Mellos v. Silverman
367 So.2d 1369 (1979)
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Rule of Law:
Under a real estate listing agreement with an extension clause, a broker is entitled to a commission if they 'introduce or interest' a prospect in the property during the listing period, and that prospect purchases the property within a reasonable time after the listing expires, even if the broker's efforts are not the direct procuring cause of the final sale.
Facts:
- On November 15, 1976, Thomas and Anthi Mellos entered into an exclusive listing agreement with Associates Realty, Inc. to sell their restaurant, with the agreement expiring on March 1, 1977.
- The agreement contained an extension clause entitling Associates to a commission if the property was later sold to a 'prospect introduced or interested in said property during such term'.
- During the listing period, Nikola Nikolic expressed interest in the property and, with the help of broker Joel Silverman (acting for Associates), submitted a formal offer to Mellos on February 9, 1977.
- Mellos rejected Nikolic's offer and made a counter-offer, which Nikolic in turn rejected, stating he was no longer interested in the property.
- On March 1, 1977, the listing agreement with Associates expired.
- On March 22, 1977, approximately three weeks after the agreement expired, Mellos and Nikolic re-engaged in discussions and agreed to a sale on different terms than previously discussed.
- Mellos did not pay a commission to Associates or Silverman for the sale to Nikolic.
Procedural Posture:
- Joel Silverman and Associates Realty, Inc. sued Thomas and Anthi Mellos in a trial court for a broker's commission.
- The trial court, hearing the evidence without a jury, found in favor of the brokers, ruling they were entitled to the commission based on the extension clause.
- The trial court also found that Mellos was not guilty of fraud.
- Thomas and Anthi Mellos, the appellants, appealed the trial court's decision awarding the commission to the Supreme Court of Alabama.
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Issue:
Does a real estate broker earn a commission under an exclusive listing agreement's extension clause when a property is sold after the listing period to a prospect the broker 'introduced or interested' during the listing period, even if the broker's efforts were not the procuring cause of the final sale and negotiations had temporarily ceased?
Opinions:
Majority - Torbert, C.J.
Yes, the brokers are entitled to the commission. An extension clause in a real estate listing agreement that awards a commission for a sale to a prospect 'introduced or interested' during the listing term is enforceable. This contractual language requires less than being the 'procuring cause' of the sale; the broker need only show a minimal causal connection between their efforts and the eventual sale. In this case, Silverman sparked Nikolic's initial interest, assisted in preparing a written offer, and engaged in negotiations, which sufficiently 'introduced and interested' Nikolic in the property. The subsequent sale, occurring within a reasonable time after the listing expired, fell within the terms of the extension clause, obligating the sellers to pay the commission.
Analysis:
This decision reinforces the primacy of contract language in brokerage agreements, distinguishing contractually defined duties from the common law 'procuring cause' doctrine. It establishes that clauses using broad terms like 'introduced or interested' create a lower threshold for a broker to earn a commission, protecting them from sellers who might deliberately postpone a sale until after a listing expires to avoid payment. The ruling clarifies that a break in negotiations does not sever the broker's claim, as long as their initial efforts were the foundation for the eventual transaction. This precedent provides significant protection for real estate brokers by ensuring the specific terms of their listing agreements, particularly extension clauses, are honored.
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