Macondray & Co. v. Sellner
REITERATIONFacts
The Antecedents: Plaintiff, Macondray & Co., Inc., purchased a parcel of land from defendant, George S. Sellner, a real estate broker, for P17,175. Due to flooding, plaintiff became dissatisfied and requested defendant to find another purchaser, agreeing that defendant's commission would be any amount over P17,175. Defendant found a buyer, Antonio M. Barretto, willing to pay P18,892.50. Plaintiff executed a deed of conveyance and delivered it, along with the Torrens title, to defendant for the purpose of concluding the sale with Barretto. Procedural History: Plaintiff filed an action to recover damages, alleging the sale was cancelled due to defendant's failure to collect the purchase price by a specific deadline. The trial court rendered judgment in favor of the plaintiff for P3,435. Defendant appealed. The Petition: Defendant appealed the trial court's decision, arguing that he had earned his commission and that the plaintiff could not unilaterally cancel the sale.
Issue(s)
Whether the plaintiff company could lawfully terminate the negotiations and cancel the sale to Barretto on September 2, 1912, due to non-payment of the purchase price by 5:00 PM on that day. Whether the plaintiff company suffered any monetary damages from the defendant's actions, considering the market value of the land and the earned commission of the agent.
Ruling
The Supreme Court reversed the judgment of the lower court, dismissing the complaint without costs. The Court held that the plaintiff company could not lawfully terminate the negotiations and cancel the sale, and therefore suffered no damages.
Ratio Decidendi
On the issue of whether the plaintiff company could lawfully terminate the negotiations and cancel the sale: The Court held that the plaintiff company could not lawfully terminate the negotiations at the time it attempted to do so. The agreement to sell was made without an express stipulation as to the time of payment, and the purchaser, Barretto, had a right to a reasonable time to examine the documents of title before payment. The plaintiff's demand for payment by a specific hour on September 2, 1912, was an arbitrary and unreasonable attempt to deny Barretto this right. The Court emphasized that time was not of the essence of the contract, and Barretto, having accepted the offer subject to title examination, stood ready to pay upon delivery of satisfactory documents. Therefore, the plaintiff's attempt to "cancel" the agreement was ineffective. On the issue of whether the plaintiff company suffered any monetary damages: The Court found that the plaintiff company suffered no damage. Even if the plaintiff had the right to terminate negotiations, the measure of damages for an unauthorized sale would be the difference between the actual market value and the price received. The Court determined the market value of the land to be P18,892.50, the price Barretto agreed to pay. The plaintiff received P17,175, leaving an unpaid balance of P1,717.50. However, the defendant agent had earned his commission, which was any amount over P17,175. Allowing this commission and offsetting it against the unpaid balance meant the plaintiff was not entitled to a money judgment against the defendant. The Court reiterated that the agent had earned his commission by finding a willing and able buyer before the plaintiff's arbitrary revocation attempt.
Main Doctrine
A principal cannot arbitrarily revoke an agent's authority to sell real estate after the agent has secured a buyer willing and able to purchase under the terms set by the principal, especially when the revocation is motivated by the principal's change of mind regarding the price or annoyance at delays, and the agent has already earned their commission.