### No. 80-250 

### IN THE SUPREME COURTOF THE STATEOF MONTANA 1981

ASSOCIATED AGENCY OF BOZEMAN, INC., aMont. Corp., Plaintiffand Respondent,

ELVAN L. 

### PASHAAND NANCY L. 

### PASHA, DefendantsandAppellants.

Appeal from: District Courtof theEighteenth Judicial District, Inand for theCountyofGallatin, The Honorable W. W. 

### Lessley, Judgepresiding.

CounselofRecord: ForAppellant: Larry

### W. Moran,Bozeman,Montana

ForRespondent: William 

### L. Pepper,Bozeman, Montana

SubmittedonBriefs: December 17, 

### 1980 Decided:

## HAk4

# -1981

Filed: 

## ft4AR4-

## 198qMr. JusticeGene B. Daly delivered theOpinion of theCourt. Associated Agency of Bozeman, Inc., a real estate brokerage firm and respondent herein, brought an action in the Gallatin County District Court torecover 

### a real estate salescommission. Appellants, Elvan and Nancy Pasha, denied that Associated Agency had complied with the terms of 

### its exclusive listing agreement and asserted that they were justified in terminating the contract. Following trial, the court refused to enter a directed verdict in appellants' favor. The jury then returned a verdict and judgment in favor of respondent. Elvan and Nancy Pasha were the owners of a farm located near Bozeman, Montana. For the purpose of selling this property, they entered into a standard real estate broker's employment contract, dated May 27, 1977, employing Associated Agency as their agent. The contract gave Associated Agency a three-month exclusive listing and provided thatthe Pashas would pay a 6 percent commission if Associated should find a buyer "ready, willing and able to enter into a deal for said price and terms." The listing price was $450,000, with terms "to be arranged--prefer exchange for cattle ranch." The Pashas also agreed to pay the commission if the ranch was sold within 180 days of the August 27, 1977, expiration date. During the period the listing was agreement was in effect, Associated Agency, through 

### its broker/agent Randy White, produced two separate buyers willing topurchase the property for the full purchase price. The Pashas rejected the offers, however, indicating they would "prefer" an exchange of property and not a cash purchase. After the

### firstlisting agreement expired, the parties signed another employment contract. The contract extended Associated Agency's exclusive listing to December 27, 1977, and was identical interms tothe firstagreement. InAugust 1977 a ranch for salewas located forwhich the Pashas were interested in trading. This property was owned collectivelyby David R. 

### Matti, Margaret Matti, David F. 

### Matti and Judy L. 

### Matti. The Pashas proposed that the purchasers found by Associated, who wished tobuy the Pasha property, purchase instead the Matti property and then exchange 

### it for the Pasha property. The Mattis, Pashas, Randy White and theproposed purchasers, H. B. 

### Landoe and F. 

### Delbrook Lichtenberg, met and discussed the possibility of effectuating an exchange. Subsequent to this meeting, Lichtenberg and Landoe made two offerstopurchase thePasha property for the fullpurchase price, subjectto completing the Matti exchange. Neither the Mattis nor the Pashas, however, signed the earnest money receipt and agreement to selland purchase necessary tocomplete the sale. On 

### or about November 16, 1977, in Helena, Montana, another meeting was held to work out the details of 

### a possible exchange of the Pasha and Matti properties. Present at this meeting were David F. 

### Matti, Judy Matti, Landoe, Lichtenberg, and JoeGray, who had joined Landoe and Lichtenberg as interested purchasers of the Pasha property. At 

### the conclusion of the meeting, the Pashas produced a 

### proposal prepared by their attorney outlining the terms and conditionsof an exchange thatwould be agreeable tothem. The Pasha proposal was set up in various stages and provided the following:

### (1)Matti willdividehisproperty intoTracts A and

(2)Matti 

### willthen convey both tracts to Landoe and Lichtenberg (L & L), who willexecute a $180,000 mortgage on TractA and a $320,000 mortgage on Tract B. (3)L & Lwillthen convey Tract A toPasha who will

assume payment of the $180,000 mortgage. In addition, L & L willconvey Tract B toPasha free and clear inexchange for the entire Pasha property which 

### is subject to a $130,000 Federal Land Bank mortgage tobe assumed by L & L. 

### (4)Matti 

### willthen agree to release L b L from the $180,000 mortgage on TractA which was assumed by Pasha and toaccept as substitute securityon the $320,000 mortgage on Tract B the entirePasha property received by L & L. Landoe and Lichtenberg testified that all parties

were in agreement that the exchange would take place on the terms and conditions outlined in the Pasha proposal. Pashas' attorney was to prepare the appropriate documentation with the closing date set for November 28, 1977. Matti and Pasha testified, however, that no final decisionwas reached on how theexchange would actuallytake place. On December 3, 1977, the parties had yet to effectuate an exchange of property. The Pashas on thisdate sent a lettertoRandy White and AssociatedAgency informing them that the exclusive listing agreement between the two partieswas terminated. Asa basis for thetermination, the Pashas stated in the letter that White had neglected to fulfillhisobligationsunder the agreement. On December 15, 1977, the Pashas, David F. Matti andJoe Gray 

### met in the office of Pashas' attorney. White attempted to attend this meeting on behalf of Associated Agency but was excluded by the Pashas. Elvan Pasha testified thatduring themeeting, Matti statedhewould not convey Tract B free and clear as provided in the Pasha proposal (i.e., would not accept as substitutesecurity for the $320,000 mortgage on Tract B the entire Pasha property received by Landoe, Lichtenberg and Gray). The Pashas apparentlywanted thispropertywithout encumbrances because they planned to use 

### it as security for a loan to obtain operationcapital. Being unable to obtain the property free and clear, the Pashas stated they would still consummate the exchange transaction if they received an additional $50,000 from Landoe, Lichtenberg and Gray. Gray testified that the Pashas onlywanted an extra$50,000 and thatthe restof the terms of the proposal would remain intact. Matti merely testified that the parties were unable to agree on a means to accomplish the trade or sale so they decided not to pursue furthernegotiations. Associated Agency brought suit in February 1978 praying for a 6 percent commission ($27,000), costs and attorney fees. It alleged in 

### its complaint that 

### it had fully performed under the listing agreement by finding a buyer ready, willing and able to purchase or exchange the Pashaproperty and thatthePashas had wrongfully terminated the contract. The Pashas answered and denied that Associated had complied with the terms of the agreement and further contended that they were justified in terminating the contract.Subsequent tothe filingof their answer, thePashas,

on May 8, 1978, sold a portion of their property to Robert and Nancy Steinman. The remainder of the property was purcha.sed by Big West Land Company, Inc., a corporation owned and controlled by Robert Steinman. Steinman had earlier expressed an interest in the property after 

### it was shown to him by Randy White. Immediately after selling their property the Pasha.s, on the same date, purchased the Matti property. Associated Agency's suit proceeded to trial. Following trial the case was submitted to the jury. The jury, after deliberation, returned a verdict in favor of Associated, awarding ita commission of $27,000. The Pashas

now appeal. The following issues have been presented for our review:

### 1. Whether the statuteof frauds has been satisfied

soastopreclude a directedverdict infavor of appellants? 

### 2. Whether the District Court erred in failing to submit to thejury appellants' proposed instructionnos. 3, 

### 4, 16, 17 and 18? 3. Whether there 

### is substantial evidence to support

a verdict infavor of respondent? As to the first issue, appellants at trial and on this appeal make much ado over the fact that they never signed a binding written real estate contract. Based upon this fact, they assert that the requirements of the statute of fraudshave not been complied with, and respondent, as a real estate broker, 

### is not entitled to a commission as a matter of law. We must disagree.The contract at issue in respondent's action 

### is a real estate broker's employment contract or "listing agreementn--not an alleged unsigned oral real estate contract for deed. This listing agreement was in writing and signed by appellants as the party charged. A1

### 1 statutory requirements concerning the validity of this contract 

### were fulfilled, and the statuteof frauds has been complied with. See section 28-2-903 (1) (e)

## , MCA; Carnell v. Watson (1978),176Mont. 344, 578 P.2d 308. Appellantscontend thattheDistrictCourt alsoerred in failing to submit to the jury their proposed instruction nos. 3, 

### 4, 16, 17 and 18. It 

### is not reversible error for a trial court to refuse an offered instruction unless such refusal affects the substantial rights of the party proposing the instruction, thereby prejudicing him. Payne v. Sorenson (197911 Mont. 

## , 599 P.2d 362, 36 St.Rep. 1610. A party 

### is not prejudiced by a refusal of his proposed instructions where the subject matter of the instruction 

### is not applicable tothepleadings and facts, or not supported by the evidence introduced at trial, or the subject matter 

### is adequately covered by other instructions submitted to the jury. Payne v. Sorenson, supra; Brown v. North Am. Mfg. Co. (1978), 176 Mont. 98, 576 P.2d 711; Butler Manufacturing Co. 

### v. J & L Implement Co. (1976), 167 Mont. 519, 540 P.2d 962. Appellants' proposed instructionno. 3setsforththe requirement thata copy of a real estatebroker's employment contract must be provided to the landowner at the time of 

### itsexecution.

### The instructionprovides a true indicationof thelaw in Montana. The subject matter, however, was never raised in the pleadings nor has it 

### ever constituted a legitimate theory of appellants' case. Appellants admit to entering into and signing the employment contract. In signing the contract appellants certified that they received a copy of the agreement. Randy White testified at trial that appellantswere in factgiven a copy; Elvan Pasha testified he merely could not recall receiving a copy and possibly could have lost it. 

### We 

### find no reversible error in the court's refusal of proposed instructionno. 3. 

### Appellants' proposed instructionno. 4 

### setsforththe statute of fraud requirements concerning the sale of real property. The contract atissue in this suit, however, is the real estatebroker's employment contract, not a contract for deed. There was never any dispute over thevalidityof any contract for the sale of real property in that both parties agree no sale was made until the property was purchased by Robert Steinman on May 8, 1978. The instruction, consequently, was unnecessary, and 

### its refusal hasnotprejudiced appellants soastorequire reversal. Appellants' proposed instruction nos. 16, 17 and 18 dealwith conditions tobe 

### metunder theemployment contract before there could be any obligation of appellants for a commission. These instructions indicate, however, that a real estatebroker is

### never entitledtoa 

### commission until a 

### binding written agreement is 

### signed and the actual sale of real property is 

### completed. Such an instruction is 

### misleading and ignores the fact that a sale may not have been consummated due tothefaultof the seller.We acknowledge that this Court has stated that a broker employed to "sellor effecta sale" and exchange (as 

### is the case here) does not earn his commission until the purchase price 

### is paid, title 

### is conveyed and the sale 

### is completed. See Diehl and Associates, Inc. v. Houtchens (1977), 173 Mont. 372, 567 P.2d 930. In an expansion of this holding, however, 

### we must also conclude that a broker 

### is stillentitled tohis commission even if the sale

### is not completed if a ready, willing and ablebuyer 

### isprocured and the failure to consummate was solely due to the wrongful acts or interference of the seller. See Taylor v. Gaudy (1980), 46 0r.App. 235, 611 P.2d 336; Fender 

### v. Brunken (Colo.App. 1975), 534 P.2d 347; Red Carpet Real Estate of Aloha, Inc. v. Huygens (1974),270 Or. 860, 530 P.2d 46; 

### see also Ellsworth Dobbs, Inc. v. Johnson (1967), 50 N.J. 528, 236 A.2d 843. The District Court instructed the jury in this regard, and we find no reversible error in refusing appellants' tendered instructions. In regard to the final issue on appeal, the grounds upon which a recovery for respondent could have.based are twofold: (1)awrongful termination of the listingagreement by appellants prior to 

### its expiration date; and (2) a wrongful refusal by appellants to close a buy/sell transaction after respondent produced abuyer ready, willing and able topurchase appellants' property on the terms and conditions in the listing agreement. In resolving this issue, however, we need only discuss appellants' wrongful termination. As to the allegation of liability based upon a wrongful termination, the parties' agreement provides in

### pertinent part: "'THIS IS AN EXCLUSIVE LISTING' and you [respondent] are hereby granted the absolute, sole and exclusive right to sell or exchange the said described property. In the event of any sale, by me [appellants] or any other person, or of exchange or conveyance,of said property, or any part thereof, during the term ofyour exclusive employment,or in case Iwithdraw the authority --- 

### hereby givenjr -- -- 

### ior to said expiration ----- 

### date, I aqree topay you said commission 

### --- just the same as if a sale had actually been consummated by you." ----------- ---------

### --------

### -- - -- 

### (Emphasisadded.) 

### It is the employment contract which governs a real estate broker's compensation, and parties to such an agreement canmake that compensation depend upon any lawful condition. Blank v. Borden (1974), 11 Cal.3d 963, 115 Cal.Rptr. 31, 524 P.2d 127. Here, the parties entered into

an exclusive listing agreement whereby compensation can be paid upon appellants' unilateral termination. Such a "commission on withdrawal" has been deemed valid (if the withdrawal is not justified), and since the parties have agreed to the provision, it is incumbent upon the courts to enforce it. Blank, supra; see also, McMenamin v. Bishop (1972), 6 Wash.App. 455, 493 P.2d 1016; Central Idaho Agency, Inc. v. Turner (1968), 92Idaho 306, 442P.2d 442. Appellants assert that the termination was justified due to the broker's failure to fulfill his duties and responsibilities under the contract. In particular, appellants assert that respondent failed to work on sale and/or trade negotiations on their behalf; failed to advise them of important matters respecting their property; and failed to advise them of scheduledmeetings. In reviewing the evidence offered in this matter, it is our function to determine whether there is anysubstantial credible evidence to support the verdict and judgment when viewed in a light most favorable to the prevailingparty. Here, there 

### is conflicting evidence asto respondent's efforts in obtaining a ready, willing and able buyer. However, the record 

### is still replete with substantial evidence necessary to support a finding by the jury that respondent acted in furtherance of 

### its responsibilities under the contract and that appellants improperly terminated the listing agreement. The record reveals that Randy White made numerous phone calls, placed advertisements, showed the property to prospective buyers (including the party who eventually purchased the property) and helped in finding the group interested in working an exchange. We agree that this exchange was never completed, but respondent was 

### still involved inan attempttoconsummate some sortof agreement. The record also reveals that respondent did not personally notify appellants of a meeting concerning the exchange, but thiswas only due to the fact thatRandy White allowed the buyers' broker to so notify the Pashas. Appellants were thus informed of the meeting and were able to attend. Respondent also failed to attend the November 16, 1977, meeting in Helena, Montana, but this was only after being informed by appellants that White's presence was not necessary. We cannot conclude that the evidence supporting a finding that appellants wrongfully terminated the contract

was "so inherently impossible or improbable as not to be entitled to belief." Berdine v. Sanders County (1974), 164 Mont. 206, 209, 520 P.2d 650, 651. Consequently, in

### accordance with 

### the terms of the contract agreed to by 

### the parties, we 

### must conclude the jury was proper in awarding respondent its 

### commission "as if a sale had been consummated.

### " The verdict and judgment of the District Court is 

### affirmed.

We concur: 

# 2'2 Chief 

# &&,s&&t&q Justice