Century 21 Deep South Properties, Ltd. v. Keys, 91-CA-00757-SCT

CourtUnited States State Supreme Court of Mississippi
Citation652 So.2d 707
Docket NumberNo. 91-CA-00757-SCT,91-CA-00757-SCT
Decision Date09 March 1995

Gary L. Geeslin, Lipscomb Geeslin & McClanahan, Columbus, for appellant.

H. Russell Rogers, Gholson Hicks Nichols & Ward, Starkville, for appellee.

Before HAWKINS, C.J., and McRAE and JAMES L. ROBERTS, Jr., JJ.

HAWKINS, Chief Justice, for the Court:

On June 14, 1990, Century 21 Deep South Properties, Ltd. (hereinafter Century 21) filed its Complaint for Discovery, Accounting and Damages against Bobby Norris Keys in Lowndes County Chancery Court. Keys replied and countersued Century 21 with his Answer to Complaint for Discovery, Accounting and Damages with Counter-Claim on July 19, 1990. Century 21 responded in turn with its Answer to Counter-Claim on September 13, 1990. For the remainder of 1990 and the first quarter of 1991, the parties engaged in extensive discovery. A hearing was then held before Judge Robert L. Lancaster on April 24 and 25, 1991. On May 10, 1991, Judge Lancaster issued an opinion of the Court.

Four days later, Century 21 filed a Motion to Amend Findings and Conclusions or to Alter or Amend Judgment. On May 17, 1991, Keys answered Century 21's motion with a Defendant's Response to Plaintiff's Motion to Amend Findings/Conclusions or to Alter/Amend Judgment and a Motion and Incorporated Memorandum for Post Judgment Relief. Century 21 immediately responded with their Plaintiff's Reply as to Plaintiff's Motion to Alter or Amend Etc. and Plaintiff's Response to Defendant's Motion for Post-Judgment Relief. A hearing on these motions was held on May 30, 1991, and on June 12, 1991, Judge Lancaster issued a second opinion of the Court.

Judge Lancaster handed down his final Judgment on June 26, 1991. Century 21 filed their Notice of Appeal exactly one month later and on August 9, 1991, Keys filed his Notice of Cross Appeal.


The seeds of this case were planted in 1956. In that year Bobby Keys and Tommy Vice formed a partnership to sell real estate named Keys and Vice Realtors. Twenty years later, in 1976, the partnership became Century 21 Keys and Vice Real Estate Agency, Inc., a corporation with Keys and Vice serving as equal shareholders. On March 19, 1981, the corporation redeemed Keys' stock leaving Vice as the sole shareholder. The agreement which redeemed Bobby Keys' stock also made Keys and his wife, Beth, independent contractors for the corporation. The clause which does so says in part:

Purchaser, after the consummation of the sale and redemption of the corporate stock provided for herein, does hereby agree to employ Seller and his wife, Elizabeth V. Keys, as independent contractors for the sale of commercial, residential and/or farm properties in accordance with the policies and procedures of Seller whether now existing or hereafter established, governing all actions and conduct of employees and/or independent contractors of Seller and further in accordance with the standard independent contractor employment now existing or hereafter amended and/or established by the Purchaser with the exception that any such contractor employment agreement shall contain the following provisions relative to Seller and wife: Said employment shall be guaranteed for a period of three (3) years from the date hereof. During such employment or any extension thereof, Seller and his wife shall be guaranteed sales commissions of thirty-five percent (35%) of commissions on listings plus forty-five percent (45%) of commissions on sales (a total of 80% of commissions in transactions where either party is both the listing and selling agent.)

The working relationship of the parties was governed by this agreement until February 1, 1985, when Keys and the corporation, then called Century 21 Deep South Properties, Ltd., entered into a new real estate sales commission contract. Under this contract, Keys was to act as a "real estate salesman" as defined under Miss.Code Ann. Sec. 73-35-3(4) (1972). The contract further stated that:

Salesman shall become thoroughly familiar with and be governed by the Code of Ethics of the National Association of Realtors and the applicable laws of the State of Mississippi with respect to the sale of real estate and the by-laws and regulations of the Lowndes County Board of Realtors. Salesman shall also become thoroughly familiar with the current "Policies and Procedures" of CENTURY 21 DEEP SOUTH PROPERTIES, LTD. and shall be governed by same. The current "Policies and Procedures" of CENTURY 21 DEEP SOUTH PROPERTIES, LTD. shall be an extension of this contract.

One of the "Policies and Procedures" incorporated into the contract by reference is Policy L-1 which deals with salespersons buying and selling on their own account:

There will be times when a salesperson desires to buy or sell property for his own account. When buying properties, the salesperson will obtain permission of the agency for this action. The agency has first refusal on the purchase and if the agency refuses, then the salesperson may buy the property for his own account. A full sales commission will be paid by the seller to the agency. It is important to advise the seller that the agent is buying for his own account. (Emphasis ours)


When the salesperson sells property that he owns, other than his homestead or personal residence, the commission fee to the agency will be waived on one sale annually. If there is more than one sale annually, the seller will pay the full commission to the agency. It is the intent of management to encourage sales associates to invest in real estate for their future. Accordingly, this waiver of commission shall apply to those properties that meet the IRS requirements and definitions of property held for investment. This means property must be held for a minimum of one (1) year prior to selling. Property that is sold within a period less than one (1) year, a full commission will be due to the agency.

The above policy was first implemented in 1983 and was revised in 1987. 1

Policy G-1 dealing with commission fees and commission splits was also incorporated into the 1985 contract. It states specifically that, "On all lots, acreage and farms, the commission fee will be 10%, but not less than $1,000.00." Another item incorporated into the contract was Policy G-3 which dealt with annual commission splits. This detailed document was discussed by Tommy Vice while being questioned by his attorney, Gary Geeslin, at the April 24, 1991, hearing:


All right. Now, this document is somewhat complex. It appears that one would need to know the number of million dollar producers in the agency before you can actually determine what the split is. Can you or do you have recollection of or personal knowledge of the number of million dollar producers in the agency was at this relevant time?


Yes, at the time this became effective and the changes were made to incorporate this, there were six.

Q. Six?

A. Six Million dollar producers.

Q. All right. Then if you look over to the column on the right hand side where the six million dollar producers, then what is the, if you were dealing with what is called an in-house, in other words, no other real estate company or agency was involved and it was all in the agency, what would be the split between the agency and the individual agent, salesperson?

A. The agent would receive 75 percent, the agency would receive 25 percent.

The final item to be incorporated into the contract was Policy A-14 dealing with a sales associate's termination. The version of this policy that was in effect on February 1, 1985, states in pertinent part:

Those transactions which the terminating sales associate has initiated and are in the process of closing shall be assessed at 50% of the terminating sales associates commission for follow-up action by management in order to complete the transactions.

This policy was revised on May 1, 1986. The new version of the above clause reads:

Those transactions which the terminating sales associate has initiated and are in the process of closing shall be paid to the sales associate based on 50% of the current CENTURY 21 DEEP SOUTH PROPERTIES commission schedule as outlined in the POLICY & PROCEDURE manual.

Bobby Keys operated as a sales associate for Century 21 Deep South Properties under the 1985 contract complete with all of the incorporated documents until April 1989.

In addition to witnessing the signing of the above new contract, 1985 also saw the start of the Sweetbriar subdivision. Keys' exact role in the development of Sweetbriar was an object of great dispute in the case below, with Keys stating that he and Columbus attorney Aubrey Nichols were equal partners in the subdivision's development and Century 21 claiming that no such partnership existed. Keys testified that the idea for Sweetbriar came in a 1985 conversation that he and Nichols had about a nearby piece of land. According to Keys, this conversation led to further inquiries about the property and the forming of a partnership for the development of the subdivision.

There is little physical evidence of the Keys/Nichols partnership. First, the partnership agreement was never reduced to writing. Second, Keys' name does not appear on the July 31, 1985, Warranty Deed of the land from the Leigh family that was to become Sweetbriar; the August 15, 1985, Land Deed of Trust with Merchant Farmers Bank for the $140,000 that was used to buy the Sweetbriar property; or the November 26, 1985, listing of Sweetbriar's restrictive covenants and conditions. Furthermore, aside from two deeds in which Keys was the grantee, none of the deeds issued to the purchasers of the Sweetbriar lots bears his name either. The only member of the supposed partnership whose name appears on each of these documents is Aubrey Nichols.

Nichols explained on cross-examination why the partnership was set up and operated like...

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