The sole question is whether terms embodied in a final loan commitment are at variance with the terms of the loan application sufficient to deny the loan broker its right to a commission for procuring a loan for its principal, or the right of the prospective lender to retain an application fee paid in advance, upon the prospective borrower's refusal to accept the terms and conditions of the loan offered. The majority conclude that the conditions imposed by the prospective lender were in accordance with the loan application and thus are permissible. I disagree, and accordingly I dissent.
Ashford Developments, Inc. is engaged in the business of real estate development. On April 16, 1979, Ashford entered into an agreement with Carruth Mortgage Corporation, a loan broker, whereby Carruth would secure for Ashford a loan commitment of at least $1,000,000.00. The agreement specified certain conditions of the loan, including Ashford's agreement to pay Carruth a fee of 1% " . . . upon issuance of such a commitment, or a commitment for a loan at any other terms which we may also otherwise accept. . . . "
A few days later, Carruth, who was also an underwriter for USLife Real Estate Services Corporation, in its dual capacity as agent for both Ashford and USLife, procured from USLife a form entitled "Letter of Financing Intent." This document, when completed, was the loan application which was submitted to various prospective lenders. The parties agree that the loan application was a valid and binding agreement, and neither party contends that it is ambiguous.
The loan application contained more detailed provisions than did the first agreement of April 16, 1979. It first requires that a certified or cashier's check in the amount of $11,000.00 payable to USLife Real Estate Service accompany the loan application. It then provides that the prospective borrowers':
acceptance of a commitment which differs in any way from the terms hereof shall automatically amend this agreement so as to conform to the commitment.
It further provides that should a willing lender be found, the permanent loan commitment:
will be issued on the form attached hereto which will incorporate the terms specified above and to which supplemental provisions may be added as deemed reasonably necessary by their counsel to conform to the particular requirements of this transaction. Upon such issuance of the commitment and acceptance thereof by you, the Application Fee will be applied and fully credited toward the Commitment Fee specified above.
The attached form referred to above contained a paragraph which read:
23. Access: All streets necessary to access to the Property Security must be dedicated and accepted for maintenance and public use by the appropriate governmental authority and satisfactory evidence thereof must be submitted to us prior to closing.
The loan commitment, in its final form, as submitted to Ashford for its approval, was for a period of twenty-four months after its issuance and it contained, in addition to paragraph 23, as set forth above, an additional paragraph numbered 46 which read:
46. STREET COMPLETION: Evidence satisfactory to us should be submitted prior to closing which shall reflect 100% completion of Antoine Street and the payment in full of any paving lien imposed in connection with any improvement required herein.
The majority concludes that the addition of paragraph 46 was permissible in light of *Page 102 the provision permitting the lender's counsel to supplement the application provisions as they deem necessary. I strongly disagree with this conclusion, insofar as its effect is to bind the principal to the payment of Carruth's commission, or to permit USLife to retain the $11,000.00 application fee. The loan, as offered by the lender contained substantially different terms from that sought and was found unacceptable by the borrower. The parties agree, and the majority recognizes that the street in question had been dedicated and its completion was solely within the control of the officials of the City of Houston. The loan commitment, being only for a term of two years, and containing the requirement that Antoine Street, the street in question, must be 100% complete before funding, left the borrower in an intolerable position. The City of Houston might or might not complete Antoine Street within two years, or they might never complete Antoine Street. Its time of completion, if ever, was not within the control of the borrower. I do not quarrel with the requirement of the lender that Antoine be completed, but such a requirement was a substantial variance with the requirement that all access streets must only be dedicated prior to funding, as was provided by paragraph 23 of the loan application.
The majority opinion states that the parties understood Antoine Street to be a street "necessary for access to the Property Security". I disagree with this statement. I find nothing in the evidence that forces the conclusion that the completion of Antoine Street was necessary for access tothe property. The map set forth in the majority opinion shows that access was readily available to the site from Mitchelldale. I would agree that access might be easier when Antoine Street was complete, and its completion might make the property more valuable, yet its completion is far from being necessary for access. In fact this is the very crux of the dispute.
The loan offered Ashford, with its changed conditions, provided in paragraph 46, constituted a counter offer by the lender which required acceptance by Ashford before any commission would be due the broker. Richardson v.Rowland, 275 S.W.2d 184 (Tex.Civ.App.-Fort Worth 1955, writ ref'd n.r.e.). Furthermore, it has been held that an offer to sell realty, listed with a broker for sale, must meet the term of the listing agreement to entitle the broker to recover his commission, and even a slight variance from such terms is fatal to recovery. Quaile v. McArdle, 244 S.W.2d 695 (Tex.Civ.App.-San Antonio 1951, writ ref'd n.r.e.). AlthoughQuaile concerned a real estate broker and this case concerns a loan broker, I fail to perceive any significant difference between the two.
Since the commitment issued did not conform to the agreement between the parties, and was not accepted by Ashford, the Application Fee should not have been applied to the lender's Commitment Fee.
I would reverse, denying Carruth's right to a commission, and granting Ashford recovery of its $11,000.00 application fee.