### IN THE COURT OF APP EALS OF TENNESS EE AT NAS HVILLE A pr il 16, 200 4 S es sio n

CRYE-LEI KE, I NC., ET AL 

### . v. THE ESTAT E OF KE NNETH H . EARP, ET AL


### . Appeal f romthe Chancer y Court for Sumner County No. 2001C-142 TomE. Gr ay, Chancellor

No. M2003- 00740-COA-R 3-CV - F iled Novem ber 18, 2004

This case involves a dispute over wh et h er a

rea l estate listing c ontrac t was ca ncele d by oral ag ree ment prior to re ceipt of a full-price d offe r fr om a buy er. Pl aintiff real estate ag ents claim the
contra ct was still in effe ct at the time of the offe r entitling them to their sales commission when Def endant se llers re fused to sell their pr operty

. The trial court found that the contract wa s canc eled by or a l a g re e me nt p rior to recei pt of the of fe r a nddis mis se d Pl a int if fs ’ c omp la int . D e fe nd a nts counter claimed f

or violations of the Tenne ssee Consumer Protec tion Act and the Te nnessee Real Estate B roker ’s L icensing Act. De fenda nt s co u n t erc laims were also dismissed. W e af firm the de c isi on of

the tr ia l c ou rt

. Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Chancer y Court Aff irm ed and Rem anded

W I L L I AM B. C A IN , J ., delivere d the opinion of the court, in which W I L L I AM C. K O CH , J R ., P.J ., M.S., and F R ANK G. C L EME NT , J R ., J ., joined.

Arthur E. Mc Clellan, Gallatin, Tenne ssee, f or the a ppellants, Cry e-L eike , I nc., Connie Reese and Cha rl e s H a y ne s.

Walter H. S tubbs, Gallatin, Tennessee, for t he appellee, The Estate of Kenne th H. Ear p, dece ased and surviving spouse, Tina M. Ea rp.

OP IN ION

Appellee s, Ken a nd Tina Ear p, owned a

380 acr e fa

rm known as the “ Wallace F arm” . After Mr. Ear p was d i agn osed with a terminal illness, he decided to se ll this farm and contac ted Hub Reese, a rea l estate a g ent he ha d used pre viously
, to list his pr operty

. Unbeknownst to Mr. Ea rp, Mr. Reese was no longe r licensed to sell re al estate . His wife, Connie Ree se, wa s licensed, and the two

wo rk e d to g e the r i n h e r r e a l e state bu sin e ss w ith Hu b Re e se a c tin g a s h e r ‘ a ssi stant’ . M r. a ndMr s. Ea rp me t w ith Con nie a nd Hu b Ree se on Oc tob e r 1 7, 20 00 a nde nte re d in to a writt e n c on tr a c t w ith-2-

Con nie Re e se a nd Cr y e -L e ike Re a lty g ivi ng Con nie Re e se a ndCr y e -L e ike the e xclu siv e ri g ht t o s e ll their fa rm. The pr operty

was listed for $1,600,000. At no time did the Reeses inform the Earps tha t Hub Reese no longe r held a rea l estate lice nse, an d Mr. Ear p believed that the contra ct to sell the farm was with Hub Reese

. Approxim ately

three months after the property was listed, the Ea

rps re ceive d an offer f

rom Henry Hollerman, an individual who had previously expressed an intere st in purchasing the fa rm and who was spe cifica lly

excluded from the c ontrac t with Conn i e R ee s e and C ry e-L eike. Mr. Hollerman’ s offe r for

1.5 milli on dollars was r ece ived by the Earps on the m orning of January 25, 2001. After

discussing the matter, the Ea rps dec ided they

wer e no long er inter es ted in selling the fa rm a nd c on ta c te d Hub Re e se to inf or m the m tha t the y

wi sh e d to take the pr op e rt y of f the mark e t. On t h at d ay , C o n n ie Reese was sick in bed w ith the flu and unable to transac t any business. Hub Reese inf ormed Mr. Ea

rp that he w ould need to conta ct J an Pag e, the br oker f or Cry e-L eike, to wor

k out the details of withdra wing the prope rty . Hub Reese then contac ted J an and disc ussed the si t u at i o n wi t h her. Mr . Earp subse quently spoke with J an Pag e and w as informe d by her tha t the property could be withdra wn from the marke t pr ovided Mr. Earp ag ree d to c erta in stipul ations. Mr. Earp a g ree d to these stipulations, and Ms. Page stated that she would ha ve her secr etary , who was

ou t of the of fi c e a t th a t ti me , type up a wri tt en cop y of the ir a g re e me nt a ndfa x it to him fo r h is signature. When Mr. Ea

rp did not rec eive the w ritten ag ree ment within a fe w hours, he c ontacted J an Pag e ag ain to inquire about the document. He wa s, ag ain, told by Ms. Page that her se cre tary was out of the of

fice but that she would have t h e d o cu m en t typed and se nt to him as soon as her

secr etary returne d.

L ater that afte rnoon, Hub Reese w as conta cted by another ag ent, Mr. Charle s Hay nes, and informed that ther e we re buy ers inte re s ted in the “Wallace Fa rm” a nd that a contr act mig ht be fo rthc omi ng fr om the bu y e rs that day

. Hu b Ree se inf or me d Mr. Ha y ne s th a t th e re mig ht b e so me problems wi t h s el l ing the farm. As a re sult of this conversation, the buy ers de cided to pre sent an offe r for the full asking price
, with no conditions. Howeve r, Hub Ree se neve r informe d Mr. Haynes that the Ear

ps had dec ided t o withdraw the property from the mar

ket. L ater that evening , Mr. Haynes did present a contra ct for full asking price to Hub R eese and J an P ag e. Mr. R eese and Ms. Pag e then
met Mr. Earp at a re staurant at approxim ately eig ht o’clock in the e vening to present this contra ct to him. Mr. Earp ag ain informed Ms. Pag e and Mr. R eese that he wa s no longe r intere sted in selling
t h e p r o p e r t y b u tu l t i m a t e l y a g r e e d t o t a k e t h e b u ye r ’ s c o n t r a c t h o m e f o r c o n s i d e r a t i o n

. A f

e w d a ys la te r, Mr . E arp re turne d th e c on tr a c t to Mr . H a y ne s’ of fi c e wi th the wo rd “ re

je c te d” writt e n a c ro ss the contra ct. No further a ction was take n by any party with reg ard to selling the farm or removing it o ff ic ia lly fr om the mark e t.

Cry e-L eike, Connie Ree se, and Char l es Ha y n es, sued the Earps for brea ch of the sales Contract and r equeste d the court to a war d the commission that they would have r ece ived from the

sa le . T he Ea

rp s, wh o h a d b y

that ti me fo un d out that Hub Re e se wa s not lic e ns e d to se ll r e a l e state and not ac ting a s t h eir real esta te ag ent, counter claimed f or violations of the Real Estate Br oker’ s L icensing Act and the Consumer Protection Act.-3-

After a full evide ntiary

hearing, the trial court dism issed all claims by both parties. The trial court, in a Memorandum, set out its detailed finding of f acts. The se finding s of fa ct pre sent a ve ry thoroug h summary

of the e vidence prese nted b ythe parties and the ba sis for the trial c ourt’s decision.

1. Ke nn e th H . E arp a nd wi fe , T ina M. Ea rp , p ur c ha se d f

ro m th e e state of Dr

. John Wal la c e , d e c e a se d, a fa rm c on sis tin g of

app ro xima te ly 37 9. 58 9 a c re s k no wn a s th e Wal la c e F arm

. 2

. On or abo u t th e 1 7 thd a y o f O c to b e r , 2 0 0 0 K e n n e thE arp c o n ta c te d He rb e rt (Hu b) Re e se , Jr. , a

bo ut l ist ing the fa

rm fo r s a le . K e nn e th Earp had utiliz ed the se rvice s of Hub Ree se, Jr., as a Tenne ssee licensed r eal e state ag ent in listi ng and selling rea l property owned by Kenne th Earp a nd wife, Tina Earp. 3. At the time of being contac ted by Ke nneth Ear p on the 17th day

of October , 2000, Hub Reese did not have an a ctive re al estate license. The wife , Connie, of Hub Ree se held a license to sell re al estate

. 4. Kenne th Earp talked with Hub Reese a bout list ing the Wallace F arm for sa le. 5

. Hub Re e s e a n d Co n n ie Re e s e w e n t t o th e h o me o f K e n a n d Tina Earp. T hey

went into the offic e of K en Ea rp a n d discussed the Wallace F arm. Tina E arp w as at home, but she di d not rema in in the office , and she did no t p ar t icipate in the discussion conc erning the

sa le of the Wal la c e F arm

. 6. Hub Reese and wife , Connie Reese, a nd Ken Earp dr ove out to the Wallace F arm a nd looked at the pr oper ty , and further

discussed listing the pr op e rt y

fo r s a le . A ft e r l oo kin g a t th e pr op e rt y the y re turne d to the home of K en Ea

rp and continued to discuss the contra ct. Tina Earp did not participate in the discussion. 7. Connie Reese f

illed in the blanks on a pre- printed form for listing the Wallace F arm for

sale. On the form ther e we re a lso printed the

names o f threepersons who w ere excluded by Ken Ea rp fr om the Reese’ s re ce i v i n g a commission if the property wer e sold to either

on e of tho se pe rs on s. 8. Neith er C o n n ie Reese nor Hub Ree se informe d Ken Ea rp that Hub Reese did not hold a lice nse to sell rea l estate and that he wa s acting

as an a ssistant to hi s wife, Connie Ree se. 9. Ken Ea

rp aske d about taking the prope rty off of the m arke t before the listi ng ag ree ment expired and Connie Reese replied, “ Call us”. 10

. Up on c omp le tio n o f the lis tin g a g re e me nt, it w a s si g ne d o n th e 17 th da y of Oc tob e r, 20 00 by

Ke nn e th H . E a

rp , T ina M. Ea rp , a ndCon nie Reese. 11. The listing c ontrac t ga ve the right t o Cry e-L eike, Inc. to have the

e xclu siv e ri g ht t o sel l th e re a l pr op e rt y fo r a pe ri odof six mo nth s.-4- The Ea rps ag ree d to pay

Cry e-L eike, Inc. fi v e (5% ) per cent commission on the gr oss selling pric e. 12. At the re quest of Ke n Earp no sig n was placed on the Wallac e F arm g iving notice to the g ener al public that the fa rm was f or sale. Cry eL eike ha s expended no funds adve rtising the Wallace F arm for sale. No evidenc e exis t a s to any funds expended by

Connie Reese or

Hub R e e s e i n a d v e r t i s i n g t h e p r o p e r t y. 13. On the morning of the 25th day of January
, 2 0 0 1 He n ry

Holliman, one of the persons e x empt from commis sion under the contrac t, went to the home of Ken and Tina Earp and made an offe r to purcha se the Wallace F arm for

1.5 milli on dollars. The offer was not ac cepte d. Ken a nd Tina Ear

p discussed the fa

rm and de cided that they

wanted
to t ake if of f the mark e t. 14. At approximat el y 9 : 3 0 a.m. on the 25th day of January , 2001, Ken Earp c alled Hub Ree se and informed him that he wante d to take the property (Wallace Fa

rm) off the marke t. Hub Reese inf ormed Ke n Earp that Connie Reese wa s in bed sick and that he would see w hat he could do. In a subseque nt phone conve rsation that morning Hub Reese inf ormed Ken Earp that this m atter w ould have to be ha ndled by Cry e-L eike. Ke n Earp obje cted sa y ing t h at h e didn’t make the listi ng with Cry e-L eike but with t h e Reeses. H ub Reese inf ormed Ken Ea rp that he ha d to call J an Pag e at Cry e-L eike. 15. Ken Earp called J an Pag e at Cry e-L eike Realtors and disc u s s ed t he

ma tte r o f t akin g the pr op e rt y of f the ma rk e t. 16. After

discussion w ith Ken Ear

p, J an Pag e informe d Ken Ea rp that the pr op e rt y c ou ld b e take n o ff

the ma rk e t un de r c e rt a in s tip ulatio ns

. Ken E arp a g r e e d to a ll o f th e s ti p u lati o n s o f

f e r e d b y Ja n Pa g e

. Jan Pag e informe d Ken Ea

rp that her

secr etary was not in at the time and

a writing would be f

orthcoming . I t was to be fa x ed to Ken E a r p

. Whe n th e writi ng did n’ t arrive tim e ly Ke n Ea rp c a lle d Jan Pa g e a g a in on J anuary

25 and aske d about the writing, and he was informed that the sec reta

ry had not y et re turned. 17

. On the a ft e rn oo n o f the 25 th d ay of Jan ua ry , 2 00 1, Hu b Re e se
rec eived a

telephone c all on his cell phone fr o m C h ar l es Haynes, a
rea ltor, who informed H ub Reese that he wanted to disc uss a n offe r
on the Wal la c e F arm

. 18. Hub Reese went to t h e o ffice of Charle s Hay nes who indica ted that he wa s probably

g oing t o h ave a n offe r fr om prospective buy ers on the Wallace F arm. Hu b Reese did not inform Char les Haynes that Ken Ea rp had ta ken the pr opert y o ff t he mar ket. He did state that there was some controve rsy conce rning the prope rty . As a re sult of the statements of Hub Reese, the prospec tive buy ers decide d that they

wo uldmake the ir of

fe r at the fu ll list ing pr ic e a nd wi th n o c on dit ion s.-5-

19

. Hu b Re e se no tif

ie d Jan Pa g e that Charl es Ha y ne s h a d an o ff e r t o make a nd she and H ub Reese met Charles Ha y nes at his offic e at approximately

6:00 p.m. on the 25th day of January , 2001. 20

. Af

te r C ha rl e s H a y ne s p re se nte d th e writt e n o ff e r, Hu b Rees e telephoned K en Ea

rp and a sked for

a m ee t i n g and Ke n Earp a g ree d to meet them at the Cattlemen’ s Re s t aurant in Gallatin at approximately

8:00 p.m. on the 25th day of January , 2001. 21. The mee ting at the Ca t t l em en’s Restaur ant on the 25th day of J anuar y , 2001 took place w ith Hub Reese, Jan Pag e and K en Ea rp. 22. The off

er to purc hase was presented to Ken E arp on the 25th day of J anuar y , 2001at the C attlemen’s Restaurant, and he stated a r ejec tion in tha t he ha d ta

ke n th e pr op e rt y

of f the ma rk e t. A ft e r s ome dis c us sio n, he wa s per su a de d to tak e the writt e n off e r hom e wi th h im and to g ive it further

consideration. 23. Subsequent to the 25t h day of J anuary , 2001 the contract wa s returne d reje ct ed and sig ned by

Ken Ea rp. Tina Ea

rp did not sign the reje ction. 24. The c omplaint in this matter was filed on the 25t h day of April, 2001

a nd a s of that da te the Wal la c e F arm ha d n ot b e e n s oldby

the Ea rp s.

As furthe r fa cts in this matter the Court states that Tina Ear p did not notifyHub Reese or Connie Reese or

J an Pag e that she w as
canc elling the listi ng contra ct and a s stated above she did not sign of f on the re jection on the contr act pr esente d.

At the trial of this matter on the 10th day of F ebrua

ry , 2003, J an P age te stified that she did not have a n ag ree ment to canc el the listi ng con tr a c t. T h e Co u r t f in d s th a t s h e d idn o t h a v e a w r it te n ag ree ment. She had ag ree d with Mr. Earp to c ance l th e li sting ag ree ment. I n the deposition of J an P age t ak en on the 31st day of July , 2 00 1 s he te sti fi e d a s f oll ow s:
Q. Ok a y . O ka y

. On Janu ary 25 th, 20 01 , w ha t do y ou re c a ll w a s, I g ue ss, yo u r f i r s ti n f o r m a t i o n o r

k n o w l e d g e ab o u tt h i s l i s t i n g o r p r o p e r t y? A. Sometime - - I

can’ t even put a time. Sometime during the day Hub called me and said that the Ea rps wante d out of the listing. Q. Uh-huh. A. And he t o l d m e wh i ch one. I said fine. He said Connie was sick, deathly ill in bed, and just could not even come to the phone. Q. Uh-huh. A. That wa s his conversation. And I s ai d
, o k ay , Hub, y ou know, what d o es s h e wa n t to do. And he said, y ou know, g osh, it’s been on the marke t for I

don’t know how many months at t his point, nothing has-6- happene d much, y ou know. I said, well, it is up to y ou as to what y ou

w a n t t o d o , y o u m e a n i n g y o u a l l
, w i t h t h e l i s t i n g , t h a t i s n o tmy decision to make. Q. Uh-huh. A. I sa id, I wo uld re c omm e nd that if y ou do
, that the re sh ou ld b e so me stipulations - - Q. Uh-huh. A. - - just don’t blanket - - bec ause somebody wants out of a listing , y ou kn ow , le t th e m ou t, the re ha ve to b e sti pu la tio ns

. Q

. O k a y. A. - - a nd those are my rec ommendations. He said fine. Then I think he must have ca l l ed Ken. Ke n called me . And I said, there are stipulations, but we’ ll let y ou out of the listing - - Q. Uh-huh. A. - - one , y ou cannot sell it to anybody during the time of our listing or any body that has see n it for - - I

think it was a

hundred a nd eig hty

- - it might have be en nin ety - - our contra ct has c hang ed and I don’t

re ca l l - - af

t ert h e l i s t i n g, fo r n i n et y

d ay s af t ert h e l i s t i n gQ

. O k a y. A. - - that a nd y ou can’ t list with another c ompany - - Q. Uh-huh. A. - - until our listing would have expired. Q. Okay . And - - A. And he sa id fine. He said, y ou know, fa x it over to me. Q

. O k a y. A. An d I

sa id, I c a n’ t ha ve it d ra wn up, myse c re tary is i n a me e tin g in Br entwood - - Q. Uh-huh. A. - - y ou know, we’ ll ge t it back to y ou as soon as we can. Q. Uh-huh. A. And she didn’t show up until close to five o’ clock f rom the meeting in Bre ntwood. Q. Do y ou rec all hm calling y ou back - - A. He did. Q. - - a nd say ing, w here is it, and y ou said, she’s still not back? A. And that’s whe n I told him, s he’s still not here. Q

. O k a y. A. An d th a t’ s p re tty

muc h it

. Q. But y ou didn’t have a problem with him doing it, a s long as t h ere

w e r e t h e s e s t i p u l a t i o n s , a s yo u s a y. A. Rig ht. Q. An d th a t’ s w ha t y ou ind ic a te d to him

. A. Uh-huh.-7-

Q. And that’s what the Reeses indicated. A. Uh-huh. Q. I s th a t r ig ht? A. Uh-huh.

I n th is matt e r

th e Co u r t f

in d s th a t th e r e e xis te d a n a g ency rel ati on sh ip bet ween th e Earp s an d C on ni e R eese and Cr y e-L e ike. By ag ree ment, the principa l/ag ency rela tionship came to an e nd when Mr. Earp reque sted to take the pr operty off the ma

rket a nd Cry e-L eike and Connie Reese ag ree d. Principal/ag ency relationship m ay be established by

oral a g ree ment. The re l at i o nship may be terminated

o r a l l y.

Para g ra ph 23 of Exhi bit 1, the lis tin g a g re e me nt, pr ov ide s a s f oll ow s:
The pa rties ag ree that this c ontrac t constitutes their entire a g ree ment

a ndthat no or a l or

imp lie d a g re e me nt e xist. Any a me nd me nts to this ag ree ment shal l b e m ad e in writi ng , signe d by both parties, and sha ll be attache d to this original ag ree ment and all other copies he reof

.

There wer e no ame ndments to the agr eeme nt. Mr. Earp ha d asked prior to the execution of the ag ree ment conce rning taking the pr op e rt y of f the ma rk e t a ndthe re sp on se wa s “ Ca ll us ”

. He didthat. He the n fol low e d the dir e c tio ns of the a g e nt’ s ass ist a nt, Mr . Ree se , to call Jan Page . He r ece ived an a g ree m en t t h at t he prope rty could be taken of f the pr o p er t y wi th certain stipulations. He ag ree d to all of the stipulations. Ms. P age t o l d Mr. Ear p that when he r sec reta

ry
re turne d th e pa

pe r w or k w ou ld b e ty

pe d up an d sen t to him . She did not ask that he write it up and send to her.

I t was an or al ag ree ment to rescind t h e co n trac t. The Court finds that this is not in contradiction to Tenne ssee law . The statute of frau ds do es no t r e qu ir e a lis tin g a g re e me nt t o b e in w ri tin g . I n th is

case the listing wa s in writing a nd was for a def inite time.

I n t h i s c a s e t h e r e c i s i o n w a s c l e ar l y e xp r e s s e d a n d c l e a rl y
acc epted. . . .

. . . .

At the time that J an P ag e informed Ken Ea rp that he w as let out of the li s t i ng ag ree ment neither she nor Connie Reese or Hub Reese w ere awa

re tha t an of

fe r wa s g oing to be made that da y . No-8- third party

rig hts, if any , had come into being when Ke n Earp took the p r o p e r ty o f f th e ma rk e t w ith c o n s e n t o f

th e li s ti n g a g e n t a n d the broker

.

. . . .

Fr om the ev i d en ce in this case it is clear that there was ag ree ment by J an P age a nd Connie Reese to let Ke n Earp a nd Tina E ar p with stipul ations out of the listing ag ree ment of the Wallace Fa rm. Ba sed upon t h e fa ct s in this case the lac k of writing terminating wit h stipulations t he listing a g ree ment is considere d by the Court t o be of no c onsequenc e. It was cle ar the re w as mutual

c on se nt t o te rm inate the c on tr a c t w ith the a g e nt s e tti ng fo rth stipulations t o which Ke n Earp a g ree d.

Appellant, Cry e-L eike, Connie Ree se, and Charles Hay nes, allege that the t rial court erre d in finding tha t the parties mutually consente d to terminate the listing contrac t. I t is their contention that the contra ct could only be modified in writing , and since no written ag ree men t wa s ever
e xec ute d, the lis tin g a g re e me nt wa s in e ff e c t a t the tim e Mr

. Ea

rp re c e ive d the fu ll p ri c e of fe r, thu s, requiring the Ear

ps to sell the farm. The appellee s, Ken a nd Tina Ear p, also prese nt severa l issues for r eview: ( 1) “Whether the trial court err ed in f

inding that the a

ppellants did not violate the Real Estate B roker ’s L icensing Act and the Cons u m er P ro t ec tion Act.” (2) “Whether the claims of Appellant Charles Haynes wer e prope rly dismiss ed in any

event be cause there was no c ontrac tual

re la tio ns hip be tw e e n th e Ea rp s a ndHay ne s. ” (3 ) “ Whe the r A pp e lle e ’s a c ti on s di d no t c on sti tut e
a b r e a c h o f c o n t r a c ti n a n y e v e n tb e c a u s e t h e ap p e l l a n t ’ s f a i l e d t o p r o d u c e a

b u ye r w h o w a s r e a d y, willing, and a

ble to perf

orm.”

We f i n d t h a t t h e p ar t i e s m a d e a n o r a l a g r e e m e n t t o t e r m i n a t e t h e l i s t i n g c o n t r a c t; t hu s, terminating the Ear

ps’ contra ct with Connie Reese a nd Cry e-L eike on the morning of J anuary 25, 20 01 . We a lso ag re e wi th the tr ia l c ou rt that A pp e lla nt’ s c la ims fo r v iol a tio n o f the Re a l E state Br oker’ s L icensing Act and the Consumer Protection Act we re pr operly dismiss ed.

T h i s m att er w ill be review ed de novo u p o n t h e r e c o r d o f t h e t r i a l c o u r t , a c c o m p a n i e d b y a presumption of cor

rec tness with reg ard to the c hance llor’s finding s of fa ct unless a pr eponder ance of the e vidence shows otherwise. Tenn. R. App. P. 13(d). The trial court’ s leg al determinations are revie wed de novo without a ny such presumption. Ba nk v . Tr ail k ill , 856 S.W .2d150 (Tenn.Ct.App. 1993). F urther, the trial court’ s determina t ion with reg ard to c redibility of the witnesse s and the

we ig ht o f o ra l te sti mon y

are g ive n c on sid e ra

ble de fe re nc e , a s on ly the tr ia l c ou rt ha s th e op po rtun ity
to see a nd hear

the witnesses. Se e Ga lbre ath v . H ar ris , 811 S.W .2d 88 (Tenn.Ct.App. 1990).

I n Tenne ssee, it has long been he ld that a contract m ay be rescinded with the mutual consent and ag ree ment of the pa rties. W right v. Fischer , 148 S.W .2d 4 9
, 5 3 (T en n .Ct.App. 1940). Tenne ssee law also “re quires that the termination of a contra ct by mutual c onsent of both parties be-9-

positive, clear , and unambig uous, conveying a n unquestioned p u rpose to terminate the contr act.” Russom v. Ins. Co. of N. Am. , 4 21 F .2 d 9 85 , 9 93 (6 th C ir . 1 97 0) . F urth ermor e , th is a g re e me nt t o
resc ind a contra ct may be an ora l ag ree ment. I n Tidw ell v. Morgan Bld. Sy s., Inc. , 840 S.W .2d 373, 376 (Tenn.Ct.App. 1992), the parties made a contr act fo r the purc hase of a metal building and,

su bs e qu e ntl y , o ra lly

a g re e up on a

larg e r b uil din g . Sa id the c ou rt :
The orig inal contra ct, sig n ed b y the parties, provided that it could only be mod if ie d in writi ng

. Th e re is no dis pu te be tw e e n the pa rt ie s that the y

su bs e qu e ntl y ag ree d upon a lar g er building at an incr ease d purcha se price

. . . . We believe that the evidenc e is c lear that the parties mutually ag ree d to r escind the first contra ct. As we interpre t the written ag ree ment and T.C.A. § 47-50-112, neither prohibits the pa rties from re scinding a written ag ree ment by mutual oral ag ree ment

. . . Whil e re scission must be clea

rly expressed, the acts and conduct of the parties may

also be suff

icient
to e ff e c t th e mutua l re sc iss ion wh e re the a c ts an d c on du c t are po sit ive , u ne qu ivo c a l, and inconsistent with the contra ct’s existence. Arkansas Dailies, Inc. v . Dan , 36 Tenn. App. 663, 671, 260 S.W.2d 200, 203 (1953).

Or a l a g re e me nts be tw e e n a se lle r an d a re a l est a te a g e nt h a ve , a lso , b e e n s pe c if ic a lly he ld v a lidin the State of Te nnessee

. Se e Pa rk s v . M or ris , 914 S.W .2d 545 (Tenn.Ct.App. 1995).

Neither the Parol Evidenc e Rule nor the Stat u t e of Frauds is applicable whe n an ora l

a g re e me nt t o r e sc indis e sta bli sh e d b y

c le ar a ndc on vin c ing e vid e nc e

. I n thi s c a se the e vid e nc e is pr a c tic a lly

un dis pu te d. Th is C ou rt

ha s h e ld: “ We kno w of no re qu ir e me nt of the Sta tut e of F ra ud s, Parol Evidence Rule, or ot her r ule of law that prohibits the oral re scission, canc ellation, destruction or aba ndonment of a w ritten contra ct for the sale of land.” W alker v . W

ood , 213 S.W .2d 523, 526 (T e nn .Ct .A pp . 1 94 8) ; see also Early v . Street , 2 41 S.W. 2d 53 1 ( Te nn . 1 95 1) ; Mc

In tos h v . G oo dwi n , 292 S.W .2d 242 (Tenn.Ct.App. 1954). T he only exception to such a rule involves c ases whe re the rig hts of third parties ha ve interve n ed. See W right v. Fischer , 148 S.W .2d at 53. I n this case, the

resc ission agr eeme nt was complete d prior to the time of the Char les Haynes’ of fer

.

Ob s er v i n g t h at o n l y T ex as ad o p t s a co n t ra ry ru l e, W i l l i s t o n o n C o n t ra ct s , q u o t i n g W est River Equipment Co. v. Holzworth Const ruction Co. , 3 35 P.2 d 2 98 (M on t. 1 95 9) , a sse rt s:

“ Th e pa rt ie s to the e xec uto ry writt e n ag re e me nt we re pr ivi le g e d to te rm inate it at a ny tim e by mutua l c on se nt i nd e pe nd e ntl y of a ny e xp res s ag re e me nt s o providing and it is imm ate ri al whether such termination be char acte rized an

aba nd on me nt, c a nc e llatio n, mutua l re sc iss ion or wa ive r. Th e e ff e c t is the sa me

-- to relieve the parties from g oing f orwa rd under the written instrument, a nd this may be

acc omplished by

parol, and the fact of its hav ing be en done established by e videnc e of the acts and dec larations of the parties

. . . . “The re c an be no que stion but what a contra ct may b e m u t ually

abandone d or modified by

the parties at any

stag e of pe rformance , and ea ch of the parties rele ased f rom furthe r oblig ation on acc ount there of; that it may be ac complished by-10-

parol, a nd the fa ct o f i ts having been done established by evidenc e of the acts a nd de c laratio n o f the pa

rt ie s.

“ I t is c le ar the n th a t a w ri tte n c on tr a c t ma y be c a nc e le d b y

mutua l c on se nt . . . and that the c ance llation may be ora l. . . . “The statute of fr auds does not pre clude or al resc ission of a prior wr itten
contra ct that is within the statute. . . .”

Richard A. L ord, Will iston on Cont rac ts § 29:43 (4th ed. 1999).

I n revie wing the testimony and other evidenc e prese nted in this case , we do not see that the evidenc e pre ponderates ag ainst the trial court’s findings of fac t. I n apply ing the law to the fa cts of this case, we ag ree with the trial court that, throug h the cour se of telephone c onversa tions between Ken Ea rp, Hub Ree se, and Jan Pag e, on the morning of J anuary 25, 2001, Ken Ea rp ente red into an oral a g ree ment canc elling the listi ng contra ct with Connie Reese a nd Cry e-L eike Rea lty , removing the fa rm from the sales’ marke t. By J an Pag e’s own testimony , the ac ts of the parties to rescind the ag ree ment wer e positive, unequivoca l, and inconsistent with the contra ct’s existence.

Al tho ug h Co nn ie Re e se , d ue to i lln e ss, wa s n ot a ble to p art ic ipate in the c on ve rs a tio ns wi th J an Pag e and K en Ea

rp, the e vidence makes it clea r that Hub Reese was acting as her ag ent, as he ha d do ne so c on tin uo us ly wi th re g ard to the ir de a lin g s wi th the Ea rp s. Th e la w i n T e nn e sse e wi th reg ard to ag ency

can be found in Ru ra l E du c ati on As so c iat ion v . B us h , 298 S.W .2d 761, 766 (Tenn.Ct.App. 1956).

Ag ency may be prove d by

circ umstan ce s and by

evidenc e of the conduct of the parties. Hammond v. Herbe rt H ood Company , 31 Tenn. App. 683, 221 S.W.2d 98. What ag ent d i d with knowledg e and a pproval of his princ ipal is circumstantial evi d ence of wha t ag ent was authorized to do. Bo ill in- Ha rri so n Co mp an y v . Le wis & Company , 182 Tenn. 342, 187 S.W.2d 17. Bur den o f p ro of is on person attempting to establish an a g ency , that alleg ed ag ent was in fa ct the ag ent of the a lleg ed princ ipal and was authorized to do the ac t done. Cob ble v . La ng

for d , 190 Tenn. 385, 230 S.W.2d 194. Whether an a g ency has bee n cre ated is to be de termined by the re lations of the parties as the re lations in fact exist under thei r agreements or a cts, whethe r the pa rties understand that there is an a g ency or not. Smith v . Tennessee Coach Company , 183 Tenn. 676, 194 S.W.2d 867. A p r i n c i p a l i s b o u n d i f

a n a g e n ta c t s w i t h i n h i s a p p ar e n to r

o s t e n s i b l e a u t h o r i t y. Mc Coy v . W

ill is , 177 Tenn. 36, 145 S.W.2d 1020.

Ou r S up re me Cou rt

a pp ro ve d th is s ta te me nt of the ru le of

‘A pp are nt o r O ste ns ibl e Authority ,’ So uth e rn Ra ilwa y Com pa ny v . P ic k le , 138 Tenn. 238, 197 S.W. 675, 677:

‘A pp are nt a

uth or ity in a n a g e nt i s su c h a uth or ity a s the pr inc ipa l kn ow ing ly permits the ag ent to a ssume or which he holds the ag ent out a s possessing; s u ch-11-

authority as he a ppear s to ha ve by rea son of the ac tual authority which he ha s; such authority as a r easona

bly prudent man, using diligenc e and discretion, in view of the pr inc ipa l’ s c on du c t, w ou ld n a tur a lly su pp ose the a g e nt t o p os se ss. Os te ns ibl e authority is such authority

as a principal intentionally or by want of or dinary

car e
c a us e s o r a llo ws a

thi rdpe rs on to b e lie ve the a g e nt t o p os se ss, a ndin s ome jurisdictions it is so defined by statute. Ostensible authority to act as a g ent may be confe rre d if the principal aff irmatively or i ntentionally
, or by lack of ordinary car e,
cause s or allows third per sons to act on an a ppare nt ag ency . I t is e s sential to the application of the above ge nera l rule that two im portant fa cts be c lear ly established; (1) That the principal he ld the ag ent out to the public as posses s i ng sufficie nt authority to embra ce the particula

r act in question, or knowing ly permitted him to act as having such authority ; and (2) that the person de aling with the ag ent knew of the fac ts, and, ac ting in g ood faith, had rea son to believe, and did believe, tha t the ag ent possessed the ne cessa

ry authority .’

See also Rich P rinting C ompany v . Estate of McKellar , 330 S.W .2d 361 (Tenn.Ct.App. 1959).

Th e fa c ts o f this c a se make it c le ar that Hu b Re e se wa s a c tin g a s Con nie Re e se ’s a g e nt i n th is

ma tte r. Th e Re e se s adm itt e d tha t Hub Re e se wa s ac tin g a s Conn ie Re e se ’s a ssi sta nt thr ou g ho ut the ir dealing s with the Earps. Further, Hub Reese had previously held a rea l estate lice nse and w orked with Mr. Earp in that c apac ity in the past, and Mr. Ea

rp had no r eason to be lieve that Hub Ree se wa s not acting as his sales ag ent at this time. Mr. Earp c ommunicated primarily with H ub Reese, w as
ne ve r i nf or me d b y the Re e se s th a t H ub Re e se wa s n o lo ng e r l ic e ns e d to se ll re a l e state a ndme re ly acting as Connie Reese ’s assistant, and be lieved Hub Ree se to be his rea l estate a g ent when he dis c us se d c a nc e lin g the c on tr a c t wi th Hu b Re e se . T hu s, Mr . E arp ha d r e a so n to be lie ve Hu b Re e se had authority

to act, and, Mr . Earp acted in g ood faith on that belief when he discusse d canc eling the
contra ct with Hub Reese . Connie Reese w as aw are of Hub Ree se’s c ommunications with Mr. Earp and knew of their past dea lings a nd rela tionship. C onnie Reese intentionally held Hub Ree se out as her a g ent thus capitalizing on the pa st rela tionship betwee n Hub R eese and Mr. Earp. F urther, on the morning of January

25, 2001, Conn i e Reese w as aw are that Hub Reese was spea king on he r behalf

.

Th e Pla int if

f s h a v e a l s o t r i e d t o m a k e a n i s s u e o u t o f T i n a E arp ’ s l a c k o f i n v o l v e m e n tin

re je c tin g the fu ll p ri c e of

fe r a ndc a nc e lin g the lis tin g c on tr a c t, c la imi ng that th e bu y e rs ’ c on tr a c t mus t be pre sented to and r ejec ted by both parties and that Ms. Ea rp neve r re quested the listing c ontrac t be c a nc e le d. Af

te r K e n E arp re turne d fr om his me e tin g wi th Hu b Re e se a nd Jan Pa g e , he fa ile d to show the off

er to his wife or discuss the matter with her. When the buy er’ s contrac t was sent bac k reje cted, this reje ction was only signe d by

Ken Ea rp. Also, only

Mr. Ear p notified Hub R eese and J an Pag e that he wanted to c ance l the listi ng contra ct. Howeve r, in both situations, Ke n Earp w as
ac t i n g as T i n a E ar p ’s age n twi t h re gar d t o t h e p ro p er t y

. Fr o mt h e b egi n n i n g o f t h e E ar p s ’ d ea l i n gs with Cry e-L eike a nd the Reese s with reg ard to the sa le of the fa rm, Ms. Earp w as only

a cur sory part of the discussions a nd decisions being made and g ladly allowed her husband to a ct on h er b eh alf,

mere ly signing contra cts when he reque sted this of her. The Earps had, ear lier that day , discussed-12-

taking the prope rty

off the marke t and had determined that they did not want to sell the prope rty at all. Even upon finding out about the full price offe r and Mr. Earp’ s reje ction of that offe r, Ms. Earp

was in ag ree ment with Mr. Earp’ s rejec tion of the contra ct and unde rstood him to be acting on her behalf

.

The Ea

rps have also alleg ed viol ation of t he Tennessee Real Est ate Broke r’s L icensing Act on the part of Hub Reese, Connie Reese and Cry e-L eike. Particularly with reg ard to Te nnessee Code An no ta te d s e c tio ns 62 -1 3- 30 1, 62 -1 3- 10 2( 3) (A ), 62 -1 3- 10 3, 62 -1 3- 31 8( a )( 4) , 6 2- 13 -3 02 , it is alleg ed that Hub Ree se eng ag ed i n ac t i v i t ies which a re pr ohibited to any one without a valid re al estate lice nse. Also, with r eg ard to Connie Reese, as ag ent of Cry e-L eike, Plaintiffs a lleg e violations thr ou g h mis re pr e se nta

tio n, fr a ud ule nt ind uc e me nt to sig n the re a l e state Con tr a c t, and fal se advertising.

Although, ba sed on past dea lings with Hub Reese, it is understandable that Ken Ea rp may have be lieved his property was be ing listed wi t h Hub R eese , the evidenc e shows no ac tual mis re pr e se ntatio n o n th e pa rt of the Re e se s. Th e c on tr a c t si g ne d b y Mr . a nd Ms. Ea rp sp e c if ic a lly
state s th a t the fa

rm is b e ing lis te d w ith Con nie Re e se , n ot H ub Re e se . T his c on tr a c t w a s c omp le te ly filled out by

Connie Reese in he r handwriting and signe d by Connie Reese only . As there was no
a dv e rt isi ng un de rt ake n b y a ny on e to s e ll the pr op e rt y , ot her tha n a ro uti ne pla c ing of

the pr op e rt y
o n t h e M u l t i p l e L i s t i n g S e r v i c e a s C o n n i e R e e s e s ’ s l i s t i n g , a n d n o o f f e r s t o p u r c h a s e t h e p r o p e r t y, other than the one re ceive d afte r the c ontrac t was ca ncele d and now involved in this action, it cannot be said that the Reeses undertook any activity in violation of the Tenne ssee Real Estat e B roker ’s L i ce n s i n g Ac t

. Fu rt h er m o re , as we fi n d t h at t h e pr o p er t y wa s l i s t ed fr o mOc t o b er1 7
, 2 0 0 0 t h ro u gh Janu ary 25 , 2 00 1 w ith abs olu te ly no sa le s o r m ark e tin g a c tiv ity of a ny kin d a nd that th e pa

rt ie s to the contra ct ag ree d to terminate the contra ct and remove the l isting from the marke t prior to any offe r being rec eived throug h the Reese s or Cry e-L eike, the E arps h av e n o damag es fr om any alleg ed violations byConnie and Hub Ree se or Cry e-L eike.

L ikewise, with re g ard to v i o l ations of the Te nnessee Consumer Protection Act, other than

me e tin g wi th M r. a ndMs. Ea rp a ndsig nin g a c on tr a c t be tw e e n Mr

. a nd Ms. Ea rp a ndCon nie Re e se to allow Connie Reese a nd Cry e-L eike Rea ltors to sell the farm, the re was no further a ctivity on the part of Connie or

Hub Reese in attempt to sell or market the f arm. As such, it cannot be sa id that either Connie or Hub Reese eng ag ed in a ny act in violation of the Tenne ssee Consumer Protec tion Ac t. A s w e ha ve fo un d that the c on tr a c t w a s te rm inate d o n th e mornin g of Janu ary 25 , 2 00 1, wi th no action being taken with re g ard to sale or marke ting of the prope rty , we a g ain find that the Ear ps have no damag es for any alleg ed “unfa ir or dece ptive prac tice” on the part of Hub or Connie Ree se.
The judg ment of t he trial court is in all respe cts aff irmed and the case is remande d to the trial

c o u r tf o r s u c h f u r t h e r p r o c e e d i n g s a s m a y b e n e c e s s ar y.

Cos ts a re a sse sse d a g a ins t A pp e lla nts

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