Opinion ID: 2219648
Heading Depth: 2
Heading Rank: 6

Heading: Substantial Performance and Failure of Consideration

Text: In American Property Services, 256 N.W.2d at 887 this Court affirmed the award of a commission, without analyzing whether substantial performance was required, because the seller did not plead failure of consideration at the trial court level. Id. In his dissent Justice Wollman embraced the rationale of Kruger v. Soreide, 246 N.W.2d 764, 773 (N.D.1976), which construed an exclusive right-to-sell listing agreement: The listing agreement provided that the commission would be due whether the property was sold by Bowman Real Estate, another broker, or by the Krugers themselves. This type of provision, however, has not been interpreted to entitle the broker to a commission under all circumstances. Rather, there must be some proof of consideration for the contract by performance of services by the real estate agent. The broker must show substantial performance of the duties imposed on him by the contract, even if he does not produce a buyer to be eligible for a commission. To recover a commission even under an exclusive right-to-sell provision, clear evidence of expenditure of time, effort, or money by the broker must be presented. Where such a showing is absent the listing agreement has the characteristics of a unilateral contract, which is not binding for lack of sufficient consideration. Id. at 893-94 (citations omitted). The Kruger court went on to hold that because the record revealed at best the brokers' perfunctory effort to sell the property during the renewal period, they were not entitled to recover a commission for lack of substantial performance under the agreement. Id. at 894. Justice Wollman asserted a broker's promise to use best efforts or diligent efforts to find a purchaser is implied, for if it were not, then the broker could sit idly by and do nothing, or almost nothing, and yet be entitled to a commission derived from the seller's own efforts to secure a purchaser. Id. at 894. Here Weiss affirmatively pled failure of consideration, so we adopt the Kruger rationale. A broker must perform with best efforts to collect a commission under an exclusive selling agreement. Of course, [a] written instrument is presumptive evidence of a consideration[,] (SDCL 53-6-3) and [t]he burden of showing a want of consideration sufficient to support an instrument lies with the party seeking to invalidate or avoid it. SDCL 53-6-4. Substantial performance is a question of fact. Northern Farm Supply Inc. v. Sprecher, 307 N.W.2d 870, 872 (S.D.1981); Bismarck Realty Co. v. Folden, 354 N.W.2d 636, 641 (N.D.1984) (whether realtor substantially performed under exclusive listing agreement is question of fact). Among other things, Weiss contends: (1) Kahler attempted to achieve sales with unqualified buyers; (2) Kahler failed to return telephone calls to Weiss; (3) Kahler attempted to reduce his fee from 6% to 3% after Weiss complained to Kahler regarding the service provided, and (4) Kahler left for a month on vacation during a critical stage of negotiations with Zundel. Viewing the evidence most favorable to the nonmovant, a material issue of fact exists on whether Kahler substantially performed under the exclusive listing agreement. Therefore, summary judgment was improper on this issue.