Ross v. Perry

Annotate this Case

189 S.E.2d 226 (1972)

281 N.C. 570

Ruth P. ROSS v. Seborn PERRY.

No. 74.

Supreme Court of North Carolina.

June 16, 1972.

*228 McLendon, Brim, Brooks, Pierce & Daniels, and E. Norman Graham, and C. Allen Foster, Greensboro, for plaintiff appellant.

Jordan, Wright, Nichols, Caffrey & Hill, by Welch Jordan and William L. Stocks, Greensboro, for defendant appellee.

SHARP, Justice:

The question presented is: What effect did the unanticipated condemnation of defendant's property have upon the right of Ross' successor to continue to receive the commissions stipulated in defendant's letter of 20 September 1943 to Ross?

The rule is that a real estate broker, employed by the owner to sell or lease designated property, is entitled to his commission when he negotiates a sale or lease within the terms of his authority; and his right is not affected if the principal voluntarily cancels the contract which the broker negotiated. Bonn v. Summers, 249 N.C. 357, 106 S.E.2d 470 (1958); House v. Abell, 182 N.C. 619, 109 S.E. 877 (1921). Relying upon this rule, plaintiff contends that she is entitled to the commissions for which she has sued because "defendant, as lessor, and his lessee entered into a mutual cancelation of the lease." This contention, however, is without merit and finds no support in the record.

The lease was terminated on 1 February 1967 when the City of High Point took the hotel property in condemnation proceedings. While it might reasonably be argued that all parties contemplated the possibility that the lease might terminate before its expiration date because of the hotel's encroachment on the Railroad right-of-way, plaintiff concedes that condemnation by the City was a contingency which neither defendant nor Ross envisioned on 20 September 1943. Notwithstanding, their agreement on that date specifically provided that defendant would pay Ross commissions only as long as the lease continued and rents were collected from the tenant.

The contract between defendant and Ross is too clear to permit interpretation. "If there be no dispute in respect of the terms of the contract, and they are plain and unambiguous, there is no room for construction. The contract is to be interpreted as written." Jones v. Palace Realty Co., 226 N.C. 303, 305, 37 S.E.2d 906, 907 (1946). Accord, Barham v. Davenport, 247 N.C. 575, 101 S.E.2d 367 (1957).

Defendant's agreement was not an unconditional promise to pay monthly commissions for fifty years on the rent stipulated in the lease. Ross' right to commissions was expressly conditioned upon (1) the tenant's payment of rent and (2) the continuation of the lease "in force." Therefore, in the absence of a voluntary cancelation of the lease by defendant, or some arbitrary, capricious, unreasonable or wrongful act on his part, plaintiff's right to commissions ended with the termination of the lease on 1 February 1967. See Jones v. Palace Realty Co., supra; Segal Brokerage Co. v. Lloyd L. Hughes, Inc., 96 F.2d 208 (9th Cir. 1938); Dallas Dome Wyoming Oil Fields Co. v. Brooder, 55 Wyo. 109, 97 P.2d 311 (1940); Lind v. Huene, 205 Cal. 569, 271 P. 1087 (1928). See annot., 74 A.L.R.2d 437, §§ 12, 19(a) (1960); 12 Am.Jur.2d Brokers §§ 195, 199 (1964). Certainly, no voluntary or wrongful act by defendant put an end to the lease; defendant neither instigated the condemnation nor could he have prevented it.

Lest it be thought they were overlooked, we mention certain additional contentions and assertions made by plaintiff. Before doing so, however, we observe that they are without merit. Plaintiff contends that in the division of the compensation award the lessee received the value of his lease less the rents defendant would have received for the remaining 26 years and 7 months of the lease, and "thus the lease was `in force' between the parties to the *229 lease." Plaintiff asserts that defendant "not only received the benefit of the remaining rental payments due him under the lease but he received the benefit of the remaining 26½ years of rent telescoped into one lump sum." On this assumption she says she asks "only for the commuted value, and in a case where the lessor has received full payment for rents due to the end of the lease."

Plaintiff's assumption finds no support in the record or the law. The jury's verdict was a sum of money which could only be construed to represent the full and fair market value of the hotel property as of 1 February 1967.

When an entire tract is taken for public use the owner is entitled to recover only the fair market value of the property. His award is the purchase price which the condemnor pays for the fee simple title to the land. In determining its fair market value the rental value, or income, of the property is merely one of the factors to be considered. Income from the property is material only insofar as it throws light upon its market value.

"When rental property is condemned the owner may not recover for lost rents, but rental value of property is competent upon the question of the fair market value of the property at the time of the taking." Kirkman v. Highway Commission, 257 N.C. 428, 432, 126 S.E.2d 107, 110 (1962). See 27 Am.Jur.2d Eminent Domain § 433 (1966).

When condemned land is subject to a leasehold estate the tenant is entitled to share in the award since the value of his interest is a part of the value of the fee. See 27 Am.Jur.2d Eminent Domain § 250 (1966); 29A C.J.S. Eminent Domain § 198 (1965). "As a consequence, the owner is required to account to his lessee for the value of his lease." Durham v. Eastern Realty Co., 270 N.C. 631, 635, 155 S.E.2d 231, 234 (1967). Ordinarily the value of a lease is the difference between the rental value of the unexpired term and the rent reserved in the lease29A C.J.S. Eminent Domain § 143(b) (1965). If a forfeited lease is worth nothing more than the stipulated rent, the lessee has sustained no damage. He suffers a loss only when his lease is worth more than the rent he pays, that is, only when his lease is a bargain. Thus, when the owner of the fee is required to divide a compensation award with the owner of the leasehold he is not receiving rent from the lease but is, in effect, paying a penalty for it.

The record before us contains no explanation, or even a suggestion, of the method by which defendant and his lessee arrived at the value of the lease or the apportionment of the award between them. Nor does the record provide any clue as to what influence the lease may have had upon the evaluation of defendant's property in the condemnation proceeding. Whether the lease was in evidence, whether the tenant participated in the trial, whether stipulations were made, we do not know. However, in no view of this case can plaintiff base a claim for commissions upon defendant's award. It was not a payment of unaccrued rentals; it was the fair market value of the hotel property in cash, capital which had to be invested to earn income in lieu of the forfeited rents. Finally, defendant had agreed to pay commissions only as long as the lease remained in force and upon the rent paid by the tenant.

The decision of the Court of Appeals is

Affirmed.