Court Opinion

ID: 9573499
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:56:03.408524+00
Date Added: 2024-06-11T12:41:25.359488
License: Public Domain

ANN WALSH BRADLEY, J.
¶ 57. (dissenting). Absent an express provision in the listing contract, it is unclear whether a broker is entitled to a commission when there is a transfer of property by condemnation. Applying a long-standing rule of construction, I conclude that any ambiguity here should be construed against Kohel. In my view, the listing contract in this case should not be interpreted to provide that Kohel receive a commission. Accordingly, I respectfully dissent.
¶ 58. The WB-5 form listing contract used in this case includes the following provisions:
COMMISSION: Seller shall pay Broker's commission, which shall be earned if, during the term of this Listing:
1) Seller sells or accepts an offer which creates an enforceable contract for the sale of all or any part of the Property;
4) A transaction occurs which causes an effective change in ownership or control of all or any part of the Property ....
*491The question becomes whether a transfer of property by condemnation is included within one of these provisions.
¶ 59. I begin with the first of the two enumerated provisions, which refers to whether the seller "sells ... all or any part of the Property." The term "sells" is not defined in the contract.
¶ 60. To "sell" is to "transfer (property) by sale." Black's Law Dictionary 1365 (7th ed. 1999). Black's defines "sale," in turn, as "the transfer of property or title for a price." Id., 1337. This definition is arguably broad enough to include a transfer by condemnation.1 Yet, Black's also states that there are four elements of a "sale": "(1) parties competent to contract, (2) mutual assent, (3) a thing capable of being transferred, and (4) a price in money paid or promised." Id. The nature of at least two of these four elements makes it difficult to conceive of a "sale" as an involuntary transfer such as a transfer by condemnation.2 I doubt that a reasonable seller would expect that the sale provision here includes a transfer of property by condemnation.
¶ 61. Moreover, this court is not writing on a clean slate in seeking to interpret the term "sale" for purposes of a real estate broker's commission. A number of courts have determined that a transfer by condemnation is generally not a sale that entitles the *492broker to a commission, at least not without a specific provision to that effect in the contract. See, e.g., Preston v. Carnation Co., 196 Cal. Rptr. 240, 244 (Ct. App. 1961); Wilson v. Frederick R. Ross Inv. Co., 180 P.2d 226, 230 (Colo. 1947); Shaw v. Avenue D Stores, Inc., 115 N.Y.S.2d 194, 197 (N.Y. Sup. Ct. 1952) ("In the absence of a specific provision in a broker's contract to the contrary, disposition of the title to real estate through condemnation proceedings does not constitute a sale, transfer or assignment."); cf. Mealey v. Orlich, 585 P.2d 1233, 1234 (Ariz. 1978) (broker conceded that the term "sale" in listing agreement did not cover "condemnation sale" and would not give rise to a commission); see also 12 Am. Jur. 2d Brokers § 234 (a transfer of real property to a county public transportation authority is not a "sale" that entitles a broker to a commission under an exclusive listing agreement that contains no reference to eminent domain, condemnation, taking, or sale to any governmental agency).
¶ 62. Cases such as those cited have led at least one state court of appeals to observe as follows:
The jurisdictions that have considered the question have consistently held that, in the absence of a specific provision in the agreement or a specific indication of the parties' intent, a transfer of property by condemnation is not a sale that entitles a broker to recover a commission under a listing agreement.
Lundstrom, Inc. v. Nikkei Concerns, Inc., 758 P.2d 561, 564 (Wash. Ct. App. 1988).3
*493¶ 63. Considering the form contract language here in light of this case law, it seems unclear, at best, whether a "sale" under the contract includes a transfer by condemnation. Given a lack of clarity, I turn to the longstanding rule of construction that applies when there is ambiguity in such a contract: a form listing contract provided by a real estate broker must be "strongly construed against the broker in case of any ambiguity or doubt." Mansfield v. Smith, 88 Wis. 2d 575, 594-95, 277 N.W.2d 740 (1979) (citations omitted); accord Boutelle v. Chrislaw, 34 Wis. 2d 665, 677, 150 N.W.2d 486 (1967); E.M. Boerke, Inc. v. Williams, 28 Wis. 2d 627, 634, 137 N.W.2d 489 (1965); Dunn & Stringer Inv. Co. v. Krauss, 264 Wis. 615, 619, 60 N.W.2d 346 (1953).
¶ 64. Applying this rule to the facts here, I conclude that the contract should not be interpreted to allow for a broker commission based on the contract's provision that a commission is due when the seller "sells ... all or any part of the Property."
*494¶ 65. This brings me to the other pertinent provision in the contract, and the question of whether a transfer by condemnation may be a "transaction ... which causes an effective change in ownership or control of all or any part of the Property." To my mind, this question presents a closer call.
¶ 66. The term "transaction" is not defined by the contract provision other than as something "which causes an effective change in ownership or control of all or any part of the Property." Yet, a "transaction" under the contract seems unlikely to mean any such change in ownership or control. Kohel declines to assert, for example, that a broker would be entitled to a commission if the property were transferred by gift or inheritance.4
¶ 67. In addition, Wis. Stat. ch. 452 and Wis. Admin. Code. ch. RL 24, which pertain to the regulation of real estate practice, define "transaction" as "the sale, exchange, purchase or rental of, or the granting or acceptance of an option to sell, exchange, purchase or rent, an interest in real estate, a business or a business opportunity." Wis. Stat. § 452.01(10) (2003-04); Wis. Admin. Code § RL 24.02(18) (Jan. 2001). This definition does not appear to include a transfer by condemnation.5
*495¶ 68. I need not and do not decide whether the statutory or administrative code definition of "transaction" necessarily controls the meaning of "transaction" in the WB-5 form listing contract. Suffice it to say that the uncertain relationship between that definition and the term "transaction" in the form contract adds to the uncertainty of what this contract term means for our purposes here.
¶ 69. I am again left to construe a form listing contract term that is unclear as to whether it includes a transfer by condemnation. Thus, I again apply the long-standing rule that such a contract provided by a real estate broker is "strongly construed against the broker in case of any ambiguity or doubt." Mansfield, 88 Wis. 2d at 594-95. Applying that rule, I conclude that the term "transaction" in the WB-5 form listing contract should not be interpreted to include a transfer by condemnation.
¶ 70. The contract language at issue in this case is problematic for sellers who may not anticipate that a commission would be owed in the event of a condemnation.6 Although the language may also be problematic for brokers who hope or expect to earn a commission on a transfer by condemnation, the brokers are not without recourse.
¶ 71. Brokers are more likely to anticipate the problem caused by this language and are in the best position to prevent it. They may readily protect their commissions by inserting clear, express language in their listing contracts. The interests of both sellers and brokers should generally be served when all have a *496clear understanding of whether a commission is owed in the event of condemnation.
¶ 72. In sum, I conclude that the listing contract in this case should not be interpreted to provide that Kohel receive a commission where the property was transferred by condemnation. Accordingly, I respectfully dissent.

 Under the general definition of "sale," Black's also separately defines various types of "sales," including a "compulsory sale" and a "forced sale." Black's Law Dictionary 1337-38 (7th ed. 1999).

 The majority posits that "[vjarious jurisdictions have concluded that a condemnation action cannot constitute a sale, whereas other jurisdictions have concluded that a condemnation action does constitute a sale." Majority op., ¶ 41. It "find[s] more persuasive the reasoning among the jurisdictions that consider a condemnation action to be a sale." Id.
*493I am not persuaded by the cases that persuade the majority. None of the cases the majority cites in support of its conclusion involves real estate listing contracts or broker commissions. See id., ¶ 43 (citing United States v. 27,223.21 Acres of Land, 589 F. Supp. 1121 (D. Colo. 1984) (involving allocation of condemnation proceeds between lessors and lessees based in part on the meaning of the term "sale" in a lease); People ex rel. Dept. of Pub. Works v. County of Santa Clara, 79 Cal. Rptr. 787 (Ct. App. 1969) (involving stamp tax ordinance); United States v. Certain Parcels of Land, 51 F. Supp. 811 (M.D. Pa. 1943) (involving the meaning of the term "sale" in a lease); Jackson v. State, 106 N.E. 758 (N.Y. 1914) (involving the role of fixtures in valuation of condemned property); American Creameries Co. v. Armour & Co., 271 P. 896 (Wash. 1928) (involving the meaning of the term "sale" in a lease)).
The majority follows these cases, deeming other cases that involve real estate listing contracts and brokers' commissions to *494be "distinguishable from the present case." Majority op., ¶ 44. In my view, cases that do involve real estate listing contracts and brokers' commissions are more on point than cases that do not.

 The WB-5 form listing contract makes an express exception for certain transfers of an interest in the property "by divorce judgment."

 This assumes, of course, that a transfer by condemnation is not a "sale."

 The WB-1 form "Residential Listing Contract" contains the same terms that are at issue here in the WB-5 form "Commercial Listing Contract."