Melvin v. Aldridge

Fowler, J.,

delivered the opinion of the Court.

The plaintiffs entered into a written agreement with the defendants, by the terms of which the latter were to take charge of, manage, lay out and plat into suitable lots certain lands owned by the former on the south side of Severn River, about one mile from Annapolis,. and to develop and sell the same under certain conditions, as stipulated in the agreement just mentioned. It will be unnecessary for us to rehearse all these stipulations, for the main contention upon the merits of the case is based alone upon that which relates to the compensation the defendants are entitled to.

The plaintiffs filed their bill in the Circuit Court for Anne Arundel County, charging the defendants with having violated their contract in almost every particular, and with having combined and confederated for the purpose of injuring and defrauding the plaintiffs. The bill asked for a *656 rescission of the contract, an injunction to stay and prohibit the defendants from doing anything further thereunder, and for an account of the various sums of money received by the defendants for the plaintiffs on account of sales of lots, and on account of issues and profits and sales of timber and crops. The defendants answered, denying all allegations of wrong-doing on their part, and also that there was any ground set forth in the bill which would warrant the abrogation of the contract or the issuing of an injunction as prayed, but expressing a willingness and readiness to account fully whenever required, by the Court. Testimony was taken by both parties, and the cause having been fully argued and submitted to the Court below, the bill was dismissed as to the jarayers for abrogation and injunction and held for an account. There was no objection made to this decree by the defendants, for it only directed them to do what they had already in their answer expressed a willingness and readiness to do whenever required. By it, however, the Auditor was directed to state the accounts called for, and, for the purpose of convenience and economy, the counsel of the respective parties agreed that the accounts should be stated by the parties- or their solicitors from the proceedings and proof, subject to exception, and that in this respect the said decree should be modified. In accordance with this agreement each party stated and filed an account, and each excepted to that filed by the other.

The Court below adopted that of the plaintiff, and by its order of the I2th Ottober, 1894, overruled the defendants exceptions thereto, except as to the one item of forty-two dollars and thirty-four cents, and sustained all the exceptions of the plaintiffs to the defendants’ accounts. From this decreee of the ■ 12th October, 1894, the defendants have appealed, and have thus presented several questions.

The plaintiffs contend that there is only one question before us, and that is the correctness of the accounts which were ratified below, while the defendants insist that by virtue of their appeal they also bring up the question of the juris *657 diction of the Court below to pass the decree of the 27th of April, 1894, by which their bill was in part dismissed, and they were required to account. Although there may be some question as to whether the defendants did or did not consent to the passage of this decree, waiving this objection, we think they are not in a position now to assail it in this Court. Our Code provides (Art. 5, sec. 35) that “no defendant in a suit in equity in which an appeal may be taken shall make objection to the jurisdiction of the Court below, unless it shall appear by the record that such objection was made in said Court.” Nor does it avail the defendants that this question may have been made by them in argument below, and was passed upon by the Judge below. This does not gratify the requirements of the section just cited. The objection must be specially taken by exception filed. Hubbard and Wife v. Jarrett, 23 Md. 66 . But, as we have seen, so far from having filed an exception, the defendants offered themselves ready to do what they now contend the Court had no power to require them to do.

The only questions, therefore, now open for review, are those presented by the decree ratifying the accounts filed by the plaintiffs. This account, which is designated as “Account Complainants, No. 1,” was ratified by the order of the 12th of October, 1894, with one modification, namely, an additional credit of $42.34 was allowed the defendants, thus making the total indebtedness found to be due by the defendants to the plaintiffs to be the sum of $1,673.27, with interest from the institution of the suit. There was no objection made to> the accuracy of the ratified account, but the objections are confined to the principles upon which it is stated. We think, however, there is no error in this respect. The claims set up by the defendant cannot be maintained.

1. Upon a fair and reasonable construction of the contract, whatever may have been the practice of the parties under it, we think it clear that the defendants, as agents, had no authority to collect and receive from the purchasers the proceeds of sales of lots. On the contrary, *658 the contract itself stipulates that such proceeds should be applied by the plaintiffs to the payment of a debt of $5,000, which was a lien on the property, and that the defendants' should make the revenues from the property, until sold, sufficient to pay the taxes, insurance and the interest on said debt of $5,000. That is to say, the plaintiffs were to collect the proceeds of sale, and therewith reduce or pay in full, if possible, said lien, while the defendants were to collect the rents and apply them to interest, taxes and insurance. But this question is not important now, for it appears that the defendants have been, with the consent of the plaintiffs, allowed in the ratified account commissions on all proceeds of sale actually collected.

2. The next claim made by the defendants is that they should have been "allowed commissions on the entire purchase money out of the first instalments collected by them. But such a contention is based on neither justice, reason nor authority. It is true that the general rule has often been approved by this and many other Courts, that commissions are earned when the agent or broker finds á purchaser able and willing to complete the purchase according to the terms agreed on, and who ultimately becomes the purchaser. Kimberly v. Henderson et al., 29 Md. 515 . If the purchase money be not paid by the fault of the vendor, the agent would still be entitled to his compensation. But, as was held in Richards v. Jackson, 31 Md. 253 , the meaning of Kimberly v. Henderson is that “it is not sufficient to entitle the broker to commissions that the purchaser should enter into an agreement to purchase, but he must actually purchase, by complying with the terms agreed on, unless his failure to do so is occasioned by the fault of the vendor.” The only fair and equitable rule where the purchase money is, as here, payable in instalments, is to allow commissions on the instalments as paid from time to time, for until they are actually paid the terms of the sale have not been complied with. Any other construction would only offer inducements to sell for the purpose of securing all of *659 the commissions out of the first payment. In the case of McCulloh v. Pierce, 55 Md. 546 , it was held that a trustee in the case of a defaulting purchaser should have commissions only on the amount actually collected by him, and it was there said, “any other rule would operate unjustly, and would offer a temptation * * to make sales to irresponsible bidders at extravagant prices without any reasonable expectation that the terms of sale would be complied with.” And this language, we think, is particularly applicable here,-though we are not to be understood as intimating that there is any evidence before us to show that the defendants acted in bad faith in this respect. The construe tion of the contract urged by them would, however, enable unfaithful agents thus to defraud their principals.

(Decided June 18th, 1895.)

3. The defendants claimed, as their own, all instalments paid to them in cases in which the whole purchase money was not paid, and the purchasers have abandoned their purchases. We entirely agree with what the learned Judges below said in regard to this claim. They characterized it as “utterly untenable; not within the terms or spirit of the contract; by no rational construction to be inferred therefrom, and repugnant to every principle of law and equity.”

4- Interest was properly allowed. The defendants, as agents, should have promptly paid over to their principals the amounts collected, less commissions, as provided by the contract, and having failed to do so, they have no reason to complain if they are required to pay interest from the institution of the suit.

5. Nor do we see how the Court below could have done otherwise than reject the credit claimed by the defendants for money loaned to J. West Aldridge — that being a. transaction between them and him in which the other plaintiffs are in no wise interested.

Finding no error, the decree of the 12th October, 1894, will be affirmed.

Decree affirmed.