Generally, an Agent or Broker in a Real Estate Auction is Entitled to his Commission Once he has Produced a Purchaser Ready, Willing, and able to buy on the Terms Proposed by the Vendor

Missouri Court of Appeals, Western District in Byrd v. Wilson Trust, 182 S.W.3d 701 (2006 Missouri) held that a broker in a real estate auction is entitled to his commission upon producing a buyer ready, willing, and able to purchase the real estate on terms agreeable to the seller; provided there is no "express stipulation" in the contract indicating a contrary intent.  

In this case, Appellant Dan Byrd (“Appellant”) entered in to contract with Frank B. Wilson Trust (Trust) to sell the personal and real properties of trust by auction. The personal property auction contract provided 15 percent commission and real property auction contract provided 4 percent commission to the Appellant. Under both contracts, the Trust was responsible for paying the advertising cost of the auction. 

Appellant conducted auction of both personal and real properties on October 12, 2002. He received commission for the personal property auction contract. At the real property auction, the successful bidder made a down payment and the Trust acknowledged receipt of this payment.    Subsequently, the real property was destroyed by fire and the successful bidder refused to pay the balance amount due.  The Trust in turn refused to pay the broker’s commission.  Consequently, the Appellant filed a suit for breach of contract.  The trial court granted summary judgment in favor of the Trust.  This appeal followed.

On appeal, Appellant argued that trial court erred in granting the Trust's motion for summary judgment because he fully performed under the terms of the contract. Id. at 7055.  Appellant also claimed that he completed the auction and produced a ready, willing, and able buyer, he fully performed all of his obligations under the terms of the contract and, thus he was entitled to his commission. Id.  The Trust in response argued that the contract required a consummated sale to a bidder at the auction before Appellant earned his commission. Id. 

Under Missouri law, the general rule is that an agent or broker is entitled to his commission once he has produced a purchaser ready, willing and able to buy on the terms proposed by the vendor. Id.  And the seller is liable for his broker's commission when a purchaser is willing to buy on the seller's terms or on terms agreeable to the seller. Id.

The Court found that the Trust accepted a down payment from the successful bidder and issued a receipt to him, which indicated that the remainder was to be paid at closing. Id.  The Court further stated that, once the Trust accepted Dr. Downs' check for the down payment, Appellant successfully discharged his duty under the contract by producing a buyer ready, willing, and able to purchase the real estate on terms agreeable to the Trust. Id . 

The Court also noted that the provisions of real property auction contract state that the Trust reserved the "right to accept or reject the final bid," and "agreed that if the real estate was not sold on day of auction, but sells at a later date to a 10-12-02 registered bidder, then auctioneer is entitled to full commission." Id. at 706 (Emphasis added). According to the contract provisions if appellant found a buyer agreeable to the Trust, on the "day of auction," the real estate would be considered "sold.  Hence the Court found that the language of the contract does not support the Trust's claim that the parties intended that a "closing" was a condition precedent to Appellant earning his commission. Id.

The court stated that real estate broker earns his commission when he finds and produces to the proposed seller one who is ready, able, and willing to buy upon the terms upon which the broker is authorized to negotiate the sale, and in case the owner refuses to complete the transaction by delivery, the law declares the sale complete as far as the broker is concerned. Id at 707. 

Under Missouri law, the general rule is that a broker earns his commission when he produces a buyer, willing and able to buy on terms specified by the seller, whether or not the sale is completed.  Under Missouri law, in the absence of an "express stipulation" in the contract indicating a contrary intent, a broker is entitled to his commission upon producing a buyer ready, willing, and able to purchase the real estate on terms agreeable to the seller. Duggins, 517 S.W.2d at 92. Id. at 708.  The Court stated that because the contract in question contains no express provision deviating from the general rule, Appellant’s duty under the contract was to produce a ready, willing and able buyer and he completed the duty when the Trust received a down payment from the successful bidder. Id. The court found that contract between the Trust and Appellant contains no express provision regarding when Appellant earned his commission. Id. 

In light of the facts and law discussed above, the Court concluded that the trial court erred in granting summary judgment in favor of the Trust, rather than for Appellant. Id.   The Court reversed trial court’s judgment and remanded the case to the trial court with directions to enter summary judgment in favor of Appellant. Id.