Lay v. E. D. Hinkle & Co.

176 S.W.2d 252, 296 Ky. 129, 1943 Ky. LEXIS 113

• Court: Court of Appeals of Kentucky (pre-1976)
• Decided: December 8, 1943
• Status: Published

Opinion

Opinion op the Court by

Chief Justice Fulton—

Reversing.

H. D. Hinkle, a real estate broker doing business as E. D. Hinkle & Co. in Lexington, filed tbis action to recover of tbe appellant, Edward Lay, a 3% commission on tbe selling price of a farm, alleging tbat tbe farm was listed with bim by Lay and that be procured a purchaser at tbe price of $24,000. At tbe conclusion of all the evidence a verdict was directed for Hinkle for tbe full amount sued for, $720. Tbis appeal is from tbe judgment entered on tbat verdict, the appellant contending tbat a verdict should have been directed in bis behalf or, in any event, tbat it should have been submitted to tbe jury under appropriate instructions.

We state tbe facts as revealed by tbe evidence, when conclusions of tbe witnesses and constructions placed by them on their actions are disregarded. In stating these facts we will not discuss tbe testimony of each witness in detail but will state only tbe ultimate facts we regard as clearly and conclusively established.

In tbe early part of 1941 Hinkle endeavored to effect tbe sale of a farm for Stanley Scott. In May 1941, thinking tbe sale was about to be consummated, Hinkle procured tbe appellant to list bis farm for sale, with tbe idea of trying to sell it to Scott. He then induced Scott to look over tbe Lay farm as a prospective purchaser and Scott, after doing so, informed Hinkle that be might be interested. At tbis point tbe sale of Scott’s farm apparently fell through and nothing was done by Scott or Hinkle with reference to tbe sale or purchase of Lay’s farm. In July tbe sale of Scott’s farm was effected and in August Scott again looked over tbe Lay farm with a view to purchasing, tbis being done on Scott’s own initiative. Lay priced tbe farm to bim but it was larger, and tbe price was more, than Scott was able to handle, and be so advised Lay. Scott was then informed by Lay tbat David Tboben might buy a portion of tbe farm and Lay agreed to see Tboben. The same afternoon Scott was notified by Lay tbat Tboben would be at tbe farm to look it over. Scott went back to see if he and Tboben could agree on a joint purchase but they were unable to come to a definite agreement. Upon learning that Scott bad looked over tbe farm Hinkle advised Lay that Scott was bis prospect and Lay admits that be agreed to pay tbe commission if Hinkle sold tbe farm to Scott.

Some days later, in tbe early part of September, Scott enlisted tbe aid of Barnett & Sullivan in helping him to put over tbe deal. Barnett & Sullivan were not real estate brokers but were engaged in tbe seed business in Harrodsburg and also acted as agents of an insurance company in making loans., It clearly appears that they became involved in tbe transaction only for tbe purpose of getting a commission on a loan to be made by their insurance company to Scott, if be purchased. Barnett & Sullivan were informed by Lay that be was bolding tbe farm for $24,000 and that this offer was open only for a few days. After negotiations between Scott, Tboben and Barnett & Sullivan an agreement was reached between Scott and Tboben by which tbe former was to purchase a certain number of acres at approximately $17,000 and tbe latter tbe remainder at approximately $7,000. A contract of sale between Scott and Tboben was then prepared by which Scott agreed to sell Tboben bis agreed portion but tbe agreement was effective only in tbe event Scott could purchase tbe entire farm.

After tbe execution of this contract Barnett & Sullivan, in company with Scott, went to see Lay and an agreement was reached that Lay would sell to Barnett & Sullivan for $24,000. Lay knew, however, that Scott and Tboben were tbe eventual purchasers. Tbe next day Lay, Scott, Tboben and Barnett & Sullivan met in Harrodsburg and. a contract of sale was drawn between Lay and Barnett & Sullivan. A check for $2,400 for the down payment was given to Lay by Barnett & Sullivan but on tbe same day Scott gave bis check to Barnett & Sullivan for $2,400 and a contract of sale was drawn between Barnett & Sullivan and Scott. Deeds were executed directly to Scott and Tboben by Lay for their respective portions, although tbe witnesses make it appear that this was done at tbe instance of Scott to save tbe expense of additional deed stamps and recording fees.

That the transaction was, in effect, a sale by Lay to Scott and Thoben is manifest. Barnett & Sullivan never intended to become actual purchasers and were interested only in earning a commission on a loan to be made to Scott, if he purchased — they were mere conduits through whom title was to pass to Scott and Thoben, a fact known to Lay, and even this pretense was abandoned when deeds were eventually executed. Scott and Thoben were the real purchasers. This being true, the sale of the larger portion of the farm was made to a purchaser furnished by. the appellee and the appellant became liable to the appellee for the commission, since a real estate broker is entitled to a commission when he furnishes a purchaser who is accepted by his principal on satisfactory terms even though the transaction as concluded is different in terms from the one which the broker was authorized to negotiate. Consolidated Realty Co. v. Graves, 291 Ky. 456, 165 S. W. (2d) 26; Hammond v. George W. Gill Realty Co., 221 Ky. 521, 299 S. W. 165; McDowell v. Lewis, 200 Ky. 126, 254 S. W. 208.

But Scott, the purchaser furnished by the appellee, did not purchase the entire farm and did not procure the purchaser who purchased the balance. Neither Hinkle nor Scott was in any wise instrumental in procuring Thoben as a purchaser, the evidence being clear and uncontradicted that Lay himself did so. And, since this is true, the appellee was not entitled to commission on that portion of the farm sold to Thoben. It is true that where a prospective purchaser furnished by a broker in turn interests another who becomes the eventual purchaser the broker is entitled to his commission. Clarke v. People’s Roller Mills Co., 206 Ky. 686, 268 S. W. 333. But no such situation existed here and, clearly, Hinkle, whose prospective purchaser purchased only a portion of the farm, is not entitled to commission on the entire farm since the purchaser furnished by him for a part of the farm did not interest the purchaser of the remainder, the latter purchaser being furnished by the owner.

The appellant, in his insistence that the trial court was in error in directing a verdict for any part of the commission, and that, on the contrary, a verdict should have been directed in his behalf, relies on a line of cases such as Koch Real Estate Co. v. Durrett, 214 Ky. 162, 282 S. W. 1079, and Watts v. Barber, 275 Ky. 411, 121 S. W. (2d) 59. These cases hold that when real estate has been listed with more than one broker, that broker is entitled to the commission who is successful in bringing the seller and purchaser together and inducing them to enter into the contract of sale, regardless of which one first introduced the seller and purchaser. An all sufficient answer to this contention is that no such situation confronts us. Barnett & Sullivan, who finally helped put over the sale, do not claim they had a contract with Lay for a commission. From the testimony of both it is clear, as pointed out above, that their only interest was to bring about the sale in order that they might secure a commission on a loan to be made to Scott when the sale was effected.

In view of the conclusions enunciated the trial court was correct in holding that appellant Lay sold to Scott and that the appellee was entitled to commission on that portion of the farm sold to Scott but was in error in directing a verdict for appellee for the commission on that portion of the farm sold to Thoben.

Judgment is reversed, with directions to grant the appellant a new trial and for further proceedings consistent herewith.