# FILED August 5, 1998 Cecil W. Crowson Appellate Cou rt Clerk 

### IN THE COURT OF APPEALS OF TENN ESSEE

AT NASHVILLE

MARVIN E. ALEXANDER ) d/b/a ALEXANDER AUCTIONS & ) REAL ESTATE SALES, ) ) Plaintiff/Appellee, ) ) Appeal No. ) 01-A-01-9710-CH-00590 VS. ) ) Giles Chancery ) No. 9087 JOHN HOPKINS and RHONDA ) HOPKINS, individuall

y and d/b/a ) RICHLAND CREEK SOD FARM, ) ) Defendants/Appellants. )
APPEALED FROM THE CHAN CERY COUR T OF GILES CO UNTY AT PULASKI, TENNESSEE THE HONORABLE JIM T. HAMI LTON, JUDGE

THOMAS W. HARDIN 102 West 7th Street P. O. Box 692 Columbia, Tennessee 38402-0692 Attorney for Plaintiff/Appellee M. ANDREW HOOVER JOHN P. DAMRON 134 North Second Street P. O. Box 288 Pulaski, Tennessee 38478

AFFIRMED AS MODIFIED AND REMANDED

BEN H. CANTRELL, JUDGE CONCUR: TODD, P.J., M.S. KOCH, J. 

## O P I N I O N1 The parties di spute whether a date certai n for the auct ion was establ ished before the app ellant told th e app ellee h e had a pro spe ctive b uyer f or the prop erty; bu t we d o not conc eive th is to be a de termin ative fact. - 2 -

A li censed auctioneer and real estate broker filed suit again st th e defendant landowners for breach of an auction contract, because the defendants sold theirland prior to the scheduled auction without his participation. The trial court held that the auctioneer was entitled to the anticipated commissi on amount. We affirm the trial court’s holding

that the property owners are liable, but we modify th e amount of damages.

I. An A uction that Nev

er Happened

All the facts t hat are material to this c ase are undisputed 1 , and its resolution thus turnsentirely o n questio ns of law. On August 1, 1995, John Hopki ns and his wife Rhonda Ho pkins sign ed an auction contract prepared by Marvin Alexander, sole proprietor and operato r of Alexander Auctions and Real Estate Sales. Mr. Alexander is a licensed auctioneer and a licensed real estate broker. Both licensesare required to auction real estate in Tennessee. Tenn. Code Ann. § 62-19- 102.

The contract authorized M r. Alexande r to sell at absolute aucti on a 416.9 acre tract of land and all the equipment associated with the Hopkins’ operati on of a sod farm on that la nd . Tracts of 55, 63 and 178 acres ar e also mentioned in the contract following the language “owner may include . . . .” The consideration section of the contract states that:

“[p]artiesof the secon d pa rt are to se ll the abo ve described property at public auc tio n according

to the terms announced at date of sale and are to r ece ive as compe nsatio n for selling the above des cribed property the sum of 5% of the proc eeds from s aid sale , said sum of moneyor percentage agreed upon to be paid parties of the second part upon completion of said s ale.”- 3 - Other parts of the contract provide that the advertising for the s ale was to be paid 50% by the owner s and 50% by

the auction company; that pre- auction set up labor was

to be paid by the auction company; and that the auction date was to be set sometime between September 15th and October 28th, 1995.

Aft er the contract was executed, Mr. Alexander beg an making preparationsfor the auction, including inspecting the land, making plans to divide it into seven tracts, desig ning brochures and print advertisements for inclus ion in a number of publications, and collec ting and washing the equipment.

Sometime

later, Mr. Hopkins

notified Mr. Alexander that he been talking privately to some individuals about purchasing the land, and that he would sell to them if they offered him the price he wanted. He advised Mr. Alexand er to stop any further preparationsfor the auction, pen ding the results of his negotiati ons. Mr. Alexander was unhappy with this dev elopment, and Mr. Hop kins rebuffed several attempts by him to learn the identity of the purchasers or the proposed sales price.

The auctioneer arm ed himself with a mini-cass ette tape recorder and surreptitiousl y t aped a subsequent conversation with Mr. Hopki ns. During the conversatio n , Mr. Alexander stated that if the property was sold, he considered himself entitled to his full commissi on. Mr. Hopkins argued that Mr. Alexander had not earned the full commission, and offered to p ay him 2 1/2% of the closing pri ce . He also offered to let Mr. Alexander sell the 55 acre tract at auction, as well as the remaining equipment, to compensate him for any gri evance he might have about the loss of the larger tract , but Mr. Alexander ang rily refused.

At some point during these neg otiations, the auc tion con tract was amended by crossing out the word “may” before mention of the 55 acre tract, and the amendment was initialed by both parties. Howev

er the auction was nev er held.- 4 - Mr. Hopkins obtained a sales contract for the 416.9 acre property and the 63 acre trac

t in late Sep

temb er. The contract provided for a sales price of $400,000 cash, and made the seller responsible forany real estate commissi on owed to Alexander Realty and Auction. The sale closed on October 19, 1995. M r. Hopkins subsequently put $15,800 of the proceeds into an escrow account

to take care of his o blig ation to Mr. Alexander. At about the same time, Mr. Hopkins sold some of his equipment for approximately $77,000.

Mr. Alexander filed suit for hi s commission . The tria l court found that under general principles of

contract law, he w

as entitled tothe benefit of his bargain, and granted the plaintiff damages of $23,9 14.46 as a 5% commission based upon the sales price of

$477,000 for land and equipment. On the auctioneer’s Moti on to Alter or Amend, the court found that Mr. Alexan der was also entitled t o a 5% commission on the unsold 55 acre tract, as wel l as on the r emaining equipment. The court accordinglyincreased the judgment by $15,300, to $39,214.46. This appeal followed.

II. The Go

ver ning Law

The appellants argue that the trial cour t erred in deciding

this case under general princi ples of c ontract la w rather th an under the speci fic rules that have evolved to gover n real estate listing contracts. They also note that the auction contract, which was drafted by the appellee, does not prohibit the owner from selling the property hi mself.

Under the law applicable to real estate brokers in Tennessee, a broker ma ybe entitled to receive a commission when the proper ty is sold by th e owne r himself,but only when the lis ting contract contains v ery specific lan g uage to that effect. Turnblazer v. Smith, 379 S.W.2d 772, 214 Tenn. 277 (1964). Even language granting the broker an exclusive agency is n ot sufficient to guarantee him a- 5 -

commission, unless he can show t hat he was the procuring c ause of a completed sale. Hood v. Gillespie , 230 S.W.2d 997 190 Tenn. 548 (1950).

Mr
. Alexander admits that he neither procured nor introduc ed th e ultimate buyer to th e seller, a nd judging both from his testimony and that of Mr. Hopkins, it seems highly unlikely that any of his promotional efforts contributed in any way to the ultimate sale. Thus, if we accepted the appella nts’ argument, we w ould be compelled to find that Mr. Alex ander is not entitled to a commi ssion.

The appellee notes, however, that there are important differences between ordinaryreal estate listings and an absolute auction contract
. While ordinary listings are subject to uncertainti es or contingenc ies, a n absolute auction contract creates a date certain for sal e, there is little doubt that the property will

be sold, and the terms (though not the pri ce) are preset.

There is apparently no Tennessee authority

on the question of whether real estate auction contracts ar e to be treat ed as ordinary contracts, or in the sa me way as real estate

brokerage listing s. The appel lee urg es us to adopt th e logic of a Wisconsin case, Thorp Sales Corporation v. Gyuro Grading Co.,Inc. 331 N.W.2d 342 (Wisc. 1983), as persuasi ve authority for the pr oposition that they should be interpreted under ordinary contract principles.

As t he appellant points out, howev er, the Thorp

case only involv

ed chattels, and not real property, and the agreement in that case was characteriz ed as “an irrevocabl e agre ement to produce specified goods at a scheduled auction,” whereasthe contract in the present case contained no language as to irrevocab ility.

We also note that there is another line of authority which hol ds that “if the property is sold pr

ior to th e auction by someone other than the auctioneer, the auctioneer

may recover his ex

penses and reasonable compensation for his services,- 6 -

but not his commission under the contract.” 7 Am. Jur. 2d Auctions and Auctioneers § 75. This line of authority is exemplified by the cas e of Greer v. Arnold, 633 S.W.2d 75 (Ky. App. 1982).

After weighing the tw

o competing theories, w e are not inclined to adopt a doctri ne that would suddenly subject auctioneers to the rules that have slo wl y evolved in Tennessee

to govern the rights of property owners and brokers in regard to each other. We note that such a ruling would tend to undermine the certainty that di stinguishes

auction sales from brokered real estate sales, and which make s auctions the preferred means of disposing of property in many instance s. We also believe that a property owner who wishes to keep hi s opti ons open may contract to limit his liability

in case of sale before auction.

In affirming the trial court’s ruling on liability, we would like to underline a distinctio n t hat the Thorp court made explicit. S ince an auction contract is to be treated under ordinary pr inciples of contract law , the auctioneer is not entitled to his commission per se; he is entitled to the damag es he has suffered from the defendant’s breach of contract. As the court said, however,

“
. . . the agreed-upon commission is an important factor in determining what would have been necessary to giv e the injured party the benefit of the bargai n by putting it in as good a po sition as it would hav e been in had the contract b ee n performed.” 331 N.W.2d at 347.

III. The Calculation o f Damages

The initial order of the tri al court granted the aucti oneer “damages representing five (5%) percent of the proceeds of

the sale of that portion of the real estate and equipment s old by t he Defendant.” However , the proof shows that the real estate sold by the defendant s included 63 acres that they wer e not obligated to submit to the auctioneer, and w hich was therefore not part of the bargain.- 7 - The award should thus be rec alcul ate d to exclude any amount at tributable to the sale of the 63 acres. The appel lant is also entitled to h ave hi s damages reduced by the amount the auctioneer saved by virtue of not conducting the auction.

Since the sales contract does not v alue the 63 acre tract separa tely from the 416.9 ac re tract, we a dopt the appellants’ suggestion that we place a uniform per/acre valuation on the property. For the total $400,000 transaction, thi s comes to $833.51 per acre for 479.9 acres. If w e recalculate, and multiply the pr ice per

acre by the 416.9 acres, we reach a figure of $347,490.32. Five percent of th at figure is $17,374.53

. To that figure we must add 5% of the $77,000 sales price on th e equipment, or $3,850. After adding the two eleme nts of th e auction eer’s dam age, we reach a total of $2l,224.53. From this sum we must subtract the money he would have spent if he had conducted the auc tion as planned, because the defenda nts’ breach has saved him this amount. He concedes his sav ings to be $3,400, and when we subtract, we re

ach net damages of $17,824.53.

As to the $15,300 added to the judgment on the motion to alter or amend, we note that a commission of that amount correspo nds to a $306,000 value forthe remaining equipment and the 55 acre tract included in the original agreement. The final order includes a finding that the value “is the val ue agreed upon between the parties prior to the date of the auction.”

We cannot find in the record an ag reement as to the v alue of th e property, and the parties do not cite the part of the record wher e the agreement can be found. There are some estimates as to the valueof the individual properti es, but we think the estimates are too unr eliable and speculative to sup port a ju dgment for a com mission ba sed on the value. For ins tance, prior to the sale the parties estimated that the 416 acre tract w as worth $520,000 and the 63 acre tract was worth $94,000. The appellants actually s old these two parcels for $400,000. We do not- 8 -

think the amount o f the plai ntiff ’s damages for the sale of the 55 acr e tract and the balance of the equipment have been proven to

a reasonable certainty. See Buice v. Scruggs Equipment Co ., 267 S.W.2d 119 (Te nn. App. 1953).

The amount of the plaintiff’s damages is modified as indicated herein. In all other

respects the lower court’s judgment is affirmed. Remand this cause to the Chancery Court of Giles County for further proceedings. Tax the co sts on appeal equally to the parties.

____________________________ BEN H. CANTRELL, JUDGE CONCUR:

_______________________________ HENRY F. TODD, PRESI DING JUDGE MIDDLE SECTION

_____________________________ WILLIAM C. KOCH, JR., JUDGE