Century 21 Quality Properties, Inc. v. Chandler

• Decision Date: 06 April 1982
• Docket Number: No. 13799,13799
• Citation: 646 P.2d 435,103 Idaho 193
• Parties: CENTURY 21 QUALITY PROPERTIES, INC., an Idaho corporation, Plaintiff-Appellant, v. Stephen L. CHANDLER, M. E. LaMarche, and Adolfo James Archabal, Jr., Defendants-Respondents.
• Court: Idaho Court of Appeals

Page 435

646 P.2d 435

103 Idaho 193

CENTURY 21 QUALITY PROPERTIES, INC., an Idaho corporation, Plaintiff-Appellant, v. Stephen L. CHANDLER, M. E. LaMarche, and Adolfo James Archabal, Jr., Defendants-Respondents.

No. 13799.

Court of Appeals of Idaho.

April 6, 1982.

Petition for Review Denied June 18, 1982.

Randall C. Fredricks of Clemons, Cosho & Humphrey, Boise, for plaintiff-appellant; Paul T. Baird, Boise, on the briefs.

Bruce H. Tompkins of Elam, Burke, Evans, Boyd & Koontz, Boise, for defendants-respondents; Merrily Munther, Boise, of the firm, on the briefs.

SWANSTROM, Judge.

Century 21 Quality Properties, Inc., a real estate broker, brought suit in the district court for a broker's commission claimed to have been earned as a result of a sale of property owned by respondents. The trial judge found there was no agreement by respondents to pay a commission on the sale, which occurred several months after the closing date set forth in an "earnest money agreement." We affirm.

The principal issue on appeal is whether the trial court erred in deciding that Century 21 was not entitled to the commission under the provisions of an "earnest money agreement" dated October 10, 1977. A threshold issue is whether that agreement complied with the requirements of I.C. § 9-508, the statute of frauds. The facts essential to our opinion are as follows: Century 21 Quality Properties, Inc. and Chase Barbee are licensed real estate brokers. Barbee worked for Century 21 and was acting in its behalf during the transactions we discuss. Barbee had business dealings with one Craig Johnson. Barbee knew that Johnson and his partner, doing business as J & K Builders, Inc., wanted property to develop with an apartment complex. Barbee learned that respondents, Chandler, LaMarche and Archabal, owned a piece of property suitable for development. With knowledge of J & K's needs, Barbee approached one of the owners to determine if the property was for sale. Barbee sought a "listing" on the property from the owners, but the owners were unwilling to list the property with Century 21. Barbee was told the owners might consider a specific proposal.

Barbee made several contacts back and forth between J & K and the owners that led to the signing of an "earnest money agreement" in February, 1977, by the owners and J & K. The agreement provided for a sale of the property from owners to J & K by May 1, 1977, for $97,500 with a payment by owners of a six percent broker's commission upon closing. Barbee spent considerable time and effort to bring about a closing of the sale. He introduced Craig Johnson to certain lending officers, an architect, and planning and zoning officials, in trying to assist J & K with its planning and borrowing problems. However, J & K was unable to obtain financing for the project, and the sale did not close as provided in the February agreement.

Negotiations broke off between the owners and J & K. During the summer of 1977 the owners listed the property with a real estate broker other than Century 21 for a short period of time. Barbee attempted, unsuccessfully, to locate other property for J & K. However, in September, 1977, the owners' property was still available and Barbee renewed his negotiations with the owners for a sale to J & K. These negotiations led to the signing, by the owners and J & K, of another earnest money agreement dated October 10, 1977, for the sale of the same property, this time for $103,000. The final paragraph of this agreement was as follows:

SELLER ACCEPTS the foregoing terms and conditions and agrees to sell the above property to Buyer and to pay the Broker's commission Five Thousand One Hundred Fifty which the Broker shall have the right to retain from the proceeds of this sale. In the event the earnest money receipted for in connection with this sale is forfeited, Seller agrees that one half thereof shall be retained by the broker, provided the amount to the broker does not exceed the agreed upon commission due, and the balance shall be paid to the undersigned Seller.

(NOTE: The words underlined were written in on the printed form.)

Shortly after this agreement was signed, J & K abandoned its apartment complex plans in favor of a townhouse development, for financing and marketing reasons. Delays in obtaining financing approval for the new project prevented closing of this sale by January 15, 1978, the specified closing date. Barbee was told the owners would not extend the agreement.

After January 15, Barbee had no further part in negotiations between the owners and J & K. Barbee testified that Craig Johnson did not want to talk to him any more about it. On January 17, however, Johnson personally filled out a "real estate purchase and sale agreement" that he presented to the owners. This provided for sale of the same property to J & K for $103,000, giving credit to J & K for $2,000 earnest money already received by the owners from the previous agreements. The owners and J & K signed this new agreement, which expressly stated there was no broker's commission to be paid. Again the sale did not close by the closing date due to delays J & K encountered in obtaining financial approval. Successive agreements were executed between the owners and J & K. Between January and June of 1978, J & K made at least four payments of $811 each, which were applied against the underlying debt owing on the property. J & K made these payments for the benefit of the owners, to keep the transaction going until the sale finally closed about June 14, 1978. There is no evidence that these payments were applied against the purchase price. J & K also paid $5,000 on March 24, $5,000 on April 2, and $10,000 on May 16, all of which payments were applied to the purchase price of $102,750 shown on the final agreement.

Century 21 claims that Barbee was instrumental in bringing the owners together in 1977, and that Century 21 is entitled to the $5,150 commission under the October, 1977, agreement signed by the owners and J & K. The owners contend that the October, 1977, agreement, upon which Century 21 relies for its commission, did not satisfy the requirements of I.C. § 9-508, the statute of frauds, because it was not signed by any representative of Century 21 until April, 1980, a week before the trial. Idaho Code § 9-508 requires real estate commission contracts to be in writing:

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 of another shall be valid unless the same shall be in writing, signed by the owner of such real estate, or his legal appointed and duly qualified representative.

The owners contend the agreement did not contain the basic elements of a broker's employment contract or listing agreement. The owners argue that a broker's employment contract is not a unilateral agreement which the broker may accept by full performance, and that the case of C. Forsman Real Estate Company v. Hatch, 97 Idaho 511, 547 P.2d 1116 (1976) requires the signatures of both the broker and the party seeking to obtain a purchaser.

Certain dictum in Forsman did state "that a brokerage contract required the signature not only of the broker, but also of the party seeking to obtain a purchaser." (Emphasis added) 97 Idaho at 515, 547 P.2d at 1120. However, it is not necessary for us to determine how that language in Forsman applies in this case. Neither the earnest money agreement dated February 2, 1977, nor the one dated October 10, 1977, is a "listing agreement" or a broker's employment contract. These agreements are nothing more than printed contract forms supplied by Century 21, filled in by Barbee, setting forth the terms and conditions under which the owners agreed to sell their property to J & K. Each contains a broker's payment clause.

Century 21 had the burden of proving there was a listing agreement or a broker's employment contract, either written or oral, and it failed to carry that burden. Wilson v. Colburn, 167 Kan. 381, 206 P.2d 1054 (1949); Patee v. Moody, 166 Kan. 198, 199 P.2d 798 (1948). The trial judge's finding that there was no written or oral listing agreement between owners and broker is supported by substantial and competent evidence. The court's finding will not be set aside. I.R.C.P. 52(a).

Absent a broker's employment contract or listing agreement meeting the requirements of I.C. § 9-508, a broker in Idaho may recover a commission only in exceptional circumstances. For example, in Isaguirre v. Echevarria, 96 Idaho 641, 534 P.2d 471 (1975) the court allowed a broker who was "orally engaged" by the owner to arrange for the sale of a ranch to recover a commission from the owner, where the owner and the purchaser, but not the broker, had signed a "receipt and agreement to purchase" that contained a provision for payment of the broker's commission by the owner. Homefinders v. Lawrence, 80 Idaho 543, 335 P.2d 893 (1959), also involved the oral employment of a broker followed by a written agreement between the owner and the purchaser wherein the owner acknowledged employment of the broker and agreed to pay the broker's fee.

In both Isaguirre and Homefinders the court recognized the brokers' claims were not dependent upon any contract meeting the requirements of I.C. § 9-508 obligating the owners to pay for a broker's services to be rendered in finding a purchaser. Rather, the brokers' claims in these cases were predicated upon the written promises of the owners, made after rendition of those services, to pay the brokers for services rendered, evidenced by the type of clause we have quoted above.

These cases are illustrative of situations where the Idaho court has allowed brokers to recover commissions without a written employment contract or listing agreement. In this case, had the sale closed as specified in the October agreement, the owners would have been obligated to pay...