Court Opinion

ID: 1079670
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:34:27.025831+00
Date Added: 2024-06-11T13:01:07.663081
License: Public Domain

COURT OF APPEALS OF TENNESSEE

                             AT KNOXVILLE            FILED
                                                   March 24, 1998
TRULA MUGFORD REALTY,         )   C/A NO. 03A01-9709-CV-00412
                              )                   Cecil Crowson, Jr.
          Plaintiff-Appellant,)                      Appellate C ourt Clerk
                              )
                              )
                              )
                              )   APPEAL AS OF RIGHT FROM THE
v.                            )   GRAINGER COUNTY CIRCUIT COURT
                              )
                              )
                              )
                              )
CLAY LETHCO,                  )
                              )   HONORABLE BEN W. HOOPER, II,
          Defendant-Appellee. )   JUDGE

For Appellant                         For Appellee

ANDREW J. EVANS, JR.                  CREED A. DANIEL
Knoxville, Tennessee                  Rutledge, Tennessee

                         O P I N IO N

REVERSED
REMANDED WITH INSTRUCTIONS                                      Susano, J.

                                  1
              The plaintiff real estate agency brought this civil

action1 to recover a commission allegedly due it for services

rendered with respect to the sale of 114.5 acres of real property

in Grainger County.      Following a bench trial, the Circuit Court

dismissed the complaint, predicated primarily on the fact that

the sale did not close.      The plaintiff appealed, arguing that it

is entitled to a commission under the terms of the listing

agreement signed by the defendant.

              We review this non-jury case pursuant to Rule 13(d),

T.R.A.P.      The record comes to us with a presumption of

correctness that we must honor unless the evidence preponderates

against the trial court’s factual findings.          Id.   There is no

presumption of correctness as to the trial court’s conclusions of

law.       Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn. 1997).

               On July 21, 1993, the parties entered into a “Sales

Agency Contract,” by the terms of which the plaintiff, Trula

Mugford Realty (“Mugford”), was granted “the sole, exclusive and

irrevocable right,” for a specified period of time, to sell 114.5

acres of real property in Grainger County.          The defendant, Clay

Lethco (“Seller”), is reflected on the listing agreement as the

sole owner of the property.       There is nothing in the agreement to

indicate that Seller is anything other than the fee simple owner

of the subject property.       Included among the agreement’s “Terms

and Conditions” is the following:

       1
       This action was originally brought in the Grainger County General
Sessions Court. Following an adverse ruling there, the plaintiff appealed to
Circuit Court. Throughout these proceedings, the plaintiff has sought a money
judgment in the amount of $9,999.99.

                                      2
          TITLE. I warrant that I am the owner of the
          property or have the authority to execute
          this contract and sell the property. Should
          the property be sold, I agree to furnish the
          purchaser a good and sufficient Warranty
          Deed.

          During the period of the listing agreement, Mugford

showed the property to Chris C. Mynatt (“Purchaser”).

Thereafter, on January 29, 1994, Seller and Purchaser, with the

active involvement of Mugford, entered into a “Sales Contract,”

by the terms of which they agreed that Purchaser would buy the

subject property for $125,000.    The Sales Contract provides,

among other things, as follows:

          In case merchantable title cannot be shown or
          perfected..., earnest money to be returned
          and contract cancelled.

The sale was not consummated because Seller’s former wife, Stella

Lethco, who is not a party to either agreement, refused to convey

her one-half interest in the property’s minerals that had been

awarded to her in their 1977 divorce.    While Seller was

chargeable with knowledge of this outstanding interest impinging

on his fee simple title when he listed the property with Mugford,

neither Mugford nor Purchaser was aware of it until after the

Sales Contract was executed.   A title report ordered and paid for

by Purchaser revealed Ms. Lethco’s interest.

          This case is controlled by the decision of the Supreme

Court in Cheatham v. Yarbrough, 90 Tenn. 77, 15 S.W. 1076 (1891).

In that case, the listing agent secured a purchaser who was

willing to purchase the property on terms satisfactory to the

                                  3
seller.   The sale was not consummated because of a defect in the

seller’s title.    As in the instant case, the defect was not known

to the listing agent until “disclosed by the purchaser.”    Id. 90

Tenn. at 78.    In holding that the listing agent was entitled to

his commission, the Supreme Court opined as follows:

          The just and well-settled rule of law
          requires that the agent shall be paid his
          compensation when he procures a purchaser who
          is acceptable to the principal, and ready,
          able, and willing to buy on the agreed terms,
          though in fact the sale be not ultimately
          consummated, provided its consummation is
          prevented by the fault, refusal, or defective
          title of the principal. (Citations omitted).

                             *    *    *

           The objection to the title of [the seller]
           was not a captious one. On the contrary, it
           was made in good faith, because of a real
           defect, by a person who would otherwise have
           been glad to purchase the property at the
           price and on the terms required by [the
           seller]. The contract made by [the seller]
           with the plaintiffs was in the ordinary
           terms. That they were to receive their
           compensation out of the proceeds of sale, did
           not make their right to compensation
           dependent, at all events, on the completion
           of the sale. If they performed their part of
           the contract, and the trade was defeated
           alone by the inability of their principal to
           make a good title, as is conclusively shown
           to have been the fact, then they should
           receive compensation for their services,
           though it cannot be paid as agreed, out of
           the purchase money. There is nothing in the
           contract, nor in any fact or facts disclosed
           in the record, to take the case out of the
           operation of the general rule of law stated
           above.

Id. at 79-80.     See also Loventhal v. Noel, 265 S.W.2d 891, 893

(Tenn. 1954); Parks v. Morris, 914 S.W.2d 545, 548 (Tenn.App.

1995); Smithwick v. Young, 623 S.W.2d 284, 291 (Tenn.App. 1981).

                                   4
             In the listing agreement now before us, Seller agrees

“to furnish a good and sufficient Warranty Deed.”      It is clear

that “[a]n agreement to convey by a good and sufficient warranty

deed requires a good and perfect title, as well as a good and

sufficient warranty deed.”     7 GEORGE W. THOMPSON, COMMENTARIES ON

THE MODERN LAW OF REAL PROPERTY § 3177 (1962 repl.) (hereinafter

“THOMPSON”).    In Hall v. McKee, 147 Ky. 841, 145 S.W. 1129

(1912), the Kentucky Court of Appeals made the following

statement:

            A good and sufficient deed is a marketable
            deed -- one that will pass a good title to
            the land it purports to convey. We do not
            agree with counsel that a stipulation in a
            contract, providing that the grantor shall
            convey “a good and sufficient deed,” is
            satisfied by a conveyance of any title he may
            have, whether it be good or bad.

Id. 145 S.W. at 1130-31.     We agree with the Kentucky court.

            Seller argues that he should not be faulted for his

inability to furnish a “good and sufficient Warranty Deed.”      He

suggests that his former wife is the “culprit.”      He also argues

that Mugford is “at fault in not checking regarding [his] title.”

We disagree on both counts.     As previously indicated, Seller’s

warranty on the listing agreement includes an assertion that

amounts to a statement that he has “perfect title.”      See

THOMPSON.    He does not.   Furthermore, there is nothing in the

listing agreement imposing an obligation on Mugford to verify

Seller’s title.

                                   5
          In the instant case, the Sales Contract produced as a

result of Mugford’s efforts was not consummated, solely because

the Seller could not deliver a merchantable title as he had

agreed to do.   His inability to do so was due to the existence of

his former wife’s interest in the minerals on the property.      This

inability to convey good title was unknown to Mugford until after

the Sales Contract was executed.       The listing agent was totally

without blame in the failure of the sale to close.      It had done

everything it was required to do in order to receive its

commission.   The commission sought -- $9,999.99 -- is within the

percentage compensation provided for in the contract, and the

plaintiff is entitled to it.

          The judgment of the trial court is reversed.      Costs on

appeal are taxed to the appellee.      This case is remanded to the

trial court for the entry of an order awarding the appellant a

judgment for $9,999.99 and court costs against the appellee.

                                        __________________________
                                        Charles D. Susano, Jr., J.

CONCUR:

________________________
Herschel P. Franks, J.

________________________
Don T. McMurray, J.

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