Bullard v. Austin Real Estate Bd., Inc.

• Decision Date: 18 March 1964
• Docket Number: No. 11170,11170
• Citation: 376 S.W.2d 870
• Parties: W. H. BULLARD et al., Appellants, v. AUSTIN REAL ESTATE BOARD, INCORPORATED, Appellee.
• Court: Texas Court of Appeals

Page 870

376 S.W.2d 870

W. H. BULLARD et al., Appellants, v. AUSTIN REAL ESTATE BOARD, INCORPORATED, Appellee.

No. 11170.

Court of Civil Appeals of Texas, Austin.

March 18, 1964.

Rehearing Denied April 1, 1964.

Louis H. Owen, III, Austin, Arthur Mitchell, Austin (on appeal only), for appellants.

Niemann & Babb, Austin, for appellee.

PHILLIPS, Justice.

This case involves the right of a private association to make rules of conduct involving its membership and its right to expel a member for failure to follow the rules.

Appellants, W. H. Bullard as an individual and the First Austin Investment Company of which Bullard is owner, were both members of the Austin Real Estate Board, Inc. The Company's licensed salesmen were also associate members of the Board. Bullard is a licensed Real Estate Broker and was, prior to this controversy, a member of the Board of Directors of the Austin Real Estate Board, Inc.

The Austin Real Estate Board is a voluntary association of licensed real estate brokers and brokerage firms to which membership is by invitation only. Active memberships are limited to individuals or firms owned by indvidual members. In this case First Austin's membership is dependent on the continued membership of appellant Bullard who owns the company.

Among the association's many services is the Multiple Listing Service which is a program created by and administered by the association for the benefit of its members, but not for nonmembers. While Multiple Listing Service has its own rules and regulations, 'It is part and parcel of the Austin Real Estate Board and is subject to the constitution and by-laws of the Board.' (Article I of the Multiple Listing Service Rules.)

Multiple Listing Service is administered by one of the association's numerous committees under its own printed rules and regulations. When a member obtains an exclusive listing, he has his client fill out and sign the standard printed form which is provided by the Service and required to be used under the rules. (Article VI of the Multiple Listing Service Rules.) The member who submits this contract to the Multiple Listing Service office is called the 'listing broker.' When submitted, a copy of this contract is distributed to all members of the association. By this medium each member is given an opportunity for procuring a buyer for the property, in which event he is known as 'selling broker.'

The specific Multiple Listing Service regulations which control the Austin Real Estate Board's Order in question are Articles VIII and V, which are as follows:

'ARTICLE VIII--SALES

'The selling broker shall hold the earnest money.

'The selling broker shall in every case consult with the listing broker when an offer is made on a given property. Contract with the owner shall come only through the listing broker in the first instance, unless permission is granted by the listing broker to the selling broker to present directly to the owner. The selling broker may represent the buyer in such negotiations, not necessarily introducing the buyer to the listing broker.

'A copy of the sales contract shall be furnished the listing broker; and the committee on request.

'The selling broker shall arrange for the closing, but the listing broker must be notified of the time and place for the closing.

'ARTICLE V--COMMISSION SPLITS

'The minimum commission on all Multiple Listing Service listings shall be 6%. This commission shall be split 1/3 to the listing broker and 2/3 to the selling broker, unless the listing broker offers a greater percentage of commission to the selling broker, which he may do. This rule shall apply to Realtor- Owners and Realtor-Builders alike and any rules or regulations now in effect to the contrary are hereby repealed.'

A Dr. Casey owned a 20.03 acre tract of land on which two houses were located. Abutting this land was 160 more acres which he also owned. Dr. Casey had in a prior year purchased the 20 acres for $35,000 through Jacob Bauerle and Associates, a farm and ranch brokerage firm in Austin, Texas. Upon deciding to sell this tract, Casey personally contacted Bauerle who came to Casey's residence, at which time they entered into an exclusive-agency, multiple-listing-service contract. Bauerle filed this contract with multiple-listing-service which in turn distributed copies of it to Bullard who was a multiple-listing-service member by virtue of his association membership. The sale price set in this contract was $40,000.

In his letter to the association's president priro to the arbitration hearing, Bullard stated that Dr. Casey had informed Bauerle at the time of the listing agreement that he, Casey, 'reserved the right to make a deal directly with W. H. Bullard, or his companies, exclusive of and outside of the multiple listing with Jacob Bauerle.' This allegation which was presented to the arbitration committee was also before the trial court in the form of an affidavit, signed by Dr. Casey. At both arbitration and trial, Bauerle testified to the exact contrary, that Bullard's name was never at any time mentioned, and that nothing was ever said about any concurrent negotiations between Bullard and Casey for the purchase of the property. Abner Jones, an associate in Bauerle's firm, who had shown the property on several occasions, also testified at the trial that he had never been told of Casey's alleged exception for Bullard or his companies.

Bauerle's first knowledge of the sale of the tract was a letter from Bullard on December 12, 1962, in which Bullard stated that 'Mr. and Mrs. Clifford B. Casey have traded to my Bullard Company the 20.03 acres on Circle Driver containing two houses, subject to your right under Multiple Listing Contract dated October 18, 1962.' Abner Jones was also informed by Bullard of the 20 acre sale for which there was a consideration of $37,500. The 160 acre tract was also sold to the Bullard Company for $17,500. Total consideration for both tracts was $55,000.

Believing he was entitled to one-third of 6% commission as listing broker for the 20 acres, Bauerle made such request to all parties involved in a letter dated December 17, 1962. After a month of waiting and receiving no reply, Bauerle called Joe Perrone, who was president of the association at that time, asking for assistance in settling the dispute. Baurerle also wrote a letter to the new president, Willard Connolly, requesting formal arbitration of this dispute. Perrone attempted to effect an amicable agreement between the two relators as was his usual practice when disagreements between fellow members arose. Bullard's telephone response, as related by Perrone, was as follows:

'No, definitely he would not; that he had no time to take up the thing, and that if Mr. Bauerle had any recourse or wanted any relief, for him to go to the Courthouse, that that is what the Courthouse was for, and as far as he was concerned, he didn't intend to take up any time to come down and have a bunch of Boy Scouts tell him what to do.'

Both Bullard and the First Austin Company were notified by letter, dated February 25, 1963, of Bauerle's complaint of nonpayment of commissions and of his requirest for arbitration thereon. Bullard readily admitted receipt and knowledge of this notification which was in accordance with arbitration procedures under Article XVI of the Austin Real Estate Board's constitution. Bullard was expressly advised of his opportunity to be heard, present witnesses documents or any other evidence in his behalf, and to have the assistance of legal counsel for the hearing if he so desired.

The hearing was set for March 12, 1963. On March 11, Bullard wrote to Connolly, informing the president that the arbitration committee had no jurisdiction over the dispute; that no commission was owed by him to Bauerle; that he did not intend to appear at the arbitration proceedings; and that his legal and ethical rights were not subject to arbitration without his specific consent.

Despite Bullard's refusal to recognize its jurisdiction over the controversy, the committee held the hearing as scheduled for the purpose of determining the rights of the parties under the multiple listing service regulations.

Article XVI of the Austin Real Estate Board's constitution prescribes detailed procedural safeguards to assure a fair and impartial hearing for all concerned. Section 2 thereof gives all members a right to arbitration: 'If a dispute arises, any party may write to the President stating the facts and request arbitration.' Among the requirements set out in the constitution for arbitration are (1) notice to the parties, (2) time for defense, (3) presentation of evidence, (4) a majority of votes for decision, (5) recordation of the hearing (by tape recorder in this case), (6) a written report to the president, containing a statement of facts found, the decision of the committee, and the reasons therefor.

All this was done.

After full consideration of Bullard's letter and the documentary and testimonial evidence presented by Bauerle and other witnesses, the committed made written findings of fact and reached the following decision in their report to the Board:

'WHEREFORE, it is the decision of the Arbitration Committee after hearing all matters presented that, under the Rules and Regulations of the Multiple Listing Service, Jacob Bauerle is the listing broker in the sale of the subject property and entitled to a commission as listing broker and that in accordance with the Rules and Regulations of the Multiple Listing Service member W. H. Bullard should pay member Jacob Bauerle an amount equal to one-third (1/3) of a minimum 6% commission on the sale of subject property as a commission to the listing broker in accordance with Article V, Rules and Regulations of the Multiple Listing Service of the Austin Real Estate Board, Inc.'

The committee vote was 11 to 0 with one member absent. Copies of their complete report were sent to both Bauerle and Bullard.

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