Bismarck Realty Co. v. Folden

• Decision Date: 28 June 1984
• Docket Number: No. 10442,10442
• Court: North Dakota Supreme Court
• Parties: BISMARCK REALTY COMPANY, Plaintiff and Appellee, v. Gaylord FOLDEN, Pioneer Realty & Land Company, and Kenneth Austin, Defendants and Appellants. Civ.

Page 636

354 N.W.2d 636

BISMARCK REALTY COMPANY, Plaintiff and Appellee, v. Gaylord FOLDEN, Pioneer Realty & Land Company, and Kenneth Austin, Defendants and Appellants.

Civ. No. 10442.

Supreme Court of North Dakota.

June 28, 1984.

Wheeler, Wolf, Peterson, Schmitz, McDonald & Johnson, Bismarck, for plaintiff and appellee; argued by David L. Peterson, Bismarck.

Kelsch, Kelsch, Bennett, Ruff & Austin, Mandan, for defendants and appellants; argued by Timothy J. Austin and Thomas F. Kelsch, Mandan.

On Petition for Rehearing

PEDERSON, Justice.

This case involves an action brought by a realty company (Bismarck Realty Company): (1) against a property owner (Gaylord Folden) for the breach of an "exclusive" listing agreement; and (2) against a competing realty company (Pioneer Realty & Land Company) and its agent (Kenneth Austin) for tortious interference with the "exclusive" listing agreement. The trial court determined that Folden had breached his contract with Bismarck Realty and entered judgment against him for $50,110.94, plus interest. The trial court found that Pioneer Realty had tortiously interfered with the contract and awarded Bismarck Realty $10,417.18 in punitive damages and costs. The trial court dismissed all claims against Austin. We dismiss Austin's appeal; affirm, but remand for modification, the judgment against Folden; and affirm in part and reverse in part the judgment against Pioneer Realty.

On a preprinted form labeled "Exclusive Listing Agreement" and bearing the Bismarck Realty Company logo and the statement "This form approved by N.D. Real Estate Commission and N.D. State Board of Realtors", Folden and Bismarck Realty agreed that for a six-month period from August 9, 1980, to February 9, 1981, Bismarck Realty would have the "exclusive right to sell or exchange" five eight-unit apartment buildings owned by Folden in Bismarck. As a "Special Condition" of the contract, Folden was given an option to withdraw the listing after three months "if reasonable promotion and activity" had not taken place. The contract also contains the following provision:

"2. I (we) hereby agree to pay you or any other broker working in cooperation with you, in cash for your services a commission of [7%, less $1,000 per building] of the total selling price, in the event you shall find a buyer, ready and willing to purchase exchange, option, or lease, with an option to purchase where said option is exercised, said property for the price and terms stated, or such terms as I may accept, during the period of this agreement or within six months after the termination of the agreement or any renewal thereof should a sale be completed to any person or to anyone acting for said person, with whom the broker or any of his agents personally exhibited by showing said property prior to the expiration of this contract, and in either case whose name the broker has submitted to the seller in writing not later than twenty-four (24) hours after the expiration on [sic ] this contract."

Following execution of the contract, Bismarck Realty began marketing the property. Bismarck Realty prepared prospecti on the property, advertised the property, and showed the property to several potential buyers. During November, Doug Moore, an agent of Bergquist-Walker Real Estate On December 16, 1980, Folden visited with Austin, a real estate broker and part owner of Pioneer Realty. Folden and Austin had engaged in numerous real estate transactions together in the past and they were close friends. Folden, who at one time had been a real estate agent in Minot and was an experienced and knowledgeable real estate owner, had purchased the apartment complex through Austin several years earlier. Folden allegedly told Austin that he had "withdrawn" the listing with Bismarck Realty. Austin offered to attempt to sell the property at only a six-percent commission.

with the knowledge and consent of Bismarck Realty, showed the property to Cornelius and Anna Heppner. Moore, who had handled several prior real estate transactions with the Heppners, also provided them with copies of the Bismarck Realty prospecti. Folden contacted Bismarck Realty on several occasions to inquire about the property and was informed of prospective purchasers.

The Heppners contacted Austin later the same day. When Austin showed the apartment complex to the Heppners, they informed him that another broker or salesman had previously shown them the complex. Anna Heppner and Austin later signed an earnest money agreement to purchase the property. Austin made no effort to contact Bismarck Realty to verify Folden's claimed withdrawal from the contract or to inquire as to any prospective purchasers.

On December 19, 1980, the Heppners contacted Bismarck Realty. Bismarck Realty showed the Heppners the same apartment complex again and the Heppners stated that they had already made an offer through Austin. Bismarck Realty did not contact Austin or Folden at that time, but waited to see if the financing by the Heppners on their offer was successful. Several days later Bismarck Realty discovered that the sale was to be completed. The Heppners purchased three of the apartment buildings for $604,500. Bismarck Realty contacted Austin, who refused to pay or split the commission with Bismarck Realty. This lawsuit followed. The defendants chose not to file cross-claims.

On December 15, 1983, we filed an opinion in this case, in effect holding that certain letters of understanding regularly exchanged among Bismarck area realty companies offering to split the commission fees automatically became part of the contract between Folden and Bismarck Realty and, therefore, the sale of the property by Pioneer Realty did not breach that exclusive contract. We also held that the failure of Pioneer Realty to split the commission with Bismarck Realty was a breach of contract.

In that opinion we failed to heed our warning in Center State Bank, Inc. v. State Banking Board, 276 N.W.2d 132, 134 (N.D.1979):

"It has been said that when an appellate court proceeds on a theory which was not advanced by the parties there is no fair opportunity for the litigants to meet the issues, and there is an increased chance that the appellate court will commit error."

Two petitions for rehearing, one from Bismarck Realty and one from Pioneer Realty, and separate responses from both and from Folden, tell us that we erred. We agree and accordingly hereby withdraw the opinion filed December 15, 1983, and declare it void, and issue this opinion in lieu thereof.

Before reaching the contentions of the parties, we note that although the trial court dismissed all claims against Austin, his name appears in the Notice of Appeal. None of the parties have objected to Austin's dismissal from the action, and we therefore dismiss his appeal.

BREACH OF CONTRACT

Folden asserts that the trial court erred in determining that the requirements of the statute of frauds, Sec. 9-06-04(4), NDCC, did not apply to the listing agreement in this case. In Kruger v. Soreide, 246 N.W.2d 764, 770 (N.D.1976), we stated Folden also contends that the trial court's finding that Folden had not withdrawn from his contract with Bismarck Realty prior to the sale of property is clearly erroneous. Evidence was introduced which supports Folden's claim that he asked that the listing be withdrawn. Contradictory evidence was also introduced. A trial court is not bound to accept as the truth the testimony of any particular witness, and where the trial court chooses between two permissible views of the evidence, its decision on the matter is not clearly erroneous. Leno v. Ehli, 339 N.W.2d 92 (N.D.1983).

                that "[a] listing contract or an authorization to sell agreement is basically an employment contract or a creation of an agency relationship."   The listing agreement in this case is not a contract for the sale of real property within the meaning of Sec. 9-06-04(4), NDCC
                

Folden asserts that the trial court erred in determining that the listing agreement is ambiguous. The determination of whether or not a contract is ambiguous is a question of law for the court to decide. Schulz v. Hauck, 312 N.W.2d 360 (N.D.1981). An ambiguity exists in a contract when rational arguments can be made in support of contrary positions as to the meaning of the language in question. Johnson v. Mineral Estate, Inc., 343 N.W.2d 778 (N.D.1984); Mueller v. Stangeland, 340 N.W.2d 450 (N.D.1983).

Folden contends that the contract unambiguously provides for a commission only upon delivery by the broker of "a buyer, ready and willing to purchase." Folden claims that because the sale was made through Austin and Pioneer Realty, Bismarck Realty did not satisfy the terms of the contract and therefore Bismarck Realty is not entitled to any commission.

We agree with the trial court that the listing agreement is ambiguous as to the intention of the parties and that to construe the contract it was proper, under cases such as Stuart v. Secrest, 170 N.W.2d 878 (N.D.1969), and Sec. 9-07-12, NDCC, to refer to the circumstances under which it was made. Folden's contention that the terms of the agreement unambiguously establish that Bismarck Realty was entitled to a commission only if it personally presented Folden with a buyer for the property ignores other provisions in the contract which relate to the "exclusive right to sell or exchange" the property for a six-month period. Folden's interpretation would render this language meaningless. See Starks v. Springgate, 39 N.D. 228, 167 N.W. 221 (1918). A contract must be read in its entirety. Oakes Farming Ass'n v. Martinson Bros., 318 N.W.2d 897 (N.D.1982). Because rational contrary arguments can be made as to the meaning of the language in the contract, the trial court did not err in concluding that the contract was ambiguous and in considering extrinsic evidence as to the intention of the parties. Accord Dahl v. Griffin, 652 P.2d 84 (Alaska 1982).

Folden...