American Property Services, Inc. v. Barringer

• Decision Date: 17 August 1977
• Docket Number: No. 11840,11840
• Parties: AMERICAN PROPERTY SERVICES, INC., Plaintiff and Respondent, v. Vern BARRINGER, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 887

256 N.W.2d 887

AMERICAN PROPERTY SERVICES, INC., Plaintiff and Respondent, v. Vern BARRINGER, Defendant and Appellant.

No. 11840.

Supreme Court of South Dakota.

Aug. 17, 1977.

Joseph M. Butler and Allen G. Nelson of Bangs, McCullen, Butler, Foye & Simmons, Rapid City, for plaintiff and respondent.

Robert L. Varilek, Rapid City, for defendant and appellant.

ZASTROW, Justice (on reassignment).

Defendant appeals from a judgment entered in favor of plaintiff for a commission for the sale of certain real estate in Rapid City, South Dakota. We affirm.

On June 23, 1973, plaintiff and defendant entered into a real estate listing agreement, the pertinent terms of which were as follows:

"In consideration of your agreement to use your efforts to find a purchaser, and to list with the members of the RAPID CITY MULTIPLE LISTING SERVICE, the real property described below, I hereby grant to you for the above term the exclusive irrevocable right and privilege to sell the following property * * * . ¹

"If during said period, the property is sold by you or me or anyone else; or if you, or any member of the RAPID CITY MULTIPLE LISTING SERVICE produce a purchaser ready, willing and able to purchase the property; or if within three months after the expiration of said period a sale is made to any person to whom the property has been shown by you or me or any said member of the MULTIPLE LISTING SERVICE, I agree to pay you a commission of 6% of the sale price. * * * "

This listing agreement expired by its own terms on August 23, 1973, and on September 7, 1973, defendant signed an authorization extending the listing agreement to December 31, 1973.

Plaintiff did not produce a purchaser for the property covered by the listing agreement, and on October 1, 1973, defendant entered into a contract for the sale of the property to a purchaser with whom he had negotiated directly. In April of 1974, plaintiff commenced an action to recover the commission based upon the price at which defendant had agreed to sell the property to the third party.

The defendant's answer stated a general denial, ² and from his pretrial brief it appears that his original defense was based upon an alleged contemporaneous oral agreement that the renewal of the listing agreement would exclude B & C, Inc., the eventual purchaser of the property covered by the listing agreement. The trial judge ruled that the parol evidence rule would bar the introduction of any evidence of such an oral agreement. The defendant did not assign that ruling as error, nor does he raise it on appeal.

The matter was then submitted to the trial court entirely upon depositions and trial briefs. The trial court found generally for the plaintiff and against the defendant. The issue presented at the trial and in defendant's appellate brief is stated in this fashion: "Must a broker, in order to recover compensation called for by its contract of employment, procure a person who is ready, willing and able to purchase on terms proposed by his principal?" In support of his position, the defendant cites a number of our decisions, i. e., Ericson v. Ebsen, 52 S.D. 97, 216 N.W. 860; Dobson v. Wolff, 74 S.D. 493, 54 N.W.2d 469; Rossum v. Wick, 74 S.D. 554, 56 N.W.2d 770; Mehlberg v. Redlin, 77 S.D. 586, 96 N.W.2d 399; Larson v. Syverson,84 S.D. 31, 166 N.W.2d 424. See also, Richardson v. Kelley Land and Cattle Company, 8 Cir., 504 F.2d 30. Defendant's reliance upon these cases is misplaced, however, because the listing agreement in question clearly provided that if the property was sold during the period covered by the agreement, defendant would be liable to plaintiff for a commission whether or not the purchaser was procured by plaintiff.

In presenting his argument in support of that issue, the defendant stated:

"In this case, it is admitted by Plaintiff ³ that neither they nor any other realtor sold the real estate, never showed the property, never presented any offers, never knew or met the ultimate purchasers, the property was never sold upon the listed terms during the life of the listing, the property was not sold during the listed time; in short, nothing was done upon which to predicate an earned fee. It is in this regard that the evidence clearly preponderates that the Trial Court's Findings and Conclusions are not supported."

The defendant's assignments of error contain a similar allegation. Although he cites no authority therefor, it appears that the defendant attempts to argue that there was a failure of consideration by the plaintiff's failure to use reasonable and diligent efforts to obtain a purchaser. ⁴

SDCL 15-6-8(c) lists those defenses which must be set out affirmatively in the pleadings:

"In pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, waiver and any other matter constituting an avoidance or affirmative defense. * * * " (emphasis supplied)

The defense of failure of consideration is not put in issue by a general denial to the complaint but must be affirmatively pleaded. Kent Feeds, Inc. v. Stahl, 1976, S.D., 238 N.W.2d 483; Seaboard Surety Company v. Harbison, 1962, 7 Cir., 304 F.2d 247; Pacific Indemnity Company v. Wyrembek, 1960, D.C.Wis., 183 F.Supp. 252. See also 12 C.J.S. Brokers § 108. If an affirmative defense is not pleaded, it is waived to the extent that the party who should have pleaded it may not introduce any evidence in support thereof. 2A Moore's Federal Practice P 8.27(3); Gajewski v. Bratcher, 1974, N.D., 221 N.W.2d 614; Durr v. Hardesty, 1956, 76 S.D. 232, 76 N.W.2d 393.

There are two exceptions to the general rule that affirmative defenses not pleaded are waived. It will not be waived if an amendment to set forth the affirmative defense is properly made. See SDCL 15-6-15(a); Federal Savings & Loan Ins. Corporation v. Szarabajka, D.C.Ill., 330 F.Supp. 1202; 2A Moore's Federal Practice P 8.27(3) at 1853.

The second exception to the rule is found in SDCL 15-6-15(b):

"When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence." (emphasis supplied)

The fact that an affirmative defense has not been formally pleaded or an amendment made is immaterial if the issue was tried by express or implied consent. Sabbagh v. Prof. & Bus. Men's Life Ins. Co., 1962, 79 S.D. 615, 116 N.W.2d 513; Durr v. Hardesty, supra; Fredrick v. Christensen, 73 S.D. 130, 39 N.W.2d 529; Knapp v. Brett, 54 S.D. 1, 222 N.W. 297; City of Mitchell v. Dakota Central Telephone Co., 27 S.D. 509, 131 N.W. 1090. In Mitchell v. Kickapoo Prairie Broadcasting Company, 1960, D.C.Mo., 182 F.Supp. 578, the court, in ruling on plaintiff's objection to the consideration of an affirmative defense, stated:

"It undoubtedly is true that this defensive matter normally is required to be pleaded and proved by defendants. However, counsel for defendants announced in opening statements as to Nova Nash that the defense would be that he was an exempt employee. Extensive evidence both direct and on cross-examination was introduced in the trial without objection. Within long established rules of procedure in this and other courts, plaintiff must be deemed to have waived the objection. The pleadings are considered amended to conform to the proof. Rule 15(b), F.R.Civ.P., 28 U.S.C.A."

The test for allowing an adjudication of an issue under FRCP 15(b) and SDCL 15-6-15(b) tried by implied consent is whether the opposing party will be prejudiced by the implied amendment, i. e., did he have a fair opportunity to litigate the issue, and could he have offered any additional evidence if the case had been tried on the different issue. ⁵ 3 Moore's Federal Practice P 15.13(2) at 993; Lomartira v. American Automobile Insurance Co., 1967, 2 Cir., 371 F.2d 550; Deitz v. Bowman, 1975, D.C.S.D., 403 F.Supp. 1111. Where there has not been a fair opportunity for a party to be heard on the issue and/or additional evidence could have been offered, any implied amendment would be prejudicial and no trial by implied consent exists.

The settled record in this matter reveals several determining facts. The defendant's answer was a general denial and was never amended to include any affirmative defenses, nor was the issue tried by the express consent of the parties. Defendant does make some references in the depositions and in his trial brief to the inadequacy of plaintiff's efforts to find a purchaser; however, those references are invariably made in relation to defendant's argument that the plaintiff was not a procuring cause of the sale. Nothing in the court's findings of fact and conclusions of law, nor in defendant's objections thereto, nor in defendant's proposed findings raises the issue of failure of consideration.

Applying the previously stated test, it would be very prejudicial to the plaintiff to construe defendant's...