Dorman v. Pan-American Investments, Inc., PAN-AMERICAN

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: Before GODBOLD, TJOFLAT and SAM D. JOHNSON; GODBOLD
• Citation: Dorman v. Pan-American Investments, Inc., 625 F.2d 605 (5th Cir. 1980)
• Decision Date: 10 September 1980
• Docket Number: No. 78-2957,PAN-AMERICAN,78-2957
• Parties: Tyrus M. DORMAN, Plaintiff-Appellee, v.INVESTMENTS, INC., a corporation, Defendant-Third-Party Plaintiff-Appellant, v. Emmett F. HILDRETH, Jr., and Allison V. Hildreth, Individually and as Executors of the Estate of Emmett F. Hildreth, Sr., Deceased, Third-Party Defendants-Appellants.

Page 605

625 F.2d 605

Tyrus M. DORMAN, Plaintiff-Appellee, v. PAN-AMERICAN INVESTMENTS, INC., a corporation, Defendant-Third-Party Plaintiff-Appellant, v. Emmett F. HILDRETH, Jr., and Allison V. Hildreth,

Individually and as Executors of the Estate of

Emmett F. Hildreth, Sr., Deceased,

Third-Party Defendants-Appellants.

No. 78-2957.

United States Court of Appeals Fifth Circuit.

Sept. 10, 1980.

Leon M. Capouano, Montgomery, Ala., for Hildreth.

Cleary, Lee, Porter, Evans & Rowe, L. Tennent Lee, III, Huntsville, Ala., for Pan-American.

Timberlake & Gammons, H. Kenan Timberlake, Huntsville, Ala., for Tyrus Dorman.

Appeals from the United States District Court for the Northern District of Alabama.

Before GODBOLD, TJOFLAT and SAM D. JOHNSON, Circuit Judges.

GODBOLD, Circuit Judge:

In this case plaintiff Tyrus Dorman is seeking to recover a finder's fee or a fee for the release of his purported leasehold interest in land that was sold to defendant Pan-American. The district court held in favor of Dorman on several alternate theories and awarded a fee of $34,900 with interest. We reverse and hold that Dorman is not entitled to a finder's fee because he was not a licensed real estate broker and he is not entitled to a fee for release of his interest in the land because he had no colorable interest to release.

I. Facts

Pan-American Investments, Inc. is a land investment corporation. In 1973 Pan-American was looking for land to purchase. E. F. Hildreth, Sr. was the owner of a number of parcels of mountainous timberland in rural Alabama. Dorman, although not a licensed real estate broker, brought the two parties together, and on April 20, 1973, Pan-American and Hildreth entered into a land purchase agreement. This agreement provided for sale of 3,507 acres for $78 per acre, with $10,000 earnest money to be paid in advance and the balance paid over a term of years. The agreement also stated that "Mr. Tyrus Dorman is entitled to receive $10 per acre as his finder's fee," and "that I will convey to said purchaser all oil, gas and minerals and mineral rights as I may now possess." Pan-American was allowed six months in which to close the deal.

On July 20, 1973, before the sale was closed, but within the six month period, Hildreth died. Problems with title to the land were not cleared up by October 20, 1973, when the six months expired. Consequently Pan-American although financially able to buy the land, did not do so within the allowable period.

In November and December Pan-American had meetings with the Hildreth heirs. A new agreement was worked out for sale of the land. The contract entered into in December was similar to the April agreement with Hildreth, providing for the same purchase price and with interest computed from April 20. In addition, the $10,000 earnest money previously paid Hildreth was credited to the purchase price. There were, however, some differences in the terms. The title was still not clear, and Pan-American agreed to take the land "as is." The Hildreth heirs kept one-half of the mineral rights. No provision was included for Dorman to be paid a finder's fee.

Dorman previously had made other land deals with Hildreth. In 1971 he leased the mineral rights to Hildreth's land, including the land later sold to Pan-American. He leased this land in the hope of strip mining coal from it, as he was then doing with land leased from others. In 1972, before he had begun to mine Hildreth's land, Dorman's other strip mining operations were enjoined as a nuisance. The mineral lease with Hildreth provided that delay rentals of $100 per month were necessary to keep the lease in force before production began. It also stated that "when drilling or other operations are delayed or interrupted . . . as a result of some order, requisition or necessity of the government, or as a result of any cause whatsoever beyond the control of the Lessee, the time of such delay or interruption shall not be counted against Lessee . . . ."

After the injunction was issued against Dorman's strip mining (on lands leased from others), Dorman requested Hildreth to excuse him from the delay rental payments. This request was refused but Dorman stopped making the payments anyway.

In October 1972 at Hildreth's request Dorman signed a release of any interest in 520 acres covered under the mineral lease from Hildreth. In 1973 Dorman signed a release for land to be sold to Pan-American that had...