In Maryland, an Agreement with Auctioneer to Pay Commission When Property "Is Sold" is Construed To Mean Consummated Sale and Not Contract to Sell

In Childs v. Ragonese, 296 Md. 130, 132 (Md. 1983), the Maryland Court of Appeals held that, if the contract between a seller of real property and an auctioneer states that the auctioneer will be paid a commission if the property is "sold," the auctioneer will be entitled to retain his full commission only when the successful bidder at the public auction consummates the sale.  In order to earn commission, the auctioneer should carry out the sale. 

In Childs, the seller, John C. Childs, and several partners trading under the title of Paradise Joint Venture (collectively hereinafter referred to as “Childs”) entered into an employment contract with auctioneer A. J. Billig and Company (“Billig”) to auction and sell the parcel of land that they owned.  Billig prepared a contract which provided for the payment of 5% of the sale price to Billig as a commission if the property is "sold."  An auction was conducted and Parkview was the highest successful bidder.  Parkview deposited an amount of $ 20,000.00 soon after the auction.  The deposit was in the form of a check payable to the order of Frank P. Ragonese, the principal stockholder of Parkview, and endorsed by Ragonese to Billig.  The balance of the bid amount was to be paid within 60 days.  Billing deducted his commission and advertisement costs from the deposit money and gave the balance deposit amount to Childs. 

Parkview later refused to close the sale transaction.  And Billing refused to return the commission that he had retained.  Consequently, Childs brought an action against Billing and Frank Ragonese.  The trial court found in Billig’s favor holding that Md. Code Ann., Real Prop. § 14-105 was applicable to auctioneers. The Court of Special Appeals affirmed, but disagreed with the trial court's reasoning. This appeal followed. 

The Court of Appeals stated that, by its very language, § 14-105 and the statute does not cover auctioneers. Id. at 135.  It speaks only of "a real estate broker" and the time such "broker" is deemed to have earned his commission. Id. 

The Court stated that, with respect to agreements entitling an agent to a commission upon the sale, purchase, lease, or other transaction concerning property, it is well settled in Maryland that when there is no statute or an express agreement to the contrary, words such as "sell," "sold," "sale," "purchase," "lease," all refer to a consummated transaction and not merely the execution of a contract to sell, purchase, lease, etc. Id. at 136. The Court noted that, this is a rule of contract interpretation applicable to agents generally. Id.

The Court observed that, in the case at hand, the employment contract entitled Billig to a commission only if the property "is sold."  In addition, the owners agreed to pay the commission "on the amount for which the property is sold." Id. at 139-40.  The Court stated that, per Maryland rule of contract interpretation, such language refers to a consummated sale. Id. at 140.  Therefore, the Court concluded that the agent Billing in this case was not entitled to his commission because he failed to carry out the contract of sale. Id.  Also, the employment contract did not contain any express language applicable to the facts of this case which would change this result. Id.  Therefore, Billig was not entitled to retain a full commission from the deposit. Id. 

The Court of Appeals reversed the appellate court's judgment. Id.  The Court held that the auctioneer was not entitled to keep the commission after a purchaser in a public sale refused to consummate the sale because there was no language in the contract indicating that the auctioneer was entitled to keep the commission. Id.