No. 13586 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1977 

DIEHL AND ASSOCIATES, INC., 

A Montana Corporation, 

Plaintiff and Respondent, 

-vsL. R. HOUTCHENS, 

Defendant and Appellant. 

Appeal from: District Court of the First Judicial District, 

Honorable Gordon R. Bennett, Judge presiding. 

Counsel of Record: 

For Appellant: 

Smith and Harper, Helena, Montana 

Charles A. Smith argued, Helena, Montana 

For Respondent : 

Kline and Niklas, Helena, Montana 

John R. Kline argued, Helena, Montana 

Filed: 

Submitted: April 27, 1977 

Decided: RlfG - - $ 5977 
Mr. Justice Gene B. Daly delivered the Opinion of the Court. 

Defendant appeals from the judgment of the district 

court, Lewis and Clark County, sitting without a jury. The 

district court entered judgment for plaintiff and decreed 

that plaintiff recover from defendant the sum of $5,450 in 

real estate broker's commissions plus reasonable attorney fees 

in the amount of $400. 

Plaintiff initiated this action to recover real estate 

broker's commissions purportedly due and owing from the sale 

of two parcels of real property owned by defendant. On March 

19, 1975, plaintiff and defendant entered into two listing 

agreements entitled REAL ESTATE BROKER'S EMPLOYMENT CONTRACT. 

One of the contracts was for the sale of 80 acres of agricultural 

land in the vicinity of Applegate Road (the Applegate property). 

The employment contract specified a purchase price of $50,000 

cash or possible contract for deed with a sizeable down payment. 

The rate of brokerage commission was to be 10% of the stated 

selling price and the agreement was to expire on June 1, 1975. 

The second listing agreement was for the sale of a trailer 

park referred to as the Broadwater Trailer Court. This employment contract specified a purchase price of $55,000 cash or terms 

of $15,000 down payment with the buyer assuming defendant's 

outstanding contract for deed, the balance to be financed by 

defendant on a contract for deed at 8% interest. The rate of 

brokerage commission was to be 6% of the stated selling price 

and the agreement was to expire on June 1, 1975. 

On April 18, 1975, plaintiff obtained the signatures of 

Courtney B. Atlas and defendant on a buy/sell agreement entitled 

EARNESTMONEY RECEIPT AND AGREEMENT TO SELL AND PURCHASE. Atlas 

deposited $500 as earnest money toward the purchase of the 

Applegate property. The buy/sell agreement provided for a purchase 
price of $35,000 with Atlas to pay $5,000 to defendant, assume 

defendant's existing contract for deed at existing terms, the 

balance of the purchase price to be financed by defendant on a 

contract for deed at 7-1/2% interest for 15 years. The buy/sell 

agreement specified the sale was to be closed on or before May 

30, 1975, with a 30 day grace period allowed for the completion 

of financing, if necessary. The buy/sell agreement further provided that the earnest money was to be returned if the purchaser 

was unable to assume defendant's existing contract for deed at 

the existing terms; plaintiff was to receive a brokerage conmission in the amount of 7% of the stated selling price; in the event 

of a forfeiture of the deposit, the deposit was to be used to 

pay the agent's incurred expenses related to the sale and the 

balance was to be apportioned to the seller and agent equally, 

provided the amount to the agent would not exceed the agreed 

commission. 

Courtney B. Atlas failed to complete the purchase of the 

Applegate property by May 30, 1975. Atlas attempted to substitute 

his wife, Donna Jean Atlas, as the purchaser and upon defendant's 

refusal to accept Ms. Atlas as a purchaser the negotiations 

terminated. 

On April 25, 1975, plaintiff obtained the signatures of 

Ray R. Buck and defendant on a similar buy/sell agreement entitled EAIFJESTMONEY RECEIPT AND AGREEMENT TO SELL AND PURCHASE. 

Buck deposited $200 as earnest money toward the purchase of the 

Broadwater Trailer Court. The buy/sell agreement provided for 

a purchase price of $50,000 with Buck to pay $10,000 as down 

payment, assume defendant's existing contract for deed, the balance of the purchase price to be financed by defendant on a contract for deed at 8% interest for 10 years. The buy/sell agreement further provided for the return of any earnest money in the 
same manner as in the previous buy/sell agreement; plaintiff 

was to receive a brokerage commission in the amount of 6% of 

the stated selling price; and the earnest money was accepted 

''subject to the easement being granted and recorded for the 

disputed western boundary line of the above property". 

The sale of the Broadwater Trailer Court was not conpleted by June 1, 1975. Defendant's reason for failing to 

consumate the sale to Buck was the failure to reconcile the 

boundary dispute, the condition precedent contained in the buy/ 

sell agreement. No easement was granted or recorded, nor was 

the lawsuit settled prior to the June 1, 1975, termination date 

of the buy/sell agreement. 

On July 3, 1975, plaintiff filed his original complaint 

which was subsequently amended on September 12, 1975. In the 

amended complaint plaintiff sought to recover $3,000 as the 

brokerage commission for procuring a purchaser for defendant's 

Broadwater Trailer Court, $2,450 as the brokerage commission 

for procuring a purchaser for defendant's Applegate property, 

plus reasonable attorney fees and costs. Defendant filed an 

answer and counterc~aim seeking the $500 earnest money deposit 

made by Courtney B. Atlas and held by plaintiff, plus attorney 

fees and costs. Plaintiff and defendant instituted discovery 

and both parties filed motions for summary judgment. On May 20, 

1976, the district court issued its order vacating the June 1, 

1976, date for trial and ordered: 

"The matter will be submitted to the Court 

for decision on the basis of the record, including all written discovery, as of June 1, 

1976, by stipulation of counsel, the Court 

reserving the right to hold a hearing on 

factual issues, if necessary." 

On August 13, 1976, the district court issued its findings of fact and conclusions of law holding the defendant, by 

virtue of his acceptance and execution of the contracts entitled 
EARNEST MONEY RECEIPT AND AGREEMENT TO SELL AND PURCHASE 

" * * * is thereupon obligated to pay the plaintiff broker 

its commissions, as beyond doubt the plaintiff broker had 

complied with the terms of its listing agreement and has done 

all that could be done by it." Judgment was accordingly entered 

in plaintiff's favor on August 19, 1976, and defendant appealed 

to this Court. 

In defendant's brief on appeal and on oral argument 

before this Court defendant's counsel contends the sole issue 

for review is whether the district court erred "in granting 

Plaintiff's motion for summary judgment and not Defendant's." 

Apparently defendant's counsel overlooked the effect of the 

pretrial conference held with the district court on May 20, 1976, 

and the district court order which provided the matter to be 

submitted to the district court for decision on the basis of 

the record, pursuant to the oral stipulations of both parties. 

For purposes of our discussion, we characterize the district 

court's judgment as a final judgment on the merits and view 

defendant's arguments as challenging the sufficiency of the 

evidence relied on by the district court in its findings of 

fact, conclusions of law and judgment. 

Our resolution of this matter is simplified by a brief 

summation of the law in the area of a real estate broker's right 

to compensation for commissions. 

It is a generally accepted law that a real estate 

broker is entitled to commissions 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 to 

purchase the seller's property on the terms and conditions 

specified in the contract of employment. Roscow V. Bara, 114 

Mont. 246, 135 P.2d 364; 12 Am Jur 2d 921, Brokers S182. When 
the broker procures a buyer who makes a counteroffer or agrees 

to terms at variance to the terms specified in the employment 

contract, the seller has the option of accepting or rejecting 

the counteroffer. If the seller accepts the counteroffer of 

the procured buyer, the seller is legally obligated to pay commissions to the broker, either under the terms of the contract 

of employment or the mutually agreed terms of a contract for 

sale. 

The broker's ability to recover commissions is premised 

on the broker's ability to accomplish what he undertook to do 

in his contract of employment. 32 ALR3d 321, section 2. The 

broker is not entitled to compensation for unsuccessful efforts 

under his contract of employment, irrespective of how great his 

efforts were or how meritorious his services. Roscow v. Bara, 

supra. It is generally necessary to refer to the specific terms 

of the particular employment contract in order to determine 

whether or not the broker's duties have been performed. 

Plaintiff contends it completed performance under the 

employment contract when it obtained the signatures of Courtney 

B. Atlas and Ray R. Buck on the buy/sell agreements, the terms 

of which were agreed to by defendant. Plaintiff insists that 

any failure to complete the sale transaction is due to the default or refusal of defendant and is not attributable to the 

actions of the buyers. In order to resolve what the broker's 

duties were under the enployment contract, we look to the listing agreements which provide: 

"FOR VALUE RECEIVED, you hereby are employed to 

sell or exchange the property described hereon 

at the selling price and on the terms noted. 

You hereby are authorized to accept a deposit on 

the purchase price. You may, if desired, secure 

the cooperation of any other broker, or group of 

brokers, in procuring a sale of said property. 

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 durinq your employment you 

place me in contact with a buyer to or throuqh 

whom at any time within 90 days after the 

termination of said employment I may sell or 

convey said property, I hereby aqree to pay 

you in cash for your services a commission equal 

in amount to % of the above stated selling 

price. I agree to convey said real estate to 

the purchaser by a good and sufficient deed, to 

transfer and deliver said personal property, if 

any, by good and sufficient bill of sale and to 

furnish title insurance insuring marketable 

title to said real estate and good right to convey. I hereby warrant that the information shown 

hereon below is true, that I am the owner of said 

property, that my title thereto is a good and 

marketable title, that the same is free of encumbrances except as shown hereafter under "Financial Details" and except taxes levied on said 

property for the current tax year which are to be 

pro rated between the seller and buyer. In case 

of an exchange, I have no objection to your representing and accepting compensation from the other 

party to the exchange as well as myself. I hereby 

authorize you and your customers to enter any part 

of said property at any reasonable time to show 

same. Also, I authorize you, at any time, to fill 

in and complete all or any part of the "Informative 

Data" below, except financial details. This agreement expires at midnight on , 19 I 

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. It is 

further agreed that my signature affixed to the 

renewal clause below shall have the effect of renewing and extending your employment to a new date 

to be fixed by me on the same terms and all with 

the same effect as if the said new date had been 

fixed above as the expiration date of your employment. 

"THIS LISTING IS AN EXCLUSIVE LISTING and you hereby 

are granted the absolute, sole and exclusive right 

to sell or exchanqe the said described property. In 

the event of any sale, by me or any other person, or 

of exchanqe or conveyance of said property, or any 

part thereof, durinq 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." (Emphasis 

added. ) 

We note the distinction between a brokerage contract which 

requires a broker to merely find a purchaser and a brokerage 

contract which requires a broker to sell, make or effect a sale. 
In the first case the broker earns his commission when he 

procures a buyer able, ready and willing to purchase on the 

seller's terms. A broker employed to sell or effect a sale 

does not earn his commission until he completes the sale. 

Completion of the sale, where real property is involved, 

amounts to payment of the purchase price and conveyance of title. 

OtNeill v. Wall, 103 Mont. 388, 62 P.2d 672. 

The employment contract or listing agreement in the 

present case provides for the broker's employment to "sell or 

exchange the property described hereon * * * THIS LISTING IS AN 

EXCLUSIVE LISTING and you hereby are granted the absolute, sole 

and exclusive right to sell or exchange the property." The 

plain and clear meaning of the language in the listing agreement specifies a contract to sell or effect a sale, not a contract merely requiring the broker to find a purchaser. In order 

for plaintiff to recover commissions in the present case it must 

have completed the sale of the properties owned by defendant. 

In determining whether the sales were completed we must 

look to the provisions of the buy/sell agreements and the actions 

of the parties. The buy/sell agreement for the Applegate property specified Courtney B. Atlas as the purchaser and depositer 

of $500 earnest money. On May 30, 1975, Atlas refused to sign 

a sale contract or otherwise complete the sale in accordance 

with the buy/sell agreement. In lieu of Courtney B. ~tlas' 

performance under the buy/sell agreement, Ms. Atlas was offered 

as a signatory to all closing papers and the contract for deed. 

We fail to find merit in plaintiff's argument that the substitution of Ms. Atlas benefited defendant in that defendant 

gained "an additional signatory to the obligation". Courtney 

B. Atlas was the contracted purchaser and no party except 

Courtney B. Atlas was entitled to perform under the buy/sell 
agreement, absent the assignment of Courtney B. Atlas' rights 

under the contract with the written permission of defendant. 

We fail to find any legal compulsion which would compel defendant to accept a substituted purchaser. The failure of 

Courtney B. Atlas to perform under the buy/sell agreement 

amounted to a material breach of contract and plaintiff's 

attempt to perform under the listing agreement was defeated. 

The buy/sell agreement for the Broadwater Trailer Court 

was a conditional contract, i.e., the buy/sell agreement contained the condition precedent of "the easement being granted 

and recorded for the disputed western boundary line". The 

conditional contract became binding only in the event the easement was granted and recorded. Cochran v. Ellsworth, 272 P.2d 

904, 126 C.A.2d 429; Blaine v. Stinger, 290 P.2d 732, 79 Ariz. 

376; Diamond v. Haydis, 356 P.2d 643, 88 Ariz. 326. Since 

no evidence was ever presented that the easement was granted 

and recorded, the legal effect is that no binding contract was 

ever consummated between defendant and Ray R. Buck. Plaintiff's 

attempt to perform under the listing agreement failed. 

The plaintiff failed to accomplish what he undertook 

to do as set forth in his contracts of employment with defendant 

and plaintiff is neither entitled to brokerage commissions for 

his unsuccessful efforts nor reasonable attorney fees for 

plaintiff's prosecution of the two actions. 

Lastly, we consider the subject of the $500 earnest money 

deposit made by Courtney B. Atlas. Atlas' failure to perform 

under the terms of the buy/sell agreement amounted to a material 

breach of contract and pursuant to the terms of the buy/sell 

agreement "said earnest money shall be forfeited to the seller 

as liquidated damages * * *". The buy/sell agreement further 

provides : 
"In the event of a forfeiture of the deposit 

as above provided, the said deposit shall be 

used to pay the agents incurred expenses 

related to this sale and the balance shall be 

apportioned to the seller and agent equally, 

provided the amount to the agent shall not 

exceed the agreed commission." 

Therefore, we remand this matter to the district court 

for determination of any "agents incurred expense related to 

this sale", the balance of the deposit to be equally apportioned 

between plaintiff and defendant. 

The judgment of the district court is reversed and the 

cause is remanded to the district court for further consideration 

consistent with this opinion. 

Justice 

We concur,: P 

Chief Justice 

(1 

Justices 6'