Sec. 208. Commissions From Purchaser (P. 218)

In second paragraph, after words, "are not unusual," add footnote 27 a:

Roberts v. Martin (Ga. App.) 82 S. E. 813 (1914).

Sec. 209. Purchaser's Promise To Pay Commission (P. 219)

Add to footnote 31:

Cf. Urtz v. N. Y. C. & H. R. R. Co.. 202 N. Y. 170; 95 N. E. 711 (1911).

Sec. 210a. Purchaser's Liability For Commissions On Refusal To Purchase (P. 221)

Refusal to comply with an agreement to purchase real estate by reason of which the broker who negotiated the sale is deprived of his commissions, will render the intending purchaser liable for the damages thereby inflicted on the broker, although he had agreed to look to the seller for his commissions. 32

"It would seem to be immaterial whether in the original negotiaation or the sale the plaintiff was the agent of the vendor or the purchaser. The complaint here is for the violation of the contract to purchase, from which violation damages directly result to plaintiff." 33

28Lord v. U. S. Transportation Co., 143 App. Div. 437; 128 N. Y. Suppl. 451 (1911); citing Camacho v. Hamilton Bank Note & Eng. Co., 2 App. Div. 36?; 37 N. Y. Suppl. 725; Leonardi v. Times Sq. Auto Co., 127 App. Div. 193; 111 N. Y. Suppl. 523; Norman v. Loomis, etc. Co., 123 App. Div. 739, 740; 108 N. Y. Suppl. 261; Norton v. Genesee Nat. Savings Assn., 57 App. Div. 520; 68 N. Y. Suppl. 32; Brewster v. Wilson. 30 App Div. 494; 52 X. Y. Suppl. 272; Benedict v. Pell, 70 App. Div. 40, 45; 74 N. Y. Supp . 1085: Cohn Co. v. Lee, 132 App Div. 697; 117 N. Y. Suppl. 550; Alexander v. Cauldwell, 83 N. Y. 480; Jacques v. Todd, 3 Wend, 91.

29Lord v. U. S. Transportation Co., supra, citing Hay v. Platt, 66 Hun. 488, 491; 21 N. Y. Suppl. 362; Edwards V. Dooley, 120 N. Y. 540; 24 N. E. 827

30 Lond v. U. S. Transportation Co., supra, citing Lee v. Pittsburgh Coal & Mining Co 56 How. Pr. 373; affd., 75 N. Y. 601; Smith v. Martin, etc. Co., 47 N. Y. St. Repr. 26; 19 X. Y. Suppl. 285; mem. 64 Hun 639.

31Lord v. United States Transportation Co., 143 App. Div. 437; 128 N. Y. Suppl.

451 32 Live'rmore v. Crane. 26 Wash. 529; 67 Pac. 221; 57 L. R. A. 401 (1901); Clark & Skyles on Agency, pp. 1696, 1697.

In Hunter v. Lyons,34 this doctrine was also applied to an exchange, and it was there held that where both parties to a trade knew of and assented to contracts by the broker for commissions from both of them, and he was the efficient cause of the trade, upon a refusal by one of the parties to perform, the broker may recover from him, not only the commission which he contracted to pay, but also that which he would otherwise have received from the opposite party. It was also said that it is not essential that the party so to be held should know the amount of commission the broker was to receive from the other side of the exchange, it being sufficient to charge him with liability if he knew and consented to the other side's agreeing to pay some commission to the broker.

Yet in Le Master v. Dalhart Real Estate Agency, 35 it was said: "It was clearly decided by our Supreme Court on writ of error in Tinsley v. Dowell,36 that a mere selling agent or broker has no such interest in a contract for the purchase of land secured by him, as authorizes a recovery of damages in the way of lost commissions from the proposed purchaser who has refused to comply with the contract. To the same effect is the decision in the case of Tinsley v. Anderson,37 by the Court of Civil Appeals of the Fourth Judicial District."

In Tinsley v. Dowell,38 it appeared that the broker had been authorized to sell and on behalf of the owners had entered into a contract of sale with the purchaser, and the court said that the broker had no such interest as to give him a right to maintain a suit for the breach of the contract to purchase the land, and that if the purchaser refused to comply with his contract he would be liable to the owner for the damages. The court advanced general arguments to sustain its position that the broker could not, in that case, recover on any theory, from the purchaser, notwithstanding that the broker had an interest in the sale to the extent of all over a minimum price which the owner had fixed.

33 Livermore v. Crane, supra. In this case an agreement in writing had actually been made between purchaser and seller and a deposit paid and the broker was to receive his commission from the seller from time to time as various payments were to be made on the contract of sale by the purchaser. While in some states a broker is not entitled to his commissions until he brings about a written contract between seller and purchaser, that doctrine does not prevail universally and the broker is generally entitled to his commissions when he succeeds in having the minds of the parties meet. See Sec. 117.

34(Tex. Civ. App.) 144 S. W. 353 (1912).

35 56 Tex. Civ. App. 302; 121 S. W. 185 (1909).

36 87 Tex. 23; 26 S. W. 946.

37 33 S. W 266

38 87 Tex. 23; 26 S. W. 946 (1894).

Tinsley v. Anderson/39 was decided on the authority of Tinsley v. Dowell, supra. The head note reads: "Plaintiff, who was authorized to sell certain land for the owners (his compensation to be any excess of a specified price), procured a written offer from defendant to purchase the same at a price in advance of that fixed by the owners; but defendant refused to comply with his contract, though the owners of the land executed to him a deed thereof. There was nothing to indicate that the land, at the time of the default, was not worth the sum which defendant agreed to pay. Held, not to show any relation of principal and agent, so as to render defendant liable for the difference between the fixed price and the amount which the latter agreed to pay."

In Donnelly v. Chetejian,40 it was held that the intending purchaser is not liable for commissions where before acceptance by the seller, the proposed purchaser withdrew his offer to buy land carried by the broker on his books for sale for the owner, no promise or word with reference to payment of commissions by the proposed purchaser being shown.

An intending purchaser may, of course, negotiate for the purchase of property, and if he finds that he is unable to purchase on terms wholly satisfactory to himself, he may abandon the negotiations whenever he wishes, without incurring any liability for the commissions lost by the broker.

So too, if the broker represents the seller and a written contract of sale is entered into between buyer and seller, the commissions would be due from the seller, and no liability would be incurred by the purchaser for the loss of any commissions if the purchaser refused to carry out his contract of purchase. In such case, the broker, having brought about a contract of sale, is undeniably entitled to his commissions from the seller and the seller could enforce the contract of sale against the purchaser, or not, just as he chose.

In Hevia v. 'Wheelock,41 A and B had agreed in writing to exchange lands, and, before delivery or exchange of deeds, A employed a broker to procure a loan on the property to be conveyed by B to A. B subsequently refused to carry out the contract of exchange. It was said that the broker having procured the loan could recover his commissions from A, but the broker could not recover the amount of these commissions from B on the theory that by B's refusal to carry out the contract for exchange the broker was prevented from earning and receiving his commission. It was further stated that A on suing B for breach of his contract of exchange could probably recover as an item of damage, the amount A paid the broker for procuring the loan, providing the agreement with the broker to procure the loan was made with the knowledge and consent of B.

3933 S. W. 266 (1895).

40115 N. Y. Suppl. 125 (App. Term, 1909)

41162 App. Div. 759; 148 N. Y. Suppl. 165 (1914).

As to B's liability to the broker for the commissions he would have been paid by A on the exchange had the contract been carried out, the court said that if such commissions were only to be paid upon the consummation of the exchange, then such commissions never became due from A. If they did become due when the contract for exchange was executed, B's breach of the contract with A would not absolve A from the payment of the commission to the broker.

While the authorities on this subject are not abundant, yet it is difficult to draw from these authorities any principle which may be laid down as general. In such states where the doctrine prevails that a broker is not entitled to commissions until he has procured an executed contract,42 it may be argued that in no case could a broker have a cause of action against the purchaser for the commissions lost by the broker by reason of the refusal to purchase. The broker would not be entitled to commissions from the seller until he has brought about an executed contract, and therefore would not have been entitled to commissions from the seller until the broker had done so, and consequently could have suffered no loss. Yet even in such case, the question is open to debate, for the seller may be perfectly willing to enter into the contract after all the terms have been agreed upon, and the purchaser's refusal would be the reason for the loss of the commissions.

In those states wherein the doctrine prevails that broker's commissions are earned when the broker produces a purchaser ready, willing, and able to purchase on his principal's terms, the broker could have no right of action against the purchaser if he refused to perform after having made a written contract of purchase. In such case, the seller would be obligated to pay the commissions and enforce the contract of sale against the purchaser or not, as he chose. Where, however, all the terms of sale have been agreed upon, and the purchaser has accepted the terms, and then changes his mind and refuses to carry out his acceptance, the seller being ready and willing, the broker would not be entitled to commissions from the seller because the broker had not produced a purchaser ready, willing, and able, yet for the change of mind or refusal on the intending purchaser's part, he would have produced such. In the latter case, the broker ought to be entitled to recover the lost commissions from the intending purchaser.43 In all such cases, however, strict and convincing proof should be required so that no injustice be done to one who merely negotiated to purchase and then abandoned the negotiations without actually having come to final and settled terms.

"See Sec. 117.