214 N.W.2d 532 (Mich.App. 1974), 13618, Barrows v. Grand Rapids Real Estate Bd.

Docket Nº:Docket No. 13618.
Citation:214 N.W.2d 532, 51 Mich.App. 75
Opinion Judge:Before R B BURNSand DANHOF and O'HARA, JJ
Party Name:Ralph E. BARROWS, Plaintiff-Appellant, v. The GRAND RAPIDS REAL ESTATE BOARD, a Michigan non-profit corporation, Defendant-Appellee.
Judge Panel:Before R. B. BURNS, P.J., and DANHOF and O'HARA,[*] JJ.
Case Date:January 14, 1974
Court:Court of Appeals of Michigan

Page 532

214 N.W.2d 532 (Mich.App. 1974)

51 Mich.App. 75

Ralph E. BARROWS, Plaintiff-Appellant,


The GRAND RAPIDS REAL ESTATE BOARD, a Michigan non-profit

corporation, Defendant-Appellee.

Docket No. 13618.

Court of Appeals of Michigan, Division No. 3.

January 14, 1974

Released for Publication Feb. 11, 1974.

Page 533

[51 Mich.App. 77] John D. Tully, Warner, Norcross & Judd, Grand Rapids, for plaintiff-appellant.

Jon F. DeWitt, Varnum, Riddering, Wierengo & Christenson, Grand Rapids, for defendant-appellee.

Before R. B. BURNS, P.J., and DANHOF and O'HARA,[*] JJ.

DANHOF, Judge.

Plaintiff brought this action alleging that defendant, Grand Rapids Real Estate Board, hereinafter the Board, through the operation and maintenance of its multiple listing service, hereinafter the Service, unreasonably restrained trade in violation of the common law and M.C.L.A. § 445.701; M.S.A. § 28.31. Plaintiff also alleged that defendant monopolized the real estate profession in derogation of the common law and M.C.L.A. § 445.762 et seq.; M.S.A. § 28.62 et seq. Plaintiff prayed that the continued operation of the Service in its then current form be enjoined and that the Board be ordered to permit all brokers licensed by the state to participate in the Service. Trial was had before the Honorable Stuart Hoffius who found that neither monopoly nor unlawful restraint of trade had been proved and thus denied the requested relief. Plaintiff appeals. We affirm.

[51 Mich.App. 78] The Service is a system whereby residential listings of all the Board's members are exposed by the listing broker to all other members. Except where the owner does not desire his property listed through the Service, members obtain listings on listing agreement forms and transmit a copy of the listing agreement to the Board within 48 hours after it is signed. The Board then reproduces the pertinent information from the listing agreement, including all data about the property and a photograph, and delivers this information to all of its members. When a sale of a listed property is concluded by any member-broker other than the listing broker, a service fee is deducted from the sales commission and paid to the Board. The remaining sales commission is then divided between the selling broker and the listing broker.

The Board was established in 1893 and incorporated as a Michigan nonprofit corporation in 1945. The Board's purposes, stated in its original charter and reiterated in its articles, of incorporation, are to provide a medium for the collection and dissemination of information about real estate transactions for the benefit of its members and the public at large, to promulgate and enforce rules of ethics and fair trade practices, and to establish a multiple listing service.

As a minimum requirement, an applicant for junior-broker membership in the Board must be duly licensed as a broker by the State of Michigan. The Board also requires an applicant to either have been affiliated as a full-time salesman with a broker member for a continuous period of not less than 2 years; or the applicant must have been a full-time broker licensed by the state for at least 2 years immediately preceding his application; or the applicant must have been an active full-[51 Mich.App. 79] time broker member of some other member of the National Association of Real Estate Boards (NAREB) for 2 years immediately preceding the filing of his application.

The Board further requires that an applicant must not only have devoted full time to the real estate business, but that his primary income must have been derived from such business. A broker applicant

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when applying for membership must agree to engage in the real estate business full time. The Board also requires the applicant to establish or associate with an office, open during regular business hours, which meets various physical requirements such as separation from living quarters or other commercial offices, and maintenance of a private closing office which is equipped with a private telephone line and identified by a sign.

The Board requires an applicant to pass a written examination. In addition, the applicant must have satisfactorily completed the Board's education course in real estate or, in lieu thereof, not less than 2 courses in real estate offered by the University of Michigan or an equivalent institution. An applicant must have conducted himself in such a manner as not to have violated the Board's code of ethics, and he must have established a favorable reputation for professional conduct. To that end, he must secure the endorsement of at least 3 broker members of the Board.

A $500 entry fee must accompany the junior-broker application. Applicants are investigated by a membership committee. Election to membership is by an affirmative vote of a majority of all of the Board's directors. Membership is individual and nontransferable.

During the 12-year period preceding the trial of [51 Mich.App. 80] this case, 1957 through 1969, only 14 applicants for broker membership in the Board were rejected. Of these 14 rejections, 5 were admitted on subsequent applications. Therefore, only 9 persons were refused membership in the Board during that 12-year period and at least 98 persons were accepted for membership.

The Board's bylaws contain further provisions governing the junior-broker's 2-year probationary period, elevation after that period to senior-broker status, arbitration of disputes with members and nonmembers, hearings on complaints of unethical conduct, provisions for representation by counsel and sworn testimony, expulsion from membership, appeal and review.

In October of 1967, plaintiff obtained a broker's license from the state and made application to become a member of the Board. His application was processed and reviewed according to the procedures outlined above and was denied. For purposes of this opinion, it is important to note that plaintiff has never objected to the Board's rejection of his application. He does not claim that the Board's action was arbitrary and capricious. Neither does he attack the Board's membership requirements. In the 2 years intervening between his rejection and February, 1967, plaintiff never asked for the reasons behind his rejection. Plaintiff's contention below and here on appeal is that even though he is not a member of the Board, he should be allowed to participate in the Service. He argues that, if any greater requirements than a state license are imposed upon a broker to participate in the Service, then the Service violates the state antitrust laws.

The trial court's opinion reviewing the evidence and applicable law reads in part as follows:

[51 Mich.App. 81] 'Plaintiff, Ralph E. Barrows, has been licensed as a real estate salesman by the State of Michigan since 1964. From 1964 to 1967 he was associated with a number of real estate offices which were members of defendant Board. * * * He testified that during the years that he was associated with members of defendant Board, he had between 3,000 and 4,000 listings to work from. At the time of trial he had only five listings with his office.

'He testified in detail concerning his efforts to sell premises which were listed with defendant Board since he has been in his own business and a nonmember of the Board.

'He testified in detail concerning problems he had in working out a sale of a property listed with Vredegoogd Realty

Page 535

Company, a member of defendant Board, even though his offer was for the price asked on the multiple listing service.

'He related that on another occasion in May, 1969, he had had good cooperation from Westdale Realty Company on the sale of a property listed under the multiple listing service. He related that he had had good cooperation from three members of defendant Board in selling real estate and felt that there were substantial economic advantages to the gained from membership on the Board. * * *

'Other real estate brokers who were not members of defendant Board testified relative to their transactions with Board members and working out individual sales of properties listed with defendant Board. Each testified that with certain members of defendant Board they had received less than full cooperation, but in other instances had worked out a satisfactory division of commissions. They also testified that membership in the Board and particularly the use of the multiple listing service would be a substantial advantage in their business.

'* * * It (the Board) maintained the following services for its members and to assist the public:

'1. Multiple Listing Service.

'2. Computer service for its members.

'3. Educational service.

[51 Mich.App. 82] '4. Seminars for its members.

'5. Meetings to discuss mutual problems.

'Two of the present members of the Board testified concerning their successful operation as salesmen and brokers with offices not affiliated with defendant Board prior to their joining the Board. The real estate broker with the largest office in Grand Rapids, Leonard L. Westdale, testified concerning his arrangement for splitting of commissions with nonmembers of defendant Board.

'Professor Carl G. Pearson, Professor of Business at the University of Michigan, testified that a real estate board such as defendant served the public by demonstrating the integrity and ability of its members and described in detail the function of a multiple listing system. The advantages of such system were stated as follows:

'1. Shows the listed property to more individuals.

'2. Better competition among buyers and sellers.

'3. Meets and enforces integrity standards.

'4. An accumulation of much data relative to sales rental, and exchanges of real estate, and tax matters.

'It was his...

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