No. 13654 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977

McDONALD & CO.

## ,a Montana Corporation, Plaintiff and Respondent,

FISHTAIL CREEK RANCH LIMITED PARTNERSHIP, A Montana Limited Partnership, and JAMES R. REGER, Defendants and Appellants.

Appeal from: DistrictCourt of the ThirteenthJudicial District, Honorable Charles Luedke, Judge presiding. Counsel of Record: For Appellants: Moses, Tolliver and Wright, Billings, Montana Kenneth D. Tolliver argued, Billings, Montana For Respondent: Hibbs, Sweeney and Colburg, Billings, Montana Maurice R. Colberg, Jr. argued, Billings, Montana

Submitted: September 23, 1977 Decided: 

## goy ;,9 yf!

4. -. Filed:

### Mr. 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' allegedbreach of a real estate listingagreement. Defendants counterclaimed to recover damages purportedly caused by plaintiff's breach of a broker's fiduciary duty. The jury returned a verdict and judgment was entered awarding plaintiff damages inthe sum of $11,830 and awarding defendants damages

on their counterclaim in the sum of $10,000. Plaintiff filed

an alternative motion to alter or amend thejudgment. The District Court granted the motion and an amendedjudgment on the verdict was entered awarding plaintiff damages inthe 

### sum of $11,830 and awarding defendants damages on their counterclaim inthe sum of $2,500. Defendants appeal from the District Court's amended judgment allowing plaintiff to recover $11,830 indama~s and granting plaintiff's alternative motion to amend thejudgment by reducing defendants' amount of recovery on their counterclaim from $10,000 to $2,500. Plaintiff appeals from the District Court judgment allowing defendants torecover on their counterclaim. The issues presented on appeal are: 

### 1. Whether plaintiff McDonald & Co. should be entitled torecover a commission under the listingagreement? 

### 2. Whether the written listingconstituted merely a written confirmation of just one part of the overall oral contract between the parties which could be repudiated and thereby allow defendants todeem allagreements atan end? 3. Whether the District Court erred inreducing the jury's verdict todefendants on their counterclaim?McDonald & Co. is a Montana corporation located in 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 

### isa limited partnership organized under the laws of Montana and qualified to do business inMontana. Itsoriginal articles of limited partnership were executed on May 

### 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. Mr. Reger testifiedhe received a monthly salary of $250 as compensation forhis duties as general partner. In the spring of 1973, Reger became associatedwith McDonald & Co. as a real estate salesman. He received his real estate license inJune 1973. Reger and McDonald purportedly formed an oral agreement as to the division of commissions between the broker and salesman upon the sale of property. Reger remained associatedwithMcDonald & Co. until mid-January 1974. During his employment with McDonald Reger's major effortswere devoted tonegotiating the sale of Fishtail Creek Ranch, a cow ranch, formerly known as the Partington Ranch located inStillwaterCounty, Montana. The ranch was purchased by Fishtail Creek Ranch Limited Partnership as an investment property. An instrument entitled "EXCLUSIVE RIGHT TO SELL RANCH AND ACREAGE LISTING FORM" was executed by Sam E. McDonald, 

### Jr., and James R. Reger, inhis capacity asgeneral partner of Fishtail Creek Ranch Limited Partnership. The instrument 

### is dated June 20, 1973; however, the testimony of the signatorsindica

### ks the instrument was not executed until sometime in November 1973. The instrument indica

### tes the listingwas not toexpire until June 19, 1974. The apparent motive for predating the instrument was toguaranteeMcDonald & Co. a commission from any saleof Fishtail Creek Ranch which might have been precipitated afterJune 20, 1973. During Reger's employment with McDonald & Co. there were severalattempts toconsummate a sale of Fishtail Creek Ranch. InJuly 1973, Jim0. Mayo executed an agreement topurchase Fishtail Creek Ranch for $235,000. Mayo deposited $1,000 with McDonald & Co. asconsideration for an option to purchase, the option to expireAugust 31, 1973. Mayo was unable toobtain financing for the purchase and requested a refund of his $1,000. McDonald & Co. returned $800 toMayo, $200 was forfeited to the limited partnership. InOctober 1973McDonald & Co. inan alleged attempt to precipitate sale of the Fishtail Creek Ranch, contracted with Mueller Engineering for the subdivision and plotting of some ten acre tracts on the property. McDonald & Co. paid the costs for the subdivisionwork and was purportedly reimbursed by Fishtail Creek Limited Partnership for allcosts incurred inlisting theproperty. On November 9, 1973, an agreement for the purchase of Fishtail Creek Ranch (exclusive of the area being subdivided)

was executed by Reger, inhis capacity as generalpartner for FishtailCreek Ranch Limited Partnership, and the purchasers, Jack D. Shanstrom, Morris P. Blakely, and Arnold Huppert, Jr. The agreement incorporated a contract fordeed which providedfor the deposit of earnest money. The typed contract specified

an earnest money deposit in the amount of $5,000. However, the printing on the instrument had been struck out by a pen and the figure $15,000 written inas a substitution. The facts reveal that only $5,000was 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 to the buyers when the prospective purchase fell through. On 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 

### is presently deposited in the escrow account of McDonald & Company." Further,that the purchasers be released from allclaims or demands arising out of the agreements executed by the parties for the purchase of Fishtail Creek Ranch. The $5,000 was delivered toFishtail Creek Ranch Limited Partnership. Reger's associationwith McDonald & Co. was terminated inJanuary 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. By letter of February 

### 1, 1974, counsel forReger informed McDonald that the listingagreement for Fishtail Creek Ranch was terminated

as of January 28, 1974, the datewhen the parties allegedly severed their association. Reger subsequently went towork for Northwest Real Estate,

a real estatebrokerage firm located inBillings. By May 

### 1, 1974, Reger had sold eight of the previously subdivided tracts for a total amount of $123,000. Six of the eight tracts were

### sold to or through representatives of Mueller Engineering. OnApril 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 Sevenpercent (7%) of Sales price "Exclusive Listing McDonald & 

### Co. II

### 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

canbe no other reasonable construction of this agreement than that it grants an exclusive listing to the broker whose name is typed in the appropriateblank, "McDonald & 

### Co."

# . The exclusive listing agreement to that broker has a one year period of duration commencingJune 20, 1973 and expiring June 19, 1974. Theword "no" is inserted in the blank after the form provision of "Non-Exc.". Certainly thatmeans 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, letter givingnotice the listing agreement was terminated, unilaterally terminated the listing agreement. Plaintiff 

### axtends defendants could not unilaterally terminate the listing agreement. InKester 

### v. Nelson, 92 Mont. 69, 73, 10 P.2d 379 (1932), thisCourt stated:

II8Persons competent to contract can asvalidly agree torescind a contract already made as they could agree tomake it originally. However, as a contract 

### ismade by thejoint 

### willof two parties, it can be rescinded only by thejoint willof the two parties. It 

### is obvious that one of the parties can no more rescind the contractwithout the other's express or implied assent, than he alone can make it.

## "' Inthe instant case, there was no mutual assent. In fact, after SaniMcDonald received the termination letter of February 

### 1, 1974, he personally told James Reger that the exclusive listing agreement was stillineffectuntil 

### its termination date. In Cloe v. Rogers, 31Okl. 255, 

### 121P. 201 (1912), the court, relying

on similar facts as are found inthe instant case, stated a general rule that:

'I*

# ** where an agency 

### isuncoupled with an interest, itmay be revoked by the principal at

### will, without liability 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 areentered upon by the agent, and money and time are expanded inpursuance of the object of the agency, that, although the principal has the power torevoke 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 ashe may sufferby reason thereof." 121P. 203. Issue 2. Defendants in their second issue raise an ingenious but unmeritorious argument. They allegeMcDonald & Co. breached 

### its employer-employee relationship with James Reger and this breach alsobreached the exclusive listingagreement betweenMcDonald & Co, and Fishtail on the premise that the general partner signing that agreement for Fishtailwas alsoJames Reger. Defendants citesection 13-708, R.C.M. 1947, as authority. That statuterequires that contracts tobe considered as one transaction 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 listingagreement for the saleof 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 

### isbetween McDonald & Co. and Fishtail. Again, inCloe v. Rogers, supra, it 

### is stated: '"Where an agent has an agreement withhis principal to sellcertain lands, which have been placed in his hands tobe disposed of within a time limited, and the agent 

### is to receive no pay or compensation for advertising, putting the same upon the market, or forhis services, excepting a share of the profits arising from the sales of the lands, and in the performance of such agreement he renders services for several months, and expends time and money, and then, without any reason or excuse, the principal revokes the contract, the agent 

### is entitled to recover from the principal such compensation indamages as

### willbe equal inamount tohis share of the profits which would have resulted had the lands been sold by him." 121P. 207. In the instant case, McDonald & Co. not only advertised this land inmajor newspapers throughout the country, it also arranged for part of these lands tobe surveyed and platted

so it could be subdivided. Robert Sanderson, president of Mueller Engineering, testified: "Q. Who firstcontacted you concerning thiswork? A. Our records indicate that Randy Reger was our first contact on the project. Q One of the defendants in this case 

### isJames R. Reger. 

### Is that the person you refer to asRandy Reger? A. That's correct."Q. Did you understand that he represented another firmatthat time? A. Yes. Again, our fileindicates that Randy Reger was the contact on the project and our clientwas actuallyMcDonald & Company, of which we understood that he was an employee. "Q. You mention your lastbillof January 28, 1974. To whom was that directed, thebill? A. The statement was directed to the client, McDonald & Company." As a result of contact withMueller Engineering which was initiatedby McDonald & Co., sixof the subdivision tractswere sold topeople associated with Mueller Engineering. "It 

### is a generally accepted law that a real estate broker 

### is entitled tocommissions when he has, in pursuance of his employment and within the time specified in the contract of employment, procured a purchaser able, ready and willing topurchase the seller's property on the terms and conditions specified inthe 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.~ep. 814, 817 (1977). When, as in the instane case, there 

### isa revocation and

a subsequent salewithin the period of the exclusive listing agreement, it

### willbe presumed that the broker with the exclusive listingwould have made the sale. "'Where 

# *

# ** a real estatebroker has an exclusive listingand has established that the property described inthe listingagreement has been sold, a prima facie case 

### is established for a codssionupon the entire 

### sales price. ''I Seattle Investment Company v, Kilburn, 

### 5Wash,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 entirePartington ranch was soldwithin the time the exclusive listing agreement was ineffect. Therefore, the District Court was correct in 

### its award of commissions totaling $11,830 toMcDonald & Co. Issue 

### 3. The finalconsideration on appeal iswhether the District Court erred inreducing thejury's verdict to the defendants' counterclaim? Reger and Fishtail claim thatMcDonald& 

### Co. failed to collect anadditional $10,000 earnestmoney in connectionwith the proposed Shanstrom,Blakely and Huppert sale. The agreementon this sale called for $15,000 earnest money. Of this $15,000 only $5,000 was ever received. The

reasonwhy the other 

### $10,000was not received isnot clear from the record,however, James Murphy, attorney for the threebuyers, testified: "Q. Did you ever get authority fromyour clients to release those checks, totaling $10,000.00 to the seller of the property or the broker? A. 

### NO." Whatever the reason for withholding the authority to deliver those checks, nowhere in the record does it disclose thatMcDonald & 

### Co. was negligent innot collecting this $10,000. The Shanstrom,Blakely and Huppert agreementwas terminated by all parties including Reger and Fishtail. A mutual release agreementwas signed and dated January 11, 1974. This agreementwas signed by Reger as generalpartner of Fishtail. Itwas also signedby the threebuyers. All parties agreed that any contracts to purchase and sell the property were terminated. Thebuyers agreed that $5,000earnest money couldbe forfeited to Fishtail and matters were in fact terminated. There is no question that therewas a recognition in the execution 

### of this agreement that $5,000 was the total amount of earnest money to be forfeited onbehalf of the buyers. Here, the recordnot only fails to substantiate damages but it is devoid of anywrongdoing by McDonald in collecting the earnestmoney. Therefore,Fishtail on its counterclaim is entitled to nothing and the District Court is affirmedwith 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