Court Opinion

ID: 9572765
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:44:25.42272+00
Date Added: 2024-06-11T12:34:09.035252
License: Public Domain

HARRISON, J.,
dissenting.
The majority holds that the agent Shelton violated a fiduciary duty to his principals by failing to disclose the tender of a payment under protest. I disagree.
Shelton was employed by property owners to procure a purchaser for a tract of land and was successful in this undertaking. The sellers and buyers executed a contract of sale and scheduled a day for the closing. The buyers were unable to complete their arrangements for financing by the appointed time, and the closing date was postponed. The sellers had no objection to this but instructed Shelton to collect 7% interest on the purchase price from December 13, 1976, to the day of closing, and not to close until the interest was paid.
On April 19, 1977, the transaction was closed. Pursuant to his *1057instructions Shelton collected from the purchasers the entire purchase price of $188,000.00 and $4,386.66 representing interest. The buyers questioned their legal obligation to pay the interest and wrote Shelton that the interest was being paid under protest.
Payment under protest is an approved statutory method whereby one may perform in a manner demanded without prejudice to his rights. It is not a conditional or a qualified payment. Code § 8.1-207 concerns performance or acceptance under reservation of rights. In the official comment it is said:
The section is not addressed to the creation or loss of remedies in the ordinary course of performance but rather to a method of procedure where one party is claiming as of right something which the others feels to be unwarranted.
Shelton did not contact the sellers to inform them that the interest was being paid under protest and proceeded with the closing. The majority concludes that Shelton’s omission violated his fiduciary duty to the sellers. To discipline him, this court requires Shelton to forfeit his $9,400.00 commission, which he earned, and to pay the sellers’ “litigation costs” incurred in defense of the buyers’ action contesting the interest payment.
The facts of this case indicate that the majority’s decision is harsh and unsound. In its opinion the majority concedes that Shelton followed the sellers’ instructions to “the letter.” While the opinion attributes the agent’s failure to act to his awareness “that, under the terms of his contract, failure to consummate the sale would defeat his right to a commission,” there is no factual basis supporting this statement. In fact there is not a scintilla of evidence in the record to support a conclusion that Shelton acted in bad faith or was prompted by greed when he failed to advise his principals that the interest payment was made under protest.
Arguably, it would have been the better part of wisdom for Shelton to have informed the sellers that the buyers questioned any obligation by them to pay interest and were paying it under protest. Even so, his failure to do this was a mistake in judgment, not a breach of a fiduciary duty. Shelton did not thereby compromise any rights of the sellers. Although the position asserted by the buyers was without merit, and was so decided by the lower court, it was a position which they had a legal right to assert, and neither the sellers nor their agent had any control over buyers’ decision to do so.
It is doubtful that the sellers could have legally refused settlement *1058when the buyers paid the purchase price in Ml and tendered the interest under protest. However, it is clear that the buyers wanted the property and intended to close even if they did have to pay the interest. Had the sellers refused to accept the purchase price and interest because of the protest, it is certain that the buyers would have sought specific performance and tendered in court the purchase price in full and interest under protest. The sellers would still have been confronted with a law suit involving the interest payment. It is therefore obvious that what the agent did, or did not do, neither precipitated nor contributed to the litigation which the sellers were required to defend.
We have here a real estate transaction involving $192,386.60, of which only $4,386.66 was ever in controversy. And we have a claim for “litigation costs” of $3,820.59 to resolve this $4,286.66 law suit. By requiring Shelton to forfeit his commission, pay litigation costs, and pay the costs incident to the instant case, we exact of him a horrendous penalty. To do so where there is no evidence that he acted in bad faith, and where the prejudicial effect of his omission to his principals is at most minimal, is to “discipline” an agent without justification.
I would affirm the judgment of the court below.
THOMPSON, J., concurs in dissent.