Urban Investments, Inc. v. Branham

trust, creating the agreement and his

comply any requirements savings

institution did not alter that fact. Nor did agreement

his to review the matter with

attorney Dolphin have that effect. We are

satisfied that Dr. Cabaniss went to his un-

fortunate death the belief that he had

taken steps additional to assure the well-be- incompetent his daughter.

We conclude that the trial court correctly

ruled that decedent had unconditionally trust,

manifested his intention to create a

that the trust was created for the benefit of

Carla, and that consequently appellee was

entitled to summary judgment as a matter

of law.

Affirmed. INVESTMENTS, INC.,

URBAN et

al., Appellants, BRANHAM, Appellee.

Lillian

No. 79-816.

District of Columbia Appeals. Court of

Argued April 1980. July

Decided Axelson, D.C., M.

Jeffrey Washington, for appellants. Cooper, Washington,

Clement Theodore D.C., appellee. for NEWMAN, Judge, Chief Before FERREN, Judges. Associate MACK PER CURIAM: case the trial court rescinded contract, real sales cancelled parties’ estate trust, deeds of and or- corresponding (defendant- its agent vendor and dered the appellants) return $7,000 pay- down (plaintiff-appellee) appellee also awarded ment. The court stated, $3,500 damages. Briefly punitive a sales con- Branham entered into appellee appellant, Urban tract with Inc., for buy located 3715 Ninth tered into the property Street, $52,500, putting N.W. Soon and ar- after execution of down for two deeds of ranging repairs discovered trust remainder. The trial (for which responsi- found it was “understood that ble) had not sought [Branham] been made. rescis- She house would move into the sion of damages. the contract and The trial necessary repairs and that all would granted grounds her relief on the completed by then.” The trial court also appellants to fiduciary duty breached their negotiations, during found that Greenbaum appellee, resulting and his superior position was in to exert influ- a was unconscionable of appellants’ because experienced ence because of his status as an misrepresentations superior fraudulent and greater sophisti- real estate broker and his bargaining position. reviewing After Additionally, elderly cation. Branham was law, first, hold, record and the relevant education, high and business school no that the trial concluding court erred in “little, experience, comprehen- and if any, duty had a appellee. provisions sion of the docu- various We disagree, moreover, with the trial signed.” ments she court’s unconscionability ruling. Conse- time At the the sales contract and deeds quently, judgment we reverse the in appel- executed, of trust were Urban Investments lee’s favor. property stating held a deed to the it was subject to the interests of Louis Johnson I and Johnson. Aleushia Urban Investments 1978, In January having recently inherit- quitclaim also held two unrecorded deeds $20,000 husband, ed from her conveyed by the Johnsons. After settle- Branham began looking buy. home to ment, appellants quit- recorded both the Branham, son, her acquaintance and an claim cloud on (thereby removing deeds looked at a vacant house located at 3715 title) prop- and the deed conveying the Ninth Street, N.W. The house was in 29, erty January to Branham. On Branham dilapidated condition, but Branham decided went the house and found that re- purchase anyway. it acquaintance Her not pairs had been started. demanded She directed her office A-l Realty, rescission the contract and return of her wholly-owned subsidiary appellant Ur- down payment. Appellants countered ban which owned the Ninth consisting repair eye- evidence bills and office, property. Street At the Branham testimony showing repairs witness Willis, appellant met Elaine secretary substantially complete were at least one Urban Investments employee and an of A-l week later. Realty. Branham told Willis that The trial court concluded that wanted to buy if she would not fiduciary duty owed a to Branham and Willis, have to put more than down. by failing breached advise her to ob- reference, after checking Branham’s bank counsel, independent disclosing by tain financing said that arranged could be two unre- quitclaim deeds were Branham deposited $7,000. Comment- settlement, by corded at the time of and house, on the condition of the Willis told “understanding” some reaching the necessary work would be necessary repairs. relying The trial completed in two to three weeks. negotiations, on the manner of the also later, 18, Branham, days

Six that the contract was unconscion- concluded children, accompanied by her grown two able.

returned appellants’ office. Willis intro- II Greenbaum, duced Branham to Irvin presi- (and dent Urban damage Investments Willis’ court predicated The trial its brother). meeting, appellants’ At Branham en- award to Branham on breach circumstances, unless, full action under fiduciary duty dealing of “fair and certain protection

disclosure utmost parties fully freely and the have consented transaction,” interests in the v. Goodman representation. to the dual [Branham’s] Coates, 102 quoting Brown v. Woods, (D.C.1969); Keith 259 A.2d Specifical- F.2d (D.C.Mun.App. Berry, ly, “competent the court said that 840; Am.Jur.2d, 1949); Brokers, individual, seeking protect honest 598, 601- Salisbury, see Yerkie v. 264 Md. “permit” interests of the plaintiff,” (where seller her to the contract and settle without to use skill broker, broker’s employs about the reaching agreement necessary exclu diligence, zeal for seller’s “own repairs, advising initiate sum, benefit”).1 In least sive competent a title search examiner or by vendor both absence of informed consent appraisal. to obtain an Cer- independent con purchaser, “irreconcilable that, appellants it is true if had a tainly (to broker flicting” duties of vendor’s Branham, they with fiduciary relationship for the possible price highest obtain the held with duty must be to a strict to act (to purchaser’s broker property) and good loyalty, utmost faith and in further- buy possible for lowest property court, ance of her The trial how- interests. serving one price) preclude individual ever, misconstruing while nature of Harten agent principals. as both for context, fiduciary in this nonetheless duty If a Loffler, 362, (1908). 368 App.D.C. 31 fidu- deciding erred had a sides, “he is to act for both attempts broker ciary duty to here. purchaser We of se impossible with the task confronted support clude the insufficient evidence is advantageous most bar for each the curing finding confidential rela- special that a Am.Jur.2d, Brokers, 12 gain possible.” tionship was between appellants established 87, (footnote omitted). at 841 § treat requiring appellants and Branham Willis, secre- present In the Elaine ordinary as than an anything sale other and Irvin tary of Urban business transaction. Greenbaum, Invest- president of Urban that, un trial court is correct ments, corpora- agents were for the vendor law, der well settled “a broker principles such, fiduciary they their tion.2 As owed highest fidelity owes his principal the vendor. duty “highest fidelity” trust by obligations of his bound Thus, at unless 755. Jay, supra, fully develop inform the principal every imposed other a similar circumstances Jay affecting ment his interest.” v. Gener (Branham), purchaser toward the Co., 752, (D.C.Mun. al Realties 755 parties. both permitted were not serve (suit for App.1946) principal recovery Goodman, at 596. supra, 259 A.2d See on profit secret does not have be based courts We examined cases where fraud; have ground it is if extreme sufficient also broker the vendor’s held fi principal scrupulous did not give broker It is fiduciary duty buyer. to the owed a demands); 12 Am.Jur.2d delity law present cases 84, apparent these (1964). readily Because a Brokers at 837 § ordinary business ad factors addition protecting broker is charged purchas- interests, prospective relationship between a broker vancing principal’s example, er vendor’s broker. For parties both to a trans- and the thus serve middleman, only states that “the broker fail[ed] broker as a mere The trial court 1. If the acts Yet, together ly bringing parties property.” advis his interest in the to disclose behalf, party’s the bro on either Branham testified she understood agent act as for both ker in some cases parties. purchasing from Willis Brokers, 841; Am.Jur.2d, addition, 12 lists Ur- the contract Greenbaum. Loffler, App.D.C. Harten v. see as the ban Investments vendor. Coates, were, in Brown v. parties ties situated as these cannot 301-02, (1958), F.2d equity.” relied receive sanction of a court of by the trial Id4 plaintiffs first hired real estate broker to sell their home but us, however, In the case before there persuaded by were exchange the broker to basis evidentiary their he home one showed them. When present circumstances remove the case

plaintiffs during hesitated negotiations, estate general from the rule that the real broker affirmatively assured them that must act for the benefit of broker exclusive they did not a lawyer need because he was the principal principal only. and for that one and take “would care of them.” The Brown, Unlike there vendor- was no initial that, situation,” court there said “in this later devel- broker relation broker plaintiffs, owed both as vendors and Nor, oped a purchaser-broker into relation. purchasers, high degree fidelity Brown, affirmatively as in did appellants throughout the transaction. Id. 253 tell procure lawyer Branham not to be- F.2d at 38. And, they cause after un- would look her. Hammett, appellants like the realtor Similarly, in Ruby Hammett v. Lee Mi Branham; they not friends had no nar, Inc., 60 App.D.C. 53 F.2d go reason to believe she would forward (1931), denied, cert. 52 S.Ct. U.S. only with the sale advised the same. (1932), 76 L.Ed. 576 special circum Nor, Hammett, where the stances created a duty between was advised to the contract even (a realty defendants company presi and its she though had not seen the are property, dent), who were trying property, to sell the there in the present suggesting facts and plaintiff, prospective the purchaser. unsuspecting that an into a party was lulled Plaintiff long-time was a friend and former security. false Minar, employee of Mrs. company’s the president; she told a company salesperson sum, there is evidence insufficient that she would not go through with the That circumstances here. personally transaction until she had consult superior position by Greenbaum was “in a ed Mrs. talking Minar. After to Mrs. Mi- virtue his status” as a not broker does nar, plaintiff a signed property contract for tri imply fiduciary obligation. alone a which she had never exchange seen. In states, al court “It is inconceivable her regular payments, did re plaintiff not individual, seeking competent and honest land; instead, ceive a deed to the re she protect the interests of the plaintiff, personal ceived a requir services contract her to deal permit consummate the ing defendants to deliver the deed at the independent ad recommending obtain 289, end of years. ten Id. at 53 F.2d 147. added). vice or counsel” Con (emphasis The contract thus was not a recordable understanding, the law trary to court’s deed, and, consequently, no one on would be broker with charge does not vendor’s plaintiff’s notice of in interest the land.3 At protection purchaser’s interest. said, contracts, ap The court there “These least in this where Branham circumstances, made these par investigated proached appellants between after she Additionally, ported “finding 3. the court referred to the “undue trial court’s fraud” buyer. imposed “price burdens and hazards” on land which defendant 289, Appellee Id. at 53 F.2d 147. here has plaintiff buy” “any not bear induced did similar, produced not evidence of unfair results. Id. at reasonable relation to its actual value.” III See Part B. infra. Hiltpold proposition 126-27. stands for the duty fraudulently vendor has a not to Stern, 123, (D.C. Hiltpold v. A.2d 82 126 purchase; buyer a into not induce does Mun.App.1951), refers the court vendor however, follow, ven- or the the vendor who of” the “won the trust and confidence solely agent dor’s has to act permitted purchaser. Yet the court cancella purchaser’s interest. sup- tion of the contract because evidence 98 (1) disrepair, appel- The essential elements of fraud are: its state affirmatively required

lants were representation (2) false reference advice or advise Branham to obtain outside (3) knowledge material fact made with until bargaining refrain its with the intent deceive falsity she did so. upon repre (5) action taken reliance v. C.J. sentation. Blake Construction Co. Ill Co., 569, (D.C.1981); Coakley 577 had Having determined Inc., & A.2d Phelps, Remeikis v. Boss 419 Branham, obligation special fiduciary 986, v. (D.C.1980); accord Howard 988 to the court’s turn determination Bank, 706 Riggs National and thus that the contract itself invalid (D.C.1981). binding. signs who One course, obligated by provi its ordinarily points property’s Robinson, Housing Corp. sions. Diamond v. general disrepair state 257 (D.C.1969); Hollywood A.2d 493 appellants’ repre 1978 and contends that Gibson, A.2d Clothing Credit v. Co. com that all would be repairs sentations (D.C.1963). be unen A contract will date5 pleted by that were fraudulent forceable, however, one party’s assent contract.6 It induced her to misrepresen fraud through obtained note, however, “promis that a important to tation, or under circumstances render representation as sory representation, or a unconscionable. Diamond asserted in a common law to future events Housing, supra; Hollywood Clothing Credit action, be only fraud should considered Co., supra; Williams Walker-Thomas where the evi misrepresentation fact Co., Furniture promise was made dence shows will F.2d Relief intent or that perform, without the parties afforded “the minds of the because events promisor knowledge did not meet ‘honestly fairly without Kiggins, occur.” Bennett v. would not misunderstanding, upon mistake or mutual ” denied, (D.C.1977), A.2d cert. all points Holly the essential involved.’ 54 782 U.S. 98 S.Ct. L.Ed.2d Co., Clothing wood 188 supra, Credit A.2d Howard, at (1978); supra, 432 A.2d omitted). accord (citation 349 See also Bennett repairs that not Fitness, (D.C. v. A.2d 480 706. The fact were Fun & 434 1981) (this law applying Maryland on by January support 29 does performed unconscionability). representing appellants, in conclusion that never completed, the repdirs would be Obviously, A. Fraud. there cannot carry promise; there intended to out agreement be an honest when one and fair support record no other evidence induces another to party fraudulently promise “was appellants’ inference that case, contract. such a the court will To perform.” the intent made without grant Lee party. relief to the deceived v. appellants put forth evidence contrary, (D.C. Enterprises, Fisco 46 completed promised repairs 1967); Perillo, The Law J. Calamari & J. of 9-13, (2d 1977). January at 277-78 ed. one week after § Contracts misrepresentation, appears 5. The evidence unclear as to whether was no fraudulent there (a repair date was time was essence time was we decline to review the contract). mentioned however, The trial of essence. plain- stated: “It was understood tiff would move into the on house visited observed 6. Branham necessary repairs and that all would be com- consulting appellants. its before She condition pleted by then.” Whether time is of es- justifiably cannot claim she relied therefore any may question be sence the trier fact. existing appellants as to statement Contractors, Ltd., Peoples Murchison property. condition of the (D.C.1969). A.2d Because hold If (1938) curiam) (if we assume the in Branham’s fa- vendor (per facts F.2d appellants promised completion vor—that able to remove encumbrances ready and title, repairs by January convey that this date was clear existence of encum- obli- essence of the and that the does not relieve brances deeds, more- repairs may gation buy). quitclaim were not done The on time —there over, after settlement shortly cause action for breach contract. were recorded But support this evidence does not a conclu- of this contract. The record therefore, promise support sion that fraudulent. does not the conclusion represented There is no evidence material appellants posi- appellants falsely tively stated that was to be something facts to Branham with intent deceive done, and, consequence, procured her assent knowing intending contrary. Howard, (quot- See 432 A.2d at 706 the contract. ing Kiggins, supra, Bennett v. 377 A.2d at Unconscionability. pur B. 61). doctrine is to pose unconscionability Nor appellants’ did other actions consti- surprise.” prevent “oppression and unfair tute ap- fraud. The trial court found that Perillo, (citations J. J. supra Calamari &

pellants (1) failed to disclose their interest omitted). Thus a “contract be uncon (2) property, charged in the Branham for a scionable either because of the manner in title search never intended conduct which it was sub made or because benefit, for her did not disclose or, terms of the fre stantive contract more Branham the existence of a on the cloud both.” quently, because combination of title. place, In the first although appellants Fitness, supra, Bennett v. Fun & may not have told Branham about explicitly Perillo, J. (citing at 480 J. Calamari & su vendor, their affiliations with the Urban 9-40, 325). These two pra, elements acknowledged dur- as procedural are often referred to uncon- testimony thought that she scionability and substantive unconscionabil purchasing the house from Willis and ity. Leff, Unconscionability See Greenbaum, and the contract itself identi- Clause, Emperor’s Code — The New appellant fies Urban Investments as the (1967). Although U.Pa.L.Rev. Thus, appellants vendor. actively did not usually present both elements are in uncon- conceal the nor ownership property, cases, scionability we have indicated was Branham under impression. a false situation, egregious “in an one or the other Fitness, Bennett v. suffice.” Fun & Further, concerning as to the issues supra, at 480 n. 4. A.2d title, appellants’ even we assume that failure Usually, party seeking to order a title search to disclose to avoid the quitclaim prove that the deeds were unrecorded “an contract must both elements: to misrepresentations, meaningful amounted were choice the part absence material; the that provided parties together contract of the with contract one any defect of title could and be favorable to unreasonably reme terms which are Williams, supra, died at the vendor’s would not 121 expense party.” the other U.S. 319, permit voiding (footnote the at 350 449 App.D.C. the contract. See F.2d at Baker, 266, 267, Bruffy omitted).7 arguably 69 100 In this Branham App.D.C. Co., Housing supra, Corp., 7. Accord Diamond 257 lowitzki v. Atlantic Richfield 396 A.2d (tenant defending power possession (Del.1978) (“[sjuperior bargaining A.2d 492 suit 960 alleged unconscionability containing of lease alone without the element of unreasonableness days unconscionability right permit clause that waived to 30 notice does not Co., because, quit; disagreed although unfairness”); to court or Weaver v. American Oil 460-462, may meaningful 146 there have been “absence of 257 Ind. 276 N.E.2d parties’ (1971) (inquiry analysis unequal to bar- includes of whether choice” attributable the position, waiving gaining to be contract term notice “the clauses involved are so one-sided as unfair); quit Tu- under the circumstances exist- to was not unreasonable or unconscionable 100 481, it is ness, usually difficult meaningful an absence of 434 A.2d at

demonstrated of the four corners unconscionability) but determine (procedural choice the terms are unconscion- evidence that the con- contract whether put failed forth able; setting, purpose, tract advanta- the commercial unreasonably terms were be normally must geous (substantive unconscion- effect of the contract circumstances, considered, through thus established there- ability). Under the fore, below, v. Walker- evidence. Patterson we must reverse extrinsic as elaborated Co., 111, 114 277 A.2d ruling the contract Thomas Furniture trial court’s that (D.C.1971).9 subject re- was and thus unconscionable scission.8 The court on the man trial relied prima showing Without a facie unconscion- negotiations procedural ner of — itself item of it “affronts any contract unconscion ability declare contract —to J. & decency,” light sense J. Calamari “that in here. court stated able The Perillo, 9-40, (citations supra, at 325 par § of the expertise of the divergence omitted), grant it is rescission on difficult was ties, the sale the time frame which unconscionability. Without grounds plaintiff inability completed, and unfair, the proof the terms are court and understand fully read what normally will be unable to ascertain was the sale of the [] party detriment the weaker suffered as is bargain arms-length of an result the bargaining process. result of Unless Even if we assume unconscionable.” therefore, “egregious,” sales tactics are implied find trial correctness of the court’s Fitness, supra, v. Fun 434 A.2d Bennett & deprived ing negotiations seeking to avoid the party choice,10 480 n. perceive do not meaningful “the will to show that terms contract egregious to be procedural factors these appear ruling are ‘so extreme as to unconscionable themselves, support enough, according prac- to the mores and business unconscionability. ’’ Williams, place.’ tices of the time and is there record evidence Nor 320, 350 F.2d at 121 terms resulted contract negotiations Corbin, (quoting Contracts unreasonably appellants. favorable Tulowitzki, (1963)); supra note fair- as to the only presented evidence The at 960. price consisted of sale ness of the terms insur- the title Furthermore, ($52,500) the value of “[ojoutland although prop- procured for the ish in themselves render a con ance that terms” “the stated court unenforceable, ($16,500). erty Bennett v. Fun & Fit- tract contract”); making basis on which conclude has little at the time of the unreasonably Corp., to one May favorable W.L. Co. v. Philco-Ford Or. surrounding 705-707, (sufficient (“party party. facts See id. P.2d setting, must unconscionability purpose, and effect” asserting must demonstrate “commercial alleged proved form question so unconscionable that the clause in made”). judgment of un- existence of valid claim as to at the time contract was conscionability). unconscionability aas 8. The court determines law, clear there Walker-Thomas record matter of Patterson v. 10.From the Co., strength (D.C.1971). bargaining inequality attribut- Furniture some exper- superior appellants’ real estate to able expe- of business end, total lack tise and Branham’s encourage the use of dis- this we 9. To did not note that Branham seeking But we also covery party rience. avoidance so that the after she saw opportuni- the contract until week a reasonable the contract opportunity to property, she had an ty and that present substance of the evidence that the surrounding she that she light the contract: admitted read of the contract is unfair signed Patterson, before all of the contract she not read A.2d circumstances. my glass- read without she “can’t well mores and busi- because of the 114. Without evidence place, practices es.” time and a court of the ness fact that the was in the the contract policy proof unreasonably amount was $16,500 appellants. favorable to some indication as what defendants felt was worth.” property Reversed. insurance, however, Title does not necessar- on

ily improvements reflect the value MACK, Judge, dissenting: Associate land, and, event, any appellants procured I title insurance for Urban Thus, for Branham. record evi- The trial was the noblest property dence that insured the judicial traditions when it ordered contract, value, for its resale it rescission of this real estate sales speculative is as- deeds of corresponding cancellation sume that the title insurance is rele- policy trust and the return to the of her vant here. $7,000 payment. majority down The of this Moreover, the salient consideration in a court, in is cold reversing, preoccupied with unconscionability substantive is not analysis principles ordinary transactions business what the “felt” value defending party lawyer disagree; with which no Rather, proper was. the com- focus is however, blindly adhering principles setting, mercial purpose, and effect glossing over factual cir- presented contract. Branham no evidence cumstances remove this case from prices comparable proper- as to the sale mold, it ordinary compelling result that neighborhood. ties in the Nor did she show equity no court of should sanction. appellants’ financing arrangement was amply I read the facts in light unreasonable of the business cir- trial of un- supporting findings court’s cumstances the time the contract dealings conscionable contractual evidence, executed. objective Without such oversimplify- duty. breach broker’s $52,- a finding that sale of the I ing the transactions run the risk of distor- unreasonably 500 was appel- favorable to but since I see the facts as supporting tion lants cannot be sustained this record. conclusion, I take that risk. This my record Basically, a court cannot conclude in a real essentially experienced shows that es- vacuum, $52,500 reference to a selling have, by passive tate dealers active and price, that this contract is unconscionable. misrepresentations pressured elderly an accordingly has carry failed to her widow, little and no formal education demonstrating burden of the contract whatever, turning into experience business or, egregious the result of overreaching money practically over to them all terms, by its is extreme and uncon- down on the possessed payment thus for the scionable relative to the of a house which dealers purchase price mores and business practices they could of the time and themselves owned and which place the contract to own. expect with confidence to continue was executed. credi- position judge trial in a The thusly: described bility, IV is satisfied that the defend- Court presents This case situa- unfortunate ants, learning plaintiff had upon a party tion which entered con- a sales apply to willing she was which tract residential later property and estate, real rushed purchase Although wished she had not. sym- we are with- through a contract and settlement situation, pathetic with her reverse must her of making any apprise effort to out court’s order that the steps might which she the various subject (and rescission interests.... protect sider punitive damages). short, also must There pay realized that the defendants careful were no fatal defects in fish prize the formation of had hooked in the line. leaving and there was insufficient avoid slack 1st and 2nd deeds of view, in which this the issuance of my the manner Branham support contract was made alone would Investments. Mrs. trust Urban as re- procedural unconscionability such what testified that she did understand Bennett v. Fun & quire affirmance. See thought was She said she she signing. she Hill, Inc., Fitness of Silver for with an signing was a contract rental Moreover, cir- (D.C.1981). there are arrangement she said she option buy —an cumstances here which remove this newspaper a ad. had learned about from general that operation from the of the rule print of the con- did not read the fine She a real estate broker acts for the exclusive reading glasses she no tracts because had Hiltpold v. principal. benefit of his See her to urged her. Mr. Greenbaum Stern, (D.C.Mun.App.1951); 82 A.2d 123 relied she explanation Coates, 300, Brown v. both and Willis. upon Greenbaum Mi- (1958); Ruby F.2d 36 Hammett v. Lee In this the trial court found respect, nar, Inc., F.2d 144 App.D.C. out time himself Mr. Greenbaum the held - broker, Mrs. a that he did not inform as ordinary show this facts was in the he also Branham that was relationship prospective business between a property, owner of capacity of the purchaser and the vendor’s broker. For all awas did not out that the owner point he practical purposes, here the broker was corporation, that he and Ms. Willis (a vendor. Branham widow When Mrs. that Mrs. corporation, of that officers with income from Veteran’s Benefits and an inde- seek advice from should month)1 Security totalling per Social $393 Noting person. pendent Realty entered the A-l office timely repairs gave assurances of 12,1978, entering she was in fact the office not, in- were not which were property wholly-owned subsidiary appellant be, also relied kept, the trial court tended Investments, in- expressed Urban Inc. She showing appellants did facts upon terest in vacant if would be made a house of the then-existence appellee inform so she told the office doing habitable. or the property title cloud on the Willis, manager, who was also Elaine secre- her protect of title insurance to availability Investments, how much mon- tary Urban sub- (although interest Urban Investments she had received from her late husband’s ey its own insurance for sequently procured estate, that mon- and where the balance of incredi- The trial court found protection). ey promptly and Ms. Willis deposited, Greenbaum that testimony of Irvin ble days fact. Ms. Willis verified this later Six search, for Mrs. Branham was title which her escorting Branham and one of Mrs. to settle- prior charged, had been instituted brother, children into the office of her Irvin ment. Greenbaum, a licensed real estate broker findings as made Finally, the (who president of Invest- was the Urban sophistication and relative status ments), only where Mrs. Branham not Greenbaum, Mr. as parties noting signed wrote check — witness, gained the confidence exhibited house from purchase tract real estate broker years licensed where, but in the ab- Urban very and her children and that any representative sence of title com- provi- little, comprehension of necessary any,2 pany, signed papers she all the signed. documents on the includ- sions the various complete settlement accompanied daughter, were on Public ham’s who Mrs. adult children Branham’s session, contract-signing, settlement Assistance. combined testified: accompanied her to 2. Mrs. Branham’s son who just kept asking questions Willis] [Ms. visit, thought realty office on the first my was all she father’s death about going rent the house. He did his mother was said, [sic], gave Mr. Willis he me “mortgage” Bran- what a was. Mrs. not know law, As a Bennett, matter of the trial court 434 A.2d at 480 n. 4. As to cluded contract, that appellants owed a the manner of making we noted duty to appellee, appellee right important had the that it was for the trial court to to, did, upon and the rely competence, hon- consider whether the seller identified and esty Greenbaum, contract, good explained and faith of Mr. the those particularly might unusual in which viewed as or un- had breached a also seeking protect appellee’s recognized to fair.3 We that sales tactics Rely- interest. ing upon was a divergence the relevant —whether there weak- expertise er parties, bargaining position sophistica- the time or frame in which lack sale was part party exploited by of the tion on the of one completed, the inability plaintiff to read fully party. Applying other Id. at understand considerations, the trial court these I would find no diffi- found that the sale of the culty concluding was not the of an court was result arms-length making correct in the manner of bargain and was unconsciona- ble. this so to Finally, egregious the trial court Wil- contract be uncon- found that Greenbaum, lis concert, Appellants exploited scionable. will- fully fraudulently unequal bargaining power made to obtain a promises knowing could windfall well that knowing not fulfill full same, to accompli. induce windfall would become a the sales fait view, contract and immediately proceed my inquiry second line of into the to settle- ment. substantive terms of the is contract neces-

sary. If the record that appellee’s shows situation financial was such she could II house, pay appellants, I am by somewhat puzzled inducing her to make a down payment the majority’s reluctance apply theory taking and in over 1st and 2nd trusts for of unconscionability. In Bennett Fun & same, fact, knew this the favorable or Hill, Fitness Inc., of Silver supra, we noted terms unfavorable of the contract are of no contract be unconscionable “[a] moment. either because of the manner in it which was made or because of the puzzled substantive I am by majority’s likewise or, terms of the contract more frequently, strong principle reliance the established because of a (citing combination of both” J. that it broker’s duty solely is a to act for his CALAMARI & J. 9-40, benefit. Here broker principal’s § PERILLO, CONTRACTS (2d at 325 1977)). ed. We am, added “we do not therefore, his own acting for benefit. I understand ... necessarily decisions unimpressed by majority rationale in [the] to require the presence of both distinguish elements which have attempting cases establish unconscionability; in an egregious held that create a circumstances de- situation one or other may suffice.” gree fidelity by owed broker to a 3. See purchase property before and she had never remember what seen a white Comment d signed the house back from me much told him I didn’t understand stand it. It was paper daughter papers.” Restatement looked settlement rent she read. And (Tent.Draft belonged my like, and said didn’t just sheet. had (Second) never papers as I some replied: No. I Asked if was to seen a contract pay every papers saying Contracts, mother and how it then he took it 1970) (bad “I know was have to read it she mother month. under- § and I faith performance voidable Corbin, language in which the party causes the mistake that the other is accepts an instrument induced making most often signer is illiterate If specify equally other Contracts, mistake of when he terms). by by applicable inferred from an abuse of a illustrated the artifice or party, signs. (Footnotes mistaken or is unfamiliar course party cases misrepresentation signer. who is written but in which the in which one reading contract omitted.) with the signs This is power it is Coates, he would supra. appellant, Brown v. In faith assured that

purchaser. Cf. truth, painstakingly sepa- interests; in analysis, such guard conversely, appel- their rating duty the unconscion- concepts and owed lant must be considered to have underpinnings ability recognize does not the appellees high degree fidelity a —fore- of these rela- decisions—that the obligation most being dealing of fair tionship broker, insure operates to full and protec- and disclosure the utmost by way superior of his cannot position, in tion their interests the transaction. through and practices, devious unfair win Id. trust and unsuspecting party of an lull view, In the instant my presents party taking operating into loss Brown. analogous situation that of the broker’s benefit. Here, Brown, as was led in It is the com- remembering worth broker, real who believe that estate realtor, law in recognizes mon that a addi- and held conducted the entire transaction good tion to the faith loyalty duties and broker, was out for looking himself out as a principal, pub- he his owe to owes Brown, inducement her interests. In lic, including prospective purchaser, appellees by leading was fed assurances duty dealing of fair Funk honesty. See broker, that, dealing to conclude in with Tifft, (9th Cir.1975); v. Ward 515 F.2d v. needed; in the in- outside advice was not Taggart, 51 Cal.2d 336 P.2d 534 by fed as- stant the inducement was (en banc); Adametz, Harper v. 142 Conn. appellee’s wishes would surances that (1955); Quinn Phipps, 113 A.2d 136 v. with, time complied by exerting unusual (1927).4 93 Fla. 113 So. remaining silent on critical pressures, and Moreover, general that a broker duty matters, even keep designed what suggested owes is in Brown v. public unequal bargaining position more of an Coates, Judge where supra then-Circuit instanc- (than Brown), unequal. in In both Burger wrote: es, profited who fact the broker in Appellant was a licensed real estate independently. public broker. He held himself out to the concept to the guidance general For as person public in whom the could hon- imposing duty dealing of fair place trust and confidence in real estate esty, jurisdic- this look to other court (Footnote omitted). transactions. tions. courts have found a basis Some Id. 102 253 F.2d 38. (see in principles equity the rule general “exchange Brown involved an Factually, Adametz, in state Harper supra); v. or contract,” where a broker induced home- profes- governing statutes conduct owners to convey absolute title their (see Taggart, supra). v. Ward sionals him, exchange home to a new home duty cases have attributed the some courts the resulting with effect that the homeown- knowledgeable as a position to the realtor’s lost equity ers all old house Tifft, supra, Funk intermediary. See obligated the full for the new pay price 25. F.2d at house. no difficulty The circuit fiduciary relationship this rule arising reasons account for policy Sound noting: out of the First, duty honesty. such of fairness and recognized profession the real estate appellees right by In this had a situation realtor, rule rely competence, honesty good through itself that a concept incorporated endanger principle, interest unworthiness as to such statutory provisions providing public, guilty for the revoca- or been other where, suspension tion or license broker’s charac- duct “whether of the same or different alia, inter broker has substantial made specified which con- ter from that hereinbefore continuing misrepresentations, for or acted re- dealing.” D.C. stitutes fraudulent or dishonest party compensation ceived than one more Code parties, without to all demonstrated disclosures addition to seller, his has an merely here, in the circumstances additional “obligation to fairly par- treat all where superi- acted from a ties to the transaction.” of Ethics broker, Code seller, or posture as undisclosed Realtors, National Association of Art. note, promissory holder of and have led Second, 7.5 the rule protects the unsuspect- unsuspecting purchaser part with ing and unknowing exploita- novice from in the process appellants’ benefit —to tion a professional superior knowl- any hope of equitable benefit to the edge. justified. Such —rescission holding keeping would be in with tradition- The instant case replete with evidence al principles that from which we could find the breach of a common law of fairness honesty. equity has carefully refrained from defin- First, appellants did disclose to Mrs. ing a fiduciary relationship precise de- Branham that they were record owners of tail such manner as to exclude the property and were in their own new situations. It has left the bars down interest; they did tell her of the exist- for situations in justifia- which there is a ence of a cloud on the title and the unre- ble trust confided on one side and a re- quit corded claim deeds purporting to re- sulting superiority and influence on the move such cloud on the title. This would other. have deprived even a more sophisticated Adametz, Harper 113 A.2d at 139. purchaser of the opportunity fully con- Finally, I would suggest majori- sider the fairness of the transaction or the ty does not tell the whole story when it worth of the property. Significantly appel- categorizes this case as merely an unfortu- lants charged Mrs. Branham for a title nate situation in which a party entered search that was performed never for her. sales contract for residential Second, appellants rushed appellee (a wom- later wished she had not. It is a fact of life an with a education, limited poor eyesight, many there are people who live a life- and children whose testimony reveals an rent, time paying choice, not by and who ignorance of the distinction between rent owning dream, dream of a house. This and mortgage payments) through a combi- when coupled education, with lack of so- nation contract-signing and settlement ses- phistication, resources, peo- make such sion without advising her might that she ple easy prey to others who would bene- want outside advice and without explaining fit at cost. While I am not suggesting to her the significance of the documents she that a broker has a duty to be his “brother’s was signing. Moreover, reasonable infer- keeper,” suggest I do that this case is not ences can be drawn here that appellants one lending itself to the application of “ca- never intended to make timely repairs; veat emptor.” repairs so crucial to her acceptance were I would affirm. and, fact, never itemized the trial judge found that the promises to make prompt

repairs were fraudulently made to induce

appellee to sign the contract quickly. Fi-

nally, the entire transaction was unortho-

dox and varied considerably accepted

real estate practice.

I would not consider affirmance pose any prin- threat to established

ciples of real estate law. I would hold interesting buyer

5. It is protection to note that Mr. Greenbaum amount of and seller as testified: “I’m a licensed real estate broker. well.” As a licensed real estate broker I offer an

Case Details

Case Name: Urban Investments, Inc. v. Branham

Court Name: District of Columbia Court of Appeals

Date Published: Jul 5, 1983

Citation: 464 A.2d 93

Docket Number: 79-816

Court Abbreviation: D.C.