Court Opinion

ID: 1055022
Source: CourtListenerOpinion
Date Created: 2013-10-08 20:54:15.300592+00
Date Added: 2024-06-11T12:32:55.327389
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                             AT NASHVILLE
                                     April 16, 2004 Session

                         CRYE-LEIKE, INC., ET AL. v.
                   THE ESTATE OF KENNETH H. EARP, ET AL.

                     Appeal from the Chancery Court for Sumner County
                        No. 2001C-142    Tom E. Gray, Chancellor

                  No. M2003-00740-COA-R3-CV - Filed November 18, 2004

This case involves a dispute over whether a real estate listing contract was canceled by oral
agreement prior to receipt of a full-priced offer from a buyer. Plaintiff real estate agents claim the
contract was still in effect at the time of the offer entitling them to their sales commission when
Defendant sellers refused to sell their property. The trial court found that the contract was canceled
by oral agreement prior to receipt of the offer and dismissed Plaintiffs’ complaint. Defendants
counterclaimed for violations of the Tennessee Consumer Protection Act and the Tennessee Real
Estate Broker’s Licensing Act. Defendants counterclaims were also dismissed. We affirm the
decision of the trial court.

          Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                                Affirmed and Remanded

WILLIAM B. CAIN , J., delivered the opinion of the court, in which WILLIAM C. KOCH , JR., P.J., M.S.,
and FRANK G. CLEMENT , JR., J., joined.

Arthur E. McClellan, Gallatin, Tennessee, for the appellants, Crye-Leike, Inc., Connie Reese and
Charles Haynes.

Walter H. Stubbs, Gallatin, Tennessee, for the appellee, The Estate of Kenneth H. Earp, deceased
and surviving spouse, Tina M. Earp.

                                             OPINION

       Appellees, Ken and Tina Earp, owned a 380 acre farm known as the “Wallace Farm”. After
Mr. Earp was diagnosed with a terminal illness, he decided to sell this farm and contacted Hub
Reese, a real estate agent he had used previously, to list his property. Unbeknownst to Mr. Earp, Mr.
Reese was no longer licensed to sell real estate. His wife, Connie Reese, was licensed, and the two
worked together in her real estate business with Hub Reese acting as her ‘assistant’. Mr. and Mrs.
Earp met with Connie and Hub Reese on October 17, 2000 and entered into a written contract with
Connie Reese and Crye-Leike Realty giving Connie Reese and Crye-Leike the exclusive right to sell
their farm. The property was listed for $1,600,000. At no time did the Reeses inform the Earps that
Hub Reese no longer held a real estate license, and Mr. Earp believed that the contract to sell the
farm was with Hub Reese.

        Approximately three months after the property was listed, the Earps received an offer from
Henry Hollerman, an individual who had previously expressed an interest in purchasing the farm and
who was specifically excluded from the contract with Connie Reese and Crye-Leike. Mr.
Hollerman’s offer for 1.5 million dollars was received by the Earps on the morning of January 25,
2001. After discussing the matter, the Earps decided they were no longer interested in selling the
farm and contacted Hub Reese to inform them that they wished to take the property off the market.
On that day, Connie Reese was sick in bed with the flu and unable to transact any business. Hub
Reese informed Mr. Earp that he would need to contact Jan Page, the broker for Crye-Leike, to work
out the details of withdrawing the property. Hub Reese then contacted Jan and discussed the
situation with her. Mr. Earp subsequently spoke with Jan Page and was informed by her that the
property could be withdrawn from the market provided Mr. Earp agreed to certain stipulations. Mr.
Earp agreed to these stipulations, and Ms. Page stated that she would have her secretary, who was
out of the office at that time, type up a written copy of their agreement and fax it to him for his
signature. When Mr. Earp did not receive the written agreement within a few hours, he contacted
Jan Page again to inquire about the document. He was, again, told by Ms. Page that her secretary
was out of the office but that she would have the document typed and sent to him as soon as her
secretary returned.

         Later that afternoon, Hub Reese was contacted by another agent, Mr. Charles Haynes, and
informed that there were buyers interested in the “Wallace Farm” and that a contract might be
forthcoming from the buyers that day. Hub Reese informed Mr. Haynes that there might be some
problems with selling the farm. As a result of this conversation, the buyers decided to present an
offer for the full asking price, with no conditions. However, Hub Reese never informed Mr. Haynes
that the Earps had decided to withdraw the property from the market. Later that evening, Mr. Haynes
did present a contract for full asking price to Hub Reese and Jan Page. Mr. Reese and Ms. Page then
met Mr. Earp at a restaurant at approximately eight o’clock in the evening to present this contract
to him. Mr. Earp again informed Ms. Page and Mr. Reese that he was no longer interested in selling
the property but ultimately agreed to take the buyer’s contract home for consideration. A few days
later, Mr. Earp returned the contract to Mr. Haynes’ office with the word “rejected” written across
the contract. No further action was taken by any party with regard to selling the farm or removing
it officially from the market.

       Crye-Leike, Connie Reese, and Charles Haynes, sued the Earps for breach of the sales
Contract and requested the court to award the commission that they would have received from the
sale. The Earps, who had by that time found out that Hub Reese was not licensed to sell real estate
and not acting as their real estate agent, counterclaimed for violations of the Real Estate Broker’s
Licensing Act and the Consumer Protection Act.

                                                -2-
        After a full evidentiary hearing, the trial court dismissed all claims by both parties. The trial
court, in a Memorandum, set out its detailed finding of facts. These findings of fact present a very
thorough summary of the evidence presented by the parties and the basis for the trial court’s
decision.

        1.      Kenneth H. Earp and wife, Tina M. Earp, purchased from the estate
                of Dr. John Wallace, deceased, a farm consisting of approximately
                379.589 acres known as the Wallace Farm.
        2.      On or about the 17th day of October, 2000 Kenneth Earp contacted
                Herbert (Hub) Reese, Jr., about listing the farm for sale. Kenneth
                Earp had utilized the services of Hub Reese, Jr., as a Tennessee
                licensed real estate agent in listing and selling real property owned by
                Kenneth Earp and wife, Tina Earp.
        3.      At the time of being contacted by Kenneth Earp on the 17th day of
                October, 2000, Hub Reese did not have an active real estate license.
                The wife, Connie, of Hub Reese held a license to sell real estate.
        4.      Kenneth Earp talked with Hub Reese about listing the Wallace Farm
                for sale.
        5.      Hub Reese and Connie Reese went to the home of Ken and Tina
                Earp. They went into the office of Ken Earp and discussed the
                Wallace Farm. Tina Earp was at home, but she did not remain in the
                office, and she did not participate in the discussion concerning the
                sale of the Wallace Farm.
        6.      Hub Reese and wife, Connie Reese, and Ken Earp drove out to the
                Wallace Farm and looked at the property, and further discussed listing
                the property for sale. After looking at the property they returned to
                the home of Ken Earp and continued to discuss the contract. Tina
                Earp did not participate in the discussion.
        7.      Connie Reese filled in the blanks on a pre-printed form for listing the
                Wallace Farm for sale. On the form there were also printed the
                names of three persons who were excluded by Ken Earp from the
                Reese’s receiving a commission if the property were sold to either
                one of those persons.
        8.      Neither Connie Reese nor Hub Reese informed Ken Earp that Hub
                Reese did not hold a license to sell real estate and that he was acting
                as an assistant to his wife, Connie Reese.
        9.      Ken Earp asked about taking the property off of the market before the
                listing agreement expired and Connie Reese replied, “Call us”.
        10.     Upon completion of the listing agreement, it was signed on the 17th
                day of October, 2000 by Kenneth H. Earp, Tina M. Earp, and Connie
                Reese.
        11.     The listing contract gave the right to Crye-Leike, Inc. to have the
                exclusive right to sell the real property for a period of six months.

                                                  -3-
      The Earps agreed to pay Crye-Leike, Inc. five (5%) percent
      commission on the gross selling price.
12.   At the request of Ken Earp no sign was placed on the Wallace Farm
      giving notice to the general public that the farm was for sale. Crye-
      Leike has expended no funds advertising the Wallace Farm for sale.
      No evidence exist as to any funds expended by Connie Reese or Hub
      Reese in advertising the property.
13.   On the morning of the 25th day of January, 2001 Henry Holliman,
      one of the persons exempt from commission under the contract, went
      to the home of Ken and Tina Earp and made an offer to purchase the
      Wallace Farm for 1.5 million dollars. The offer was not accepted.
      Ken and Tina Earp discussed the farm and decided that they wanted
      to take if off the market.
14.   At approximately 9:30 a.m. on the 25th day of January, 2001, Ken
      Earp called Hub Reese and informed him that he wanted to take the
      property (Wallace Farm) off the market. Hub Reese informed Ken
      Earp that Connie Reese was in bed sick and that he would see what
      he could do. In a subsequent phone conversation that morning Hub
      Reese informed Ken Earp that this matter would have to be handled
      by Crye-Leike. Ken Earp objected saying that he didn’t make the
      listing with Crye-Leike but with the Reeses. Hub Reese informed
      Ken Earp that he had to call Jan Page at Crye-Leike.
15.   Ken Earp called Jan Page at Crye-Leike Realtors and discussed the
      matter of taking the property off the market.
16.   After discussion with Ken Earp, Jan Page informed Ken Earp that the
      property could be taken off the market under certain stipulations.
      Ken Earp agreed to all of the stipulations offered by Jan Page. Jan
      Page informed Ken Earp that her secretary was not in at the time and
      a writing would be forthcoming. It was to be faxed to Ken E a r p .
      When the writing didn’t arrive timely Ken Earp called Jan Page again
      on January 25 and asked about the writing, and he was informed that
      the secretary had not yet returned.
17.   On the afternoon of the 25th day of January, 2001, Hub Reese
      received a telephone call on his cell phone from Charles Haynes, a
      realtor, who informed Hub Reese that he wanted to discuss an offer
      on the Wallace Farm.
18.   Hub Reese went to the office of Charles Haynes who indicated that
      he was probably going to have an offer from prospective buyers on
      the Wallace Farm. Hub Reese did not inform Charles Haynes that
      Ken Earp had taken the property off the market. He did state that
      there was some controversy concerning the property. As a result of
      the statements of Hub Reese, the prospective buyers decided that they
      would make their offer at the full listing price and with no conditions.

                                        -4-
19.   Hub Reese notified Jan Page that Charles Haynes had an offer to
      make and she and Hub Reese met Charles Haynes at his office at
      approximately 6:00 p.m. on the 25th day of January, 2001.
20.   After Charles Haynes presented the written offer, Hub Reese
      telephoned Ken Earp and asked for a meeting and Ken Earp agreed
      to meet them at the Cattlemen’s Restaurant in Gallatin at
      approximately 8:00 p.m. on the 25th day of January, 2001.
21.   The meeting at the Cattlemen’s Restaurant on the 25th day of
      January, 2001 took place with Hub Reese, Jan Page and Ken Earp.
22.   The offer to purchase was presented to Ken Earp on the 25th day of
      January, 2001at the Cattlemen’s Restaurant, and he stated a rejection
      in that he had taken the property off the market. After some
      discussion, he was persuaded to take the written offer home with him
      and to give it further consideration.
23.   Subsequent to the 25th day of January, 2001 the contract was returned
      rejected and signed by Ken Earp. Tina Earp did not sign the
      rejection.
24.   The complaint in this matter was filed on the 25th day of April, 2001
      and as of that date the Wallace Farm had not been sold by the Earps.

              As further facts in this matter the Court states that Tina Earp
      did not notify Hub Reese or Connie Reese or Jan Page that she was
      cancelling the listing contract and as stated above she did not sign off
      on the rejection on the contract presented.

              At the trial of this matter on the 10th day of February, 2003,
      Jan Page testified that she did not have an agreement to cancel the
      listing contract. The Court finds that she did not have a written
      agreement. She had agreed with Mr. Earp to cancel the listing
      agreement. In the deposition of Jan Page taken on the 31st day of
      July, 2001 she testified as follows:

Q.    Okay. Okay. On January 25th, 2001, what do you recall was, I guess,
      your first information or knowledge about this listing or property?
A.    Sometime - - I can’t even put a time. Sometime during the day Hub
      called me and said that the Earps wanted out of the listing.
Q.    Uh-huh.
A.    And he told me which 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 was his conversation. And I said, okay, Hub, you know, what
      does she want to do. And he said, you know, gosh, it’s been on the
      market for I don’t know how many months at this point, nothing has

                                        -5-
     happened much, you know. I said, well, it is up to you as to what you
     want to do, you meaning you all, with the listing, that is not my
     decision to make.
Q.   Uh-huh.
A.   I said, I would recommend that if you do, that there should be some
     stipulations - -
Q.   Uh-huh.
A.   - - just don’t blanket - - because somebody wants out of a listing, you
     know, let them out, there have to be stipulations.
Q.   Okay.
A.   - - and those are my recommendations. He said fine. Then I think he
     must have called Ken. Ken called me. And I said, there are
     stipulations, but we’ll let you out of the listing - -
Q.   Uh-huh.
A.   - - one, you cannot sell it to anybody during the time of our listing or
     anybody that has seen it for - - I think it was a hundred and eighty - -
     it might have been ninety - - our contract has changed and I don’t
     recall - - after the listing, for ninety days after the listing-
Q.   Okay.
A.   - - that and you can’t list with another company - -
Q.   Uh-huh.
A.   - - until our listing would have expired.
Q.   Okay. And - -
A.   And he said fine. He said, you know, fax it over to me.
Q.   Okay.
A.   And I said, I can’t have it drawn up, my secretary is in a meeting in
     Brentwood - -
Q.   Uh-huh.
A.   - - you know, we’ll get it back to you as soon as we can.
Q.   Uh-huh.
A.   And she didn’t show up until close to five o’clock from the meeting
     in Brentwood.
Q.   Do you recall hm calling you back - -
A.   He did.
Q.   - - and saying, where is it, and you said, she’s still not back?
A.   And that’s when I told him, she’s still not here.
Q.   Okay.
A.   And that’s pretty much it.
Q.   But you didn’t have a problem with him doing it, as long as there
     were these stipulations, as you say.
A.   Right.
Q.   And that’s what you indicated to him.
A.   Uh-huh.

                                       -6-
Q.   And that’s what the Reeses indicated.
A.   Uh-huh.
Q.   Is that right?
A.   Uh-huh.

             In this matter the Court finds that there existed an agency
     relationship between the Earps and Connie Reese and Crye-Leike. By
     agreement, the principal/agency relationship came to an end when
     Mr. Earp requested to take the property off the market and Crye-Leike
     and Connie Reese agreed. Principal/agency relationship may be
     established by oral agreement. The relationship may be terminated
     orally.

     Paragraph 23 of Exhibit 1, the listing agreement, provides as follows:

            The parties agree that this contract constitutes their entire agreement
     and that no oral or implied agreement exist. Any amendments to this
     agreement shall be made in writing, signed by both parties, and shall be
     attached to this original agreement and all other copies hereof.

             There were no amendments to the agreement. Mr. Earp had
     asked prior to the execution of the agreement concerning taking the
     property off the market and the response was “Call us”. He did that.
     He then followed the directions of the agent’s assistant, Mr. Reese, to
     call Jan Page. He received an agreement that the property could be
     taken off the property with certain stipulations. He agreed to all of
     the stipulations. Ms. Page told Mr. Earp that when her secretary
     returned the paper work would be typed up and sent to him. She did
     not ask that he write it up and send to her.

             It was an oral agreement to rescind the contract. The Court
     finds that this is not in contradiction to Tennessee law. The statute of
     frauds does not require a listing agreement to be in writing. In this
     case the listing was in writing and was for a definite time.

            In this case the recision was clearly expressed and clearly
     accepted. . . .

            ....

             At the time that Jan Page informed Ken Earp that he was let
     out of the listing agreement neither she nor Connie Reese or Hub
     Reese were aware that an offer was going to be made that day. No

                                       -7-
               third party rights, if any, had come into being when Ken Earp took the
               property off the market with consent of the listing agent and the
               broker.

                       ....

                       From the evidence in this case it is clear that there was
               agreement by Jan Page and Connie Reese to let Ken Earp and Tina
               Earp with stipulations out of the listing agreement of the Wallace
               Farm. Based upon the facts in this case the lack of writing
               terminating with stipulations the listing agreement is considered by
               the Court to be of no consequence. It was clear there was mutual
               consent to terminate the contract with the agent setting forth
               stipulations to which Ken Earp agreed.

        Appellant, Crye-Leike, Connie Reese, and Charles Haynes, allege that the trial court erred
in finding that the parties mutually consented to terminate the listing contract. It is their contention
that the contract could only be modified in writing, and since no written agreement was ever
executed, the listing agreement was in effect at the time Mr. Earp received the full price offer, thus,
requiring the Earps to sell the farm. The appellees, Ken and Tina Earp, also present several issues
for review: (1) “Whether the trial court erred in finding that the appellants did not violate the Real
Estate Broker’s Licensing Act and the Consumer Protection Act.” (2) “Whether the claims of
Appellant Charles Haynes were properly dismissed in any event because there was no contractual
relationship between the Earps and Haynes.” (3) “Whether Appellee’s actions did not constitute
a breach of contract in any event because the appellant’s failed to produce a buyer who was ready,
willing, and able to perform.”

       We find that the parties made an oral agreement to terminate the listing contract; thus,
terminating the Earps’ contract with Connie Reese and Crye-Leike on the morning of January 25,
2001. We also agree with the trial court that Appellant’s claims for violation of the Real Estate
Broker’s Licensing Act and the Consumer Protection Act were properly dismissed.

        This matter will be reviewed de novo upon the record of the trial court, accompanied by a
presumption of correctness with regard to the chancellor’s findings of fact unless a preponderance
of the evidence shows otherwise. Tenn. R. App. P. 13(d). The trial court’s legal determinations are
reviewed de novo without any such presumption. Bank v. Trailkill, 856 S.W.2d150 (Tenn.Ct.App.
1993). Further, the trial court’s determination with regard to credibility of the witnesses and the
weight of oral testimony are given considerable deference, as only the trial court has the opportunity
to see and hear the witnesses. See Galbreath v. Harris, 811 S.W.2d 88 (Tenn.Ct.App. 1990).

       In Tennessee, it has long been held that a contract may be rescinded with the mutual consent
and agreement of the parties. Wright v. Fischer, 148 S.W.2d 49, 53 (Tenn.Ct.App. 1940).
Tennessee law also “requires that the termination of a contract by mutual consent of both parties be

                                                  -8-
positive, clear, and unambiguous, conveying an unquestioned purpose to terminate the contract.”
Russom v. Ins. Co. of N. Am., 421 F.2d 985, 993 (6th Cir. 1970). Furthermore, this agreement to
rescind a contract may be an oral agreement. In Tidwell v. Morgan Bld. Sys., Inc., 840 S.W.2d 373,
376 (Tenn.Ct.App. 1992), the parties made a contract for the purchase of a metal building and,
subsequently, orally agree upon a larger building. Said the court:

               The original contract, signed by the parties, provided that it could only be
       modified in writing. There is no dispute between the parties that they subsequently
       agreed upon a larger building at an increased purchase price. . . . We believe that the
       evidence is clear that the parties mutually agreed to rescind the first contract. As we
       interpret the written agreement and T.C.A. § 47-50-112, neither prohibits the parties
       from rescinding a written agreement by mutual oral agreement . . . While rescission
       must be clearly expressed, the acts and conduct of the parties may also be sufficient
       to effect the mutual rescission where the acts and conduct are positive, unequivocal,
       and inconsistent with the contract’s existence. Arkansas Dailies, Inc. v. Dan, 36
Tenn. App. 663, 671, 260 S.W.2d 200, 203 (1953).

Oral agreements between a seller and a real estate agent have, also, been specifically held valid in
the State of Tennessee. See Parks v. Morris, 914 S.W.2d 545 (Tenn.Ct.App. 1995).

        Neither the Parol Evidence Rule nor the Statute of Frauds is applicable when an oral
agreement to rescind is established by clear and convincing evidence. In this case the evidence is
practically undisputed. This Court has held: “We know of no requirement of the Statute of Frauds,
Parol Evidence Rule, or other rule of law that prohibits the oral rescission, cancellation, destruction
or abandonment of a written contract for the sale of land.” Walker v. Wood, 213 S.W.2d 523, 526
(Tenn.Ct.App. 1948); see also Early v. Street, 241 S.W.2d 531 (Tenn. 1951); McIntosh v. Goodwin,
292 S.W.2d 242 (Tenn.Ct.App. 1954). The only exception to such a rule involves cases where the
rights of third parties have intervened. See Wright v. Fischer, 148 S.W.2d at 53. In this case, the
rescission agreement was completed prior to the time of the Charles Haynes’ offer.

      Observing that only Texas adopts a contrary rule, Williston on Contracts, quoting West River
Equipment Co. v. Holzworth Construction Co., 335 P.2d 298 (Mont. 1959), asserts:

               “The parties to the executory written agreement were privileged to terminate
       it at any time by mutual consent independently of any express agreement so
       providing and it is immaterial whether such termination be characterized an
       abandonment, cancellation, mutual rescission or waiver. The effect is the same--to
       relieve the parties from going forward under the written instrument, and this may be
       accomplished by parol, and the fact of its having been done established by evidence
       of the acts and declarations of the parties. . . .
               “There can be no question but what a contract may be mutually abandoned
       or modified by the parties at any stage of performance, and each of the parties
       released from further obligation on account thereof; that it may be accomplished by

                                                 -9-
       parol, and the fact of its having been done established by evidence of the acts and
       declaration of the parties.
                “It is clear then that a written contract may be canceled by mutual consent .
       . . and that the cancellation may be oral. . . .
                “The statute of frauds does not preclude oral rescission of a prior written
       contract that is within the statute. . . .”

Richard A. Lord, Williston on Contracts § 29:43 (4th ed. 1999).

        In reviewing the testimony and other evidence presented in this case, we do not see that the
evidence preponderates against the trial court’s findings of fact. In applying the law to the facts of
this case, we agree with the trial court that, through the course of telephone conversations between
Ken Earp, Hub Reese, and Jan Page, on the morning of January 25, 2001, Ken Earp entered into an
oral agreement cancelling the listing contract with Connie Reese and Crye-Leike Realty, removing
the farm from the sales’ market. By Jan Page’s own testimony, the acts of the parties to rescind the
agreement were positive, unequivocal, and inconsistent with the contract’s existence.

       Although Connie Reese, due to illness, was not able to participate in the conversations with
Jan Page and Ken Earp, the evidence makes it clear that Hub Reese was acting as her agent, as he
had done so continuously with regard to their dealings with the Earps. The law in Tennessee with
regard to agency can be found in Rural Education Association v. Bush, 298 S.W.2d 761, 766
(Tenn.Ct.App. 1956).

       Agency may be proved by circumstances and by evidence of the conduct of the
       parties. Hammond v. Herbert Hood Company, 31 Tenn. App. 683, 221 S.W.2d 98.
       What agent did with knowledge and approval of his principal is circumstantial
       evidence of what agent was authorized to do. Boillin-Harrison Company v. Lewis
       & Company, 182 Tenn. 342, 187 S.W.2d 17.
       Burden of proof is on person attempting to establish an agency, that alleged agent
       was in fact the agent of the alleged principal and was authorized to do the act done.
       Cobble v. Langford, 190 Tenn. 385, 230 S.W.2d 194.
       Whether an agency has been created is to be determined by the relations of the parties
       as the relations in fact exist under their agreements or acts, whether the parties
       understand that there is an agency or not. Smith v. Tennessee Coach Company, 183
Tenn. 676, 194 S.W.2d 867.
       A principal is bound if an agent acts within his apparent or ostensible authority.
       McCoy v. Willis, 177 Tenn. 36, 145 S.W.2d 1020.

       Our Supreme Court approved this statement of the rule of ‘Apparent or Ostensible
       Authority,’ Southern Railway Company v. Pickle, 138 Tenn. 238, 197 S.W. 675, 677:

              ‘Apparent authority in an agent is such authority as the principal knowingly
       permits the agent to assume or which he holds the agent out as possessing; such

                                                -10-
        authority as he appears to have by reason of the actual authority which he has; such
        authority as a reasonably prudent man, using diligence and discretion, in view of the
        principal’s conduct, would naturally suppose the agent to possess. Ostensible
        authority is such authority as a principal intentionally or by want of ordinary care
        causes or allows a third person to believe the agent to possess, and in some
        jurisdictions it is so defined by statute. Ostensible authority to act as agent may be
        conferred if the principal affirmatively or intentionally, or by lack of ordinary care,
        causes or allows third persons to act on an apparent agency. It is essential to the
        application of the above general rule that two important facts be clearly established;
        (1) That the principal held the agent out to the public as possessing sufficient
        authority to embrace the particular act in question, or knowingly permitted him to act
        as having such authority; and (2) that the person dealing with the agent knew of the
        facts, and, acting in good faith, had reason to believe, and did believe, that the agent
        possessed the necessary authority.’

See also Rich Printing Company v. Estate of McKellar, 330 S.W.2d 361 (Tenn.Ct.App. 1959).

        The facts of this case make it clear that Hub Reese was acting as Connie Reese’s agent in this
matter. The Reeses admitted that Hub Reese was acting as Connie Reese’s assistant throughout their
dealings with the Earps. Further, Hub Reese had previously held a real estate license and worked
with Mr. Earp in that capacity in the past, and Mr. Earp had no reason to believe that Hub Reese was
not acting as his sales agent at this time. Mr. Earp communicated primarily with Hub Reese, was
never informed by the Reeses that Hub Reese was no longer licensed to sell real estate and merely
acting as Connie Reese’s assistant, and believed Hub Reese to be his real estate agent when he
discussed canceling the contract with Hub Reese. Thus, Mr. Earp had reason to believe Hub Reese
had authority to act, and, Mr. Earp acted in good faith on that belief when he discussed canceling the
contract with Hub Reese. Connie Reese was aware of Hub Reese’s communications with Mr. Earp
and knew of their past dealings and relationship. Connie Reese intentionally held Hub Reese out as
her agent thus capitalizing on the past relationship between Hub Reese and Mr. Earp. Further, on
the morning of January 25, 2001, Connie Reese was aware that Hub Reese was speaking on her
behalf.

        The Plaintiffs have also tried to make an issue out of Tina Earp’s lack of involvement in
rejecting the full price offer and canceling the listing contract, claiming that the buyers’ contract must
be presented to and rejected by both parties and that Ms. Earp never requested the listing contract
be canceled. After Ken Earp returned from his meeting with Hub Reese and Jan Page, he failed to
show the offer to his wife or discuss the matter with her. When the buyer’s contract was sent back
rejected, this rejection was only signed by Ken Earp. Also, only Mr. Earp notified Hub Reese and
Jan Page that he wanted to cancel the listing contract. However, in both situations, Ken Earp was
acting as Tina Earp’s agent with regard to the property. From the beginning of the Earps’ dealings
with Crye-Leike and the Reeses with regard to the sale of the farm, Ms. Earp was only a cursory part
of the discussions and decisions being made and gladly allowed her husband to act on her behalf,
merely signing contracts when he requested this of her. The Earps had, earlier that day, discussed

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taking the property off the market and had determined that they did not want to sell the property at
all. Even upon finding out about the full price offer and Mr. Earp’s rejection of that offer, Ms. Earp
was in agreement with Mr. Earp’s rejection of the contract and understood him to be acting on her
behalf.

         The Earps have also alleged violation of the Tennessee Real Estate Broker’s Licensing Act
on the part of Hub Reese, Connie Reese and Crye-Leike. Particularly with regard to Tennessee Code
Annotated sections 62-13-301, 62-13-102(3)(A), 62-13-103, 62-13-318(a)(4), 62-13-302, it is
alleged that Hub Reese engaged in activities which are prohibited to anyone without a valid real
estate license. Also, with regard to Connie Reese, as agent of Crye-Leike, Plaintiffs allege violations
through misrepresentation, fraudulent inducement to sign the real estate Contract, and false
advertising.

         Although, based on past dealings with Hub Reese, it is understandable that Ken Earp may
have believed his property was being listed with Hub Reese, the evidence shows no actual
misrepresentation on the part of the Reeses. The contract signed by Mr. and Ms. Earp specifically
states that the farm is being listed with Connie Reese, not Hub Reese. This contract was completely
filled out by Connie Reese in her handwriting and signed by Connie Reese only. As there was no
advertising undertaken by anyone to sell the property, other than a routine placing of the property
on the Multiple Listing Service as Connie Reeses’s listing, and no offers to purchase the property,
other than the one received after the contract was canceled and now involved in this action, it cannot
be said that the Reeses undertook any activity in violation of the Tennessee Real Estate Broker’s
Licensing Act. Furthermore, as we find that the property was listed from October 17, 2000 through
January 25, 2001 with absolutely no sales or marketing activity of any kind and that the parties to
the contract agreed to terminate the contract and remove the listing from the market prior to any offer
being received through the Reeses or Crye-Leike, the Earps have no damages from any alleged
violations by Connie and Hub Reese or Crye-Leike.

        Likewise, with regard to violations of the Tennessee Consumer Protection Act, other than
meeting with Mr. and Ms. Earp and signing a contract between Mr. and Ms. Earp and Connie Reese
to allow Connie Reese and Crye-Leike Realtors to sell the farm, there was no further activity on the
part of Connie or Hub Reese in attempt to sell or market the farm. As such, it cannot be said that
either Connie or Hub Reese engaged in any act in violation of the Tennessee Consumer Protection
Act. As we have found that the contract was terminated on the morning of January 25, 2001, with
no action being taken with regard to sale or marketing of the property, we again find that the Earps
have no damages for any alleged “unfair or deceptive practice” on the part of Hub or Connie Reese.

        The judgment of the trial court is in all respects affirmed and the case is remanded to the trial
court for such further proceedings as may be necessary.

        Costs are assessed against Appellants.

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       ___________________________________
       WILLIAM B. CAIN, JUDGE

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