Aasheim v. Reum

• Decision Date: 20 August 1996
• Docket Number: No. 95-481,95-481
• Parties: E.T. AASHEIM and Ettabel Aasheim, d/b/a Montana Real Estate Exchange, Plaintiffs and Appellants, v. LeRoy REUM and Cliff Reum, d/b/a Roy's Ready Mix and Lake County Abstract Co., Defendants and Respondents.
• Court: Montana Supreme Court

Page 1167

922 P.2d 1167

277 Mont. 471

E.T. AASHEIM and Ettabel Aasheim, d/b/a Montana Real Estate

Exchange, Plaintiffs and Appellants, v. LeRoy REUM and Cliff Reum, d/b/a Roy's Ready Mix and Lake

County Abstract Co., Defendants and Respondents.

No. 95-481.

Supreme Court of Montana.

Submitted on Briefs June 27, 1996.

Decided Aug. 20, 1996.

Bryan Charles Tipp and Raymond P. Tipp; Tipp and Buley, Missoula, for Plaintiffs and Appellants.

James A. Manley; Manley, O'Rourke-Mullins, Polson, for Defendants and Respondents.

ERDMANN, Justice.

This is an appeal from the Findings of Fact and Conclusions of Law and Judgment by the Twentieth Judicial District Court, Lake County, holding that the plaintiffs/real estate brokers were not entitled to a commission for an aborted sale as a ready and willing buyer was not procured. We affirm.

The issue on appeal is as follows:

Did the District Court err when it concluded that Aasheim was not entitled to recover his commission for the aborted sale?

FACTS

LeRoy Reum operated a concrete business and owned the real property upon which the business was located. Reum entered into a listing agreement with real estate brokers E.T. Aasheim and Ettabel Aasheim for the purpose of completing a sale to Larry L. Smith. In October 1988, Reum and Smith entered into a buy/sell agreement for Reum's business and property for $200,000. This agreement required Reum to carry fire insurance on the real property, fixtures, and equipment. Smith paid $2,000 earnest money upon signing the agreement and the closing date was set for December 15, 1988.

On November 28, 1988, a fire destroyed the main building on the property, a vehicle, and some miscellaneous tools. Reum did not have fire insurance on the real property, although he did have insurance for the personal property. Reum offered to rebuild the main structure, replace the personal property, and go through with the deal. Smith declined this offer and negotiations continued between the parties' attorneys over the next two months. Smith and Reum agreed to new terms and a reduction of the purchase price to $140,000 in early February 1989. A modified agreement was drafted but was never executed by the parties.

During the next three months there was continued correspondence between the parties; however, a closing date was never set. By late April 1989, Reum was informed by his bank that he was at risk of losing his property unless he concluded the sale and paid his debt. Reum wrote Smith on April 21 that the sale must close no later than April 25, 1989. In May, Reum notified Smith that the sale was terminated because of Smith's financial inability to close. Reum entered into another buy/sell agreement at this time.

The attorney for the new buyer contacted Aasheim and Smith seeking liability releases. Smith provided the new buyer with a release but Aasheim refused to release Reum from his alleged obligation to pay a brokerage fee. Aasheim faxed a letter to the closing agent claiming a $10,000 commission on the closing proceeds. The new buyer insisted that $10,365 out of the total sale amount to be disbursed to Reum be withheld due to Aasheim's claim. This money was placed in an interest bearing trust account which was subsequently paid over to the Clerk of District Court, Lake County. Smith's $2,000 earnest money was returned by the title company to Aasheim who placed it in his own noninterest bearing account.

The District Court determined that a modified agreement was reached between Reum and Smith and that Smith was not a financially able buyer in the spring of 1989. The District Court therefore held that Aasheim was not entitled to the commission. Aasheim appeals.

ISSUE

Did the District Court err when it concluded that Aasheim was not entitled to recover his commission for the aborted sale?

We review a district court's findings of fact to determine whether they are clearly erroneous. Daines v. Knight (1995), 269 Mont. 320, 324, 888 P.2d 904, 906. This Court has adopted a three-part test to determine whether the findings are clearly erroneous. Interstate Prod. Credit Ass'n v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287. The test provides that: (1) the Court will determine whether the findings are supported by substantial evidence; (2) if the findings are supported by substantial evidence the Court will determine if the trial court has misapprehended the evidence; and (3) if the findings are supported by substantial evidence and that evidence has not been misapprehended, this Court may still find that a finding is clearly erroneous when, although there is evidence to support it, a review of the record leaves the Court with the definite and firm conviction that a mistake has been committed. DeSaye, 820 P.2d at 1287.

The standard of review for a district court's conclusions of law is whether the court's interpretation of the law is correct. Carbon County v. Union Reserve Coal Co. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686; Steer, Inc. v. Dep't of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603-04.

This Court, in Ehly v. Cady (1984), 212 Mont. 82, 687 P.2d 687, has previously held that:

[A] broker employed to 'sell or effect a sale' and exchange (as is the case here) does not earn his commission until the purchase price is paid,...