ASSOCIATED AGENCY OF BOZEMAN v PAS
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No. 80-250 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 ASSOCIATED AGENCY OF BOZEMAN, INC., a Mont. Corp., Plaintiff and Respondent, ELVAN L. PASHA AND NANCY L. PASHA, Defendants and Appellants. Appeal from: District Court of the Eighteenth Judicial District, In and for the County of Gallatin, The Honorable W. W. Lessley, Judge presiding. Counsel of Record: For Appellant: Larry W. Moran, Bozeman, Montana For Respondent: William L. Pepper, Bozeman, Montana Submitted on Briefs: Decided: Filed: ft4AR 4 - 198q December 1 7 , 1980 HAk 4 - 1981 Mr. J u s t i c e Gene B. Associated brokerage Daly d e l i v e r e d t h e Opinion of t h e C o u r t . Agency of Bozeman, Inc., f i r m and r e s p o n d e n t h e r e i n , a real estate b r o u g h t an a c t i o n i n t h e G a l l a t i n County D i s t r i c t C o u r t t o r e c o v e r a r e a l e s t a t e s a l e s commission. A p p e l l a n t s , E l v a n and Nancy P a s h a , d e n i e d t h a t A s s o c i a t e d Agency had exclusive listing complied w i t h agreement and asserted j u s t i f i e d in terminating the contract. court refused favor. to enter The j u r y then a directed returned its t h e terms of that they were Following t r i a l , t h e verdict a verdict in appellants' and judgment in f a v o r of r e s p o n d e n t . Elvan and Nancy this property, they were Montana. l o c a t e d n e a r Bozeman, Pasha For entered into the owners of a farm t h e purpose of s e l l i n g a standard real estate b r o k e r ' s employment c o n t r a c t , d a t e d May 27, 1 9 7 7 , e m p l o y i n g Associated Agency as Associated Agency a their agent. three-month The contract exclusive gave listing and p r o v i d e d t h a t t h e P a s h a s would p a y a 6 p e r c e n t commission i f A s s o c i a t e d should f i n d a buyer " r e a d y , w i l l i n g and a b l e t o enter i n t o a d e a l f o r s a i d p r i c e and t e r m s . " price was $450,000, with terms exchange f o r c a t t l e ranch." "to be The l i s t i n g arranged--prefer The P a s h a s a l s o a g r e e d t o p a y t h e commission i f t h e r a n c h was s o l d w i t h i n 180 d a y s o f t h e August 27, 1977, e x p i r a t i o n d a t e . During effect, the period Associated the Agency, l i s t i n g was a g r e e m e n t was through its broker/agent in Randy W h i t e , p r o d u c e d two s e p a r a t e b u y e r s w i l l i n g t o p u r c h a s e t h e property f o r the f u l l purchase price. the offers, exchange of however, property indicating and n o t they The P a s h a s r e j e c t e d would a cash purchase. "prefer" After an the f i r s t l i s t i n g agreement e x p i r e d , employment Agency's contract. exclusive the p a r t i e s signed another The c o n t r a c t listing extended Associated t o December 27, 1977, and was i d e n t i c a l i n terms t o t h e f i r s t agreement. I n A u g u s t 1977 a r a n c h f o r s a l e was l o c a t e d f o r which t h e P a s h a s were interested in trading. owned c o l l e c t i v e l y by David R. F. M a t t i and J u d y L . Matti. T h i s p r o p e r t y was M a t t i , M a r g a r e t M a t t i , David The P a s h a s p r o p o s e d t h a t t h e p u r c h a s e r s f o u n d by A s s o c i a t e d , who w i s h e d t o buy t h e P a s h a property, purchase it exchange for instead the Matti the Pasha p r o p e r t y . property and The M a t t i s , then Pashas, Randy W h i t e and t h e p r o p o s e d p u r c h a s e r s , H . B . Landoe and F . D e l b r o o k L i c h t e n b e r g , met and d i s c u s s e d effectuating an exchange. t h e p o s s i b i l i t y of Subsequent to this meeting, L i c h t e n b e r g and Landoe made two o f f e r s t o p u r c h a s e t h e P a s h a property f o r the f u l l purchase p r i c e , s u b j e c t t o completing the Matti however, exchange. Neither the Mattis nor the Pashas, s i g n e d t h e e a r n e s t money r e c e i p t and a g r e e m e n t t o s e l l and p u r c h a s e n e c e s s a r y t o c o m p l e t e t h e s a l e . On another a b o u t November meeting possible Present or was exchange at held of the 16, to 1977, work Pasha t h i s m e e t i n g w e r e David out i n Helena, the Montana, details of a and Matti properties. F. Matti, Judy M a t t i , Landoe, L i c h t e n b e r g , and J o e G r a y , who had j o i n e d Landoe and Lichtenberg a s i n t e r e s t e d p u r c h a s e r s of t h e Pasha p r o p e r t y . At the conclusion of the meeting, the Pashas produced a p r o p o s a l p r e p a r e d by t h e i r a t t o r n e y o u t l i n i n g t h e t e r m s and c o n d i t i o n s o f an e x c h a n g e t h a t would be a g r e e a b l e t o them. The P a s h a p r o p o s a l was s e t up i n v a r i o u s s t a g e s and provided t h e following: (1) M a t t i w i l l d i v i d e h i s p r o p e r t y i n t o T r a c t s A and ( 2 ) M a t t i w i l l t h e n c o n v e y b o t h t r a c t s t o Landoe and L i c h t e n b e r g (L & L ) , who w i l l e x e c u t e a $ 1 8 0 , 0 0 0 m o r t g a g e on T r a c t A and a $320,000 m o r t g a g e on T r a c t B. (3) L & L w i l l t h e n c o n v e y T r a c t A t o P a s h a who w i l l assume payment of t h e $180,000 m o r t g a g e . In addition, L & L w i l l c o n v e y T r a c t B t o P a s h a f r e e and c l e a r i n e x c h a n g e f o r the entire Pasha p r o p e r t y which is s u b j e c t t o F e d e r a l Land Bank m o r t g a g e t o be assumed by L a $130,000 & L. ( 4 ) Matti w i l l then agree t o release L L from t h e b $ 1 8 0 , 0 0 0 m o r t g a g e on T r a c t A which was assumed by P a s h a and t o a c c e p t a s s u b s t i t u t e s e c u r i t y on t h e $320,000 m o r t g a g e on T r a c t B t h e e n t i r e P a s h a p r o p e r t y r e c e i v e d by L Landoe and Lichtenberg testified that & L. all parties w e r e i n a g r e e m e n t t h a t t h e e x c h a n g e would t a k e p l a c e on t h e terms and Pashas' conditions attorney was documentation with Matti 1977. outlined the to the prepare closing and P a s h a in date testified, set Pasha the for however, proposal. appropriate November that no 28, final d e c i s i o n was r e a c h e d on how t h e e x c h a n g e would a c t u a l l y t a k e place. On December 3, 1977, the e f f e c t u a t e an exchange o f p r o p e r t y . parties had yet to The P a s h a s on t h i s d a t e s e n t a l e t t e r t o Randy W h i t e and A s s o c i a t e d Agency i n f o r m i n g them that the e x c l u s i v e l i s t i n g a g r e e m e n t b e t w e e n t h e two p a r t i e s was t e r m i n a t e d . Pashas stated in the A s a basis for the termination, letter that White had neglected the to f u l f i l l h i s o b l i g a t i o n s under t h e agreement. On December 1 5 , 1 9 7 7 , t h e P a s h a s , David F. M a t t i and Joe met Gray attempted Agency in to but the attend was off ice of Pashas' t h i s meeting excluded by on the attorney. behalf of Pashas. White Associated Elvan Pasha t e s t i f i e d t h a t d u r i n g t h e m e e t i n g , M a t t i s t a t e d h e would n o t convey Tract proposal free B (i.e., and clear as provided in the Pasha would n o t a c c e p t a s s u b s t i t u t e s e c u r i t y f o r t h e $ 3 2 0 , 0 0 0 m o r t g a g e on T r a c t B t h e e n t i r e P a s h a p r o p e r t y received by Landoe, Lichtenberg and Gray). The Pashas a p p a r e n t l y wanted t h i s p r o p e r t y w i t h o u t e n c u m b r a n c e s b e c a u s e they planned to it use as security for a loan t o obtain operation capital. B e i n g u n a b l e t o o b t a i n t h e p r o p e r t y f r e e and c l e a r , t h e P a s h a s s t a t e d t h e y would s t i l l consummate t h e e x c h a n g e transaction Landoe, if they received Lichtenberg and an Gray. additional Gray $50,000 testified from that the P a s h a s o n l y wanted an e x t r a $ 5 0 , 0 0 0 and t h a t t h e r e s t o f t h e terms of the proposal would remain intact. Matti merely t e s t i f i e d t h a t t h e p a r t i e s were u n a b l e t o a g r e e on a means to accomplish the trade or sale so they decided not to pursue f u r t h e r negotiations. Associated praying attorney for a fees. fully performed buyer ready, brought percent 6 Agency commission It alleged under willing the in suit its listing in February ($27,000), complaint that a g r e e m e n t by and a b l e t o p u r c h a s e o r costs 1978 and i t had finding a exchange t h e P a s h a p r o p e r t y and t h a t t h e P a s h a s had w r o n g f u l l y t e r m i n a t e d the contract. The Pashas answered and denied that A s s o c i a t e d had c o m p l i e d w i t h t h e t e r m s o f t h e a g r e e m e n t and further contended the contract. that t h e y were justified in terminating Subsequent t o t h e f i l i n g of t h e i r answer, t h e Pashas, 1978, s o l d a p o r t i o n of t h e i r p r o p e r t y t o Robert on May 8, and Nancy Steinman. purcha.sed owned by and Big The West controlled remainder Land by Company, Robert e a r l i e r e x p r e s s e d an i n t e r e s t shown to him by Randy of the Inc., property a corporation Steinman Steinman. Immediately after had i t was in the property after White. was selling t h e i r p r o p e r t y t h e P a s h a . s , on t h e same d a t e , p u r c h a s e d the Matti property. Associated Following jury, trial after Agency's the suit c a s e was deliberation, proceeded submitted returned a to to the verdict jury. in A s s o c i a t e d , awarding i t a commission o f $27,000. trial. The favor of The P a s h a s now a p p e a l . The following issues have been presented for our review: 1. Whether t h e s t a t u t e o f f r a u d s h a s been s a t i s f i e d s o a s t o preclude a d i r e c t e d v e r d i c t i n favor of a p p e l l a n t s ? 2. Whether t h e D i s t r i c t Court erred in failing t o submit t o t h e j u r y a p p e l l a n t s ' proposed i n s t r u c t i o n nos. 3, 4 , 1 6 , 17 and 1 8 ? 3. Whether t h e r e i s s u b s t a n t i a l e v i d e n c e t o s u p p o r t a v e r d i c t i n favor of respondent? As this to appeal the first make much issue, ado appellants over the fact at trial that signed a binding w r i t t e n r e a l e s t a t e contract. and they on never Based upon t h i s f a c t , they a s s e r t t h a t t h e requirements of t h e s t a t u t e o f f r a u d s h a v e n o t been c o m p l i e d w i t h , and r e s p o n d e n t , real estate broker, m a t t e r o f law. is n o t entitled W must d i s a g r e e . e to a commission as a as a The real contract estate and an statutory by in respondent's employment alleged f o r deed. signed issue broker's agreementn--not contract at unsigned This l i s t i n g appellants requirements contract as action or oral the party estate in writing A 11 charged. concerning t h e v a l i d i t y of c o n t r a c t were f u l f i l l e d , and t h e s t a t u t e o f this f r a u d s h a s been S e e s e c t i o n 28-2-903 ( 1 ) e ) , MCA; ( complied with. "listing real a g r e e m e n t was is a C a r n e l l v. Watson ( 1 9 7 8 ) , 1 7 6 Mont. 344, 578 P.2d 308. A p p e l l a n t s contend t h a t t h e D i s t r i c t Court a l s o e r r e d i n f a i l i n g t o submit t o t h e jury t h e i r proposed i n s t r u c t i o n 3 , 4 , 1 6 , 1 7 and 1 8 . nos. It refuse the is not reversible an o f f e r e d (197911 A proposed instruction unless the thereby is of prejudicing , Mont. party for rights substantial instruction, error a such party him. trial refusal Payne v. prejudiced i n s t r u c t i o n s where the by a subject to affects proposing 599 P.2d 3 6 2 , 36 S t . R e p . not court the Sorenson 1610. refusal of his matter of the i n s t r u c t i o n is n o t a p p l i c a b l e t o t h e p l e a d i n g s and f a c t s , o r not s u p p o r t e d by t h e e v i d e n c e subject matter Am. Mfg. or the i s a d e q u a t e l y c o v e r e d by o t h e r i n s t r u c t i o n s submitted t o the jury. North introduced a t t r i a l , Co. Payne v . (1978), B u t l e r M a n u f a c t u r i n g Co. v . J Mont. 5 1 9 , 540 P.2d S o r e n s o n , s u p r a ; Brown v . 176 Mont. & L 98, 576 Implement Co. P.2d 711; ( 1 9 7 6 ) , 167 962. A p p e l l a n t s ' p r o p o s e d i n s t r u c t i o n no. 3 sets forth the r e q u i r e m e n t t h a t a copy o f a r e a l e s t a t e b r o k e r ' s employment c o n t r a c t must be p r o v i d e d its execution. t o t h e landowner a t t h e time of The i n s t r u c t i o n p r o v i d e s a t r u e i n d i c a t i o n o f t h e l a w i n Montana. The s u b j e c t m a t t e r , it ever i n t h e p l e a d i n g s nor has theory of appellants' however, was n e v e r r a i s e d case. constituted a legitimate Appellants admit t o e n t e r i n g i n t o and s i g n i n g t h e employment c o n t r a c t . In signing the c o n t r a c t a p p e l l a n t s c e r t i f i e d t h a t t h e y r e c e i v e d a copy of the agreement. Randy White testified at trial that a p p e l l a n t s were i n f a c t g i v e n a c o p y ; E l v a n P a s h a t e s t i f i e d he mere l y c o u l d not recall could it. W e have lost receiving a copy and p o s s i b l y f i n d no r e v e r s i b l e e r r o r in the c o u r t ' s r e f u s a l o f p r o p o s e d i n s t r u c t i o n no. 3 . A p p e l l a n t s ' p r o p o s e d i n s t r u c t i o n no. 4 s e t s f o r t h t h e s t a t u t e of fraud requirements concerning the s a l e of real property. The c o n t r a c t a t i s s u e i n t h i s s u i t , h o w e v e r , is t h e r e a l e s t a t e b r o k e r ' s employment c o n t r a c t , n o t a c o n t r a c t f o r deed. any T h e r e was n e v e r any d i s p u t e o v e r t h e v a l i d i t y o f contract parties for agree purchased the no by s a l e of sale Robert was real made Steinman property until on the May in that both property was 1978. The 8, and i t s r e f u s a l i n s t r u c t i o n , c o n s e q u e n t l y , was u n n e c e s s a r y , has not prejudiced appellants so a s t o require reversal. Appellants' proposed i n s t r u c t i o n nos. 1 6 , 17 and 1 8 d e a l w i t h c o n d i t i o n s t o be m e t u n d e r t h e employment c o n t r a c t before there commission. could be any o b l i g a t i o n o f These instructions appellants for indicate, however, that a a r e a l e s t a t e b r o k e r is never e n t i t l e d t o a commission u n t i l a b i n d i n g w r i t t e n a g r e e m e n t i s s i g n e d and t h e a c t u a l s a l e o f real property misleading and is completed. ignores the Such fact that an a instruction is s a l e may n o t h a v e been consummated d u e t o t h e f a u l t o f t h e s e l l e r . W e acknowledge that this Court has stated that a b r o k e r employed t o " s e l l o r e f f e c t a s a l e " and e x c h a n g e ( a s is t h e c a s e h e r e ) does n o t is p a i d , purchase p r i c e completed. See t h i s holding, and 372, however, commission until the i s conveyed and t h e s a l e i s title Diehl ( 1 9 7 7 ) , 1 7 3 Mont. earn h i s Associates, 567 P.2d Inc. 930. v. Houtchens I n an e x p a n s i o n of w e must a l s o c o n c l u d e t h a t a b r o k e r i s s t i l l e n t i t l e d t o h i s commission e v e n i f t h e s a l e i s n o t c o m p l e t e d i f a r e a d y , w i l l i n g and a b l e b u y e r i s p r o c u r e d and the failure to consummate was a c t s or interference (1980), 46 (Colo.App. 0r.App. of the 235, s o l e l y due seller. 6 1 1 P.2d 1 9 7 5 ) , 534 P.2d 347; t o t h e wrongful See Taylor 336; v. v. Fender Brunken Red C a r p e t R e a l E s t a t e o f 46; see A l o h a , I n c . v . Huygens ( 1 9 7 4 ) , 270 Or. 8 6 0 , 530 P.2d a l s o E l l s w o r t h Dobbs, 236 A.2d this 843. regard, appellants' Inc. v. Johnson The D i s t r i c t C o u r t and we find no ( 1 9 6 7 ) , 50 N . J . instructed reversible error upon which a r e c o v e r y by 528, the jury in in refusing tendered instructions. I n r e g a r d t o t h e f i n a l i s s u e on a p p e a l , twofold: Gaudy for respondent t h e grounds could have.based a r e (1) a w r o n g f u l t e r m i n a t i o n o f t h e l i s t i n g a g r e e m e n t appellants wrongful prior refusal its to by expiration appellants to date; close and a (2) a buy/sell t r a n s a c t i o n a f t e r respondent produced a buyer ready, w i l l i n g and a b l e t o p u r c h a s e a p p e l l a n t s ' conditions issue, in the however, we listing need p r o p e r t y on t h e t e r m s and agreement. only discuss In resolving appellants' this wrongful termination. As wrongful to the allegation termination, the of liability parties' based agreement upon provides a in pertinent part: "'THIS IS AN EXCLUSIVE LISTING' and you [respondent] are hereby granted the absolute, sole and exclusive right to sell or exchange the said described property. In the event of any sale, by me [appellants] or any other person, or of exchange or conveyance, of said property, or any part thereof, during the term of your exclusive employment, or in case I withdraw the authority- hereby g i-- n j -ior ve rto said expiration date, I aqree to pay you ---said commission j u s t the same as if a sale -h ---------- y ----------------d --y -you." ad a c t u a l l been consummate- b -(Emphasis added. ) It is the employment contract which governs a real estate broker's compensation, and parties to such an agreement can make that compensation depend upon any lawful condition. Blank v. Borden Cal.Rptr. 31, 524 P.2d 127. (1974), 11 Cal.3d 963, 115 Here, the parties entered into an exclusive listing agreement whereby compensation can be paid upon appellants' unilateral termination. "commission on withdrawal" has been deemed valid withdrawal Such a (if the is not justified), and since the parties have agreed to the provision, it is incumbent upon the courts to enforce it. (1972), Blank, supra; see also, McMenamin v. Bishop 6 Wash.App. 455, 493 P.2d 1016; Central Idaho Agency, Inc. v. Turner (1968), 92 Idaho 306, 442 P.2d 442. Appellants assert that the termination was justified due to the broker's responsibilities failure to under the fulfill contract. his duties and In particular, appellants assert that respondent failed to work on sale and/or trade negotiations on their behalf; failed to advise them of important matters respecting their property; and failed to advise them of scheduled meetings. In reviewing the evidence offered in this matter, it is our function to determine whether there is any substantial judgment credible when evidence viewed in support light a to most the verdict favorable and to the Here, t h e r e is c o n f l i c t i n g evidence a s t o prevailing party. r e s p o n d e n t ' s e f f o r t s i n o b t a i n i n g a r e a d y , w i l l i n g and a b l e buyer. However, the is record still replete with s u b s t a n t i a l e v i d e n c e n e c e s s a r y t o s u p p o r t a f i n d i n g by t h e jury that respondent responsibilities under acted the in furtherance contract and that its of appellants improperly terminated t h e l i s t i n g agreement. The record reveals that Randy phone c a l l s , placed advertisements, prospective buyers purchased the interested exchange ( including property) in working was never and an White made showed t h e p r o p e r t y t h e p a r t y who helped in exchange. completed, but numerous eventually finding W e to the that agree respondent group this still was i n v o l v e d i n a n a t t e m p t t o consummate some s o r t o f a g r e e m e n t . The r e c o r d a l s o r e v e a l s t h a t r e s p o n d e n t d i d n o t p e r s o n a l l y n o t i f y a p p e l l a n t s of a meeting concerning t h e exchange, b u t t h i s was o n l y d u e t o t h e f a c t t h a t Randy W h i t e a l l o w e d t h e buyers' thus broker informed Respondent meeting to so notify of also the informed by meeting failed i n Helena, the to Montana, appellants Pashas. and able to were attend. 16, 1977, t h i s was o n l y a f t e r being attend but that were Appellants the White's November presence was not necessary. W e cannot finding that was "so conclude inherently 206, the evidence appellants wrongfully terminated impossible or entitled to belief." Mont. that 209, 520 improbable supporting a the contract as not to be B e r d i n e v . S a n d e r s County ( 1 9 7 4 ) , 164 P.2d 650, 651. Consequently, in a c c o r d a n c e w i t h t h e t e r m s of t h e c o n t r a c t agreed t o by t h e parties, we m u s t c o n c l u d e t h e j u r y was p r o p e r respondent its commission "as if a i n awarding sale had been consummated. " The v e r d i c t and judgment of the District affirmed. W concur: e &&,s&&t&q 2'2 Chief Justice Court is
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