Farnsworth Samuel Ltd. v. Grant: Louisiana Court of Appeals Examines Elements of Procuring Cause
In Farnsworth Samuel Limited v. Grant, the Court of Appeal of Louisiana addressed the issue of procuring cause in the sale of property. The court found that although the sale occurred outside of the listing agreement and extension periods, because broker initially introduced the buyer to the property and assisted in the original bid, which differed from the final bid by an amount nearly equal to the commission, broker was procuring cause of the sale.
In April 1981, Farnsworth Samuel Limited (Broker) executed a six-month listing agreement with Grant (Seller). An extension of the listing agreement was executed six months later, including an extension clause providing that Broker would be entitled to a commission if a sale was negotiated within 180 days of the expiration or termination of the contract. Peck (Buyer) lived across the street from Seller’s property, but did not know it was for sale until he read Broker’s ad in the newspaper. In May 1982, Buyer contacted Broker, who showed him the property and submitted a bid at $169,000. The offer was refused because Seller had accepted another offer. However, this sale was never consummated.
Broker did not know that the sale had fallen through until September or October of 1982. At that time, the listing agreement had expired; however, the extension clause was still in effect. Broker contacted Buyer, who informed her he was not interested in the property. Broker was unaware that in the interim, in July 1982, Seller hired Buyer to manage the property for him. In February 1983, Seller sold the property to Buyer for $160,272. Broker sued Seller claiming it was due a commission. The trial court found for Broker and ordered Seller to pay the $8,410 commission. Seller appealed.
The Court stated that “Procuring cause has been defined as a cause originating or setting in motion a series of events which, without break in their continuity, result in . . . a sale or exchange of . . . property, an ultimate agreement between . . . the contracting part[ies], or the procurement of a purchaser who is ready, willing, and able to buy on the principal’s terms.” The court noted that factors to consider in determining whether a broker was the procuring cause of a sale included: (1) whether the ultimate purchaser knew about the property before being contacted by the broker; (2) the relative success or failure of the negotiations conducted by the broker, including the continuity of the original and final negotiations, the length of time between those negotiations, and the development of another motive to purchase by the ultimate purchaser; (3) whether or not the broker abandoned efforts to negotiate the transaction with a prospective purchaser; and (4) the good or bad faith of the principal and the broker.
The Court found that the above-listed factors indicated that Broker was procuring cause of the sale. First, Buyer did not know the property was for sale prior to reading Broker’s ad. Second, Broker helped Buyer prepare and submit a bid on the property. Third, as late as September 1992, Broker continued to try to sell the house to Seller. Fourth, the difference between the original bid and the final price was roughly the equivalent of the commission indicating bad faith. Finally, the court indicated that Grant knew that Peck was Broker’s prospect. For these reasons, the court affirmed that Broker was procuring cause of the sale.
Farnsworth Samuel Limited v. Grant, 470 So. 2d 253 (La. Ct. App. 1985).