Hecht Realty v. Whisnant: North Carolina Court Reviews Elements of Procuring Cause to Resolve Commission Dispute
In Hecht Realty, Inc. v. Whisnant, the Court of Appeals of North Carolina addressed procuring cause in the sale of a home. The court held that the plaintiff, a realty firm which showed the house to the purchasers, which had knowledge of the vendor's listing with another agency, and which presented the purchaser's offer that was met by an unaccepted counteroffer was not the procuring cause of the sale.
In April 1975, Leatherwood, a licensed real estate broker for Hecht Realty, Inc. (HRI) showed a home owned by the Whisnants to the Castles. At that time, HRI did not have a listing agreement with the Whisnants, who had agreed to pay a six percent commission if an acceptable offer were produced. HRI, however, obtained an exclusive listing from August through November 1975. After this listing expired and after showing the property to the Castles again in January 1976, Leatherwood drafted an offer contingent upon the sale of the Whisnants' property. At this time, Leatherwood and Mr. Whisnant discussed and agreed to a five percent commission because Leatherwood believed the property was then exclusively listed by Howard Realty.
On March 2, 1976, Mr. Castles signed the offer and gave Leatherwood a $7,000 binder. When the offer was presented to the Whisnants, they altered it. The counteroffer was not accepted by Mr. Castles. On March 4, 1976, Mr. Castles met with Leatherwood and asked that the binder be returned. Later that day, Mrs. Whisnant told Leatherwood that she had signed an offer to sell the house to the Castles. A commission of $1,000 was paid to Howard Realty. HRI sued the Castles, the Whisnants, and Howard Realty to recover the reasonable value of the firm's services in bringing the parties together, and on the basis that those parties conspired to deprive HRI of its commission. After Howard Realty was granted summary judgment and after the Castles were voluntarily dismissed, judgment was entered in favor of HRI. The Whisnants appealed.
The Court noted that ordinarily, a broker with whom an owner's property is listed for sale becomes entitled to a commission when he procures a party who actually contracts for the purchase of the property at a price acceptable to the owner. The court stated that the broker is the procuring cause "if the sale is the direct and proximate result of his efforts or services." The court observed that procuring cause refers to "a cause originating or setting in motion a series of events which, without break in their continuity, result in . . . a sale or exchange of the principal's property, an ultimate agreement between the principal and a prospective contracting party, or the procurement of a purchaser who is ready, willing, and able to buy on the principal's terms."
The Court determined that under the law stated above, HRI was not the procuring cause of the sale to the Castles. The court noted the following factors for its rationale: (1) HRI had knowledge of the listing between the Whisnants and Howard Realty; (2) Howard Realty, in fact, sold the property pursuant to the listing; (3) the offer prepared by HRI was met by a counteroffer which was not accepted; (4) the final sales price was lower than that in the HRI offer; (5) the final closing date was accelerated nearly three weeks; and (6) the Whisnants did not prevent HRI from making the sale under the terms as specified in their counteroffer. The court held that the chain of events set in motion by HRI was broken to the extent that HRI could not establish that it was the procuring cause of the ultimate sale of the property.
Hecht Realty, Inc. v. Whisnant, 41 N.C. App. 702, 255 S.E.2d 647 (N.c. Ct. App. 1979).