Case Title: E & E Min., Inc. v. Flying D Group, Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1986-04-29T00:00:00Z

Document:
E & E Min., Inc. v. Flying D Group, Inc.1986 WY 106718 P.2d 58Case Number: 85-260Decided: 04/29/1986Supreme Court of Wyoming
E & E MINING, INC., a 
Wyoming 
corporation, Appellant (Defendant),

v.

FLYING "D" GROUP, INC., a 
Wyoming 
corporation, Appellee (Plaintiff).

Appeal from District 
Court, FremontCounty, Roberty B. Ranck, 
J.

Norman E. Young 
of Hill, Young & Barton, Riverton, for appellant.

David B. Hooper 
of David B. Hooper, P.C., Riverton, for 
appellee.

Before THOMAS, C.J., and BROWN, CARDINE, URBIGKIT 
and MACY, JJ.

MACY, 
Justice.

[¶1.]     This appeal concerns a 
real estate broker's right to a commission under an exclusive-right-to-sell 
contract. The trial court entered judgment for the broker, resulting in the 
vendor's appeal to this Court.

[¶2.]     We 
affirm.

[¶3.]     In January 1982, 
appellant E & E Mining, Inc. entered into two listing agreements with a real 
estate brokerage firm, appellee Flying "D" Group, Inc., to sell a motel and 
adjacent vacant lot in Riverton, Wyoming. The listing prices were $800,000 for 
the motel and $97,000 for the lot. The agreements, which were to expire on June 
22, 1982, provided for commissions of six percent on the motel and seven percent 
on the vacant lot.

[¶4.]     Appellee expended 
approximately $1,500 and 85 hours attempting to sell the property. Although a 
number of potential buyers were contacted, there were no offers produced as a 
result of this work.

[¶5.]     On or about June 17, 
1982, Frank Espinosa, president of appellant, went to the office of James 
Soumas, his accountant, and entered into a discussion with Mr. Soumas and his 
wife concerning the sale of appellant's motel. During this discussion, Espinosa 
incorrectly stated that the listing agreements with appellee had expired. Soumas 
asked Espinosa if he would be interested in selling the motel to him and the 
amount for which he would sell it. Espinosa stated a price of $800,000. Espinosa 
told Soumas to make an offer if he was interested and to take the offer to his 
son, since he intended to travel to Alaska within the next day or 
so.

[¶6.]     Espinosa left for 
Alaska on June 
19, 1982, never informing appellee of the interest expressed by Soumas. While in 
Alaska, 
Espinosa negotiated by telephone with Soumas, and on July 7, 1982, Soumas' offer 
of $800,000 was accepted. Shortly thereafter, Espinosa requested that appellee's 
president sign a release waiving any right to a commission on the sale. The 
request was refused.

[¶7.]     The sale between 
appellant and Soumas was closed for a purchase price of $800,000, of which 
$705,000 were allocated to the motel and $95,000 to the adjacent lot. Appellee 
then filed a complaint claiming that, under the listing contract, appellant had 
agreed to refer inquiries from all prospective purchasers to appellee and that 
appellant's failure to refer Soumas was a breach of the contract. Appellee 
claimed that it was entitled to the agreed commission.

[¶8.]     The pertinent portions 
of the listing agreements, which are entitled "EXCLUSIVE RIGHT TO SELL LISTING 
CONTRACT," provide:

"1. For and in 
consideration of the services of the hereinafter named real estate broker, I 
hereby list with said broker, from Jan 22, 1982, to June 22, 1982, inclusive, 
the property described below and I hereby grant said broker the exclusive and 
irrevocable right to sell the same within said time at the price and on the 
terms herein stated * * *. I further authorize said broker to advertise the 
property, show the property at reasonable times, and to list the property with 
any multiple listing service in which he is a participant and to accept the 
assistance and cooperation of other brokers, all at broker's 
expense.

"2. I hereby agree to pay 
said broker SIX [seven]%1 of the selling price for his 
services:

"(a) In case of any sale 
or exchange of the subject property within said listing period by the 
undersigned owner, the said broker, or by any person; or

"(b) Upon the said broker 
committing in writing, within said listing period, a purchaser who is ready, 
willing and able to complete the purchase as proposed herein by the owner; 
or

"(c) In case of any such 
sale or exchange of said property within the 180 days subsequent to the 
expiration of this agreement to any party with whom the said broker negotiated 
and whose name was disclosed in writing to the owner by the broker during the 
listing period, such written notice to be delivered to owner within three (3) 
days after expiration of this listing agreement; * * *

* * * * * 
*

"13. The owner agrees to 
refer to the broker all inquiries from other brokers, salesmen and prospective 
purchasers received during the term of this listing."

[¶9.]     The trial court found 
that the contract was not ambiguous, that Mr. Soumas was a prospective 
purchaser, and that appellant breached the contract by failing to inform 
appellee of the prospective purchaser. As a result of the breach, appellee was 
awarded $48,950 - six percent of $705,000 plus seven percent of $95,000. After 
appellant's motion for a new trial or to alter or amend the judgment was denied, 
appellant brought this appeal, raising the following 
issues:

"1. The Court erred in 
finding the contract(s) commencing January 22, 1982, and ending June 22, 1982, 
were not ambiguous.

"2. The Court erred in 
finding, based on the June 18, 1982 conversation between Soumas and Espinosa 
that Soumas was a prospective purchaser and appellant breached the contract by 
not informing appellee of the prospective purchaser.

"3. The Court erred in 
assessing as damages caused by the alleged breach the full 
commission."

[¶10.]  Appellant contends that under this 
Court's holding in McCartney v. Malm, Wyo., 
627 P.2d 1014 (1981), these agreements were ambiguous. In McCartney v. Malm, we 
said that an agreement is ambiguous "`which is obscure in its meaning, because 
of indefiniteness of expression, or because a double meaning is present.'" 627 P.2d  at 1019, quoting from Bulis v. Wells, Wyo., 565 P.2d 487, 490 (1977). Appellant 
maintains that appellee's president recognized the owner could sell the property 
unaided by appellee under paragraph 2. Yet, under paragraph 13, the owner was 
required to refer all inquiries to the broker. Paragraph 13 thus is inconsistent 
with paragraph 2 since it negates the owner's ability to sell unaided by the 
broker. According to appellant, this results in an ambiguous agreement under our 
definition in McCartney v. Malm.

[¶11.]  The question of whether an ambiguity 
exists is a question of law to be determined by this Court. Burk v. Burzynski, Wyo., 672 P.2d 419 
(1983).

"* * * We are, therefore, 
at liberty to make a determination as to the existence of ambiguity whether or 
not the parties here agree thereto one way or the other * * *." Amoco Production 
Company v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463, 465 
(1980).

We will not 
assume the parties intended an inconsistency between two paragraphs in a 
contract. Covey v. Covey's Little America, Inc., Wyo., 378 P.2d 506 
(1963).

[¶12.]  Despite appellant's arguments, the trial 
court found, and we agree, that there is no indefiniteness of expression or 
double meaning in this contract. Paragraph 13 requires that the owner refer all 
inquiries he receives to the broker. Paragraph 2 should not be read to do away 
with the owner's agreement to refer an inquiry to the broker, as that would 
assume the parties intended an inconsistency. Instead, we think it is clear that 
paragraph 2 merely recognizes that the owner might sell the property himself, 
unaided by the broker, and provides that, even in that event, the broker is 
still entitled to the stated commission. This does not make the contract 
ambiguous.

[¶13.]  The trial court found that appellant 
breached paragraph 13 by failing to refer Mr. Soumas to appellee. In appellant's 
view, this finding is erroneous because Mr. Soumas was not a prospective 
purchaser until Espinosa learned of Soumas' written offer.

[¶14.]  The trial court found persuasive the case 
of Calka v. Donahoe, 20 Mich. App. 120, 173 N.W.2d 811 (1970). Calka 
v. Donahoe appears to be on all fours with the case at bar. There the broker and 
owner entered into an exclusive-right-to-sell agreement in which the owner 
agreed to "`refer any prospective 
purchaser of whom he has knowledge,'" 173 N.W.2d  at 813 (emphasis in 
original), during the term of the agreement to the broker. The owner was 
approached by Mr. Vollmar, who inquired about the property and declared that the 
asking price was too high. Later, Vollmar's father told the owner to contact him 
if the broker failed to sell the property. Shortly after the listing agreement 
expired, the Vollmars purchased the property.

[¶15.]  The court in Calka v. Donahoe determined 
that the Vollmars were "prospective purchasers," because that term included 
anyone who showed an interest in the property, notwithstanding an expressed 
unwillingness to pay the contract price. This interpretation of prospective 
purchaser was held to be consistent with the very purpose of the clause 
requiring referral; i.e., to give the broker an opportunity to effectuate a sale 
to those who do not plan to pay the asking price by convincing them of the 
merits of the property.

[¶16.]  Normally, construction and interpretation 
of contracts are for the court as a matter of law. Mobil Coal Producing, Inc. v. 
Parks, Wyo., 
704 P.2d 702 (1985). If the contract is free from ambiguity, we need only look 
to the plain meaning of the words in our effort to ferret out the intention of 
the parties. Bjork v. Chrysler Corporation, Wyo., 702 P.2d 146 (1985). In Calka v. 
Donahoe, 173 N.W.2d  at 814, the court noted that "prospective purchaser" is used 
interchangeably with "prospect." A prospect is "a potential buyer or customer" 
according to Webster's Third New International Dictionary (1961). The plain 
meaning of the term clearly includes those who ask the owner if he would sell 
the property to them. It is not limited to those who have made written offers. 
Interpreting "prospective purchaser" to include those who express interest at a 
price lower than that asked promotes the reason behind the referral clause.2 The contract in question here gives 
the broker the exclusive right to sell. The owner agrees to refer all inquiries 
he receives to the broker so that the result both parties seek may be 
accomplished. Appellant contends that this interpretation is unduly burdensome 
to an owner, but this Court concludes that it is a simple matter to inform an 
inquirer of the existence of the agreement and to refer him to the broker. In 
fact, in the present case Espinosa told Soumas that the agreements had 
terminated.

[¶17.]  In this case, Soumas clearly was a 
prospective purchaser. Soumas inquired as to the availability of the property. 
He asked the price for which appellant would sell it to him. Espinosa invited 
Soumas to make him an offer and apparently expected one soon, since he told 
Soumas it should be left with his son as Espinosa was traveling to Alaska in the next day or 
so. Soumas did in fact make an offer, and the offer was accepted within a few 
weeks of the June meeting. Under these circumstances, appellant's claim that 
Soumas was not "a prospective purchaser" cannot stand.3

[¶18.]  Appellant's final claim is that the trial 
court erred in assessing the damages caused by the breach. Even assuming 
Espinosa had not informed appellee of a prospective purchaser, this failure did 
not deprive appellee of its commission, or its opportunity to earn the same. In 
appellant's view, Leet v. Joder, 75 Wyo. 225, 295 P.2d 733 (1956), states that the 
proper measure of damages is the loss or injury actually sustained rather than 
the price paid on full performance.

[¶19.]  The portion of Leet v. Joder on which 
appellant relies did recognize that the injury or loss actually sustained may be 
the proper measure of damages for breach of a broker's contract. Leet v. Joder 
also recognized, however, that a broker is not limited to a suit for damages but 
may also sue on a contract when the contract provides for a commission to the 
broker on any sale, whether made by the owner or the broker. See also 12 
Am.Jur.2d, Brokers § 229 (1964); Carlsen v. Zane, 261 Cal. App. 2d 399, 67 Cal. Rptr. 747 (1968); Annot., 88 A.L.R.2d 936 (1963). In the present case, 
appellee claimed to be due a commission on the sale by appellant. Clearly, when 
an exclusive-right-to-sell contract and a sale during the term of the contract 
are involved, the broker may recover the lost commission.

[¶20.]  Appellee, in its claim for a commission, 
recognizes that there was no sale during the term of the contract and relies 
upon the 180-day extension clause. In considering the question of whether the 
breach of contract caused by the owner's failure to inform the broker of a 
prospective purchaser should, when there is a subsequent sale to that purchaser 
during the extension term, allow the broker to recover the agreed commission, 
the court in Calka v. Donahoe quoted from Doll v. Thornhill, La. App., 6 So. 2d 793, 795 (1942):

"`But above and beyond 
all of these facts we find that [the owner] clearly violated the plain 
provisions of his contract in not referring [the prospective buyer] to [the 
broker] as soon as the former evidenced any interest in the property. It will not do for him to say that had he 
done so, no sale would have resulted. A real estate agent is supposedly an 
expert in his business, and we must presume that he could have accomplished what 
[the owner] accomplished * * *. At any rate, he was entitled to try. To uphold 
the contention made here by [the owner] would establish a dangerous rule and 
would open the door in many cases to the perpetration of fraud upon agents who 
conscientiously try to carry out their mandates.' (Emphasis supplied.)" 173 N.W.2d  at 815.

[¶21.]  We agree with the Doll v. Thornhill 
court's observations. Had appellant not breached its agreement, appellee would 
have negotiated with Soumas and would have been entitled to its commission. The 
trial court correctly awarded appellee its lost 
commission.

[¶22.]  Affirmed.  

FOOTNOTES

1 The listing agreement 
for the motel provided for a six percent commission, while the listing agreement 
for the lot provided for a seven percent commission.

2 Although the issue was 
not before this Court, we note that in the case of Reed v. Taylor, 78 Wyo. 216, 
322 P.2d 147 (1958), we referred to one who was interested in purchasing listed 
property at 75 percent of the asking price as a 
"prospect."

3 In support of its 
position, appellant relies on Hobson v. Hunt, 59 Cal. App. 679, 211 P. 242, 243 
(1922), where the court stated that a prospective purchaser is "one to whom 
there was at least some probability of making a sale within a reasonable time." 
Under this definition the court in Hobson v. Hunt held that a person whose 
attention had never been called to the land could not properly have been named 
as a prospective purchaser. Although we do not find that this definition of 
prospective purchaser is applicable to the contracts in this case, we note that 
Soumas appears to fit within this definition.