Sec. 234. Deferred Commissions And Vendor's Warranty As To Title

In a Texas case42 it is said: "In the case of Gauthier v. West, 47 N. W. Rep. 656, it is stated that if the broker agrees to wait for his commission until the sale is fully completed, there is an implied contract that the defendant had the ability and would confer upon the purchaser a perfect title to the property. We think this is sound. And we are unable to see any difference between cases where the owner agrees to pay the agent generally, and where there is a stipulation that he is to receive his pay when the sale is completed, or out of the proceeds when they are received. In the latter case it is true, the agent would have to await the completion of the sale, or the receipt of the proceeds after the sale. So far his compensation would be conditional. In cases where he is to be paid upon the completion of the sale, the authorities are that the broker is, nevertheless, entitled to compensation, if the sale was not completed, because of the owner's inability to give a good title. This being the case, how can it be said that a stipulation that he was to await the payment of the purchase money, or be paid out of the purchase money when received, relieves the owner from the implied warranty that he has a good title, when this sale is defeated and thereby the fund out of which the agent was to be paid is defeated, for such reasons? If the agent can recover in the one case he should in the other. As a matter of course, an agreement might be made whereby the broker will not be entitled to compensation if the sale is defeated by reason of the title, or for any other reason. There is nothing in the contract that can be so construed. It is plain and unambiguous. It was agreed that he should have for his services in selling appellant's bonds, the excess over a fixed sum net, to be paid in cash as the same should be received from the purchasers. In other words, if he sold the bonds for a surplus over the fixed sum, he was to be paid this surplus, but as to deferred payments, having to await their payment, to this extent only his pay was conditional. There was no condition that if the sale failed for any reason, he was to receive no commissions. If such had been his agreement, it may be that it would have done away with all implied warranty, as was held in Flower v. Davidson, 46 N. W. Rep. 308. It may be proper to state in this connection that in a later case in Minnesota, Cromer v. Miller, 57 N. W. Rep. 318, the doctrine announced in Flower v. Davidson was, it seems, applied to a case where the agent's commission depended upon the payment of the purchase money, and the Court held in that case, citing Flower v. Davidson, in effect, that such a stipulation did away with the implied warranty concerning the title. There is no reference to Gauthier v. West, which seemed to hold the contrary, a case decided by the same court. We are of opinion that it requires more than the agreement shows in the present case to be construed to exclude such warranty."

41 Bogart v. Reich. 128 App. Div. 854 (N. Y. 1908).

42Berg v. Street Railway Co., 17 Tex. Civ. App. 301, 302 (1897).