Horn v. Seth

92 A.2d 312, 201 Md. 589

• Court: Court of Appeals of Maryland
• Decided: October 1, 1978
• Docket: [No. 78, October Term, 1952.]
• Status: Published

Opinions

Henderson, J.,

delivered the opinion of the Court.

This appeal is from a judgment for $500, entered by the court after a remittitur reducing a jury’s verdict of $1,000, in a case involving an action by one real estate broker against another for alleged interference with a contract for the payment of commissions. The appeal challenges the action of the court in denying the appellant’s motion for judgment N.O.V.

The facts are somewhat complicated but virtually undisputed. In 1946 Mr. and Mrs. Bramble, the owners of a house in Elkton, had listed it for sale with Mrs. Horn, a real estate broker, at a price of $15,500, the broker to be paid a commission of 5%. The listing was “open”, that is to say, non-exclusive. She had not succeeded in making a sale, and in May, 1948 the Brambles asked Seth, another real estate broker, to try to procure a purchaser on a non-exclusive basis, at a price of $12,500, the broker to receive a flat commission of $500. Seth showed the property to Mr. and Mrs. Lynch on May 18, 1948. The Lynches asked that they be allowed until Monday evening,” May 24, to make up .their minds, to which the Brambles agreed. On Monday morning Mrs. Horn showed the property to a Mr. Troutman, who indicated he was interested in the property and would make an offer later in the day. Bramble then went to see Seth and asked him if the Lynches were really interested. Seth called Lynch, who said he would take the property at $12,500, and would have a deposit up before 1 P.M. Seth so advised Bramble. Bramble went home and found Mrs. Horn there. She said Trout-man had made a definite offer to take the house at $13,000 and that she had his check for $1,000 as a deposit. At this point Lynch called Bramble on the telephone, and Bramble told him the price was now $13,000. Lynch testified he told Bramble he would take it at that figure, and Bramble said “all right”. Bramble did not deny that he made that statement. A few minutes later, Mrs. Bramble called Lynch back and told him the price was now $13,500. Lynch then called Seth and told him there was “something funny” going on. Seth called Bramble and was told the place had been sold. Seth reported this to Lynch, who asked if he (Seth) had $500 in cash. When told that he had, Lynch told him to tender this amount to Bramble. Seth called Bramble and told him he had a $500 deposit on account of the sale to Lynch. Seth fixed the time of this call at 12:50 P.M., and this was confirmed by Bramble.

Bramble testified, and was corroborated by his wife and son, that Mrs. Horn was in his house when the various calls from Lynch and Seth came in. She begged him not to sell to Lynch, but to sell to Troutman, and offered to rebate $100 out of her commission of $650 if he would do so. Mrs. Horn testified that she did not hear Bramble make any committments to Lynch, but on the contrary, heard him say that the property had been sold. She admitted that she knew the Brambles had given the refusal of the property to Lynch, conditioned upon his putting up a deposit before 1 P.M. She called her lawyer and was advised that if a deposit was not forthcoming by 1 P.M. it would be proper for her to close the deal. After 1 P.M. Troutman came to the house and the $1,000 check was delivered. The property was subsequently transferred to Troutman and the purchase price of $13,000 paid. In the settlement Mrs. Horn received $550 as commission.

It is perfectly clear under the Maryland authorities that intentional and unlawful interference with obligations created by a contract to purchase real estate, if known to the interferer, may give rise to a cause of action in tort. Stannard v. McCool, 198 Md. 609, 84 A. 2d 862, and cases cited. In that case there was no proof of knowledge. On the other hand it is recognized that up to the point where a contract is in existence, a broker or prospective purchaser has a right to compete, and even though the competition prevents the formation of a contract it is not unlawful. Goldman v. Building Ass’n, 150 Md. 677, 685, 133 A. 843. In the language of the Restatement, Torts, § 768 (i) : “When B is legally free to deal either with C or with A, the privilege of competition implies a privilege on the part of A to induce B to deal with him rather than with C. But when B is legally obligated to deal with C, A is not privileged, by the mere fact of competition, to induce B to commit a breach of his legal duty.” § 766(c) makes it clear that interference with a contract may be beyond the scope of the privilege of lawful competition even though the contract may be unenforceable because of non-compliance with the Statute of Frauds. This principle appears to have been recognized in Cumberland Glass Mnf’g Co. v. DeWitt, 120 Md. 381, 388, 87 A. 927.

In the instant case there was evidence of interference by Mrs. Horn with a bargain struck by Bramble and Lynch, when Bramble raised the price to $13,000, Lynch accepted it, and Bramble said “all right.” She denied knowledge of such a bargain, although she certainly knew that a bargain had been made conditioned only upon the making of a deposit. However, we are not concerned with the oral contract with Lynch, if any, for the contract relied on here is a contract for the payment of commissions by Bramble to Seth.

Lynch is not a party to the instant case, and the declaration clearly relies on an alleged contract between Bramble and Seth. Moreover, the court so charged the jury, and there was no objection to the charge, except on the grounds of the insufficiency of the evidence. The existence of a contract to pay commissions to Seth was not dependent upon a binding contract for the sale of the property. It has been held that a broker may have earned his commissions, even though the contract of sale may be unenforceable, Neuland v. Millison, 188 Md. 594, 597, 53 A. 2d 568, or defeated by the owner’s inability or refusal to convey. Borowski v. Meyers, 195 Md. 226, 231, 72 A. 2d 701. See also Aler v. Plowman, 190 Md. 631, 633, 59 A. 2d 196; McKeever v. Washington Heights Realty Corp., 183 Md. 216, 226, 37 A. 2d 305, and Singer Construction Co. v. Goldsborough, 147 Md. 628, 638, 128 A. 754. We think there was evidence from which the jury might properly find that Seth had earned his commissions when he procured a purchaser who was ready, willing and able to take the property at the price offered. For the purposes of this case it is immaterial whether Seth became entitled to the sum of $500 when he notified Bramble that Lynch would take the property at the quoted price of $12,500, or when Lynch told Bramble that he would take it at $13,000, and Bramble acquiesced. If there was any issue of fact as to Lynch’s readiness or ability to pay, Bramble raised no objection on that score when Seth informed him that he had a deposit. The burden of establishing that fact was not upon the broker. Stokes v. Wolf, 137 Md. 393, 411, 112 A. 566.

In Richards, Inc. v. Shearer, 186 Md. 36, 39, 45 A. 2d 627, a real estate broker brought suit for interference with its contract with an owner for the payment of commissions, against a purchaser of the property from the owner. The court remarked that “the difficulty in the appellant’s case is not with the law but with the facts”, and held that the evidence showed that the appellant had failed to prove that it had procured a purchaser at the price quoted and hence failed to establish a contract. There is a strong intimation that recovery would have been allowed if a contract had been established and interference shown.

The authorities in other jurisdictions are not entirely in accord. See notes, 97 A. L. R. 1273 and 146 A. L. R. 1417. In McAuslan & Nutting, Inc. v. Futurity Thread Co., 254 Mass. 216, 150 N. E. 96 it was held that since the broker who had earned his commissions by procuring a purchaser still had a right of action against the owner for commissions, the mere fact that the owner was induced to sell to another person did not affect the right of action or establish damage. In Hoffman v. Johnston, 68 Ohio App. 19, 36 N. E. 2d 184, 189, where the broker sued for conspiracy to deprive him of his commissions, the court said: “the gist of the action is the damage and not the conspiracy”, and held that damage was not shown where there was a subsisting right of action against the owner for the commissions, which did not depend upon the consummation of the sale. On the other hand, in Hornstein v. Podwitz, 254 N. Y. 443, 173 N. E. 674, 675, 84 A. L. R. 1, it was alleged that the plaintiff broker procured purchasers who executed a written contract with the owner, but that the defendants conspired with the President of the owner to secure the property at the same figure and divide the money that would otherwise have been paid as commissions. The complaint was amended to allege that the plaintiff suffered damages by reason of the owner’s insolvency. It was argued that the complaint failed to state a cause of action “because it discloses that the plaintiff had not suffered any damages, as he now has all that he ever had, viz., a cause of action against his principal for the agreed commissions.” The court said: “The appellants have misconceived the basis of the cause of action against them. If they had not induced the principal to breach its contract with the plaintiff, he would have received the commissions which he had earned or had a cause of action on contract, therefor against his principal. They committed a legal wrong which gave rise to a cause of action in favor of the plaintiff. The fact that the plaintiff also has a cause of action against his principal for breach of contract does not prevent his having a cause of action in tort against them. They cannot be heard to say that they are not liable for their wrongful act because the owner of the premises is also liable to the plaintiff for his commissions.” The court disapproved the earlier cases of Popper v. Korn, 218 App. Div. 513, 218 N. Y. S. 631, and Weinberg v. Irwinessie Holding Corp., 225 App. Div. 241, 232 N. Y. S. 443, and distinguished Deming v. Hill, 251 N. Y. 573, 168 N. E. 432, affirming 225 App. Div. 815, 232 N. Y. S. 448, on the ground that in the Deming case there was no allegation of damages. The court also commented that “the owner was solvent when the plaintiff’s contract was made and completed, and insolvent at the time of the trial.”

The Hornstein case was relied upon in Cal. Auto Court Ass’n v. Cohn, 98 Cal. App. 2d 145, 219 P. 2d 511 and is cited with approval in Prosser, Torts, § 104, p. 1012. See also Louis Schlesinger Co. v. Rice, 4 N. J. 169, 72 A. 2d 197. Its effect seems to have been somewhat limited by a later decision of the Court of Appeals in Simon v. Noma Electric Corp., 293 N. Y. 171, 177, 56 N. E. 2d 537, 539. In that case there was a suit against an owner for commissions and a- suit against alleged interferers who conspired to induce a breach of the contract to pay commissions, joined in one action. There was a judgment against the owner, and another judgment in the tort action. As to the latter the court said:- “Plaintiff’s recovery of a judgment against Marr does not ipso facto make it impossible for him to recover also on a cause of action against others who conspired to induce Marr to breach his contract with plaintiff. (Hornstein v. Podwitz, 254 N. Y. 443, 448, 449, 173 N. E. 674, 675, , 84 A. L. R. 1.) But to recover on the cause of action for wrongful interference, by the other defendants, with his agreement with Marr, plaintiff had to prove damages resulting from that interference. (Campbell v. Gates, 236 N. Y. 457, 460, 141 N. E. 914, 915; Associated Flour Haulers, [etc.] v. Hoffman, 282 N. Y. 173, 180, 181, 26 N. E. 2d 7, 9, 10.) No such damages were proven here, since plaintiff was successful in obtaining a judgment against Marr for the amount of the commissions due from Marr. (See Shapiro v. Greenwich Savings Bank, 266 App. Div. 359, affd. 293 N. Y. 724.)” Recovery under the doctrine of the Hornstein case seems limited, therefore, to cases where there is proof of actual damage, although it has been assumed that an allegation of special damage is not essential as a matter of pleading. See Rosenberg v. Weisberger, 200 Misc. 198, 108 N. Y. S. 2d 962.

The rule that in a civil action based on conspiracy damage is the gist of the action seems to have been recognized in Maryland. Kimball v. Harman, 34 Md. 407, 411. If not the gist of the action, it is at least an essential element of the tort. Edison Realty Co. v. Bauernschub, 191 Md. 451, 461, 62 A. 2d 354; Rent-a-Car Co. v. Globe & Rutgers Fire Ins. Co., 161 Md. 249, 260, 156 A. 847. We are not dealing with conspiracy in the instant case, but the tort of interference is somewhat analogous, and we may assume that proof of some damage would be prerequisite to recovery. However, it has been held that if damage is shown in a tort action, the defendant is not entitled to a directed verdict merely because the monetary amount is not proven, even though the defendant may be entitled to an instruction, if requested, limiting the recovery to nominal damages. Coca-Cola Bottling Works v. Catron, 186 Md. 156, 164, 46 A. 2d 303; Salisbury Coca-Cola Bottling Co. v. Lowe, 176 Md. 230, 4 A. 2d 440. There was no request for such an instruction in the instant case, and no objection to the charge except in regard to the legal sufficiency of the evidence.

We think there was legally sufficient evidence of damage. It is true that the plaintiff could have sued the Brambles for his commissions, but he was not compelled to do so, if he chose to sue the interferer in tort instead of the owner in contract. On this point we think the reasoning of the Hornstein case is persuasive. It seems probable that limitations would now bar an action on the contract; there is no showing that a judgment against the Brambles would have been collectible, if Seth had elected to sue them. On account of Mrs. Horn’s actions, Seth was put in a position where he was compelled to sue someone. If the sale to Lynch had gone through the money would have passed through Seth’s hands and no suit would have been necessary. Moreover, the Brambles would have had no reasonable objection to paying one commission, but it was foreseeable that they might resist the payment of commissions to two brokers, even if it were not inferable from the testimony that the Brambles were led to believe by Mrs. Horn that they were not obligated to Seth. It can hardly be maintained that wrongful interference that gives rise to a double claim and a potentially expensive litigation contains no element of damage. Cf. McGaw v. Acker, Merrall & C. Co., 111 Md. 153, 160, 73 A. 731.

Since the trial court cut the verdict of the jury to the amount of commissions due to Seth, we have no question here of exemplary damages based on malice. Cf. Knickerbocker Co. v. Gardiner Co., 107 Md. 556, 569, 69 A. 405, 16 L. R. A., N. S., 746. No instruction on the point was asked or given. Since there was some evidence of damage to Seth because of the interference, we think the motion for judgment N. O. V. was properly denied.

Judgment affirmed, with costs.