No. 920 Pittsburgh, 1981, Appeal from Judgment in the Court of Common Pleas, Civil Division, of Clearfield County, No. 79-2767-CD
Thomas F. Morgan, Clearfield, for appellants.
Timothy E. Durant, Clearfield, for appellee.
Cercone, President Judge, and Wieand and Beck, JJ.
[ 312 Pa. Super. Page 404]
Where improved real estate is sold by a broker but the improvements are destroyed by fire prior to final settlement and the seller voluntarily releases the buyer from further obligation under the contract of sale, is the broker entitled to recover his commission for effecting the sale? The trial court held that the broker was entitled to recover a commission and refused to enter judgment n.o.v. for the seller after a jury had returned a verdict in favor of the broker. We affirm.
[ 312 Pa. Super. Page 405]
The principle is well established that a real estate broker becomes entitled to his commission when he or she presents a purchaser who is ready, willing and able to purchase the property upon terms satisfactory to the seller. Dixon Estate, 426 Pa. 561, 563 n. 2, 233 A.2d 242, 244 n. 2 (1967); Sork v. Rand, 422 Pa. 512, 517, 222 A.2d 890, 893 (1966); Kizer and Associates, Inc. v. Naylor, 254 Pa. Super. 143, 145, 385 A.2d 566, 567 (1978); Shumaker v. Lear, et al., 235 Pa. Super. 509, 512, 345 A.2d 249, 251 (1975); White Realty and Insurance Agency Co. v. Moreland et ux., 215 Pa. Super. 423, 427, 259 A.2d 461, 463 (1969). When a buyer defaults after an agreement has been fully executed and the seller, instead of enforcing the sales agreement, releases the buyer and agrees to rescind the contract, the broker who procured the purchaser is nevertheless entitled to be paid his commission. Realty Investments, Inc. v. Harris, et al., 166 Pa. Super. 211, 70 A.2d 427 (1950); Advance Realty Co. v. McLeod, 84 Pa. Super. 558, 560-561 (1925). See: Annot., 74 A.L.R.2d, 437, 459-460 (collecting cases). See also: Shumaker v. Lear, supra 235 Pa. Super. at 513, 345 A.2d at 251; White Realty and Insurance Agency Co. v. Moreland, supra (whether purchaser is able, ready, and willing to consummate the purchase on the day set for settlement is immaterial to the broker's right to a commission in the absence of fraud).
The general rule is that a purchaser must bear any loss to the property caused by fire after the contract to purchase has been executed and before delivery of the deed. See: DiDonato ex ux. v. Reliance Standard Life Insurance Co., 433 Pa. 221, 224, 249 A.2d 327, 328 (1969); Synes Appeal, 401 Pa. 387, 391, 164 A.2d 221, 223 (1960); Rappaport v. Savitz, 208 Pa. Super. 175, 177, 220 A.2d 401, 403 (1966). The purchaser becomes equitable owner of the land upon execution of the contract; the seller retains legal title merely as security for payment of the unpaid purchase money. DiDonato et ux. v. Reliance Standard Life Insurance Co., supra; Payne v. Clark, 409 Pa. 557, 561, 187 A.2d 769, 770 (1963); Spratt v. Greenfield et al., 279 Pa. 437,
[ 312 Pa. Super. Page 406124]
A. 126 (1924); Yannopoulos v. Sophos, 243 Pa. Super. 454, 459, 365 A.2d 1312, 1314 (1976); Byrne et ux. v. Kanig, 231 Pa. Super. 531, 535, 332 A.2d 472, 474 (1974). In cases where improvements are destroyed by fire prior to final settlement, the seller holds in trust for the purchaser the proceeds of any policy of fire insurance owned by the seller at the time of the loss. Insurance Co. of North America v. Alberstadt, et al., 383 Pa. 556, 559-560, 119 A.2d 83, 85 (1956); Dubin Paper Co. v. Insurance Co. of North America et al., 361 Pa. 68, 63 A.2d 85 (1949); Dominski v. Garrett, 276 Pa. Super. 18, 27, 419 A.2d 73, 77 (1980).
These general principles, when applied to the facts of this case, make it abundantly clear that the appellee-broker was entitled to recover his commission from the appellant-seller. Appellee earned his commission when he produced a purchaser with whom appellant entered a written contract to sell improved real estate in Pike Township, Clearfield County. When the improvements were destroyed by fire, the risk of loss was upon the purchaser and he remained obligated to accept title to the real estate and pay the seller the unpaid balance of the purchase price. However, the buyer was entitled to receive the insurance proceeds, if any, recovered by the seller pursuant to any policy of fire insurance which the seller owned and which covered the improvements on the land sold. A seller, under these circumstances, cannot defeat the broker's right to be paid a commission by voluntarily rescinding the sales agreement and releasing the buyer from further liability thereon.
Appellant concedes that this is the present state of the law but contends that the law unduly favors the real estate broker and should be changed. He argues that where the buyer is unable to close the transaction through no fault of the seller the broker should not be entitled to receive a commission, that the loss of a commission under such circumstances should be borne by the broker as a hazard of the ...