charge of property and authorized to sell the same has no power, as a matter of law, to delegate his authority to another person or employ a subagent. Thus, in Groscup v. Downey, 105 Md. 277 (1907), the court said: " The law is firmly settled that ordinarily an agent has no power to delegate his authority to another or to employ a sub-agent in the absence of an express or implied authority to do so from his principal. This is especially true where the execution of the power conferred upon the agent involves the exercise of judgment or skill.8 The power to an agent to delegate his authority may be implied from a variety of circumstances, as where it is shown that the principal contemplated or knew that the agent intended to delegate his authority, or where such delegation is authorized by custom, usage, the course of trade or by necessity, or where the acts to be performed are merely mechanical or ministerial.7 If the authority of the agent is conferred on him by a written instrument, the construction of the instrument and the determination of the nature and extent of the agent's power are matters of law for the Court. If the agency grows out of transactions in pais or is to be inferred from the conduct or relation of the parties to each other, the existence of the agency and the nature and extent of the agent's powers are questions of fact to be found by the jury from the evidence before them under proper instructions from the Court." And it has been held that even if the acts of a sub-agent, who has been employed without authority, are afterwards ratified, he can recover no compensation from the principal, but must look to the agent.8 On the other hand, there is authority supporting a somewhat contrary view, while courts have also gone to the length of seeking, in some instances, sufficient basis for permitting the second broker to recover direct from the owner or the first broker's employer, on the ground that there was an independent employment of the second broker by the owner.

² Higgins v. Moore. 34 N. Y. 419 (1866). See also cases under Sec. 46.

³ Citing Pickering v. Busk. 15 East. 38 ; Baring v. Corrie. 2 Barn. & Ald. 137. 148.

4 Adams v. Fraser. 82 Fed. 213 (1897), (citing Butler v. Darman. 68 Mo. 298, 301; Seiple v. Irwin, 30 Pa. St. 513; Halmenfeld v. Wolff. (Com. Pl.), 36 N. Y. Supp. 473; Clark v. Murphy, 164 Mass. 490; 41 N. E. 674; Higgins v. Moore, 34 N. Y. 417, 419; Kane v. Burstow (Kans. Sup.), 22 Pac. 588).

5 Hill v. Morris, 15 Mo. App. 330 (1884); Watkins Co. v. Thetford, 96 S. W. 72 (Tex. 1906).

6 Citing Mechem on Agency, Sec. 185; Clark & Skyles on Agency, p. 767 et seq.; Wilson v. York, etc., R.R. Co., 11 G. & J. 74.

7 Citing Clark & Skyles on Agency, p. 770; Mechem on Agency. Sec. 184-196.

8 Carroll v. Tucker, 2 Misc. 397 (N. Y. 1893); Southack v. Ireland, 109 App. Div. 45 (N. Y. 1905).

Where one broker "gives" the property to another broker and after unsuccessful efforts the owner deals direct with the second broker, it has been held in Peek v. Slifer, 122 111. App. 21 (1905), that the first broker is not entitled to commission, the employment of the second broker being considered an independent arrangement. The word "gives" in the foregoing sentence is used in the sense in which it has become popularized among real estate brokers. When one broker informs another of the fact that certain property has been placed with him for sale, it is usually spoken of as the one broker "giving" the property to the other. It is evident, of course, that the meaning is that he gives the other the information.

Where one broker employed another, and the arrangement was ratified and adopted by the principal, the court permitted a recovery by the second broker direct from the principal.9 But in this case the facts were that the principal appointed the first broker as the agent to sell the property and referred the second broker to such agent, and the case went on the theory that the first broker was acting as the agent of the principal in the transaction, a situation different from the ordinary one in which one broker transmits to another the property he has for sale.

In Wefel v. Stillman, 44 So. 203 (Ala. 1907), plaintiff was employed by the owner to sell his land. Plaintiff employed defendant, also a broker. Defendant sold the land, but claimed he sold it under a direct authority from the owner. The court said: "The appellee insists that the appellant was estopped from setting up that he sold the land under an independent contract with the owner and relies on the general equitable doctrine that an agent or other fiduciary cannot acquire an interest in the subject-matter of the agency adverse to his principal which is set out in Waller v. Jones, 107 Ala. 341; 18 So. 277, and in S. U. N. Co. v. Dangaix, 103 Ala. 394; 15 So. 956, and other cases. But, while accepting that principle to its full extent, we do not think it applies here, so as to prevent the owner and the defendant from entering into an independent contract. Certainly if the agency between defendant and plaintiff was limited to a single purchaser, the relation would be at an end when that proposed purchase fell through; and there would be no principle of law forbidding a contract of agency between the owner of the property and the defendant, 103 Ala. 394, et seq.; 15 So. 958. The plaintiff had no interest in the property. At most, he had a contract allowing him to find a purchaser for the land by his own efforts or those of his agents; and, of course, if he authorized the defendant to act under his power, and the defendant, so acting, found a purchaser, the plaintiff would be entitled to share in the commission. But such a contract is unilateral, binding upon neither party until the defendant, proceeding under the offer, has procured a purchaser.10 There was a right in the owner to employ other persons than the plaintiff to sell, and a right in the defendant to contract independently with him; and if he did in fact so contract, not proceeding under the privilege extended by the plaintiff, it would be a renunciation of any contract relation with the plaintiff, and any commissions earned would belong to the defendant, and the plaintiff, at most, would have to sue for damages, if there was such a contract as would, on its breach, support an action. We do not think the principle invoked by the appellee has any application to this case, except upon the factum of the defendant's service being rendered to the owner for the plaintiff, or in pursuance of the engagement with the plaintiff. The contract between plaintiff and defendant did not per se transfer to the plaintiff any lien or property right to defendant's labor, or put any obligation on the defendant to proceed under the offer extended to him by the plaintiff, or restrict his or the owner's right to contract as principals, so as to pass any property right to the plaintiff in the wages of defendant in a service to the owner under an independent contract. But, of course, any breach by defendant of any binding contract with the plaintiff gives to the latter a plain remedy at law for his full damages."

9 Com. & Inv. Co. v. Real Estate Co., 120 Mo. App. 437 (1906).

10 Citing Sheffield F. Co. v. H. C. & C. Co., 101 Ala. 477; 14 So. 672.

If the owner lists property with the broker for sale and authorizes the broker to relist the land with other brokers, the latter, in order to recover from the owner direct, must show the authority of the former broker to do so, or that after the first broker placed the land with the second brokers the owner, being aware of such fact, consented to the latter brokers selling the land."

Where one broker is given the property to sell, and he employs another broker to sell it, and agrees to divide the commission, the latter broker may recover his share of the commission from the former.12

But where there is no agreement between the brokers to divide commissions, nor anything from which such an agreement may be implied, the sub agent cannot recover from his employer, the other broker, merely upon proof that where two brokers bring about a deal it is customary to divide the commissions. Usage cannot create a contract.13

ıı Sterling v. De Laune, 105 S. W. 1169 (Tex. 1907). 12 Kaufman v. Bloch, 5 Misc. 404 (N. T. 1893). 13 Hedenberg v. Seeberger, 140 111. App. 618 (1908).