Title: MCDONALD CO v FISHTAIL CREEK RA

State: montana

Issuer: Montana Supreme Court

Document:

No. 1 3 6 5 4 I N THE SUPREME COURT OF THE STATE OF MONTANA 1977 McDONALD & CO. , a M o n t a n a C o r p o r a t i o n , P l a i n t i f f and R e s p o n d e n t , F I S H T A I L CREEK RANCH LIMITED PARTNERSHIP, A M o n t a n a L i m i t e d Partnership, and JAMES R. REGER, D e f e n d a n t s and A p p e l l a n t s . A p p e a l f r o m : D i s t r i c t C o u r t of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t , H o n o r a b l e C h a r l e s L u e d k e , Judge presiding. C o u n s e l of R e c o r d : For A p p e l l a n t s : M o s e s , T o l l i v e r and Wright, B i l l i n g s , M o n t a n a K e n n e t h D. T o l l i v e r argued, B i l l i n g s , M o n t a n a For R e s p o n d e n t : H i b b s , S w e e n e y and C o l b u r g , B i l l i n g s , M o n t a n a M a u r i c e R. C o l b e r g , Jr. argued, B i l l i n g s , M o n t a n a S u b m i t t e d : S e p t e m b e r 2 3 , 1 9 7 7 D e c i d e d : goy ; , 9 yf! 4 . -. Filed: M r . Justice Gene B. Daly delivered the Opinion of the Court. Plaintiff McDonald & Co. initiated this action in the District Court, Yellowstone County, to recover damages for defendants' alleged breach of a real estate l i s t i n g agreement. Defendants counterclaimed t o recover damages purportedly caused by p l a i n t i f f ' s breach of a broker's fiduciary duty. The jury returned a verdict and judgment was entered awarding plaintiff damages i n the sum of $11,830 and awarding defendants damages on their counterclaim i n the sum of $10,000. Plaintiff filed an alternative motion to a l t e r or amend the judgment. The District Court granted the motion and an amended judgment on the verdict was entered awarding plaintiff damages i n the s u m of $11,830 and awarding defendants damages on their counterclaim i n the sum of $2,500. Defendants appeal from the District Court's amended judgment allowing plaintiff to recover $11,830 i n d a m a ~ s and granting p l a i n t i f f ' s alternative motion to amend the judgment by reducing defendants' amount of recovery on their counterclaim from $10,000 to $2,500. Plaintiff appeals from the District Court judgment allowing defendants t o recover on their counterclaim. The issues presented on appeal are: 1. Whether plaintiff McDonald & Co. should be entitled t o recover a commission under the l i s t i n g agreement? 2 . Whether the written l i s t i n g constituted merely a written confirmation of just one part of the overall oral contract between the parties which could be repudiated and thereby allow defendants t o deem a l l agreements a t an end? 3. Whether the District Court erred i n reducing the jury's verdict t o defendants on their counterclaim? McDonald & Co. is a Montana corporation located i n Billings, Montana, engaged in the business of selling real estate. Sam E. McDonald, Jr., is the president and majority stockholder of McDonald & Co. Fishtail Creek Ranch is a limited partnership organized under the laws of Montana and qualified to do business i n Montana. I t s original articles of limited partnership were executed on M a y 1, 1973. James R. Reger is listed as the general partner with limited partners Russell C. Clark, Sam E. McDonald, Jr., John 0. Odegaard, James R. Reger, S. C. Sande, C. B. Sand, and S.J. Sande. M r . Reger testified he received a monthly salary of $250 as compensation for h i s duties as general partner. In the spring of 1973, Reger became associated with McDonald & Co. a s a real estate salesman. H e received his real estate license i n June 1973. Reger and McDonald pur- portedly formed an oral agreement as to the division of com- missions between the broker and salesman upon the sale of property. Reger remained associated with McDonald & Co. u n t i l mid-January 1974. During his employment with McDonald Reger's major efforts were devoted to negotiating the sale of Fishtail Creek Ranch, a cow ranch, formerly known as the Partington Ranch located i n Stillwater County, Montana. The ranch was purchased by Fishtail Creek Ranch Limited Partnership as an investment property. A n instrument entitled "EXCLUSIVE RIGHT TO SELL RANCH AND ACREAGE LISTING F O R M " was executed by Sam E. McDonald, Jr., and James R. Reger, i n his capacity a s general partner of Fishtail Creek Ranch Limited Partnership. The instrument is dated June 20, 1973; however, the testimony of the signators indica ks the instrument was not executed u n t i l sometime i n November 1973. The instrument indica tes the l i s t i n g was not t o expire u n t i l June 19, 1974. The apparent motive for predating the instrument was t o guarantee McDonald & Co. a commission from any sale of Fishtail Creek Ranch which might have been precipitated a f t e r June 20, 1973. During Reger's employment with McDonald & Co. there were several attempts t o consummate a sale of F i s h t a i l Creek Ranch. I n July 1973, J i m 0. Mayo executed an agreement t o purchase Fishtail Creek Ranch for $235,000. Mayo deposited $1,000 with McDonald & Co. a s consideration for an option to purchase, the option t o expire August 31, 1973. Mayo was unable t o obtain financing for the purchase and requested a refund of h i s $1,000. McDonald & Co. returned $800 t o Mayo, $200 was forfeited t o the limited partnership. I n October 1973 McDonald & Co. i n an alleged attempt t o precipitate sale of the Fishtail Creek Ranch, contracted with Mueller Engineering for the subdivision and plotting of some ten acre t r a c t s on the property. McDonald & Co. paid the costs for the subdivision work and was purportedly reimbursed by F i s h t a i l Creek Limited Partnership for a l l costs incurred i n l i s t i n g the property. O n November 9, 1973, an agreement for the purchase of F i s h t a i l Creek Ranch (exclusive of the area being subdivided) was executed by Reger, in h i s capacity a s general partner for F i s h t a i l Creek Ranch Limited Partnership, and the purchasers, Jack D. Shanstrom, Morris P. Blakely, and Arnold Huppert, Jr. The agreement incorporated a contract for deed which provided for the deposit of earnest money. The typed contract specified an earnest money deposit i n the amount of $5,000. However, the printing on the instrument had been struck out by a pen and the figure $15,000 written i n as a substitution. The facts reveal that only $5,000 was ever received by Sam E. McDonald,Jr. Checks totaling an additional $10,000 were retained by the attorney for the buyers and these checks were eventually returned t o the buyers when the prospective purchase f e l l through. O n January 11, 1974, the parties to the purchase agreement executed a "MUTUAL RELEASEt' providing that Fishtail Creek Ranch Limited Partnership "retain the $5,000 earnest money which i s presently deposited i n the escrow account of McDonald & Company." Further,that the purchasers be released from a l l claims or demands arising out of the agreements executed by the parties for the purchase of Fishtail Creek Ranch. The $5,000 was delivered to Fishtail Creek Ranch Limited Partnership. Reger's association with McDonald & Co. was terminated i n January 1974. The purported basis for termination of the employment relationship was Reger's refusal to accept McDonald's contractual conditions for the 1974 employment year. B y l e t t e r of February 1, 1974, counsel for Reger informed McDonald that the l i s t i n g agreement for Fishtail Creek Ranch was terminated as of January 28, 1974, the date when the parties allegedly severed their association. Reger subsequently went to work for Northwest Real Estate, a real estate brokerage firm located i n Billings. B y M a y 1, 1974, Reger had sold eight of the previously subdivided tracts for a t o t a l amount of $123,000. Six of the eight tracts were sold to or through representatives of Mueller Engineering. On April 19, 1974, James E . Edwards entered an option contract to purchase Fishtail Creek Ranch for $215,000. Edwards eventually exercised the option. Issue 1 . It is necessary to decide whether or not the listing agreement between McDonald & Co. and Fishtail was exclusive or nonexclusive. The pertinent parts of the listing agreement are: The title reads:"EXCLUSIVE RIGHT TO SELL RANCH AND ACREAGE The body sets forth: "Agreed Commission Seven percent ( 7 % ) of Sales price "Exclusive Listing McDonald & Co. I I Exclusive Agency - No Non-Exc. - no "Commences June 20, 1973 Expires June 19, 1974." The agreement is on a printed form. The items inserted in the blanks are typed into the printed form. It is obvious there can be no other reasonable construction of this agreement than that it grants an exclusive listing to the broker whose name is typed in the appropriate blank, "McDonald & C o . " . The exclusive listing agreement to that broker has a one year period of duration commencing June 20, 1973 and expiring June 19, 1974. The word "no" is inserted in the blank after the form provision of "Non-Exc.". Certainly that means the agreement is not a nonexclusive agreement and therefore, the nonexclusive reference contained in the last paragraph of the portion of the agreement quoted above does not control. The agreement as a whole speaks of an exclusive listing agreement. The form provides that a commission must be paid upon any actual sales prior to the "termination of such right ." Defendants argue the February 1, 1974, l e t t e r giving notice the l i s t i n g agreement was terminated, unilaterally terminated the l i s t i n g agreement. Plaintiff axtends defendants could not unilaterally terminate the listing agreement. In Kester v. Nelson, 92 Mont. 69, 73, 10 P.2d 379 (1932), t h i s Court stated: II 8 Persons competent t o contract can as validly agree t o rescind a contract already made as they could agree t o make it originally. However, as a contract is made by the joint w i l l of two parties, it can be rescinded only by the joint w i l l of the two parties. It is obvious that one of the parties can no more rescind the contract without the other's express or implied assent, than he alone can make it. "' In the instant case, there was no mutual assent. In fact, a f t e r Sani McDonald received the termination l e t t e r of February 1, 1974, he personally told James Reger that the exclusive l i s t i n g agreement was still i n effect u n t i l i t s termination date. In Cloe v. Rogers, 31 Okl. 255, 1 2 1 P. 201 (1912), the court, relying on similar facts as are found i n the instant case, stated a general rule that: 'I* * * where an agency is uncoupled with an interest, it may be revoked by the principal a t w i l l , without l i a b i l i t y for damages; but where it is for a fixed time, and contemplates on the part of the agent the expenditure of time and money to carry it out, and is accepted, and the duties imposed are entered upon by the agent, and money and time are expanded in pursuance of the object of the agency, that, although the principal has the power t o revoke and bring to a termination the contract, yet he lacks the right of so doing, except upon the burden of responding to the agent for such damages as he may suffer by reason thereof." 121 P. 203. Issue 2. Defendants i n their second issue raise an ingenious but unmeritorious argument. They allege McDonald & Co. breached its employer-employee relationship with James Reger and t h i s breach also breached the exclusive l i s t i n g agreement between McDonald & Co, and Fishtail on the premise that the general partner signing that agreement for Fishtail was also James Reger. Defendants c i t e section 13-708, R.C.M. 1947, as authority. That statute requires that contracts to be considered as one trans- action must (1) relate to the same matter; (2) be between the same parties, It is obvious that any employer-employee agreement between McDonald & Co. and Reger personally, has no connection with the exclusive l i s t i n g agreement for the sale of the Fishtail properties. The two agreements were between different parties. The employer-employee agreement was between McDonald & Co. and Reger personally. The exclusive listing agreement is between McDonald & Co. and Fishtail. Again, i n Cloe v. Rogers, supra, it is stated: '"Where an agent has an agreement with h i s principal t o s e l l certain lands, which have been placed i n h i s hands t o be disposed of within a time limited, and the agent is to receive no pay or compensation for adver- tising, putting the same upon the market, or for his services, excepting a share of the profits arising from the sales of the lands, and i n the performance of such agreement he renders services for several months, and expends time and money, and then, without any reason o r excuse, the principal revokes the contract, the agent is entitled to recover from the principal such compensa- tion i n damages as w i l l be equal i n amount to h i s share of the profits which would have resulted had the lands been sold by him." 121 P. 207. In the instant case, McDonald & Co. not only advertised t h i s land i n major newspapers throughout the country, it also arranged for part of these lands to be surveyed and platted so it could be subdivided. Robert Sanderson, president of Mueller Engineering, testified: "Q. W h o f i r s t contacted you concerning t h i s work? A. Our records indicate that Randy Reger was our f i r s t contact on the project. Q One of the defendants in t h i s case is James R. Reger. Is that the person you refer to a s Randy Reger? A. That's correct. "Q. Did you understand that he represented another firm a t that time? A. Yes. Again, our f i l e indicates that Randy Reger was the contact on the project and our client was actually McDonald & Company, of which w e understood that he was an employee. "Q. You mention your l a s t b i l l of January 28, 1974. To w h o m was that directed, the b i l l ? A. The statement was directed to the client, McDonald & Company." A s a result of contact with Mueller Engineering which was initiated by McDonald & Co., s i x of the subdivision tracts were sold to people associated with Mueller Engineering. "It is a generally accepted law that a real estate broker is entitled t o commissions when he has, i n pursuance of h i s employment and within the time specified in the contract of employment, procured a purchaser able, ready and willing t o purchase the s e l l e r ' s property on the terms and conditions specified i n the contract of employment. Roscow v. Baia, 114 Mont. 246. 135 P.2d 364. * * *I1 Diehl and Associates, Inc. v. Houtchens, Mont . , 567 P.2d 930, 34 ~ t . ~ e p . 814, 817 (1977). When, as in the instane case, there is a revocation and a subsequent sale within the period of the exclusive l i s t i n g agreement, it w i l l be presumed that the broker with the exclusive l i s t i n g would have made the sale. "'Where * * * a real estate broker has an exclusive l i s t i n g and has established that the property described i n the l i s t i n g agreement has been sold, a prima facie case is established for a c o d s s i o n upon the entire sales price. ''I Seattle Investment Company v, Kilburn, 5 Wash,App. 137, 485 P.2d 1005, 1007 (1971), quoting from Fleetham v. Schneekloth, 52 Wash.2d 176, 179, 324 P. 2d 429, 431 (1958). In the instant case the entire Partington ranch was sold within the time the exclusive listing agreement was i n effect. Therefore, the District Court was correct i n its award of commissions totaling $11,830 t o McDonald & Co. Issue 3. The f i n a l consideration on appeal is whether the District Court erred i n reducing the jury's verdict to the defendants' counterclaim? Reger and Fishtail claim that McDonald & Co. failed to collect an additional $10,000 earnest money in connection with the proposed Shanstrom, Blakely and Huppert sale. The agreement on this sale called for $15,000 earnest money. Of this $15,000 only $5,000 was ever received. The reason why the other $ 1 0 , 0 0 0 was not received is not clear from the record, however, James Murphy, attorney for the three buyers, testified: "Q. Did you ever get authority from your clients to release those checks, totaling $10,000.00 to the seller of the property or the broker? A. N O . " Whatever the reason for withholding the authority to deliver those checks, nowhere in the record does it disclose that McDonald & Co. was negligent in not collecting this $10,000. The Shanstrom, Blakely and Huppert agreement was terminated by all parties including Reger and Fishtail. A mutual release agreement was signed and dated January 11, 1974. This agreement was signed by Reger as general partner of Fishtail. It was also signed by the three buyers. All parties agreed that any contracts to purchase and sell the property were terminated. The buyers agreed that $5,000 earnest money could be forfeited to Fishtail and matters were in fact terminated. There is no question that there was a recognition in the execution of this agreement that $5,000 was the total amount of earnest money to be forfeited on behalf of the buyers. Here, the record not only fails to substantiate damages but it is devoid of any wrongdoing by McDonald in collecting the earnest money. Therefore, Fishtail on its counterclaim is entitled to nothing and the District Court is affirmed with respect to the judgment of $11,830 awarded to plaintiff-respondent. The judgment awarding the sum of $2,500 to defendants-appellants is vacated. Austice