No. 81-176 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

MIKE NARDI, d/b/a MIKE NARDI REALTY, 

Plaintiff and Respondent, 

LAWRENCE H. SMALLEY AND CAROL C. SMALLEY, 

husband and wife, 

Defendants and Appellants, 

and 

LAWRENCE H. SMALLEY and CAROL C. SMALLEY, 

husband and wife, 

Defendants and Cross-Plaintiffs and 

Appellants, 

JOSEPH ALTMAYER and VICTORIA ALTMAYER, 

husband and wife, 

Third Party Defendants and Appellants. 

Appeal from: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, The Honorable 

William J. Speare, Judge presiding. 

Counsel of Record: 

For Appellant: 

Gary E. Wilcox, Billings, Montana 

Paul G. Olsen, Billings, llontana 

For Respondent: 

Donald ern don; Herndon, Harper & Munro, 

Billings, Montana 

Filed: 

- -- 

Submitted on Briefs: December 30, 1981 

Decided: April 1, 1982 

APR - 1 1982 
Mr. Justice Frank B. Morrison, Jr., delivered the Opinion 

of the Court. 

Plaintiff brought this action to collect a real estate 

commission against defendants, Smalleys. Smalleys, the sellers, 

impleaded third party defendants Altmayers, the buyers. 

Judgment was entered in favor of plaintiff against Smalleys 

and judgment was entered for Smalleys on their cross claim 

against Altmayers. Both Smalleys and Altmayers appeal. 

On May 20, 1977, appellants, Sma1l.eys and respondent, 

Nardi entered into a real estate broker's employment contract 

whereby Nardi agreed to attempt to sell "Smalley's Garden 

and Floral Center." The extent of the discussion and negotiations prior to the signing of the contract are disputed. 

Nardi claims that at least three hours were spent discussing 

the contract while Smalleys assert that only one-half hour 

was devoted to those conversations. No specific finding of 

fact regarding this issue was made by the District Court; 

however, the court did conclude that no act or omission by Nardi 

constituted any valid defense to his claim for the commission 

and that the contract was valid and enforceable. 

The contract provided that the selling price would be 

"$220,000 + inventory" and that the broker was to receive 

10 percent of the selling price as a commission. Other 

relevant sections of the contract state: 

"FOR VALUE RECEIVED, you hereby are employed 

to sell or exchange the property described 

hereon at the selling price and on the terms 

noted. In the event that you, or any other 

brokers cooperating with you, shall find a 

buyer ready and willing to enter into a deal 

for said price and terms, or such other terms 

and price as I may accept, or that during your 

employment you place me in contact with a buyer 

to or through whom at any time within 90 days 

after the termination of said employment I may 

sell or convey said property, I hereby agree to 
pay you in cash for your services a commission 

equal in amount to 10% of the above stated 

selling price. ($220,000 + inventory.) 

"This agreement expires at midnight on November 

20, 1977 but I further allow you a reasonable 

time thereafter to close any deal on which 

earnest money is then deposited. 

"In case of suit or action on this contract, 

I agree to pay such additional sum as the 

court, both trial and appellate, may adjudge 

reasonable as plaintiff's attorneys fees. 

"THIS LISTING IS AN EXCLUSIVE LISTING and you 

hereby are granted the absolute, sole and 

exclusive right to sell or exchange the said 

described property. In the event of any sale, 

by me 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 given prior to said expiration date, 

I agree to pay you the said commission just 

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

Pursuant to this agreement, Nardi advertised the property 

in the Billings Gazette as well as in the Minot and Fargo, 

North Dakota newspapers and PreVue Magazine. In addition, 

Nardi showed the property to approximately ten prospective 

buyers and talked to several others on the telephone. 

The Altmayers contacted Nardi in mid-September 1977, 

and expressed an interest in purchasing the floral shop. 

After several meetings between Nardi, Smalleys and Altmayers, 

a final buy/sell agreement was accepted on October 8, 1977. 

At that point, Nardi ceased advertising the property. 

The buy/sell agreement quoted the total purchase price 

as $220,000 and also provided for an earnest money payment 

of $1,000, which was paid. The agreement stated that the 

offer to purchase was contingent upon Altmayers selling 

their property in Ohio prior to January 5, 197%. Another 
special provision stated that the sale was to include 

inventory of merchandise in the amount of $20,000 and that 

the selling price would be adjusted to reflect any discrepancy in the estimated value of the inventory. Finally, 

the agreement had a closing date of January 5, 1978, or 

thirty days thereafter, February 4, 1978, for completion of 

financing arrangements. 

In mid-November, it became apparent that the Ohio 

property was not going to be sold prior to January 5, 1978. 

Therefore, Smalleys requested Nardi to once again advertise 

their property, but denied Nardi's request for an extension 

of the employment contract. Nardi kept in contact with both 

parties to the agreement and frequently contacted an Ohio 

broker regarding the progress of the sale of the Ohio property. 

Altmayers did not sell their Ohio property prior to 

January 5, 1978. In mid-January, Smalleys and Altmayers 

reentered negotiations between themselves. They did not 

request assistance from Nardi, who claims to have made his 

assistance available to them. The District Court found that 

"[alfter the contingency in the original ~uy/Sell failed, 

the parties entered into direct negotiations to the exclusion of 

the broker, Mike Nardi, who was not notified or asked for 

assistance." 

As a result of these negotiations, Smalleys and Altmayers 

executed, on January 31, 1978, the following documents for 

sale of Smalleys' shop: (1) a contract for deed; (2) a 

modification of the contract for deed; (3) an abstract of 

the agreement between the parties; and (4) a warranty deed 

for the property. 

The contract for deed contained several pertinent 

clauses : 
"(1) The purchase price of all the real and 

personal property was $200,000. 

"(2) Part of the purchase price was to be paid 

by Altmayers' assumption of Mike Nardi's real 

estate fees incurred by Smalleys as a result 

of the sale of the property. 

"(3) Once the State of Montana's condemnation 

proceedings regarding the highway in front of the 

store were final, the proceeds were to be used 

to pay $20,000 of the purchase price. If no 

proceeds were paid, $20,000 was to be added to 

the end of the contract. 

" (4) On February 1, 1978, Altmayers were to: 

"(a) determine the value of the store's inventory; 

"(b) commence paying interest to Smalleys; 

and 

"(c) be given possession of the store. 

"(5) The Warranty Deed, Bill of Sale and other 

necessary documents were placed in escrow to be 

delivered to Altmayers upon full performance 

of the agreement." 

The only terms missing from this contract were the 

value of the merchandise within the store and the value of 

the proceeds to be received as a result of the highway 

condemnation proceedings. Nevertheless, Smalleys and Altmayers 

claim that their contract for deed was unenforceable until 

the condemnation proceedings were final, August 17, 1978. 

Smalleys claim to have turned possession of the store over to 

Altmayers solely for convenience as Mrs. Smalley was ill and 

Mr. Smalley frequently was out-of-town. 

If the contract was enforceable on January 31, 1978, 

neither the 90 day extension period of the real estate 

broker's employment contract, nor the 30 day extension for 

financing of the original buy/sell agreement had expired. 

Therefore, Nardi would arguably be entitled to his commission. 

If the contract was not enforceable until August 17, 1978, 

Nardi arguably would not be entitled to a commission. 
The issues presented to this Court for review are 

numerous. 

(1) Whether Altmayers have standing to proceed as 

appellants? 

(2) Whether the District Court had jurisdiction over 

this case since plaintiff Nardi did not "first allege" that 

he was a duly licensed real estate broker in the State of 

Montana pursuant to section 37-51-401, MCA? 

(3) Whether Nardi, in his capacity as a real estate 

broker, breached his fiduciary duty to Smalleys, the listing 

owners, by failing to completely disclose the terms and 

conditions of the real estate broker's employment contract? 

(4) Whether Nardi, in his capacity as a real estate 

broker, abandoned his employment under the real estate 

broker's employment contract with Smalleys, thereby freeing 

Smalleys to sell the property free from commission liability 

to Nardi? 

(5) Whether the buyers and sellers entered into an 

enforceable contract within 90 days after the expiration of 

the real estate broker's employment contract, thus entitling 

Nardi to his commission? 

(6) If Nardi is entitled to a commission, should the 

commission be on the sale of the inventory also? 

(7) Is Nardi entitled to attorney fees? 

The first two issues presented to this Court are without 

merit. Joseph and Victoria Altmayer were properly joined as 

parties to the District Court proceedings as they signed a 

contract to pay all real estate fees owed Nardi by Smalleys. 

The judgment of the District Court included an order directing 

Altmayers to pay Smalleys $21,520. The Altmayers are entitled 

to appeal that judgment pursuant to Rule 1, M.~.~pp.civ.P. 
Section 37-51-401, MCA, requires a real estate broker 

who brings an action in a court for collection of compensation 

to first allege and prove himself to be a licensed real 

estate broker in the State of Montana. Although Nardi did 

not allege himself to be a licensed broker in his initial 

complaint, the court's pretrial order contained an amendment 

to the complaint stating that Nardi was at all material 

times a licensed real estate broker in Montana. In addition, 

at the start of the trial, Nardi introduced his broker's 

license as plaintiff's exhibit number one. None of the appellants 

objected to the pretrial order or plaintiff's exhibit number 

one. The order and the exhibit adequately prove Nardi to be 

licensed pursuant to the statute. Therefore, Nardi had standing. 

Issues three and four relate to the duties owed by a 

real estate broker to his employer, the potential seller. 

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

312, this Court recognized a fiduciary relationship between 

a real estate broker and the seller. Appellants claim that 

Nardi breached that fiduciary duty by failing to fully 

disclose the terms of the real estate broker's employment contract. The District Court held: 

"No act or omission by the plaintiff, Mike 

Nardi d/b/a Mike Nardi Realty, shown by the 

evidence constituted any valid defense, either 

in whole or in part, to the claim for a real 

estate brokerage commission on the sale of 

Smalley's Floral and Garden Center." 

We uphold the District Court's determination. Although 

neither the exact length nor the exact content of the initial 

meeting were ever completely established, both parties did 

agree that they met for at least one-half hour to discuss 

the employment contract. 

Montana case law indicates that the fiduciary duty 

between a broker and a seller is breached when the seller is 
fooled or deceived by the contract or does not understand 

the contract. Flernmer v. Ming (1980), Mont . - 

, 621 

P.2d 1038, 37 St.Rep. 1916; First Trust Company of Montana 

v. McKenna (1980), - Mont . - , 614 P.2d 1027, 37 St.Rep. 

1026. Mr. Smalley testified on cross-examination that he 

was familiar with standard broker employment contracts such 

as the one used by Nardi, that he was not fooled or deceived 

by the contract and that he understood the contract and knew 

what he was signing. Furthermore, there is no evidence that 

Nardi, in breach of the fiduciary relationship, gained an 

advantage which could result in constructive fraud under section 

28-2-406, ICA. 

The instant case is distinguishable from Lyle v. Moore 

(1979) , Mont . - , 599 P.2d 336, 36 St.Rep. 1307. In 

Lyle, this Court found a breach of the fiduciary duty when 

the broker failed to disclose to the seller that should the 

seller withdraw the broker's authority to sell the property 

or sell the property himself, the seller would be liable to 

the brcker for his coritmission. In the instant case, the 

breach of the fiduciary duty is based on the broker's failure 

to disclose whether or not his 10 percent commission included 

10 percent of the inventory price. The contract called for 

a commission to be paid equal to 10 percent of the "selling 

price." The selling price here was $200,000. The trial 

court applied the clear terms of the contract. 

Appellants contend Nardi abandoned his listing. Abandonment is a question of fact. In its findings of fact, the 

District Court stated: "After the contingency in the original 

Buy/Sell failed, the parties entered into direct negotiations 

to the exclusion of the broker, Mike Nardi." The court went 

on to conclude, "[tlhe plaintiff, Mike ~ardi, did not abandon 
his agency agreement." There is substantial credible 

evidence to support this conclusion of the District Court. 

Mr. Nardi testified that he remained in contact with the 

parties both prior and subsequent to January 5, 1981, the 

date established for fulfillment of the contingency. After 

January 5, 1981, Nardi was told by all appellants that there 

was nothing he could do as they were awaiting finalization 

of the highway condemnation proceedings and/or valuation of 

the inventory. We uphold the District Court's conclusion 

that no abandonment occurred. 

Since Nardi did not abandon his duties under the employment contract or breach any fiduciary duty owed by him to 

the seller, he is entitled to receive his commission if the 

contract by which Altmayers purchased the floral shop was 

final within the time stipulated in Nardi's employment 

contract. The employment contract provided for payment of 

the commission should Nardi, during his employment, place 

Smalleys "in contact with a buyer to or through whom at 

anytime within 90 days after the termination of said employment 

I (Smalleys) may sell or convey such property." The contract 

terminated on November 20, 1977. Ninety days thereafter was 

February 18, 1978. 

A contract for deed was executed by Smalleys and Altmayers 

on January 31, 1978. Two financial terms within the contract 

were left blank. The District Court found that they "were 

left blank to be determined after the inventory value had 

been determined and the condemnation payment from the State 

of Montana had been received and credited as agreed." heref fore, 

the only missing terms involved the method of payment, a 

collateral issue to this contract. The amount of payment 

was set, $200,000. "Matters which are subsidiary, collateral, 
or which do not go to the performance of the contract, are 

not essential and do not have to be expressed in the contract." 

Van Atta v. Schillinger (1981), - Mont . - , 625 P.2d 73, 

38 St-Rep. 426. Even without the missing "method of payment" 

terms, the contract for deed was valid and enforceable as of 

January 31, 1978. 

The employment contract between Nardi and Smalleys 

stated that Nardi would be paid a commission upon completion 

of a sale of Smalleys' shop to an individual with whom Nardi 

had established contact, if the sale occurred within 90 days 

of November 20, 1977. A sale is defined in section 30-11- 

101, MCA, as: 

"Sale defined. Sale is a contract by which, 

for a pecuniary consideration called a price, 

one transfers to another an interest in 

property." 

The contract for deed is a sale as the buyer receives an 

equitable interest in the shop in return for an obligation 

to pay seller $200,000. The contract for deed was valid 

and enforceable well within the 90 day period. The broker, 

Nardi, is entitled to his commission. 

The original employment contract stated that the broker 

would be entitled to a commission of 10 percent of the 

selling price. The selling price was stated to be "$220,000 

+ inventory." The final contract for deed had a selling 

price of "$200,000 including inventory." In both instances, 

the inventory was included under the term "selling price." 

In the first contract, the value of the inventory was unknown 

so no figure was attached to it. However, since "inventory" 

was initially included under the selling price, it was 

reasonable for the trial court to determine the broker's commission on the basis of the final selling price of $200,000, 
which included the purchase price of both the real property 

and inventory involved. 

Finally, the employment contract states that the seller 

will be liable for reasonable plaintiff's attorney's fees 

should an action be brought on the contract. An action was 

brought, the District Court properly determined plaintiff's 

attorney's fees and we uphold its determination. 

Judgment of the District Court is affirmed. 

We Concur: 

,$hief Justice