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Ham v. Morris: Broker Entitled to quantum meruit in Commission Dispute Arising Out of Oral Agreement

In Ham v. Morris, the Supreme Court of Missouri addressed a broker's claims against a seller stemming from an oral agreement regarding a brokerage commission. The court held that the oral agreement was insufficient to support the commission, but that the broker could recover $3,500 (but not a full commission) on a quantum meruit basis.

Morris (Seller) told various individuals (including real estate brokers) that he was interested in selling his restaurant. Seller also talked to Bratrud, a frequent customer, about the possibility of selling the business. Bratrud suggested that Crouch, a former Missouri resident whose daughter still lived in Missouri, might be interested in purchasing the business. Bratrud called Crouch to determine if he would be interested in returning to Missouri and buying a business, and Seller's restaurant was one of the businesses discussed. A few weeks later, when Crouch visited Missouri, he spoke with Ham (Broker) about returning to Missouri and buying a restaurant. Broker informed Crouch that Seller's restaurant might be up for sale.

A few months later, Broker and Seller were speaking when Seller suggested that Broker sell the restaurant for him. Subsequently, Broker and Crouch spoke twice regarding the restaurant. Broker then gave Seller a listing agreement providing for a certain commission percentage. Seller refused to sign the agreement, but stated that he would pay the commission if Broker could get a net amount of $595,000. Seller also asked whether Crouch was the intended buyer, and Broker replied "Yes." Subsequently, Seller and Bratrud discussed the sale several times. During that time, Seller indicated he would pay Broker between $2,000 and $5,000 for his services. Seller eventually sold the restaurant to Crouch and Bratrud for $550,000. Broker was not paid a commission and sued Seller. The trial court found that the oral agreement did not support a commission, but did award Broker $3,500 for the value of his services in connection with the sale. Broker appealed.

The Court stated that the "right of a broker to recover a commission depends upon the specific terms of the broker's contract." The court noted that the oral agreement was a "net listing," whereby Broker would be paid only if a set price was met. The court also noted that if the listing agreement is limited by time and there is no extension clause, the broker is not entitled to a commission if he does not provide a ready, willing, and able buyer within the stated time and the vendor has acted in good faith. Further, not only must the terms of the listing agreement be satisfied, but the broker must show that he was the primary, predominant, efficient, or procuring cause of the transaction or transfer. The court affirmed that under the oral agreement: (1) Broker did not provide a ready, willing, and able buyer who would pay a sales price in excess of the net price of $595,000; (2) Seller did not act in bad faith in accepting a lower price; and (3) Broker did not prove that he was the procuring cause of the sale.

The Court also refuted broker's claim that he was due a full commission under the theory of quantum meruit (payment for the value of the services provided). The court affirmed that the proper amount due under quantum meruit was the value of the services ($3,500), not the full commission amount. In dicta, the court noted that to allow a full commission on a quantum meruit basis could expose vendors to multiple suits by various brokers claiming to be the procuring cause or one of the procuring causes and entitled to all or part of the full commission.

Ham v. Morris, 711 S.W.2d 187 (Mo. 1986).