Ellingson Agency, Inc. v. Baltrusch

• Decision Date: 15 September 1987
• Docket Number: No. 87-44,87-44
• Citation: 44 St.Rep. 1598,742 P.2d 1009,228 Mont. 360
• Parties: ELLINGSON AGENCY, INC., Plaintiff and Respondent, v. Otto BALTRUSCH, Jr., and Carl Baltrusch, Defendants and Appellants.
• Court: Montana Supreme Court

Page 1009

742 P.2d 1009

228 Mont. 360

ELLINGSON AGENCY, INC., Plaintiff and Respondent, v. Otto BALTRUSCH, Jr., and Carl Baltrusch, Defendants and Appellants.

No. 87-44.

Supreme Court of Montana.

Submitted on Briefs July 1, 1987.

Decided Sept. 15, 1987.

Astle & Astle, David L. Astle, Kalispell, for defendants and appellants.

Jeffrey D. Ellingson, Trieweiler Law Firm, Whitefish, Warden, Christiansen, Johnson & Berg, Stephen C. Berg, Kalispell, for plaintiff and respondent.

TURNAGE, Chief Justice.

Defendants Carl and Otto Baltrusch appeal the judgment of the Eleventh Judicial District Court, Flathead County, which awarded to plaintiff Ellingson Agency, Inc., a broker's commission, attorney fees and interest in the total amount of $148,308.91 and dismissed defendants' counterclaim. We affirm in part and reverse in part.

Three issues are presented for our review:

1. Did the District Court err when it granted summary judgment in favor of Ellingson?

2. Did the District Court err when it granted Ellingson's motion for summary judgment dismissing the Baltrusches' counterclaim?

3. Did the District Court err when it compounded interest in violation of § 25-9-205, MCA?

This is an action for a real estate commission based on an exclusive listing agreement between Ellingson Agency, Inc. (Ellingson), and Carl and Otto Baltrusch. Prior to November 6, 1979, the Baltrusch brothers had entered into a contract for deed to purchase the Gibson Shopping Center in Kalispell from Stephen and Patricia McAfee. On November 6, 1979, Carl Baltrusch, representing himself and his brother, signed two exclusive one-year listing agreements with Ellingson covering the sale of the Gibson property. (The listing agreements were identical but covered different portions of the Gibson property; hereinafter, they will be referred to as a singular document.) Marvin Bethea, who was to be the sales agent for the sale, signed the agreement on behalf of Ellingson.

From November 1979 through June 1980, Bethea devoted substantial time and expense attempting to locate buyers for the Gibson property. On January 11, 1980, the Baltrusch brothers received a notice of default from the McAfees requesting the Baltrusch brothers bring current their taxes and special improvement district assessments on the Gibson property or face cancellation or specific performance. In February 1980, the Baltrusch brothers informed Ellingson of McAfees' notice of default. Ellingson was aware that the Baltrusches were being pressured to transfer title in lieu of foreclosure. However, Ellingson did not inform the Baltrusch brothers that upon transfer in lieu of foreclosure, Ellingson would seek a brokerage fee.

Prior to June 3, 1980, the Baltrusches informed Ellingson that they planned to transfer the property in lieu of foreclosure. Ellingson requested that the Baltrusches get a ten-day extension before transferring the property. The Baltrusches deeded the property contingent upon such a ten-day extension. However, Ellingson failed to obtain a buyer.

On June 3, 1980, the Baltrusch brothers by quitclaim deed conveyed the Gibson property back to the McAfees in lieu of cancellation or specific performance and the McAfees released them of all further liability under the contract. On May 4, 1982, Ellingson filed suit against the Baltrusch brothers alleging it was entitled to a commission under the exclusive listing agreement on the conveyance to the McAfees. On September 20, 1983, Ellingson moved for summary judgment. Seventeen months later, on March 25, 1985, the District Court entered summary judgment in favor of Ellingson. The court found the listing agreement to be clear and unambiguous and that Ellingson was entitled to commission on the conveyance of the Gibson property under the terms of the listing agreement. The court awarded Ellingson a commission of $86,862.84 plus interest from June 3, 1980, and costs of suit.

Following summary judgment the District Court granted the Baltrusches leave to amend and file a counterclaim. In the counterclaim, the Baltrusch brothers alleged that Ellingson had violated the Montana Real Estate Brokers and Salesman Act and breached its duty of good faith and fair dealing. The Baltrusches alleged Ellingson knew of the impending return conveyance of the Gibson property but failed in its duty to inform the Baltrusches it would demand a commission on the conveyance. After further discovery, both parties moved for summary judgment on the counterclaim. On August 26, 1986, the court granted summary judgment in favor of Ellingson and dismissed Baltrusches' counterclaim. Final judgment was entered on October 9, 1986, in the total amount of $148,308.91, which included interest at 10 percent on the amount of judgment entered March 25, 1985. Baltrusches' motion to alter or amend the judgment was deemed denied, and this appeal followed.

Issue 1

Did the District Court err when it granted summary judgment in favor of Ellingson?

The first issue is whether summary judgment in favor of Ellingson on the issue of its entitlement to a commission was proper. Pursuant to Rule 56(c), M.R.Civ.P., if there is no genuine issue of material fact and the evidence before the court shows the moving party is entitled to judgment as a matter of law, summary judgment is proper. In this instance, the District Court found the exclusive listing agreement to be clear and unambiguous, that Ellingson was entitled to its commission under the contract, and that the Baltrusches raised no affirmative defenses to the contract. We disagree with the District Court that there was no genuine issue of material fact and that Ellingson was entitled to judgment as a matter of law.

The exclusivity provision in the listing agreement executed by the parties provides:

This listing is an exclusive listing and you hereby are granted the absolute, sole and exclusive right to sell or exchange the said described property. In the event of any sale, by me or any other person, or of exchange or conveyance of said property, or any part thereof, during the term of your exclusive employment, or in the case I withdraw the authority hereby given prior to said expiration date, I agree to pay you the same commission, just the same as if a sale had actually been consummated by you. [Emphasis added.]

The listing agreement covered the period from November 6, 1979, to November 6, 1980.

On January 11, 1980, the Baltrusches received notice of default from sellers, Stephen and Patricia McAfee. The McAfees continued to pressure the Baltrusches to transfer the property in lieu of foreclosure. The Baltrusch brothers notified Ellingson in February 1980 that the McAfees had served notice of default. The Baltrusches also notified Ellingson that the McAfees were pressuring them to "give the property back." On June 3, 1980, the Baltrusch brothers transferred quitclaim title to the McAfees in lieu of foreclosure. It appears from the partial transcript of Otto Baltrusch, Jr.'s deposition that prior to June 3, 1980, Ellingson requested that Baltrusches obtain a ten-day extension from McAfees to enable Ellingson to find a buyer for the Baltrusch property. Additionally, it appears that the McAfees by letter dated June 3, 1980, granted a ten-day extension. However, Ellingson was unable to find a buyer.

The District Court found "the Baltrusches conveyed the Gibson property thereby effectively withdrawing the authority of the Ellingson agency to continue to try to sell the property ..." On review we are presented with the question of whether the District Court erred when it held that a transfer of title in lieu of foreclosure constitutes a sale, exchange or conveyance within the intended meaning of the listing agreement, thereby entitling Ellingson to a commission.

This Court has previously examined exclusive listing agreements identical to the agreement in the present case. In Payne v. Buechler (Mont.1981), 628 P.2d 646, 38 St.Rep. 799, the owner unilaterally terminated an exclusive listing agreement, then twelve days later sold the property which had been covered under the agreement. In finding the broker entitled to his commission, we stated:

... once the broker began performance under the written agreement by expenditure of time, efforts and money to attract a purchaser on the owner's terms, the written agreement became bilateral and binding on both parties. It could not be unilaterally terminated by the owner without payment of the brokers' commission.

Payne, 628 P.2d at 650, 38 St.Rep. at 804.

In Nardi v. Smalley (1982), 197 Mont. 321, 643 P.2d 228, this Court held the owner bound by the terms of the exclusive listing agreement and the broker entitled to his commission. In Nardi, the owners executed documents for the sale of the property seventy days after the listing agreement expired but to a buyer found by the broker. The listing agreement provided for the broker's commission on a sale to a buyer found by the broker, at the agreed price, within ninety days of the termination of the listing agreement. We held the terms of the listing agreement entitled the broker to his commission and that the broker had not breached his fiduciary duty to disclose all material terms.

In John Whiteman & Co. v. Fidei (1954), 176 Pa.Super. 142, 106 A.2d 644, 646, the Superior Court of Pennsylvania held a buyer's receipt of $1,000 coupled with the transfer of title in lieu of foreclosure constituted a "sale or exchange." Whiteman was later distinguished by Felbinger and Co. v. Traitoros (1979), 76 Ill.App.3d 725, 31 Ill.Dec. 906, 911, 394 N.E.2d 1283, 1288. In Felbinger, the Illinois Appellate Court held that when an exclusive realtor's listing contract does not state whether a transfer of title in lieu of foreclosure constitutes a sale, the term sale is susceptible to differing interpretations. Felbinger reversed and remanded the case to the District Court and ordered the court to admit parol evidence of the parties'...