In the case of Real Estate Exchange & Investors v. Tongue, 17 N. C. App. 575, recently decided by the North Carolina Court of Appeals, the plaintiff was denied recovery of a commission.

The plaintiff alleged that defendants listed their property with plaintiff under an "exclusive listing contract" by which plaintiff was granted for a period the exclusive right to negotiate for the sale upon terms specified in the listing contract, that during such period plaintiff itself offered to purchase the property but defendants refused the offer. Plaintiff sued for the agent's commission computed on the listed price at the rate specified in the listing contract. The trial court allowed defendant's motion to dismiss for failure to state a claim upon which relief can be granted and plaintiff appealed.

The Court of Appeals held that the judgment of the lower court was in accord with applicable principles of low and dismissed the plaintiff's appeal.

In its opinion, the Court stated: "An agent employed to sell his principal's property may not himself become the purchaser absent both a good faith full disclosure to the principal of all material facts surrounding the transaction and consent to the transaction by the principal after receiving such disclosure. This general rule applies although no positive fraud or unfairness may have been practiced by the agent and although he purchases the property 'at a fair market price, or at the price set by the principal, and even though he was unable to sell to anyone else at the price fixed.' Decisions of our Supreme Court support this statement of the general rule.... In the present case the allegations in plaintiff's complaint establish that defendants did not consent that plaintiff might become the purchaser; plaintiff expressly alleged that no response was received from their offer to purchase and that their subsequent tender was refused by the defendants. Since plaintiff's own allegations establish that it had no lawful right to effect a sale of the property to itself, it was not entitled to commissions for attempting to negotiate such a sale, and judgment dismissing the action on the pleadings was proper."