Townsends Inlet Realty, Inc. v. Bradley

A-3471-97T1 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: April 15, 1999

BROKERS; COMMISSIONS; NOTICE—Where it is undisputed that written notice has been received, but not clear as to when, a notice sent by regular mail will not substitute for a statutorily required registered mail notice.

A real estate broker entered into an oral agreement to market two properties. The agreement provided that a commission was to be payable upon reaching agreeable terms with a buyer. The broker’s agent sent a letter by regular mail to the property owner, allegedly to confirm the agreement. The broker then contacted a potential buyer whose offer was presented by the broker to the property owner by telephone and facsimile. The offer was orally rejected on the same day. The next day, the property owner sent a letter to the broker advising the broker that it had decided to list one of the properties with another broker and that the understanding set forth in the first broker’s letter was no longer in effect with respect to that property. The original broker alleged that it continued to market the second property because the property owner’s letter did not mention that property. Nonetheless, it had no communication with the property owner. About two months later, the property owner entered into a contract of sale for the second property. Under the terms of that contract, no commission was to be paid to anyone. After the closing took place, the original broker brought an action for its commission.

The record indicated that the broker never had any contact with the individual who ultimately bought the property. The buyer testified that its seller told him that he did not have a listing agreement and that the broker’s agent confirmed to him that there was no listing agreement. The lower court dismissed the broker’s complaint, finding that it failed to comply with the service of notice requirement in the manner required by the statute of frauds and that the broker provided no proof that the buyer and seller conspired to deprive it of a commission. On appeal, the broker argued that it satisfied the notice requirements and that it was the efficient procuring cause of the sale. Further, it claimed it should recover under a quantum meruit approach. Under the relevant statute of frauds (which has since been amended), a broker who had an oral commission agreement was required to send notice by registered mail to the last known post-office address of the property owner within five days after the making of the agreement and prior to the actual sale or exchange of the property. It was undisputed that the broker sent the required notice by ordinary mail. There was no evidence as to when the letter was actually deposited in the post office. In addition, while the property owner admitted receiving the letter, there was no proof that it received it within five days of the oral agreement. According to the Court, “one may only speculate as to when it might have been received. One obvious purpose of [the statute] in requiring personal service or registered mail was to avoid speculation about time of receipt .” Earlier case law considered it important that the Legislature, by prescribing registered rather than ordinary mail as the mode of service, expressed an intent to require positive proof of service from a signed receipt. In addition, another earlier case, though acknowledging that “strict compliance with the statute” is required, awarded a commission to the broker because there was clear evidence that the statutorily mandated written notice was delivered within the time period provided by the statute, even though not in the precise manner prescribed. Such were not the facts in this case. In the earlier cases that overlooked a failure to deliver a notice by registered mail, what was determinative “was whether the defendant actually received the notice, though improperly served, within the time frame set forth under the statute.” Here, no evidence enabled the Court to determine that the notice had been delivered within the five day period. In the court’s view, the statute was designed precisely to avoid this kind of speculative dispute.

As to the broker’s claim of entitlement under the theory of quantum meruit, the Court held that no such claim could arise out of an oral contract to pay a commission when the contract violates the statute of frauds. A broker cannot evade the statute of frauds by casting the action as a claim in quantum meruit.