Sec. 231. Valid Agreements Deferring Payment Of Commissions

By special agreement, however, the broker's commission may be made to depend upon the actual signing of a contract or passing of title, or other contingency. Agreements by which the broker is to wait for his commission, in order to be binding upon him, must be made before the broker actually has earned his commission, or else must be founded upon some consideration.

Where the principal states that no commissions are to be paid unless title actually passes, or imposes any other condition and does this at the time he engages the broker, the agreement is binding, since it is a part of the contract of employment, and if the broker accepts the employment under such conditions, he must abide thereby.

While the statement in a contract of sale that a certain person is the broker who brought about the sale, may be evidence upon which to hold the seller or the buyer, as the case may be, for commissions, yet such a clause is of no force as to the broker, unless he is a party to the contract. Hence, where such a clause provides that commissions are only to be paid on the transfer of title, it does not bind the broker where he is not a party to the agreement.24

Sec. 232. Contingent Commission Agreements

If the broker has made a valid agreement that his commission shall depend upon some contingency,25 he must show that the contingency has happened, or that it was defeated through some fault of the obligor, before he can recover.26

24 Willner v. Seale, 127 App. Div. 180 (N. Y. 1908). 25 See Sec. 231 supra.

Where the agreement with the broker provides that "commission or brokerage will be paid only to the one who actually makes and finally completes the sale and has the contract signed," it must be shown that a contract was signed, before commission can be recovered.27

Where the agreement provides that the commission is to be paid "when a contract for the sale is signed," the securing of a parol offer, which is accepted by the principal, where no contract of sale is signed, and the person making the offer fails to complete the purchase, does not entitle the broker to commission.28

Where commissions were not to be paid until and unless title passed, and the purchaser failed to complete his purchase, no right to commissions accrued.29

And where it was agreed between the vendor and the broker that the commission should not be due and payable until title passed, and title did not pass on account of defects therein, the broker is not entitled to commission.30

That the broker was to receive his compensation out of the proceeds of sale does not make his right to compensation necessarily dependent upon the completion of the sale. If the broker performs his part of the contract and the trade is defeated by the inability of the principal to make a good title, then the broker is entitled to compensation for his services, though it cannot be paid, as agreed, out of the purchase money.31

Where the broker is to receive as commission all he can get above a fixed price, he is entitled to no compensation until the principal receives the price fixed upon, unless his failure to receive it is his own fault. Hence the agent has no right to retain advance money forfeited by a proposed purchaser, such money belonging to the principal.32 And at least where the rule prevails that the broker must bring about a consummated sale to earn his commission,33 the broker cannot retain from the vendor the forfeit money paid by a purchaser who fails to complete.34

26 Hinds v. Henry, 36 N. J. L. 333 (1873).

27 Reichard v. Wallach, 91 N. Y. Suppl. 347 (1904). See also Burch v. Hester, 109 S. W. 399 (Tex. 1908).

28 Schlansky v. Hiilman. Ill N. Y. Suppl. 696 (1908). See also MeDermott v. Mahoney, 115 N. W. 32 (Iowa 1908).

29 Fittichauer v. Van Wyck. 92 N. Y. Suppl. 241 (1905). 30 Couper v. O'Neil. 53 Misc. 319 (N. Y. 1907). But see Sec. 233 infra. 31Cheatham v. Yarbrough, 90 Tenn. 77 (1891). See also Berg v. San Antonio Co., 17 Tex. Civ. App. 291 (1897).