Century 21 Associated Realty v. Hoffman, 17787

• Decision Date: 08 October 1992
• Docket Number: No. 17787,17787
• Citation: 503 N.W.2d 861
• Parties: CENTURY 21 ASSOCIATED REALTY, Plaintiff and Appellee, v. James L. HOFFMAN, Sr., Defendant, and Isis Company, Inc., a South Dakota Corporation, Defendant and Appellant. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 861

503 N.W.2d 861

CENTURY 21 ASSOCIATED REALTY, Plaintiff and Appellee, v. James L. HOFFMAN, Sr., Defendant, and Isis Company, Inc., a South Dakota Corporation, Defendant

and Appellant.

No. 17787.

Supreme Court of South Dakota.

Considered on Briefs Oct. 8, 1992.

Decided July 21, 1993.

A.P. Fuller of Fuller & Tellinghuisen, Lead, Thomas H. Harmon of Tieszen Law Office, Pierre, for plaintiff and appellee.

Thomas E. Adams of Voelker and Adams, Deadwood, for defendant and appellant.

LEE D. ANDERSON, Circuit Judge.

Following a trial to the court, the court entered judgment in favor of Century 21 Associated Realty (Century 21) and against defendant Isis Company, Inc. (Isis). The judgment awarded a real estate commission upon the sale of certain real estate in Deadwood, South Dakota. The defendant, James L. Hoffman, Sr. was dismissed from the lawsuit by the trial court at the conclusion of the trial. Defendant Isis appeals. We affirm.

FACTS

Isis owned the Fairmont Hotel located in Deadwood, South Dakota. On June 16, 1989, Century 21 entered into a multiple listing sales contract with James L. Hoffman, Sr., as president of Isis whereby Hoffman granted Century 21 the exclusive right to sell the Fairmont Hotel in Deadwood, South Dakota.

The agreement gave Century 21 the exclusive right to sell the property from June 16, 1989, to December 16, 1989 (180 days). Under the terms of the agreement Century 21 agreed to use its best efforts to obtain a purchaser and Isis agreed to pay Century 21 a six percent commission plus sales tax if during the 180 day period the property was sold by Isis, Century 21 or anyone else; or if Isis or any member of the Northern Hills Multiple Listing Service produced a purchaser ready, willing and able to purchase the property. Century 21 was also entitled to a six percent commission plus sales tax if within three months after the exclusive listing expired, a sale was made to any person to whom the property had been shown by Isis or Century 21, or any member of the Northern Hills Multiple Listing Service.

On or about October 6, 1989, Hoffman met with Century 21 agent Don Ostby. The trial court was presented with conflicting testimony as to what was said at that meeting as well as conflicting testimony concerning Century 21's actions that were taken after the meeting to fulfill its obligations under the listing agreement. Hoffman claimed that at this October 6, 1989 meeting he informed Ostby that he wanted to "cancel" the Fairmont Listing Agreement due to Isis' intention to transfer the Fairmont to another corporation in which Hoffman had an interest. Ostby claimed he was told by Hoffman that this other corporation had funds to restore the hotel and that Hoffman wanted to take the Fairmont off the market due to this prospective transfer or merger. Hoffman said Ostby indicated something to the effect that he would take care of it. The merger never occurred.

Ostby testified he never told Hoffman that the listing would be canceled. Ostby testified that he told Hoffman the property would be put on the back burner due to the potential merger. Since Ostby did not consider Hoffman's request as one for cancellation, he never discussed or provided Hoffman with Century 21's specific written form for cancellation. Ostby testified that he continued to show the property, including providing drive by viewings, a walk through, and mailing the multiple listing sheet to people inquiring about commercial property in the Deadwood area, including the ultimate purchaser.

On November 3, 1989, Ron Russo came to Deadwood for the opening weekend of legalized gambling. At the time, Russo was vice president of a real estate management company. After seeing the tremendous amount of activity, he decided to assess the commercial real estate market to see what was available. He contacted Century 21 and met with Don Ostby. According to Russo, he was told there was no commercial property available on Main Street. Russo testified that Ostby never mentioned the Fairmont, but rather Russo found out about the Fairmont on his own when he stopped at the hotel to check bus schedules. Russo also testified that he asked whether the Fairmont was for sale and was told to contact Hoffman who was away on a business trip at the time.

Russo and Hoffman eventually met and negotiated the sale of the Fairmont. On November 30, 1989, Russo signed an option to purchase the Fairmont for $600,000. The sale itself closed on February 20, 1990, within three months of the exclusive listing expiration date. Approximately one month prior to closing, Century 21 president, Ron Island, informed Hoffman that Century 21 expected its sales commission from the Fairmont sale. No commission was paid to Century 21 upon the closing of the sale.

Century 21 brought suit to recover its commission due under the agreement. The defendants answered alleging the affirmative defenses of failure of consideration, release, waiver and estoppel. Prior to Century 21's case-in-chief, the trial court sought to clarify the issues at trial. Isis delineated three issues: failure of consideration, waiver and estoppel.

Following a line of questions during trial, the court ruled that this case did not deal with cancellation of the agreement, that cancellation had not been pled nor had it been proven. Isis did not object to this ruling nor did it request that its answer be amended to include cancellation of the instrument. ^*

At the conclusion of the trial, the court held that a valid contract existed between Isis and Century 21. The court further held that Isis failed to prove failure of consideration and waiver by a preponderance of the evidence, and failed to prove estoppel by clear and convincing evidence. Century 21 was awarded its commission under the listing agreement.

On appeal, Isis asserts that the trial court erred in ruling that cancellation was not an issue before the court. Isis claims that its answer raised the defense of release, thus cancellation was before the court. Isis further contends that the trial court misapplied the doctrine of estoppel. Isis maintains that Century 21 should have been estopped from claiming that a writing was necessary to establish cancellation of the listing when the form was in its possession and control and was never provided to Isis. Although the statement of issues presented in Isis' brief refers only to cancellation and equitable estoppel, the argument within the brief also includes release and failure of consideration. Therefore, all four issues are addressed on appeal.

STANDARD OF REVIEW

This Court reviews a trial court's findings of fact under the "clearly erroneous" standard and overturns a trial court's conclusions of law only when the trial court erred as a matter of law. Dougherty v. Dougherty, 482 N.W.2d 320 (S.D.1992); Jankord v. Jankord, 368 N.W.2d 571 (S.D.1985). In applying the clearly erroneous standard, our function is not to decide factual issues de novo. The question is not whether this Court would have made the same finding that the trial court did, but whether on the entire evidence we are left with a definite and firm conviction that a mistake has been committed. People in Interest of H.M., 474 N.W.2d 267 (S.D.1991); Maryhouse, Inc., v. Hamilton, 473 N.W.2d 472 (S.D.1991). We will not overturn the trial court's decision unless, after reviewing all the evidence, we are left with a definite and firm conviction that a mistake has been made. Smith v. Sponheim, 399 N.W.2d 899 (S.D.1987). Due regard shall be given to the opportunity the trial court had to judge the credibility of witnesses. State By and Through DOT v. Garvin, 456 N.W.2d 779 (S.D.1990); Masek v. Masek, 228 N.W.2d 334, 336 (S.D.1975).

The record reflects that the witnesses' testimony conflicted on several material issues. The trier of fact is the exclusive judge of the credibility of the witnesses and the weight to be given their testimony. Wolff v. Royal Ins. Co. of America, 472 N.W.2d 233 (S.D.1991); In Interest of A.D., 416 N.W.2d 264 (S.D.1987). Additionally, we recognize all conflicts in the evidence must be resolved in favor of the trial court's findings. Matter of Estate Gibbs, 490 N.W.2d 504 (S.D.1992). "Upon review, the evidence and inferences therefrom must be viewed in a light most favorable to uphold the verdict [judgment] and, if there is competent and substantial evidence to support the verdict [judgment], it must be upheld." Gross v. Conn. Mut. Life Ins. Co., 361 N.W.2d 259, 273 (S.D.1985); Dougherty v. Beckman, 347 N.W.2d 587, 590 (S.D.1984).

DECISION

CANCELLATION

SDCL 15-6-8(c) provides that a party shall set forth affirmatively any matter constituting an avoidance or an affirmative defense. Failure of consideration, release, waiver and estoppel are specifically listed as affirmative defenses under SDCL 15-6-8(c). Although cancellation is not specifically listed, it is clear that cancellation is also a matter constituting an avoidance or affirmative defense.

Affirmative defenses must be specifically pled. A defendant has a duty to plead affirmative defenses and failure to do so would result in the defense being barred. Schecher v. Shakstad Elec. & Mach. Works, 414 N.W.2d 303 (S.D.1987). There are two exceptions to the general rule that affirmative defenses not pleaded are waived. An affirmative defense is not waived if the pleadings are properly amended to include the defense or if the issue was tried by express or implied consent. Schecher, supra; American Property Services v. Barringer, 256 N.W.2d 887, 890 (S.D.1977).

Isis did not plead cancellation of an instrument as an affirmative defense. The record does not reflect any attempt by Isis to amend the pleadings to assert cancellation as an affirmative defense. The record does not support any assertion that cancellation was tried by express or implied consent. When questioned by the trial court as to what theories Isis was relying on, defense counsel stated its...