Shrum v. Dalton

• Citation: 442 N.E.2d 366
• Decision Date: 15 November 1982
• Docket Number: No. 1-182A2,1-182A2
• Parties: Mose SHRUM and Oleavy Shrum, Defendants-Appellants, v. Asa E. DALTON, d/b/a Dalton Real Estate, Plaintiff-Appellee.
• Court: Court of Appeals of Indiana

Page 366

442 N.E.2d 366

Mose SHRUM and Oleavy Shrum, Defendants-Appellants, v. Asa E. DALTON, d/b/a Dalton Real Estate, Plaintiff-Appellee.

No. 1-182A2.

Court of Appeals of Indiana First District.

Nov. 15, 1982.

Martha S. West, New Castle, for defendants-appellants.

G.K. Hodson, H. Terrill Harvey, Millikan, Hodson & Harvey, New Castle, for plaintiff-appellee.

RATLIFF, Presiding Judge.

STATEMENT OF THE CASE

Defendant Mose Shrum appeals from the decision of the Henry Superior Court granting plaintiff Dalton a real estate commission on the sale of Shrum's farm. We reverse.

FACTS

In April 1978 Mose and Oleavy Shrum ¹ signed an exclusive listing agreement for the sale of their farm with Dalton Real Estate. The agreement was to be in effect for a six month period from April 4, 1978, to October 4, 1978. The listing agreement contained a commission clause giving Dalton five percent (5%) of the $85,000 listing price. An additional six (6) month period, running to April 4, 1979, was also included during which if the sellers sold to anyone with whom Dalton had put them in touch, Dalton would still collect his commission. On September 20, 1978, the Shrums accepted a written offer to purchase from Jay and Barbara Bramwell for $85,000. Large portions of the offer to purchase were not completed, apparently because the sale of the Shrum property was contingent upon the sale of two (2) properties owned by the Bramwells in order to raise the necessary funds. While all parties agreed this was a condition of the offer, it was not so recorded on the offer itself. The offer to purchase only indicated that it was contingent upon the Bramwells' ability to procure a loan commitment. The Bramwells did receive a commitment of $25,500 from the Federal Land Bank on October 16, 1978. The commission clause in the offer to purchase was completed in the amount of $4,250, which is five percent (5%) of $85,000. The offer to purchase did not stipulate a time during which the offer was to remain open. The Bramwells were unable to raise the necessary funds prior to April 4, 1979. On May 26, 1979, Mose Shrum agreed to take a second mortgage. The Bramwells subsequently sold one property and borrowed an additional $10,000 from Jay Bramwell's mother. This combination of financing enabled the Shrums and Bramwells to close on June 26, 1979. Upon learning of the closing plaintiff Dalton brought suit for his commission. The trial court awarded the commission and defendant now appeals.

ISSUES

Appellant presents two issues for review by this court. Since we reverse the decision of the trial court, we reach only the first of appellant's issues. Rephrased, the issue is as follows:

Does the Indiana Statute of Frauds prohibit the enforcement of a commission clause in an offer to purchase by the realtor where the contract between the parties is partly oral and partly written?

DISCUSSION AND DECISION

The trial court erred in awarding Dalton his realtor's commission.

Appellant argues on appeal that the statute of frauds precludes the enforcement of the commission clause in the offer to purchase. In order to raise the statute on appeal, the issue must first be raised at trial. Clarkson v. Department of Insurance of the State of Indiana, (1981) Ind.App., 425 N.E.2d 203, 206, trans. denied; Zeigler Building Materials, Inc. v. Parkison, (1980) Ind.App., 398 N.E.2d 1330, 1332. While appellant did not affirmatively raise the statute in a responsive pleading as required by the Indiana Rules of Civil Procedure, Trial Rule 8(C), it does appear from the record that the issue was tried by the implied consent of the parties. This is sufficient to preserve the issue for review by this court. Lawshe v. Glen Park Lumber Co., Inc., (1978) 176 Ind.App. 344, 346-47, 375 N.E.2d 275, 277-78; Hidden Valley Lake, Inc. v. Kersey, (1976) 169 Ind.App. 339, 342-43, 348 N.E.2d 674, 677, trans. denied. With this issue properly before us, we proceed to the question of whether the court erred in awarding the broker's commission based upon the contracts executed by the parties.

Indiana's legislative enactment of the statute of frauds requires that any contract for the sale of land be in writing. ² Similarly, our legislature has long recognized that any commission for the sale of land by a broker is unenforceable unless in writing and signed by the party against whom the commission is sought to be enforced. ³ These requirements inure to the benefit of both the broker and seller of real property, because where a dispute arises as to either's performance, reference to the intent of the parties is readily available from the memorialization of the written contract. It is a general rule that the intention of parties to a contract is to be determined from the "four corners" of the document. General Insurance Co. of America v. Hutchison, (1968) 143 Ind.App. 250, 254-55, 239 N.E.2d 596, 599, trans. denied. Absent any ambiguity, this court will not construe the contract, Indiana Industries, Inc. v. Wedge Products, Inc., (1982) Ind.App., 430 N.E.2d 419, 423, trans. denied, but rather will give effect to the plain language of the document. Thus, where the contract is complete on its face, it will be enforced absent such external influences as fraud, duress, or mistake.

In the instant case the offer to purchase entered into between the Shrums and Bramwells identified the buyers and sellers, the consideration to be exchanged, the receipt of earnest money, the buyers' receipt of a loan commitment as a condition precedent to the completion of the contract, and the broker's right to receive his commission. ⁴ While somewhat sketchy, the offer to purchase was an enforceable contract on its face. However, the plaintiff broker himself testified, ⁵ without objection, that while the written contract indicated the agreement was subject only to the Bramwells' ability to procure a loan, there was actually a second condition precedent to the performance of the contract which was not written on the face of the contract, but was acknowledged by all parties. That condition involved the ability of the Bramwells to sell two other properties in order to raise the additional funds necessary to purchase the Shrum farm. Once this evidence was admitted without objection, it is deemed to have been admitted for all purposes. ⁶ In the instant case, the broker himself testified that the complete offer to purchase was comprised of both written and parol terms. It is well settled that the inclusion of oral terms within a written contract is sufficient to render the entire contract oral. As our supreme court noted in Ward v. Potts, (1950) 228 Ind. 228, 91 N.E.2d 643, "[a] contract required by law to be in writing must be wholly so in order to be enforceable as a written contract. A contract partly in writing and partly in parol is a parol contract, and does not satisfy a statute requiring a written contract." Id. at 234, 91 N.E.2d at 645. As such, the offer to purchase, which admittedly contained parol terms, is a parol contract for purposes of the statute of frauds and the broker's commission statute and is, therefore, unenforceable by the broker in an action for payment of a commission. The trial court erred in awarding Dalton his realtor's commission based upon the commission clause in the unenforceable offer to purchase.

The initial contract between the broker and sellers is found in the listing agreement executed April 4, 1978. This was a complete contract as written, with no oral modifications. As such, it was enforceable pursuant to its terms. It provided for a commission if the broker found a purchaser "ready, willing and able" to buy the real estate. ⁷ Record at 52 (emphasis supplied). In addition, the agreement also provided for a six month extension period during which the consummation of a sale between the sellers and any party introduced to them by the broker would result in the broker's getting his commission. ⁸ However, as the record clearly indicates, the sale did not occur until well after the six month extension had expired. By its very terms the listing agreement indicated that it was to be unenforceable after April 4, 1979. In order to earn his broker's commission, Dalton needed to present a buyer ready, willing, and able to purchase the property prior to the termination of the listing agreement. This was not done. The Bramwells were unable to purchase the farm because their properties had not yet sold. The sale of the Shrums' farm was not able to be consummated until the Bramwells could arrange alternate financing after only one of their properties sold. This did not occur until some months after the extension period had run. Here, the broker, by his own terms in the listing agreement, indicated what he believed to be a reasonable time during which he should be able to sell the Shrums' farm and receive his commission. The sale did not occur within that time, nor was it possible until much later. Therefore, absent fraud on the part of the sellers and/or buyers, once the listing and extension periods had expired the broker had no recourse to enforce the contract. ⁹

While fraud was originally alleged by the broker, it was apparently not proved at trial, nor did the trial court rely upon fraud as a basis for entering its judgment. Rather, the court found that an enforceable contract was still in effect. The trial court made specific findings of fact on its own motion as per Indiana Rules of Civil Procedure, Trial Rule 52(A), ¹⁰ but made no general finding in favor of the plaintiff. In Hunter v. Milhous, (1973) 159 Ind.App. 105, 305 N.E.2d 448, the court set out the difference between general and special findings of fact.

"Findings of fact may be either general or special. A general finding is a finding in favor of one party and against the other. A special finding on the other hand contains all the facts necessary for recovery by the party in whose favor the conclusions of law are found and...