In Award Realty v. Copeland, the Supreme Court of Tennessee addressed the issue of dual agency. Based upon the specific facts of the case, the court held that the broker acted only on behalf of the vendor and, as such, was entitled to a commission.
In October 1982, Copeland spoke with Silver, a broker at Award Realty (Award), and advised him he was interested in selling a convenience store. During this visit, Copeland, who was Silver's friend and neighbor, did not sign a listing agreement. Silver and Copeland arrived at an asking price of $120,000. Later that day, Silver learned that Gupton, who owned Award, knew of a prospective purchaser for the store. Silver informed Copeland of the potential buyer and Copeland raised the asking price to $140,000. Silver then contacted the Evanses (buyers), and after some negotiations a contract was signed by the Evanses and Copeland for $155,000. At the same time, Copeland signed an agreement whereby he was to pay Award a commission.
Shortly after the sales contract was executed, Copeland called Silver and advised him he was having second thoughts about selling the store. Copeland also stated that his wife refused to sign the deed. The Copelands did not attend the closing and, upon failing to pay Award a commission, this suit was filed. A chancellor held for Award, but was reversed by the court of appeals, which found that Silver had acted as an agent for both the Evanses and the Copelands. Award then appealed to the Supreme Court of Tennessee.
The court found that a broker will be denied a commission where he acts as the agent of both the seller and the buyer without having fully disclosed this fact to both parties. But in this case, the court found no evidence that Award acted as an agent for the buyer. There was no contract between Award and the buyer, and the buyer was not subject to pay any fee or commission to Award. Furthermore, the court found no evidence that Award negotiated for the buyer. The transaction was a typical real estate transaction, wherein a licensee was employed to sell an owner's real estate. The court also stated that real estate licensees customarily serve as intermediaries between buyers and sellers and their services ordinarily consist of communicating offers back and forth between the parties, accompanying prospective buyers desiring to inspect or view the premises involved, negotiating the terms of the sale, and sometimes assisting the buyer in arranging for financing. However, this activity on the part of the licensee, absent an agreement or special circumstances, does not create an agency relationship between the broker and the purchaser. Thus, the court reversed the finding of dual agency.
The court refuted Copeland's argument that the commission agreement was invalid because Silver knew it was not signed by Mrs. Copeland, who was a part owner of the store. The court noted that this was not the case of a broker negotiating the sale of land, the title of which he knows to be defective. Rather, there had been a default on the part of the seller. Moreover, the court held that "when the husband assumes to have authority to offer for sale land owned by himself and his wife, this amounts to a representation that he has such authority."
Award Realty v. Copeland, 698 S.W.2d 337 (Tenn. 1985).