An excellent application of this doctrine is found in a decision of the Court of Appeals of Kentucky, Casey v. Hart Wallace & Co., 188 Ky. 441, 222 S.W. 111, 112. In that case a broker procured a purchaser, a written contract was made, a down payment given, but the trade was rescinded because of a dispute as to one of the lines of the survey of the property. The Court held that the broker was entitled to his commission. On this point the Court wrote as follows:
'Here the customers presented by plaintiffs were accepted by defendant, and the parties executed a valid and enforceable contract. That being true, plaintiffs were entitled to their commission even though the parties, through the fault of one or the other, afterwards refused to carry out the trade.'
Again it should be emphasized that the Court pointed out that it made no difference whether the fault was that of the vendor or the vendee that the transaction was not carried into effect. In either even, the broker was entitled to his commission.
In Johnston v. Smith, 43 Wash.2d 603, 262 P.2d 530, 532, decided by the Supreme Court of Washington, it was likewise held that a broker was entitled to his commission even though the purchaser, after signing the contract, declined to perform and the original owner resold the property. The Court held that the broker was entitled to his commission, stating that the failure of the vendor to require specific performance cannot defeat the broker's right to a commission. The Court went on to say:
'Otherwise, an owner could obtain a satisfactory, enforceable contract at the instance of a broker, and, on one hand, claim the advantage of that accepted contract by forfeiting it and retaining the benefits of its non-performance, and, on the other, decline to pay the one who procured it for him by asserting his own election not to specifically enforce its full performance.'
This seems to answer the contention of counsel for the defendant that, since the vendor in this case had the right to forfeit the deposit, thereby relieving the other party from his obligation or liability for damages, he could thereby defeat the broker's right to a commission.
The same conclusion was reached by the Supreme Court of Errors of Connecticut, in McHugh v. Bock, 134 Conn. 519, 58 A.2d 740; by the Supreme Court of Oklahoma in Gilliland v. Jaynes, 36 Okl. 563, 129 P. 8, 46 L.R.A.,N.S., 129; and the Supreme Judicial Court of Massachusetts in Richards v. Gilbert, 336 Mass. 617, 146 N.E.2d 921.
In Gilliland v. Jaynes, to which reference has just been made, the Court stated:
'The true rule is that the broker is entitled to his commissions if the purchaser presented by him and the vendor, his employer, enter into a valid, binding, and enforceable contract. If, after the making of such a contract, even though executory in form, the purchaser declines to complete the sale, and the seller refuses to compel performance, the broker ought not to be deprived of his commissions.' (36 Okl. 563, 129 P. 10.)
There are some old cases in Maryland which seem to hold the contrary. The law of Maryland, however, has been expressly changed by statute. Schapiro v. Chapin, 159 Md. 418, 151 A. 44, at page 47.
It is clear, therefore, that under the undisputed facts of this case the broker has earned his commission.
The other matters must be adverted to. During the trial the defendant sought to interject the issue that the proposed purchaser was not financially able to consummate the purchase. Counsel for the plaintiff objected to the introduction of this issue on the ground that it was not comprised within the pretrial order. The Court was of the opinion that this objection was well founded. It must be borne in mind that one of the principal purposes of pretrial is to crystallize and formulate the issues to be tried and to present a complete statement of all of the contentions of the parties as to the law and fact. Any contention not presented at pretrial may not be raised at the trial.
Counsel for the defendant then asked leave to amend the pretrial order in order to raise this issue. Again, counsel for the plaintiff objected on the ground that this was an afterthought and that he was not prepared to meet the issue. Again the Court was of the opinion that the objection was well founded. On the other hand, the Court felt that, as a matter of justice, all of the issues in the case ought to be disposed of and that if there were any substantial defense to the claim, an opportunity ought to be accorded, even though belatedly, to assert it, provided this could be done without prejudice to the plaintiff's rights. The Court then ruled that it would permit the amendment to the pretrial order, but would grant an application of the plaintiff either for a mistrial or for a continuance of the trial for two or three days, in order to give the plaintiff an opportunity to prepare to meet the new issue. Counsel for the plaintiff concluded, however, that he would not take advantage of this ruling of the Court but preferred to go on with the trial.
He evidently made a wise choice because when the smoke of battle cleared and both parties rested, there was no substantial evidence in support of the contention that the prospective purchaser was not financially responsible.
There is one other matter to be considered. The amount of the commission to which the plaintiff is entitled is $ 7,000. Subsequently, the plaintiff wrote a letter to counsel for the defendant in which he agreed to accept as his commission the sum of $ 3,000 in cash at the time of settlement and the balance of $ 4,000 in the form of a note secured by a third trust. It will be observed that this agreement does not change the amount of the commission due but merely the manner of its payment. Obviously, a note for $ 4,000 secured by a third trust can no longer be given since the evidence shows that the defendant no longer owns the property and, therefore, is unable to place a third or any other trust on it. The obligation to pay a commission in the sum of $ 7,000 is in no manner changed by this letter.
In the light of this discussion the Court rules that the plaintiff is entitled to recover his commission on the admitted facts and a verdict in his favor for the sum of $ 7,000 will be directed.
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