May Partnership v. Barker

431 S.E.2d 331, 246 Va. 61, 9 Va. Law Rep. 1442, 1993 Va. LEXIS 81
CourtSupreme Court of Virginia
DecidedJune 11, 1993
DocketRecord No. 921633
StatusPublished
Cited by2 cases

This text of 431 S.E.2d 331 (May Partnership v. Barker) is published on Counsel Stack Legal Research, covering Supreme Court of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
May Partnership v. Barker, 431 S.E.2d 331, 246 Va. 61, 9 Va. Law Rep. 1442, 1993 Va. LEXIS 81 (Va. 1993).

Opinion

JUSTICE STEPHENSON

delivered the opinion of the Court.

This appeal involves a dispute between a seller and a real estate broker over commissions claimed by the broker in a real estate transaction that failed to go to settlement.

Keith W. Barker, CCIM, P.A. (Barker), a Maryland corporation, sued The May Partnership (May), a Virginia partnership, to recover $150,000, plus attorney’s fees and interest. Barker alleged that May breached a real estate brokerage contract. May counterclaimed for $100,000, alleging that Barker breached the same contract. Following a bench trial, the trial court granted Barker a judgment for $150,000, plus interest and $7,500 in attorney’s fees. May appeals.

In February 1989, May and Barker entered into a written contract whereby May granted Barker the exclusive authorization to sell certain real property owned by May in Prince Georges County, Maryland. May agreed to pay Barker a brokerage fee of 10% of the sales price, provided Barker produced a buyer willing and able to pay $6.00 a square foot for the property.

[63]*63On July 21, 1989, Barker procured a sales contract signed by the potential buyer, Elmco Properties, Inc. (the Buyer), which May also signed. The sales contract provided for a sales price of $2,500,000, based upon $6.00 per square foot, with a down payment of $100,000, to be held in escrow. Paragraph 7 of the sales contract, entitled “SETTLEMENT,” provided, inter alia, as follows:

If the Buyer shall fail to make full settlement as required ' herein, the portion of the deposit herein provided for that is at risk may be forfeited as agreed liquidated damages in which event the Buyer shall be relieved from further liability hereunder. In the event of forfieture [sic], the Agent shall be allowed one half thereof as full compensation for its services hereunder.

Paragraph 16 of the sales contract, entitled “AGENCY,” stated, inter alia, the following:

Buyer and Seller acknowledge Keith W. Barker, CCIM, P.A. (herein Agent) to be the sole procuring cause of this sale. . . . The party conducting settlement hereunder is hereby authorized by the Seller to deduct the amount of the Brokerage fee from the Seller’s proceeds of sale and to pay the same directly to Agent.

On December 13, 1989, after it became apparent that the Buyer would be unable to close on the sale at the time agreed upon in the sales contract, May and the Buyer executed an “addendum” that “modified” the contract in a number of particulars. The addendum provided that the Buyer could delay settlement until April 13, 1990. May and the Buyer also agreed that the $100,000 deposit held in escrow “shall be released and disbursed to [May] . . . , and Buyer shall make an additional payment of $250,000.00” to May, all of which “shall be credited against the purchase price at settlement.” The Buyer further agreed that May could require an additional payment of $300,000 to be credited against the purchase price and agreed to pay interest on the unpaid balance of the purchase price at the rate of 1% per month. The additional $300,000 was paid to May by the Buyer, bringing the total deposit to $650,000.

Paragraph 5 of the addendum provided, inter alia, as follows:

[64]*64All monies paid over to Seller as set forth in this Addendum shall be considered as a deposit. Should Buyer default and not settle on the property, the monies on deposit shall be used to compensate Seller for actual reasonable damages sustained as the result of Buyer’s default. Seller shall exercise its best efforts in good faith to mitigate its damages. In no event shall Seller’s damages exceed the monies on deposit.

The final clause of the addendum read as follows:

All other terms and conditions of the referenced sales contract remain in full force and effect, unchanged by this addendum. In the event of any inconsistency between this addendum and the sales contract . . ., the terms of this addendum shall prevail.

Barker was not a signatory to either the sales contract or the addendum. The record shows, however, that Barker knew and approved of the provisions in the sales contract and participated in negotiating the terms of the addendum.

On the day following execution of the addendum, May paid Barker $100,000 by a check dated December 14, 1989, bearing the notation, “Commission-Beltway Center.” Thereafter, the Buyer abandoned the contract and refused to close on the purchase.

Barker claims that May is obligated to pay it a brokerage commission of $250,000, i.e., 10% of the agreed sales price of $2,500,000. The balance owing, according to Barker, is $150,000. The agreed-upon commission was earned, Barker contends, because Barker procured a buyer acceptable to May and because May and the Buyer executed a valid, binding contract. May contends, on the other hand, that, under the terms of the sales contract, it owes Barker no commission because the transaction never went to settlement.

The contracts in question were made and to be performed in the State of Maryland, and the contracts did not specify the governing law. Therefore, Maryland law governs. Woodson v. Celina Mutual, 211 Va. 423, 426, 177 S.E.2d 610, 613 (1970).

Maryland Code Ann., Real Property § 14-105 (1974) (the Maryland statute) states, in pertinent part, as follows:

In the absence of special agreement to the contrary, if a real estate broker employed to sell. . . procures in good faith a purchaser . . . and the person procured is accepted by the employer [65]*65and enters into a valid, binding, and enforceable written contract, in terms acceptable to the employer, of a sale ... or other contract, as the case may be, and the contract is accepted by the employer and signed by him, the broker is deemed to have earned the customary or agreed commission. He has earned the commission regardless of whether or not the contract entered into is performed, unless the performance of the contract is prevented, hindered, or delayed by any act of the broker.

(Emphasis added.) Thus, the critical question is whether May and Barker had a “special agreement” contrary to the provisions of the Maryland statute. See, e.g., Berman v. Hall, 340 A.2d 251, 253 (Md. 1975); Snider Bros. v. Heft, 317 A.2d 848, 852 (Md. 1974). In order to answer this question, we must consider not only the written instruments but also the testimonial evidence adduced at trial. Although Barker was not a party to the sales contract or the addendum, he accepted them and, therefore, is bound by them. Porter v. General Boiler Casing Co., 396 A.2d 1090, 1094 (Md. 1979).

The parties have not pointed to any language in the listing agreement that would constitute a “special agreement to the contrary,” and we do not find such language therein. May and Barker agree, however, that paragraphs 7 and 16 of the sales contract constituted a “special agreement” within the intendment of the Maryland statute.

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Bluebook (online)
431 S.E.2d 331, 246 Va. 61, 9 Va. Law Rep. 1442, 1993 Va. LEXIS 81, Counsel Stack Legal Research, https://law.counselstack.com/opinion/may-partnership-v-barker-va-1993.