Clapp, Jayne and Francis. The opinion of the court was delivered by Francis, J.A.D.
Plaintiff, a real estate broker, was granted a judgment for commissions adjudged as earned by the production of a buyer for defendants' property. The appeal is predicated upon the assertion that the liability for commissions was contingent upon the passing of title, an event which did not take place.
There is no doubt that defendants engaged plaintiff orally to find a purchaser for their property. Clark induced a prospective buyer to sign an informal memorandum agreement to buy at the price fixed "subject to purchasers obtaining and qualifying for mortgage loan in amount of $12,500.00 to be arranged by Bert Clark within 10 days from above date: * * *." (Emphasis added.)
At the foot of this memorandum (which provided for the preparation and execution of a formal contract) the defendants-owners endorsed their acceptance of the price and terms and a clause recognizing Clark as the broker and agreeing to pay a commission of 5%. Within the ten-day period Clark was able to procure a preliminary commitment for
a mortgage. The formal contract was then drawn by Clark and executed.
The final agreement contained no reference to the mortgage condition. Apparently the parties believed that the arrangements made by the broker would result in the actual grant of a mortgage. However -- and perhaps because the mortgage was not considered "obtained" until the transaction was concluded at the passing of title, although there is no specific proof on the subject -- Clark wrote the broker recognition clause as follows:
"And the seller hereby agrees to pay Bert Clark, Realtor a commission of 5% on the purchase price aforesaid, said commission to be paid in consideration of services rendered in consummating this sale; said commission to become due and payable upon the execution of the deed." (Emphasis added.)
Thereafter, the intending mortgagee declined to grant the loan because after search the title was found to be defective. As a result, the closing never took place. Then, upon refusal by defendants to pay the broker's commission, this action was brought.
It is a commonplace of this phase of the law that a real estate broker becomes entitled to his commission upon the production of a purchaser able and willing to buy the property upon terms authorized by the seller. Lippincott v. Content , 123 N.J.L. 277 (E. & A. 1939). Inability of the vendor to convey good title would not extinguish this liability. Ludwig v. Aberbach , 4 N.J. Misc. 169 (Sup. Ct. 1926).
However, by special agreement between the parties and the use of appropriate language the broker's right to commissions may be made to depend upon some additional circumstance such as the passing of title. Richard v. Falleti , 13 N.J. Super. 534 (App. Div. 1951); Lippincott v. Content, supra , 123 N.J.L. , at page 279.
The owners contend that by virtue of the language used by Clark himself in drafting the formal contract of sale, any obligation to him was made contingent upon the execution of ...