No. 80-250 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

ASSOCIATED AGENCY OF BOZEMAN, INC., 

a Mont. Corp., 

Plaintiff and Respondent, 

ELVAN L. PASHA AND NANCY L. PASHA, 

Defendants and Appellants. 

Appeal from: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, The Honorable 

W. W. Lessley, Judge presiding. 

Counsel of Record: 

For Appellant: 

Larry W. Moran, Bozeman, Montana 

For Respondent: 

William L. Pepper, Bozeman, Montana 

Submitted on Briefs: December 17, 1980 

Decided: HAk 4 - 1981 

Filed: ft4AR 4- 198q 
Mr. Justice Gene B. Daly delivered the Opinion of the Court. 

Associated Agency of Bozeman, Inc., a real estate 

brokerage firm and respondent herein, brought an action in 

the Gallatin County District Court to recover a real estate 

sales commission. 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 that the 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 to purchase 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 
first listing agreement expired, the parties signed another 

employment contract. The contract extended Associated 

Agency's exclusive listing to December 27, 1977, and was 

identical in terms to the first agreement. 

In August 1977 a ranch for sale was located for which 

the Pashas were interested in trading. This property was 

owned collectively by David R. Matti, Margaret Matti, David 

F. Matti and Judy L. Matti. The Pashas proposed that the 

purchasers found by Associated, who wished to buy the Pasha 

property, purchase instead the Matti property and then 

exchange it for the Pasha property. The Mattis, Pashas, 

Randy White and the proposed 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 offers to purchase the Pasha 

property for the full purchase price, subject to completing 

the Matti exchange. Neither the Mattis nor the Pashas, 

however, signed the earnest money receipt and agreement to 

sell and purchase necessary to complete 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 Joe Gray, 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 

conditions of an exchange that would be agreeable to them. 

The Pasha proposal was set up in various stages and 

provided the following: 
(1) Matti will divide his property into Tracts A and 

(2) Matti will then convey both tracts to Landoe and 

Lichtenberg (L & L), who will execute a $180,000 mortgage on 

Tract A and a $320,000 mortgage on Tract B. 

(3) L & L will then convey Tract A to Pasha who will 

assume payment of the $180,000 mortgage. In addition, L & L 

will convey Tract B to Pasha free and clear in exchange for 

the entire Pasha property which is subject to a $130,000 

Federal Land Bank mortgage to be assumed by L & L. 

(4) Matti will then agree to release L b L from the 

$180,000 mortgage on Tract A which was assumed by Pasha and 

to accept as substitute security on the $320,000 mortgage on 

Tract B the entire Pasha 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 

decision was reached on how the exchange would actually take 

place. 

On December 3, 1977, the parties had yet to 

effectuate an exchange of property. The Pashas on this date 

sent a letter to Randy White and Associated Agency informing 

them that the exclusive listing agreement between the two 

parties was terminated. As a basis for the termination, the 

Pashas stated in the letter that White had neglected to 

fulfill his obligations under the agreement. 

On December 15, 1977, the Pashas, David F. Matti and 
Joe Gray met in the off ice of Pashas' attorney. White 

attempted to attend this meeting on behalf of Associated 

Agency but was excluded by the Pashas. Elvan Pasha 

testified that during the meeting, Matti stated he would not 

convey Tract B free and clear as provided in the Pasha 

proposal (i.e., would not accept as substitute security for 

the $320,000 mortgage on Tract B the entire Pasha property 

received by Landoe, Lichtenberg and Gray). The Pashas 

apparently wanted this property without encumbrances because 

they planned to use it as security for a loan to obtain 

operation capital. 

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 only wanted an extra $50,000 and that the rest of 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 further negotiations. 

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 

Pasha property and that the Pashas 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 to the filing of their answer, the Pashas, 

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 it a commission of $27,000. The Pashas 

now appeal. 

The following issues have been presented for our 

review: 

1. Whether the statute of frauds has been satisfied 

so as to preclude a directed verdict in favor of appellants? 

2. Whether the District Court erred in failing to 

submit to the jury appellants' proposed instruction nos. 3, 

4, 16, 17 and 18? 

3. Whether there is substantial evidence to support 

a verdict in favor 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 frauds have 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 statute of frauds has been 

complied with. See section 28-2-903 (1) (e) , MCA; Carnell v. 

Watson (1978), 176 Mont. 344, 578 P.2d 308. 

Appellants contend that the District Court also erred 

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 to the pleadings 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 instruction no. 3 sets forth the 

requirement that a copy of a real estate broker's employment 

contract must be provided to the landowner at the time of 

its execution. 
The instruction provides a true indication of the law 

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 

appellants were in fact given 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 instruction no. 3. 

Appellants' proposed instruction no. 4 sets forth the 

statute of fraud requirements concerning the sale of real 

property. The contract at issue in this suit, however, is 

the real estate broker's employment contract, not a contract 

for deed. There was never any dispute over the validity of 

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 

has not prejudiced appellants so as to require reversal. 

Appellants' proposed instruction nos. 16, 17 and 18 

deal with conditions to be met under the employment contract 

before there could be any obligation of appellants for a 

commission. These instructions indicate, however, that a 

real estate broker is never entitled to a 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 to the fault of the seller. 
We acknowledge that this Court has stated that a 

broker employed to "sell or effect a 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 still entitled to his commission even if the sale is not 

completed if a ready, willing and able buyer is procured 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) a wrongful termination of the listing agreement 

by appellants prior to its expiration date; and (2) a 

wrongful refusal by appellants to close a buy/sell 

transaction after respondent produced a buyer ready, willing 

and able to purchase 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 of your exclusive employment, or in case 

I withdraw the authority - -- hereby givenjr -- -- ior 

to said expiration ----- date, I aqree to pay you 

said commission --- just the same as if a sale 

- had - - - - actually - - - - - - -- been consummated by - - - -- - - - - - - - - - - -- - you." - - (Emphasis added. ) 

It is the employment contract which governs a real 

estate broker's compensation, and parties to such an 

agreement can make 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), 92 Idaho 306, 442 P.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 scheduled meetings. 

In reviewing the evidence offered in this matter, it 

is our function to determine whether there is any 
substantial credible evidence to support the verdict and 

judgment when viewed in a light most favorable to the 

prevailing party. Here, there is conflicting evidence as to 

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 in an attempt to consummate some sort of agreement. 

The record also reveals that respondent did not personally 

notify appellants of a meeting concerning the exchange, but 

this was only due to the fact that Randy 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