Title: GUS I. KELLY AND McNAMARA REALTY v. JOHN E. ROUSSALIS, II, D.D.S.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

GUS I. KELLY AND McNAMARA REALTY v. JOHN E. ROUSSALIS, II, D.D.S.1989 WY 160776 P.2d 1016Case Number: 88-282Decided: 07/25/1989Supreme Court of Wyoming
GUS I. KELLY AND McNAMARA 
REALTY, APPELLANTS (DEFENDANTS),

v.

JOHN E. ROUSSALIS, II, 
D.D.S., APPELLEE (PLAINTIFF).

Appeal from the District 
Court, NatronaCounty, Dan Spangler, 
J.

Jerry A. Yaap of 
Bishop, Bishop & Yaap, Casper, for appellant Gus I. 
Kelly.

Phillip T. 
Willoughby, Casper, for appellant McNamara 
Realty.

James R. 
McCarty, Casper, 
for appellee.

Before THOMAS and MACY, JJ., RAPER, Ret. J., and 
TAYLOR and KALOKATHIS, District Judges.

RAPER, Justice, 
Retired.

[¶1.]     This is an action in 
tort for the alleged negligence of appellant Kelly as a real estate agent in 
advising appellee Roussalis that real property purchased by appellee at a 
sheriff's foreclosure sale was the same property previously shown by Kelly to 
appellee when in fact it was not. Appellant McNamara Realty is the real estate 
broker which Kelly was representing. The district court found in favor of 
appellee and a judgment was entered accordingly.

[¶2.]     Appellant Kelly 
represents the issues to be:

I. Whether the trial 
court erred in finding that appellant Kelly was operating as an agent and 
professional advisor for appellee.

II. Whether the trial 
court erred in admitting the testimony of Robert Tomb pertaining to the duties 
of a real estate agent as reflected in -11 of his 
deposition.

III. Whether the district 
court erred in the assessment of damages in that appellee failed to mitigate 
damages.

[¶3.]     Appellant McNamara 
Realty perceives the issues to be:

1. Whether the District 
Court erred finding defendant Gus Kelly an agent and professional advisor for 
plaintiff Roussalis.

2. Whether the District 
Court as a matter of law erred finding defendant McNamara Realty liable to 
Roussalis as a result of the actions of defendant Gus 
Kelly.

[¶4.]     Appellee Roussalis sets 
out the issues as:

I. The trial court did 
not err in finding that the appellant Kelly was operating as an agent and 
professional advisor for appellee.

II. The trial court did 
not err in admitting the testimony of Robert Tomb.

III. The district court 
did not err in the assessment of damages.

IV. Argument No. One - 
McNamara.

V. The district court did 
not err in finding the defendant McNamara Realty liable to Roussalis as a result 
of the actions of the defendant, Gus Kelly.

[¶5.]     We will affirm the 
district court.

[¶6.]     Appellee had used 
McNamara Realty and Kelly in real estate transactions prior to the one here in 
question. Appellee had purchased an office building through them; they had made 
an offer to purchase a home for him, had helped him try to find a home and, 
related to the current case, had showed him a home, 5600 South Poplar, Casper, 
Wyoming, even though the property had been listed with another real estate 
agency. Appellee thought Kelly was his realtor, and he felt comfortable with him 
and that Kelly should be doing appellee's real estate business. It was thus 
through this connection that the parties became embroiled in the litigation now 
before us.

[¶7.]     After viewing 5600 
South Poplar, listed at some $600,000, appellee indicated that price to be much 
more than he was willing to pay. Kelly advised appellee that the owner was 
having financial difficulties and that there would probably be a forced sale at 
a later time at which a better price could be obtained.

[¶8.]     Appellee advised Kelly 
that if he was able to obtain another home, he would have to list his present 
home with appellants because of the burden of supporting two residences. Kelly 
indicated agreement.

[¶9.]     Mrs. Roussalis, 
appellee's wife, saw a legal notice that legally described property owned by the 
owner of 5600 South Poplar, which latter property she and appellee had suspected 
by reason of Kelly's representations would be sold at a public foreclosure 
auction. Appellee called Kelly and asked him to find out if that was the same 
house he and Mrs. Roussalis had been shown by Kelly. Kelly agreed to look into 
the matter. Kelly assumed and advised appellee that it 
was.

[¶10.]  Appellee decided to attend the sale and 
bid. He asked Kelly to go with him. Kelly advised appellee that he would have to 
pay for the property so appellee arranged for a loan of $250,000 and a letter of 
credit. Kelly attended the sale with appellee and agreed to do the bidding. The 
mortgagee bid $97,000 and Kelly jumped the bid of appellee to $150,000. It was 
Kelly's idea to do so in order to shut out other bidding. Appellee relied upon 
the real estate expertise of Kelly. Kelly and appellee thought the bid was being 
made on the South Poplar property. Kelly went to the bank to obtain a check for 
payment, as arranged by appellee, and paid the sheriff.

[¶11.]  It was subsequently learned that the 
house sold and paid for by appellee was a property different than the one shown 
appellee by Kelly. Kelly advised appellee that he, Kelly, would get the sale set 
aside. Appellee relied upon Kelly to do so because of the latter's expertise as 
a real estate agent. Kelly, if he made the effort, was unable to do so, leaving 
appellee with a $150,000 debt plus interest accrued at the date of trial in the 
sum of $28,261.04.

[¶12.]  Kelly agreed at the trial in his 
testimony that he had the information available in his office to check the legal 
descriptions. He admitted to not checking, testifying that he was busy at the 
time with "other stuff." Kelly knew that the descriptions could also have been 
verified with a telephone call to the county assessor who could provide street 
addresses for legal descriptions but Kelly did not make such 
inquiry.

[¶13.]  Other facts may be mentioned as required 
during the further structuring of this opinion.

[¶14.]  In Hagar v. Mobley, 638 P.2d 127, 136 
(Wyo. 1981), this court pointed out the high standards to which real estate 
salesmen and brokers are held with respect to the public. Being licensed by the 
State as they are, they "must be construed in the light of an obvious purpose of 
protecting the public in the handling of important and valuable transactions 
relating to real property," citing Toavs v. State by and through Real Estate 
Commission, 635 P.2d 1172 (Wyo. 1981). In Hagar, the court cited McCarty v. 
Lincoln Green, Inc., 190 Mont. 306, 620 P.2d 1221 (1980) where the Montana court 
observed that failure to maintain high standards of skill, competency and 
integrity exposes realtors to, in effect, malpractice actions with respect to 
standards of care and held a realtor liable to a vendee for showing him the 
wrong property. Failure to provide a correct description is negligence. McCoy v. 
Thompson, 677 P.2d 839 (Wyo. 1984). 

[¶15.]  There can be no doubt that Kelly was 
negligent. He had within his office the necessary information to verify whether 
the property advertised for foreclosure was the same property he had shown 
appellee. Or Kelly could have telephoned the county assessor to determine the 
address of the foreclosure property. He assumed a key fact of great importance 
in a real estate transaction.

[¶16.]  It is the claim of Kelly that he was not 
acting as a real estate salesman but only as a friend because the broker with 
whom he was attached had a policy against attending foreclosure sales since 
there was no money in it due to the absence of a listing in such transactions. 
By this defense, Kelly is merely saying he owed no duty of care to appellee. We 
do not accept such a position.

[¶17.]  The Wyoming Supreme Court has subscribed 
to the rule, insofar as it relates to the conduct of a volunteer, 
that:

"One who undertakes, 
gratuitously * * * to render services to another which he should recognize as 
necessary for the protection of a third person or his things, is subject to 
liability to the third person for physical harm resulting from his failure to 
exercise reasonable care to protect his undertaking, if (a) his failure to 
exercise reasonable care increases the risk of such harm, * * 
*."

Ellsworth 
Brothers, Inc. v. Crook, 406 P.2d 520, 524 (Wyo. 1965).1

[¶18.]  By volunteering, Kelly became subject to 
liability to appellee in his failure to exercise not only reasonable care but 
the high degree of care expected of a real estate salesman. The office policy of 
McNamara Realty is irrelevant once Kelly embarked as a volunteer. Not at issue 
in this case is any possible liability of Kelly to McNamara Realty for Kelly's 
disregard of office policy, so we voice no opinion in that 
regard.

[¶19.]  The final important issue is the 
liability of McNamara Realty to appellee. William E. McNamara of McNamara Realty 
admitted in his testimony that McNamara Realty was responsible for its 
salesmen's actions through their employment, and that when Kelly acted as a 
salesman McNamara Realty was responsible for the actions of him as a 
salesman.

[¶20.]  An important part of the realty business 
is the obtaining of listings of property to sell and many of those listings come 
from friends of the broker and his salesmen as well. It is part of the work of a 
real estate salesman to obtain listings for the broker by whom he is employed. 
While in this case we take no position as to whether Kelly's obtaining a listing 
for the sale of appellee's residence upon his purchase of another residence was 
consideration in a contract sense, it is certainly reasonable to conclude that 
it was a motive and was within the scope of his employment. Many efforts to 
obtain listings prove fruitless but such efforts are still an important part of 
the real estate business.

[¶21.]  Real estate brokers do have the right of 
control and do control the conduct of their salesmen. The broker is the master 
and the salesman is his servant, which relationship arises out of the right of 
control. In Wyoming, as a matter of public policy and 
economic requirement, the master is liable for damages caused by the negligence 
of his servant while acting within the scope of the servant's employment. 
Combined Insurance Company of America v. Sinclair, 584 P.2d 1034 (Wyo. 1978); Blessing v. Pittman, 70 Wyo. 416, 425, 251 P.2d 243, 246 (1952). See also Stockwell v. Morris, 46 Wyo. 1, 22 P.2d 189 
(1933). As we view the facts, there was a right in McNamara Realty to control 
the work of Kelly and the conduct of Kelly who was acting within the scope of 
his employment requiring him to hustle for a listing and properly checking out 
property descriptions. A master-servant relationship existed. Beard v. Brown, 
616 P.2d 726 (Wyo. 1980).

[¶22.]  We will deal only briefly with 
appellants' objection to the deposition testimony of Robert Tomb, an expert 
called by appellee. The trial judge, after objection by appellants, did strike 
all his testimony except pages 8-11. The relevant testimony on those pages deal 
with the manner in which legal descriptions can be checked to determine street 
addresses by referring to the multiple listing service data sheets supplied to 
the offices of all brokers and available to their salesmen and by telephoning 
the county assessor. The expert testified that he followed this procedure and 
discovered that the property Kelly bid on was a different address than the 
property he had shown appellee.

[¶23.]  This was only part of appellee's proof of 
Kelly's negligence in not taking the proper steps to check the description. It 
was probably, at the most, cumulative in that Kelly admitted the availability of 
the information in his office and that a telephone call to the county assessor 
could have resolved any question about the description. He just was occupied 
with other "stuff" so assumed they were the same property.

[¶24.]  The last ten lines on covered questions 
of law related to agency. The only expert in the courtroom on questions of law 
was the district judge, and he needed no advice from a layman, even though 
well-informed, on the law of agency and the standard of care required of a real 
estate agent. We cannot see how those few legal opinions of the expert could 
have in any way influenced the court or, in any way, been prejudicial to 
appellants.

[¶25.]  Affirmed.

FOOTNOTES

1 Quoting Restatement of 
the Law (Second), Torts, § 323 (1981). Ellsworth Brothers, Inc. cites it as Rule 
324, but apparently on reprint its position has been adjusted since 
1965.