Dean Vincent, Inc. v. Krimm

• Citation: 285 Or. 439,591 P.2d 740
• Decision Date: 08 March 1979
• Docket Number: No. A7608-10969,A7608-10969
• Parties: DEAN VINCENT, INC., an Oregon Corporation, Appellant, v. David O. KRIMM, Respondent. ; SC 25511.
• Court: Supreme Court of Oregon

Page 740

591 P.2d 740

285 Or. 439

DEAN VINCENT, INC., an Oregon Corporation, Appellant, v. David O. KRIMM, Respondent.

No. A7608-10969; SC 25511.

Supreme Court of Oregon, Department 1.

Argued and Submitted Dec. 7, 1978.

Decided March 8, 1979.

Richard O. Thomas of Gaylord & Thomas, Portland, argued the cause and filed briefs for appellant.

Graham Walker, Portland, argued the cause for respondent. With him on the brief was Robert M. Mercer of Mercer, MacLaren, Talney & Crew, Portland.

Before DENECKE, C. J., and HOLMAN, HOWELL and LENT, JJ.

HOLMAN, Justice.

Plaintiff brought an action to recover a real estate commission under the terms of a listing agreement. The agreement provided that if plaintiff produced a purchaser ready, able and willing to buy upon the terms in the listing, or if the owner during the period of a listing withdrew the authority to sell, plaintiff was entitled to its full 10 per cent commission. The case was tried to the court without a jury and plaintiff appealed from a judgment for defendant.

The listing agreement was signed on November 3, 1975, and granted an exclusive listing for a period of 180 days with a non-exclusive listing for an additional like period. During the latter part of April 1976 plaintiff presented defendant with an earnest money agreement signed by a proposed purchaser for the price for which the property was listed. Defendant refused to sell and withdrew the property from the market, the withdrawal being a violation of his agreement. ¹

It is not entirely clear whether plaintiff's claim to a commission is based upon his presentation of a purchaser who was ready, able and willing to buy in accordance with the terms of the listing. It is clear, however, that plaintiff contends it is entitled to a commission because defendant withdrew the authority to sell. If plaintiff contends it is entitled to recover because it produced a purchaser, there was sufficient evidence to justify the trial judge's finding that the tendered earnest money agreement was subject to several material changes from the terms of the listing. As a result, defendant was not responsible to plaintiff for a commission on that basis.

This case was tried and decided, apparently, upon the assumption that the provision for the payment of a full commission, in the event the property owner withdrew authority to sell during the period of the listing, was a penalty and unenforceable unless Plaintiff proved that the amount provided as liquidated damages was a reasonable attempt by the parties to forecast just compensation and that the harm caused by the breach was impossible or very difficult of accurate estimation. Therefore, plaintiff undertook either to prove that the liquidated damages were a reasonable forecast of just compensation or to prove actual damages and ignore the provision for liquidated damages entirely. Plaintiff did this by attempting to prove that the probabilities were it would have been successful in obtaining a purchaser who was ready, able and willing to purchase in accordance with the terms of the listing. The trial judge in his memorandum opinion to the parties stated:

" * * * There is, however, no evidence in the case that the prospective buyer would have bought the property on the terms listed, nor is there any evidence to show that plaintiff could have sold to anyone else, or evidence of a reasonable probability that it could have done so on the listed terms. Therefore, I conclude that plaintiff has failed to prove damages, and judgment must be for the defendant."

It is our conclusion that the quoted statement of the trial judge was justified by the evidence. The property listed was advertised by plaintiff for 27 weeks and the one earnest money agreement previously mentioned was the only offer presented. The trial judge could properly conclude the probabilities were that plaintiff would not have been successful in selling the property upon the terms listed had plaintiff's authority not been terminated.

Plaintiff now urges that it was not plaintiff's burden to prove that the liquidated damage provision was valid but that it was defendant's burden to prove that it was invalid; therefore, since defendant, rather than plaintiff, had the burden on this issue, he suffered the risk of non-persuasion. In Dean Vincent, Inc. v. McDonough, 281 Or. 239, 249, 574 P.2d 1096 (1978), we held that in the absence of "adhesive" ² circumstances the defendant should have the burden both to plead and prove that a provision for liquidated damages is invalid either because it did not represent a reasonable attempt to forecast just compensation for a breach or because the harm was capable of and not difficult of accurate estimation. The opinion does not make it entirely clear whether the change from previous law, which previous law put the burden of persuasion upon the plaintiff, was intended to be effective as of that decision or whether it was to be applied as of our previous decision in the case of Layton Manufacturing v. Dulien Steel, 277 Or. 343, 560 P.2d 1058 (1977), which was quoted and in which the subject was mentioned. Layton Manufacturing was decided February 25, 1977. This case was tried August 24-25, 1977. Dean Vincent, Inc. v. McDonough was decided February 8, 1978.

Plaintiff claims the effective date of change from the old law to the new is the date of the decision in Layton Manufacturing. Assuming plaintiff is correct, it appears from the record before us, as previously mentioned, that the case was tried either as if plaintiff had the burden of proof that the provision for liquidated...