Nestle Company v. J.H. Ewing & Sons: Georgia Court of Appeals Examines Procuring Cause in Commission Dispute

Nestle' named Coldwell Banker (Coldwell) as its exclusive agent to find a tenant for its commercial property. After the exclusive listing expired on June 1, 1977, the property was placed on an "open listing." On August 11, 1977, Coldwell, acting in concert with Allen Morris Company (AMC), another brokerage firm, showed the building to Scripto's vice-president for operations, Rawlins. Coldwell and AMC immediately registered Scripto with Nestle' as a prospective tenant.

Anderson and Scott were real estate agents for J. H. Ewing & Sons and Real Estate Concepts respectively. Both men had assisted Scripto since 1976 in its search for a suitable building in which to relocate. In return, they expected a broker's commission from the owner of whatever facility Scripto finally chose. Anderson showed the Nestle' building to a Scripto consultant in June 1976, but Scripto had no interest at that time. However, by late 1977 Scripto's needs had changed, and again considered the property. On September 29, 1977, Anderson phoned Nestle's general manager for warehousing, Wellman, and advised him that he had a "hot prospect." Wellman confirmed that the building was still available and that there was no longer an exclusive listing on it. The testimony conflicted as to whether Anderson identified Scripto as his hot prospect during this initial conversation.

The following day, Anderson accompanied several Scripto officers, including Rawlins, on an inspection tour. The officers reacted positively and Anderson was instructed to pursue negotiations with Nestle'. Later that day, Anderson again phoned Wellman, advised him of Scripto's favorable response, and requested certain documents regarding the building. There was no question that Scripto was identified as the prospective tenant during this conversation.

Realizing that he had a potential commission dispute, Wellman consulted with his management, who instructed him not to have any further communication with Anderson. Nestle' soon thereafter obtained a statement from Coldwell describing its efforts on Scripto's behalf and, based on this statement, concluded that Coldwell would be entitled to the commission if Scripto decided to rent the building. During subsequent phone calls to Nestle', Anderson was told that Wellman did not wish to speak to him and that further calls regarding Scripto's interest in the building should be directed to Coldwell. Anderson reported this to Scripto and advised its management to contact Nestle' directly. Scripto did so and was put in contact with Coldwell. A sublease was negotiated soon thereafter and was closed on November 1, 1977. Coldwell handled the negotiations and received a commission of $59,000.

Anderson, Scott, J. H. Ewing & Sons, and Real Estate Concepts sued Nestle' to recover a broker's commission. The plaintiffs sought recovery based on breach of an alleged agency agreement, tortious interference with property rights, and quantum meruit. In addition to the commission, they sought punitive damages and attorney's fees. In response to written questions by the trial court, the jury found that there was an agency agreement between plaintiffs and defendant, and Nestle' had breached it to plaintiff's detriment. The jury also found that Nestle' was guilty of tortious interference with property rights (their alleged contractual relationship with Scripto). The plaintiffs were awarded $70,000 as compensation, exemplary damages of $50,000, and attorney fees exceeding $20,000. After unsuccessfully moving for a new trial and for judgment notwithstanding the verdict, Nestle' appealed.

The Court of Appeals of Georgia found that for the plaintiffs to recover, the trial court must make a determination that they were the "procuring cause." The court of appeals noted that where two brokers contribute to successful negotiations resulting in the transfer of real estate for an owner, the broker whose services and efforts were the primary, proximate, and procuring cause of the transfer is entitled to the commission. The court added that a broker makes a prima facie case of procuring cause when he shows that negotiations for the sale were begun through his efforts, that he performed every service required by his employment which it was possible to perform, and that the failure on his part to personally consummate the transaction was due to the interference of the defendant.

The Court of Appeals of Georgia reversed the jury's finding of tortious interference with property rights. The court concluded that the evidence did not support the finding, as the arrangement between Scripto and the plaintiffs disclosed no contractual rights with which Nestle' could have interfered. As a result of this reversal, the court concluded that the punitive damages award could no longer stand. Further, the court concluded that the recovery of attorney fees was not permitted as the case was a "bona fide" controversy.

Nestle' Company, Inc. v. J. H. Ewing & Sons et al., 153 Ga. App. 328, 265 S.E.2d 61 (1980).