C. Forsman Real Estate Co., Inc. v. Hatch, 11791

CourtUnited States State Supreme Court of Idaho
Citation97 Idaho 511,547 P.2d 1116
Docket NumberNo. 11791,11791
PartiesC. FORSMAN REAL ESTATE COMPANY, INC., an Idaho Corporation, Plaintiff-Appellant, v. William N. HATCH and Constance Hatch, husband and wife, dba Bill Hatch Farm, Defendants-Respondents.
Decision Date03 March 1976

Vern E. Herzog, Jr., Pocatello, for plaintiff-appellant.

D. James Manning, Racine, Huntley & Olson, Pocatello, for defendants-respondents.

SHEPARD, Justice.

This is an appeal from the summary judgment entered against plaintiff-appellant C. Forsman Real Estate, Inc. and in favor of defendant-respondent William N. Hatch. The action concerns the validity of a real estate brokerage commission contract involving real estate owned by the community of William N. Hatch and his wife Constance. Summary judgment was entered against plaintiff-appellant on his claim for a broker's commission under the contract on the basis that the contract was not executed by Mrs. Hatch and because the property was insufficiently described therein. We reverse and remand for further proceedings.

On October 19, 1972, Forsman and William Hatch entered into a broker's employment contract regarding the 'Bill Hatch Farm.' That contract was an exclusive real estate listing empowering Forsman to sell or exchange the property on or before March 31, 1973, for $200,000 at specified terms. The contract provided that the broker was to 'find a buyer ready and willing to enter into a deal for said price and terms, or such other terms and price as I may accept.' In return for which Forsman was to receive a commission of 6 percent of the sale price. Although the subject real estate was admittedly community property, the contract was signed by Hatch and an agent of Forsman but not by Hatch's wife.

During the contract period Forsman found a prospective purchaser who, after some negotiation, executed and signed an earnest money agreement to purchase the Hatch property at $170,000 and at terms significantly different from those in the listing contract. Although there is some question as to whether there was a complete meeting of the minds on all of the essential terms of the earnest money agreement, nevertheless it was signed by William Hatch on March 21, 1973. Constance Hatch, however, refused to sign the earnest money agreement, and the property was later sold for $200,000 to a buyer who was obtained without the assistance of Forsman.

Forsman then instituted this action for his brokerage commission against both Mr. and Mrs. Hatch. Upon motion and stipulation Mrs. Hatch was dismissed from the suit and thereafter, upon Hatch's motion for summary judgment, the district court granted summary judgment on the grounds of insufficiency of the property description and the absence of the wife's signature to the brokerage contract.

Appellant Forsman assigns error to the district court's entry of judgment on the basis that a real estate commission contract employing a broker to find a purchaser of community realty must contain the execution and acknowledgment of both spousal owners. Thomas v. Young, 42 Idaho 240, 245 P. 75 (1926), was an almost identical action seeking to recover a commission on a broker's contract for the sale of community real estate wherein the contract did not contain the signature of the wife. There, the court affirmed the action of the lower court dismissing the wife, but reversed the lower court's dismissal of the husband stating:

'(W)e are of the opinion that the court below erred in holding that complaint failed to state a cause of action as to Charles Young by reason of the fact that the property in question was community property. He might have been unable to comply with his part of the contract but that would not release him from liability to pay plaintiffs for their services if they had fully complied with the terms of the contract.'

At least 18 jurisdictions have enacted statutes requiring a signed memorandum in contracts involving real estate brokerage commissions. See Powell, Real Property § 938.13(3)(b). Of those jurisdictions, the courts in states adhering to the law of community property have uniformly held that brokerage agreements to procure purchasers for the sale of community and other jointly held property are valid despite the absence of the signatures of all joint owners. See McAlinden v. Nelson, 121 Cal.App.2d 136, 262 P.2d 627 (1953); Kaufman v. Haney, 80 Cal.App.2d 249, 182 P.2d 250 (1947); Dixon v. Malloy, 70 Cal.App.2d 322, 160 P.2d 896 (1945); Russell v. Ramm, 200 Cal. 348, 254 P. 532 (1927); McDonald v. Bernard, 87 Cal.App. 717, 262 P. 430 (1927); Goodrich v. Turney, 44 Cal.App. 516, 186 P. 806 (1919); Johnson v. Krier, 59 Cal.App. 330, 210 P. 966 (1922); Tamimi v. Bettencourt, 243 Cal.App.2d 377, 52 Cal.Rptr. 273 (1966); Sanchez v. Yorba, 8 Cal.App. 490, 97 P. 205 (1908); Geoghegan v. Dever, 30 Wash.2d 877, 194 P.2d 397 (1948); Lemcke Co. v. Nordby, 117 Wash. 221, 200 P. 1103 (1921); Ginn v. MacAluso, 62 N.M. 375, 310 P.2d 1034 (1957); Golden v. Halliday, 339 S.W.2d 715 (Tex.Civ.App.1960). Accord, Johnson v. Allen, 108 Utah 148, 158 P.2d 134 (1945); Haas v. Cohen, 10 Ill.App.3d 896, 295 N.E.2d 28 (1973); Winston v. Minkin, 63 Wis.2d 46, 216 N.W.2d 38 (1974); Chastain v. Carroll, 307 So.2d 491 (Fla.App.1975); Isphording v. Wolf, 36 Ind.App. 250, 75 N.E. 598 (1905).

Respondnet, however, points out that language of I.C. § 9-508 setting forth the statute of fraud requirements for real estate broker's contracts provides:

'No contract for the payment of any sum of money or thing of value, as and for a commission or reward for the finding or procuring by one person of a purchaser of real estate for another shall be valid unless the same will be in writing, signed by the owner of such real estate, or his legal, appointed and duly qualified representative.'

He argues cases from other jurisdictions such as California are distinguishable from the case at bar in that those states' statutory provisions refer to 'the party to be charged' in connection with the signature requirement whicle Idaho has chosen to employ the term 'owner' in our otherwise similar statute. See Cal.Civil Code, § 1624(5) (Derring 1971); Rev.Code Wash.Ann. § 19.36.010(5) (1961); N.M.Stat.Ann. § 70-1-43 (1953); Tex.Ann.Civ.Stat., art. 6573a, § 28 (Vernon 1968). Respondent further argues that the word owner in I.C. § 9-508 must be construed 'owners' in accordance with I.C. § 76-114.

I.C. § 73-114 is not mandatory by its terms, but merely instructive that the singular may be extended or applied to the plural. It is not a rule of general application and applies only when necessary to carry out the obvious intent of the legislature. First Nat. Bank in St. Louis v. Missouri, 263 U.S. 640, 44 S.Ct. 213, 68 L.Ed. 486 (1924); State v. Camp, 189 Ga. 209, 6 S.E.2d 299 (1939); State v. Hamilton, 298 P.2d 1073 (Okl.Cr.App.1956). We are not persuaded that the legislature intended the statutory construction sought by respondent here.

At the time these parties entered into the brokerage agreement, I.C. § 32-912 gave the husband of a marital community the sole right to manage, control and dispose of community property subject to an exception for the conveyance or encumberance of community real estate. It provided in pertinent part:

'The husband has the management and control of the community property, except the earnings of the wife for her personal services and the rents and profits of her separate estate. But he cannot sell, convey or encumber the community real estate unless the wife join (sic) with him in executing and acknowledging the deed or other instrument of conveyance, by which the real estate is sold, conveyed or encumbered . . .'

The effect of this provision on brokerage agreements was considered in Central Idaho Agency, Inc. v. Turner, 92 Idaho 306, 442 P.2d 442 (1968), where this Court stated:

'A contract employing a broker to find a purchaser of real property, is not a contract to sell, convey or encumber real property or any interest therein. It is purely a contract of employment for services to be performed by the broker for a commission to be paid upon the occurrence of certain specified events.'

By this declaration it is clear that brokerage contracts to procure a purchaser of community realty do not fall within the limitations of I.C. § 32-912.

With respect to the legislature's choice of the word 'owner' in I.C. § 9-508, in contrast to the language utilized in similar statutes of other jurisdictions, we take particular notice of case law existing in 1915 when our statute was adopted. At that time there were two cases, Houser v. Hobart, 22 Idaho 735, 127 P. 997 (1912) and Kerr v. Finch, 25 Idaho 32, 135 P. 1165 (1913), which interpreted the statutory language 'party to be charged.' Both of these cases involved the statute of frauds provisions relating to the sale of goods which mandated a writing 'subscribed by the party to be charged.' I.C. § 9-505(4) (repealed Dec. 31, 1967). It was then argued that those words merely required the signature of the party against whom enforcement of the contract was sought. Rejecting this contention the Court in Houser stated:

'The words 'the party charged' mean the party chargeable with performing some act stipulated in the agreement. That may be only one of the parties to the agreement, or it may be both the parties to the agreement. * * * (A) unilateral agreement would only require the signature of the party which would be only one party, while a bilateral or mutual agreement will require reciprocal duties and obligations to be performed. And so it appears clear to us that the words 'the party charged' have special reference to the party, whether it be one or more, charged with the performance of some duty or obligation under the contract.' 22 Idaho at 747, 127 P. at 1001.

This meant that by these terms the signature requirement differed depending upon whether the contract involved a unilateral or bilateral agreement. In a...

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