Court Opinion

ID: 9670927
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:28:20.633894+00
Date Added: 2024-06-11T18:16:07.287889
License: Public Domain

WOLLE, Justice
(concurring in part and dissenting in part).
I concur in divisions III and IV of the majority opinion but respectfully dissent from divisions I and II.
I agree with the division IV direction that this case be remanded to the trial court for resubmission on the record already made. The trial court in this jury-waived law action did not adequately comply with Iowa Rule of Civil Procedure 179(a), which requires that the court find the facts in writing and separately state its conclusions of law. The trial court’s written decision did not clearly disclose what facts it found were established by the evidence. Neither did its conclusions of law specify what legal principles were controlling as applied to the established facts. The plaintiffs, Menzels, carefully preserved their record for appeal by moving the court to enlarge its findings and conclusions in accordance with rule 179(b). See Michael v. Merchants Mutual Bonding Co., 251 N.W.2d 531, 533 (Iowa 1977) (party aggrieved by trial court’s failure to render findings or conclusions waives error by failing to file rule 179(b) motion). The trial court might have headed off this appeal, or at least avoided the remand which now is necessary, if in ruling on the motion it had responded directly to each of the Menzels’ thirteen specific requests for enlarged findings on material issues. The trial court, however, overruled the motion without addressing each individual request for enlargement.
I also agree with the division III holding concerning several assignments of error which are without merit. The trial court did not base its decision on the covenant not to sue which Menzels had given the contractor, nor did it find their claim barred by contributory negligence.
I dissent from division II because in my view the evidence was not sufficient to establish as a matter of law that defendant Morse was the agent for the Menzels. The majority correctly treats this issue as primarily a question of fact. See Walnut Hills Farms v. Farmers Cooperative Company of Crestón, 244 N.W.2d 778, 780-81 (Iowa 1976). The burden of proving the principal and agent relationship was upon the Menzels as the parties asserting the relationship. Ioerger v. Schumacher, 203 N.W.2d 572, 575 (Iowa 1973); Martin v. Jaekel, 188 N.W.2d 331, 333 (Iowa 1971). In deciding whether the relationship was established as a matter of law, the evidence should be viewed in the light most favorable to defendants. Iowa R.App.P. 14(f)(2). The majority opinion, however, summarizes the evidence supporting Menzels' position on this issue and concludes there is no substantial evidence to support Morse’s contention that he was representing the sellers. I view the record differently, finding evidence sufficient to generate questions for the trier of fact to resolve on the issue whether Morse was an agent for the seller in this transaction.
First, Morse testified that his occupation was to act as “an agent for our sellers,” that the seller pays the listing agent and the listing agent the selling agent, and that is what in fact occurred in this transaction. He pointed out that he was acting as a sub-agent of the multiple listing service, with the seller the client in this case. This is not unprecedented; Morse’s description of the relationship between a real estate salesperson and the seller in a multiple-listing situation is similar to that described in First Church of the Open Bible v. Cline J. Dunton Realty, Inc., 19 Wash.App. 275, 279, 574 P.2d 1211, 1214 (1978). See generally Gaudio, The Iowa Law of Real Estate Brokerage, 30 Drake L.Rev. 437, 482-83 (1980). Morse also testified that his function in this transaction was that of market*478ing, the same as if the buyer “buys a suit of clothes and the salesman gets a commission.”
Defendant Dave Jones, for whom Morse was a selling agent, testified that the situation here was the normal one, with the commission paid by the seller and the contract with the seller. He distinguished this from the situation where a buyer hires and agrees to pay a real estate agent to secure a given piece of property.
In my view, this testimony alone, admitted without objection, presented an issue of credibility for the trier of fact to resolve as to whether the broker Jones and the salesperson Morse were agents for the seller as they contend or agents for the buyers as Menzels claim.
Our review is not de novo because this law action was tried by ordinary proceedings. Iowa R.App.P. 14(f)(1). Had the trial court found the facts as the majority opinion finds them, I would agree that substantial evidence supports Menzels’ claim that Morse was their agent. The trial court did not make such findings of fact. The evidence is genuinely in dispute and arrayed on both sides of this pivotal agency question. I would have the trial court make the initial factual determination whether Morse was the agent for the seller as he contended or for Menzels as they contended. The trial court, not this court, should also decide whether the broker Dave Jones was or was not an agent for the buyers in this transaction.
The law should be realistic as well as idealistic. We should recognize that real estate brokers and their salespersons, with whom property is frequently listed for sale and marketed either directly or through a multiple-listing service, ordinarily become the agents of the seller for the purpose of finding a purchaser. See Frisell v. Newman, 71 Wash.2d 520, 525-26, 429 P.2d 864, 867 (1967). Included in that usual agency relationship between the real estate broker or salesperson and the seller is the strict duty of undivided loyalty and disclosure. Clinton Land Co. v. M/S Associates, Inc., 340 N.W.2d 232, 234 (Iowa 1983); Miller v. Berkoski, 297 N.W.2d 334, 338 (Iowa 1980); see Restatement (Second) of Agency § 387 (“Unless otherwise agreed, an agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with his agency.”). The relationship is confidential and fiduciary. Miller v. Berkoski, 297 N.W.2d at 339.
I believe that in determining whether a broker or salesperson has undertaken to serve the seller or buyer in a given transaction, the trial court may and should give appropriate weight to evidence that these persons ordinarily are paid by the seller and must faithfully represent the seller. The trial court should also be allowed to consider on this the fact that the buyers, like Menzels here, had had previous experience selling homes, with real estate salespersons representing them in those transactions.
Because I do not find that the evidence here established conclusively that defendants were Menzels’ agents in this transaction, I must also dissent from division I which describes the standards of skill, knowledge and practice by which the trial court on remand must now measure the defendants’ conduct.
If upon resubmission the trial court were allowed to find and did find that Morse and Jones were serving as agents for the seller and not for Menzels, their duties toward Menzels would properly be measured by principles of negligence law, the theory of the second count of Menzels’ petition, and not by the fiduciary duties pleaded in the first count of Menzels’ petition. For example, if the trial court were in fact to find that defendants were agents for the seller and not the Menzels, the court still might hold defendants liable for negligence if they misrepresented facts or failed to disclose to the Menzels information that a reasonably prudent salesperson representing a seller would disclose to buyers. See Beeck v. Kapalis, 302 N.W.2d 90, 96-97 (Iowa 1981) (describing elements of tort of negligent misrepresentation); Smith v. Peterson, 282 N.W.2d 761, 766-67 (Iowa Ct. *479App.1979) (real estate agent for seller held liable to purchaser for failing to disclose information about which realtor had superi- or knowledge). In that situation, however, the legal duties which defendants would owe to the Menzels should be viewed in the light of and harmonized with defendants’ duties, including their duty of loyalty, owed to their principal, the seller. As the Florida Supreme Court has explained in a situation where the broker was the agent for the buyer:
It follows that when a buyer and seller are dealing with one another at arm’s length, a broker employed by one party is not bound to disclose everything he knows to the other party. Indeed, his duty of loyalty to his principal may well preclude his doing so.
Ellis v. Flink, 374 So.2d 4, 5 (Fla.1979); see Stevens v. Jayhawk Realty Co., 9 Kan. App. 338, 342, 677 P.2d 1019, 1023 (1984) (quoting Ellis in case where broker represented seller, not buyer).
Menzels contend, among other things, that the defendants should have undertaken to discover structural defects in this nearly-completed home, perhaps by hiring a structural engineer. The Vermont Supreme Court has recently described, realistically I believe, one aspect of the duty a seller’s agent owes a buyer of real estate:
As an agent of a seller, a real estate broker or agent is guilty of negligent misrepresentation only if he or she passes information from a seller to a buyer that he or she knows or has reason to know may be untrue. Real estate brokers and agents are marketing agents, not structural engineers or contractors. They have no duty to verify independently representations made by a seller unless they are aware of facts that “tend to indicate that such representation[s are] false.”
Provost v. Miller, 144 Vt. 67, 69-70, 473 A.2d 1162, 1164 (1984), quoting from Lyons v. Christ Episcopal Church, 71 Ill.App.3d 257, 259-60, 27 Ill.Dec. 559, 561, 389 N.E.2d 623, 625 (1979).
I would remand this case for reconsideration by the trial court of all of the issues addressed in divisions I and II of the majority opinion, not with the critical agency question predetermined by this court.