Opinion ID: 2037629
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Heading: The Broker/Seller Relationship

Text: Coldwell is a licensed real estate broker under the laws of the State of North Dakota. A real estate broker is one who for another, for a fee, commission, salary, or other consideration, or with the intention or expectation of receiving or collecting such compensation from another, engages in or offers or attempts to engage in, either directly or indirectly by a continuing course of conduct or by a single act or transaction, such acts as listing, selling, leasing, advertising, or other actions in relation to real estate. NDCC § 43-23-06.1(5). Implicit in such a description is an underlying contractual relationship between the respective broker and seller. A listing contract or authorization to sell agreement is basically an employment contract or a creation of an agency relationship. Different principles of law may apply to this contract depending on the contents and nature of the contract. Kruger v. Soreide, 246 N.W.2d 764 (N.D.1976). A contractan agreement to do or not to do a certain thingis the basis of one or more obligations upon the contracting party or parties. NDCC §§ 9-01-01, 9-01-05. A determination of these obligations requires interpreting the language of the contract. Id. The language of the contract governs its interpretation if the language is clear and explicit. NDCC § 9-07-02. If the parties' intentions in a written contract can be ascertained from the writing alone, the interpretation of the contract is a question of law for the court to decide. Tallackson Potato Co., Inc. v. MTK Potato Co., 278 N.W.2d 417 (N.D. 1979). The language underlying the Kane/Coldwell employment contract afforded Coldwell the opportunity to procure a lessee or buyer of the property in question. If such a procurement took place before the contract's expiration, Coldwell was to receive a commission. This language is clear and explicit. Our Court has stated that for a broker to be entitled to a commission in North Dakota, the broker must generally produce a prospective purchaser ready, willing, and able to purchase (or lease, as the case may be) on the terms set forth in the agreement or, if the agreement leaves terms open for other terms acceptable to the land owner, then on such acceptable terms. Schmidt v. First Nat. Bank & Trust Co., 453 N.W.2d 602 (N.D.1990); Goetz v. Anderson, 274 N.W.2d 175 (N.D. 1978). This general theory is sometimes known as the procuring cause doctrine in other jurisdictions. E.g., Perdue v. Gates, 403 So.2d 165 (Ala.1981). The broker is entitled to a commission when the broker produces such a person, notwithstanding a failure to consummate the transaction or the refusal of the owner to transact business with the prospective purchaser. Goetz, supra . In procuring such a ready, willing, and able buyer or lessee, the broker must have in fact procured such a party. Procurement and the subsequent right to a commission must be shown by clear evidence of an expenditure of time, effort, or money by the broker. Kruger, supra . From the clear and explicit language of the Kane/Coldwell employment contract, the lessees, Drs. Dietz and Carlson, were procured and presented to Kane through Coldwell's efforts. The lessees were certainly ready, willing, and able to lease the property as shown by their entering into and being bound by the lease agreement. Kane did not deny Coldwell a lease commission. Despite Coldwells' admitted procurement of the lessees, Kane disputes Coldwell's right to a sale commission. Kane argues that there was no formal contact between Coldwell and Employees concerning the purchase of the property, nor, he argues, was there any contact between Coldwell and the doctors after the initial lease was executed. Therefore, he contends that Coldwell did not procure the sale and is not entitled to a commission for the sale. Kane overlooks the express wording of his employment contract with Coldwell. Although the employment contract between Kane and Coldwell expired on October 10, 1984, their contractual relationship did not end at that time nor at the time Coldwell procured a lessee. In order to receive a lease commission, Coldwell was to produce a ready, willing, and able lessee by October 10, 1984. Coldwell procured such a lessee. Kane accepted the lessees, paid the lease commission to Coldwell, accepted the benefits of having a lessee, and thereby cannot deny the existence of the contract or his subsequent obligations under it. The terms of the Kane/Coldwell employment contract gave the lessees procured by Coldwell a right of first refusal to purchase the building and, if the lessees exercised their option and purchased the building, Coldwell was to receive a sales commission. Plainly, if the lessees purchase, Coldwell receives a commission. Kane convinced the district court to adopt the procuring cause test as stated in Perdue v. Gates, supra , in deeming Coldwell the procuring cause of the subsequent sale of the building to the doctors. The district court's reliance upon Perdue is unnecessary. In Perdue, the Alabama court set forth guidelines for determining whether a broker was the procuring cause of a real estate sale. However, whether or not Coldwell was the procuring cause of the sale of the building as defined by Perdue is immaterial. Kane and Coldwell had an express and explicit contract which allowed Coldwell a sales commission if the lessee it procured would eventually purchase the realty. The employment contract between Kane and Coldwell was of a continuing nature, and the purchase of the property by the lessees pursuant to the option in the lease, although after the expiration of the employment contract, entitles Coldwell to a sales commission. Coldwell was the procuring cause of the lease and, as a result of the explicit contract language, it is in effect the procuring cause of the subsequent sale of the building. Whether or not Coldwell's action would pass the Perdue test is irrelevant in view of the terms of its contract which make Coldwell the procuring cause regardless of its subsequent actions or inactions.