Steinberg v. Billet, 496 N.E.2d 892 (N.Y. 1986)

A seller is not liable for a real estate broker’s commission when the sale fails to materialize because the seller willfully refuses to sign a contract of sale, even if the broker produced a buyer ready, willing, and able to purchase the property on the seller’s terms, provided the brokerage agreement specifies the commission is due upon the passing of title, except for the seller’s willful default, and such default is interpreted to mean default after a contract is signed.

Summary

Steinberg, a real estate broker, sued Billet for a commission after Billet refused to sign a contract to sell property to a buyer procured by Steinberg. Billet refused the contract because he received a better offer. The brokerage agreement stipulated the commission was due upon the passing of title, except in cases of the seller’s willful default. The court held that Billet’s refusal to sign the contract did not constitute a “willful default” under the agreement. The court reasoned that “willful default” in the context of the agreement refers to a default after the contract is signed, not before. Therefore, Billet was not liable for the commission.

Facts

Steinberg, a real estate broker, entered into a brokerage agreement with Billet to find a buyer for Billet’s property.
Steinberg found a buyer, Steinberg, who was ready, willing, and able to purchase the property on Billet’s terms.
Billet refused to sign the contract of sale with Steinberg’s buyer because he received a better offer from another buyer.
The brokerage agreement stated, “The aforesaid commission is due and payable…as, if and when title passes…except for willful default on the part of the seller, in which case the commission shall be payable upon demand after said default.”

Procedural History

The trial court ruled in favor of Billet.
The Appellate Division affirmed the trial court’s decision.
The New York Court of Appeals affirmed the Appellate Division’s decision.

Issue(s)

Whether Billet’s refusal to sign the contract with Steinberg’s buyer constituted a “willful default” under the brokerage agreement, thus entitling Steinberg to a commission.

Holding

No, because in the context of the brokerage agreement,