On appeal from Superior Court of New Jersey, Law Division, Morris County.
King, Deighan and Bilder. The opinion of the court was delivered by Deighan, J.A.D.
Plaintiff appeals from a judgment of dismissal of its complaint for real estate broker's commissions. The trial judge, sitting without a jury, entered judgment for defendants owners on the ground that the written memorandum did not specify that a commission would be paid if the property sold for less than the $1,200,000 list price. He held that in absence of such writing, the Statute of Frauds barred recovery on the ground of either express contract or quantum meruit.
The precise question before us is whether, under the facts and circumstances of this case, plaintiff real estate broker is entitled to a commission on the sale of real estate where the buyer and seller signed an agreement and consummated the sale for a lesser selling price than that authorized by the seller in his written memorandum to the broker. We hold that the broker is entitled to a commission and reverse the judgment below.
Sometime prior to March 17, 1980, Robert McCafferty, a licensed real estate salesman employed by plaintiff, contacted defendant John Evans (defendant when used in the singular), also a licensed broker, concerning the sale of defendants' property located in Chatham. A few months after defendants expressed an interest in selling their property, McCafferty obtained an interested prospect, United Research, through another broker, Dick Ward.
On March 17, 1980 at a meeting with McCafferty, defendants agreed that plaintiff could offer their property for sale for $1,200,000 and agreed to pay a brokerage commission of 10% upon closing. On the same date McCafferty wrote to defendant
to confirm the commission arrangement made that day. In pertinent part the letter stated:
We agree to offer your 14.2 acres and the improvements thereon as agents to the single prospect discussed at a price of $1,200,000 gross. Our commission will be 10% of the price payable at closing or, depending on the final terms of sale, over a period not to exceed three years together with interest at a rate cominsurate [sic] with that of the purchase money mortgage.
McCafferty requested defendants to sign and return the letter if it conformed to their understanding of the agreement at the meeting on March 17, 1980.
Defendant did not sign the letter nor did he make any immediate response. Ten days later, on March 26, 1980, he wrote a note to his wife stating that the proposed sale price represented four times their investment and there was "no harm in exploring." He also wrote: "Commission of 10% means an agreement at $1,200,000 only! Anything less, then commission is negotiable (but you don't say that to start)." At trial, defendant testified that he had told McCafferty that he and his wife wanted to clear one million dollars from the sale and that a sale price of $1,200,000 would enable him to accomplish this. McCafferty and Ward were aware of this.
On April 10, 1980 defendant responded to McCafferty's letter of March 17. In his letter defendant, among other things, stated:
The offering price of $1,200,000 is correct for this single instance and a ten percent commission on that price is agreeable but under no circumstances would we pay any interest on the terms of payment of any commissions. I have not interposed myself as a broker in this matter and would expect not to do so.
Defendant also discussed possible terms of financing and then further stated:
As we indicated to you the matter of a sale comes prematurely to us but we feel that it would be foolhardy of us not to consider any legitimate proposal.
This letter is the principal basis upon which plaintiff seeks a 10% commission.
United Research lost interest in the property but Ward found another prospective buyer, Trans World Radio (Trans World). Defendant first learned of Trans World's interest in the property
on August 6, 1980 when it inspected the property with McCafferty. On the same date McCafferty sent a written notice to defendant which stated:
Confirming our conversation of this date please be advised that I have offered your Shunpike Road property, in its entirely [sic], to Trans World Radio, of Chatham on the same terms and conditions as outlined in my letter of March 17, 1980 and your response of April 10, 1980.
Defendant confirmed plaintiff's authority to offer the property and responded by typing the following reply at the bottom of McCafferty's letter:
FOR SOME REASON I HAVE MISPLACED OUR CORRESPONDENCE, WOULD APPRECIATE YOUR SENDING ME A COPY OF THE TWO LETTERS MENTIONED ABOVE. THIS WILL SERVE TO ACKNOWLEDGE THE TRANS WORLD RADIO INTRODUCTION.
On August 11, 1980 Trans World submitted an offer through McCafferty to purchase the property for $1,100,000. The offer was conditioned on obtaining certain land-use approvals and other contingencies which were acceptable by defendants. The subject of the commission was discussed during a meeting in August. McCafferty suggested that the commission agreement be included in the sales contract but defendant insisted that the commission be dealt with by a separate agreement. On September 16, 1980 defendants and Trans World signed the agreement of sale for the property at $1,100,000.
After signing the contract, Trans World procrastinated in obtaining the necessary land-use approvals. At defendant's request McCafferty and Ward took an active part in expediting the approvals. In addition to working with the lawyers, architects and engineers to prepare the necessary material, Ward attended many other meetings in processing the approvals.
A year later, in September and October of 1981, defendant made several notes to himself and his attorney regarding the financial aspects of the transaction with several references to the broker's commission. In a memo to his attorney, George Mahr, defendant contemplated the alternatives if the sale fell through and his financial position if the sale was completed. Among other things, that note recited a commission of $100,000
or 10% to the broker. He assumed that at worst he would be required to pay a commission on 10% of the sale.
In a memo to himself defendant noted that he needed "additional cash at closing to discharge broker." In another memo prepared late September 1981, defendant indicated he needed "$100,000 additional cash at closing to discharge broker." He explained at trial that he thought he would need that amount of money to pay the commission. Finally, in another memo to himself defendant listed the sales price at $1,100,000, under which he noted a commission of $100,000 which he crossed out and substituted the number $80,000 and 7 1/2%. At trial he explained that this was his opinion of an appropriate broker's commission if title closed. He further testified that although he ...