Court Opinion

ID: 9569688
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:16:25.815938+00
Date Added: 2024-06-11T12:03:45.070834
License: Public Domain

Wright, J.
(dissenting) — I dissent. The majority opinion is not only contrary to the established law of this state, but also it relaxes the high standards we have established for the conduct of real estate brokers.
The trial court and the Court of Appeals reached the right result and I would affirm.
The Court of Appeals was right in saying the first assignment of error was inadequate and the matter was never properly presented on appeal. The first assignment of error read:
The trial court erred in granting judgment to respondents Monty against the appellants, Lewis W. Shurtleff, et ux, and Shurtleff, Inc., a Washington Corporation, in the amount of the commission earned for the sale of respondents’ apartment house.
Such a purported assignment of error does not in truth point out any alleged error, it is merely an assertion that the appellant is unhappy with the decision of the trial court. As the Court of Appeals correctly said, “Such a general assignment is but an invitation to search the record for specific errors on which the general assignment rests.” Storms v. Vincent, 57 Wn.2d 907, 358 P.2d 135 (1961). In *962Koster v. Wingard, 50 Wn.2d 855, 856, 314 P.2d 928 (1957), we said, “[W]e consider only errors specifically pointed out.”
There were only two assignments of error.
The second assignment of error was:
The trial court erred in failing to hold that the appellants were released from any further obligation to respondent pursuant to an agreement entered into evidence as Exhibit 5.
The Court of Appeals states this contention was made for the first time on appeal and, for that reason, declined to consider it. This matter was not mentioned at all in the petition for review and, hence, will be deemed abandoned and not discussed further.
The truly significant question herein relates to the right of a real estate broker to receive and retain a commission in a transaction wherein he has failed to disclose to his principal a material fact known to the broker. Without in any way receding from that position that the question is not properly before the court because of the grossly deficient assignment of error, as hereinbefore mentioned, I shall discuss that matter.
Investment Exch. Realty, Inc. v. Hillcrest Bowl, Inc., 82 Wn.2d 714, 717, 513 P.2d 282 (1973), is a recent case that states the rule as to the duty of a real estate broker to be loyal to his principal. Therein we said:
We have often held a real estate broker owes to his client the duty to exercise the utmost good faith. Frisell v. Newman, 71 Wn.2d 520, 429 P.2d 864 (1967); Mersky v. Multiple Listing Bureau, 73 Wn.2d 225, 437 P.2d 897 (1968).
We said in Moon v. Phipps, 67 Wn.2d 948, 954, 411 P.2d 157 (1966):
Loyalty is the chief virtue required of an agent. Failure to make a full disclosure of all facts within the agent’s knowledge having to do with the transactions will warrant the court’s setting the transaction aside at the behest of the principal. Breedlove v. Holton, 143 Wash. 347, 255 Pac. 132 (1927); Stewart v. Preston, 77 Wash. 559, 137 Pac. 993 (1914); Watson v. Bayliss, 62 *963Wash. 329, 113 Pac. 770, 34 L.R.A. (n.s.) 1210 (1911). This loyalty demanded of an agent by the law creates a duty in the agent to deal with his principal’s property solely for his principal’s benefit in all matters connected with the agency. Restatement (Second), Agency §387 (1958).
When compared to other cases in which a real estate commission has been forfeited, the misconduct of Shurtleff herein is far more serious than was the misconduct in many of the other cases. For example, in Frisell v. Newman, 71 Wn.2d 520, 429 P.2d 864 (1967), the only thing improper was the failure to inform the principal (seller) of buyer’s membership in a multiple-listing bureau which entitled buyer to share in the commission. In Mersky v. Multiple Listing Bureau of Olympia, Inc., 73 Wn.2d 225, 437 P.2d 897 (1968), the only improper act was failure to inform the seller that the buyer had a relative employed in the office of the real estate broker. In each of those cases the terms of sale and the price was exactly what the seller had agreed to.
Compare the present case. The broker had informed the buyer that the property was zoned to permit construction of multiple-family residences. That statement, while literally true, was misleading in the extreme because of a restriction in the deed which limited the property to single-family dwellings. The broker knew of the restriction late in February or early in March 1971, when he received a preliminary title report.
The broker knew the purchaser, his principal, wanted to acquire the property for the one and only purpose of building a multiple-family dwelling. From late February or early March 1971 to the date of closing, April 9, 1971 (approximately a month), the broker maintained a stony silence. At closing, when he finally mentioned the restriction, he was vague and evasive.
It should be specifically noted that plaintiff Ralph G. Monty testified he knew nothing of the restrictive covenant *964until about 2 months after closing when he received a title insurance policy in the mail.
Taking, however, the testimony of Shurtleff we find, as did the trial court, a wholly inadequate disclosure even on the day of closing. His own testimony was:
I mentioned to him at the time we have a preliminary report with me and we went over it briefly.' I said, “It looks like it is single family; however, I don’t think the value is any different,” and he was anxious to sell the apartment, and he says, “Well, do you think it is worth it”, and he said “Okay, let’s go ahead with the thing and get it closed.”
By the admission of the broker, that was the only discussion and no copy of the preliminary report was given to Mr. Monty until after closing. Shurtleff further testified, “I don’t think wfe ever discussed the lot at any length.”
At another point the broker testified:
Q. Now, you told Mr. Monty on that occasion in your opinion this was no different in valuation because of this restriction, didn’t you? A. Well, I indicated to him that in most lots that was no problem, and this wasn’t really an issue because there was concern on his part for getting the thing closed and also building the house, and these things were still there to be done and so this part of it became secondary to accomplishing the other objectives.
How does this compare with our rule “loyalty is the chief virtue required of an agent?” The broker knew the house his principal intended to build was a duplex. The broker knew it could not be built. The broker knew this was part of the transaction for the sale of an apartment house at a price of $55,000 for which the broker was originally to receive a 10 percent commission, although for reasons not herein material that commission was later cut to 6 percent. The broker thus had strong reasons to want the apartment house sale to be completed and strong reasons to avoid anything that might delay or prevent that sale.
• The grantee in the lot transfer was the seller of the apartment house and was thus the broker’s principal, the one to whom the broker owed undivided loyalty.
*965The majority places reliance upon the trial court’s finding that the broker acted in good faith. The rule in this state is that subjective good faith is not enough. It was said in Mersky v. Multiple Listing Bureau of Olympia, Inc., supra at 231, in part:
It is of no consequence, in this regard, that the broker may be able to show that the breach of his duty of full disclosure and undivided loyalty did not involve intentional or deliberate fraud, or did not result in injury to the principal, or did not materially affect the principal’s ultimate decision in the transaction.
For the reasons stated, I would affirm.
Rosellini, J., concurs with Wright, J.