Title: Spartz v. Rimnac

State: minnesota

Issuer: Minnesota Supreme Court

Document:

208 N.W.2d 764 (1973) F. H. SPARTZ, Respondent, v. Joseph G. RIMNAC et al., Appellants. No. 43788. Supreme Court of Minnesota. June 22, 1973. *765 Jerome V. Blatz, Minneapolis, for appellants. Hartke, Atkins & Montpetit and Jerrold M. Hartke, South St. Paul, for respondent. Heard before KNUTSON, C. J., and PETERSON, TODD, and GILLESPIE, JJ. ROBERT B. GILLESPIE, Justice.[*] This is an appeal from the denial of defendants' motion for a new trial. Plaintiff, F. H. Spartz, brought an action to collect the real estate broker's commission allegedly due him under a listing agreement with defendants, Joseph G. Rimnac and Robert F. Adelmann. The action was tried by the court with consent of the parties. The court found the plaintiff entitled to judgment. Defendants contend on appeal that a brokerage commission was not due plaintiff under the terms of the listing agreement since the purchase agreement contained a contingency which defendants allege prevented the agreement from being binding on either party. On March 18, 1969, defendants signed a listing agreement with plaintiff covering a 40-acre tract of land in Apple Valley for which defendants were asking $80,000. The listing agreement provided in relevant part: Plaintiff procured a buyer, and within a week or two both buyer and defendant-sellers had signed a purchase agreement dated March 19, 1969. Buyer and sellers agreed on a purchase price of $80,000, $1,000 earnest money with $19,000 due at closing and the balance payable through the execution of a first mortgage to sellers. The signed purchase agreement contained the following provisions: The purchase agreement also contained the following provision: The buyer never secured the rezoning and no evidence was offered to indicate any effort to do so. Defendant Adelmann testified that sometime in June he signed a deed which had been prepared by his attorney. The evidence indicates that buyer and his wife signed a mortgage deed on June 23, 1969, and that the warranty deed to the property, signed by both sellers and their wives, is dated the same day. Adelmann testified that at that time he was still ready to continue with the agreement to sell the property. Adelmann conceded that he never complained that the property had not been rezoned as stated in the purchase agreement, and further conceded that he had never talked to either plaintiff or the buyer regarding any desire on defendants' part to avoid the transaction. Defendant Rimnac likewise testified that he had invested his attorney with the authority to close the deal in his behalf and that he did not at any time wish to avoid the deal because of lack of rezoning. At trial, plaintiff testified that he had been authorized by the buyer to proceed with the purchase regardless of the rezoning and that neither defendants nor their attorney objected to the lack of rezoning or indicated any desire to avoid further participation in the contract for that reason. Near the end of June, after several attempts to contact defendants' attorney, who was difficult to reach, an agent for the broker went to the office of that attorney and attempted to close the transaction by delivering the mortgage deed and the purchaser's two checks covering real estate taxes and the balance of the downpayment. They were not accepted. Defendants' attorney refused to close the deal unless words in the signed and proffered mortgage in regard to the release of 5-acre tracts were changed from "on the principal of the purchase price" to "on the the principal of this mortgage." The trial court simply concluded that the buyer did perform and made proper tender and that the failure to close the transaction was the fault of defendants, and at this point defendants became liable for the broker's commission. We agree with the trial court. The only issue before the court is: A broker is entitled to his commission after he has performed everything that he undertook to perform, and this necessarily depends upon the agreement of the parties. Schramsky v. Hollmichel, 233 Minn. 481, 47 N.W.2d 177 (1951). Plaintiff's contract with defendants provided that defendants would pay plaintiff his commission upon any sale or contract for sale of the real estate. It is well-settled law that to be entitled to a commission upon procuring a sale or exchange of real property, a broker must secure the execution of a valid, binding, enforceable contract. Jacobson v. Rotzien, 111 Minn. 527, 127 N.W. 419 (1910); Huntley v. Smith, 153 Minn. 297, 190 N.W. 341 (1922); The Henry S. Grinde Corp. v. Klindworth, 77 N.D. 597, 44 N.W.2d 417 (1950); Sammons v. Paterson, 127 Ore. 11, 270 P. 499 (1928). Where a broker is entitled to his commission upon the sale or contract for sale, the broker is required to produce a binding contract for sale. The contract for sale which plaintiff succeeded in acquiring for defendants was an executory contract, voidable at the option of either party. See, Coppersmith v. Isherwood, 219 Md. 455, 150 A.2d 243 (1959). A voidable contract is succinctly described by 17 Am.Jur.2d Contracts, § 7: Restatement, Contracts, § 13, defines a voidable contract as one "where one or more parties thereto have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract." Comment e states: In the instant case, the purchaser had the power to avoid the contract if he failed to secure a rezoning of the property. However, the purchaser chose to ratify the contract when he sought to close the transaction without the rezoning. Ratification is a question of fact and as applied to contracts it may be express or implied. In late June, when the purchaser tendered the mortgage, the real estate taxes, and the balance of the downpayment in order to close the transaction, he ratified the contract for sale and waived his right to avoid it. The contract for sale then became binding and enforceable against the purchaser, and plaintiff became entitled to his commission. The evidence is sufficient to justify the conclusion that the failure to consummate the deal was due solely to the sellers unjustly demanding terms of sale contrary to those set forth in the bilateral purchase agreement. Defendant sellers defeated the transaction not for any fault of the broker or the purchaser. See, Kaercher v. Schee, 189 Minn. 272, 249 N.W. 180 (1933); Huntley v. Smith, supra; Knowles v. Henderson, 156 Fla. 31, 22 So. 2d 384 (1945). The decision of the trial court is affirmed. [*] Acting as Justice of the Supreme Court by appointment pursuant to Minn.Const. art. 6, § 2, and Minn.St. 2.724, subd. 2.