Gray v. Kohlhase

• Decision Date: 25 October 1972
• Docket Number: CA-CIV,No. 2,2
• Citation: 502 P.2d 169,18 Ariz.App. 368
• Parties: John D. GRAY and Laura L. Gray, his wife, Appellants, v. Charles E. KOHLHASE and Earl M. Lines, dba Kohlhase and Lines, a general partnership, Appellees. 1054.
• Court: Arizona Court of Appeals

Page 169

502 P.2d 169

18 Ariz.App. 368

John D. GRAY and Laura L. Gray, his wife, Appellants, v. Charles E. KOHLHASE and Earl M. Lines, dba Kohlhase and Lines, a general partnership, Appellees.

No. 2 CA-CIV 1054.

Court of Appeals of Arizona, Division 2.

Oct. 25, 1972.

Rehearing Denied Nov. 29, 1972.

Review Denied Jan. 2, 1973.

Anderson, Welker & Flake, by Dudley S. Welker, Safford, for appellants.

Killian & Legg, by John G. Hough, Mesa, for appellees.

HATHAWAY, Judge.

Appellants, defendants below, seek reversal of a judgment entered on a jury verdict of $17,000 in favor of the appellees, plaintiffs below.

The basis of appellees' claim against appellants was a real estate commission allegedly earned by appellees in connection with the sale of appellants' ranch property. Their complaint pleaded alternative theories; express contract and quantum meruit. Appellants' responsive pleading asserted, inter alia, the defense of the Statute of Frauds and additionally, a counterclaim for abuse of process arising out of a lawsuit which had previously been filed and dismissed without prejudice by appellees in Greenlee County.

At the conclusion of all the evidence, both parties moved for a directed verdict, appellants as to appellees' claim and appellees as to appellants' counterclaim. The court granted the latter motion and submitted to the jury the question of whether appellees were entitled to a commission.

The court instructed the jury that it had directed a verdict on the counterclaim and that it had directed a verdict against appellees on two counts, i.e., a quantum meruit theory and an oral employment contract. It did, however, instruct the jury that a party may be estopped to assert the defense of the Statute of Frauds when he had induced or permitted another to change his position to his detriment in reliance solely upon an oral agreement within the operation of the Statute of Frauds.

Appellants present various grounds for reversal including the sufficiency of the evidence to support the verdict, certain evidentiary rulings, error in jury instructions, refusal to grant their motion for a directed verdict, and the granting of a directed verdict as to their counterclaim in favor of the appellees. Since we are of the opinion that the Statute of Frauds barred appellees' claim, we address ourselves solely to the court's refusal to direct a verdict in favor of the appellants.

A.R.S. § 44--101 provides in pertinent part:

'No action shall be brought in any court in the following cases unless the promise or agreement upon which the action is brought, or some memorandum thereof, is in writing and signed by the party to be charged, or by some person by him thereunto lawfully authorized:

7. Upon an agreement authorizing or employing an agent or broker to purchase or sell real property, or mines, for compensable or a commission.'

We have held that a formal listing agreement is not required in order to satisfy the Statute of Frauds. Realty Exchange Corp. v. Cadillac Land & Dev. Co., 13 Ariz.App. 232, 475 P.2d 522 (1970); Maricopa Realty & Trust Co. v. VRD Farms, Inc., 10 Ariz.App. 524, 460 P.2d 195 (1969). In the Maricopa Realty & Trust Co. case, the escrow instructions which we deemed a sufficient memorandum of the parties' agreement, the amount of the realty commission was stated with certainty. In the case Sub judice, the memoranda signed by appellants did not set forth the amount of the commission to be paid. ¹

A memorandum on which an action by a real estate broker to recover commission is based must contain the terms and conditions of the promise sought to be enforced. McAlister v. Cooper, 91 Ariz. 191, 370 P.2d 767 (1962); Durham v. Dodd, 79 Ariz. 168, 285 P.2d 747 (1955). A statement of the compensation or commission to be paid is a vital part of the contract and unless there is some memorandum in writing stating the amount of the commission signed by the person to be charged or his agent, the contract cannot be enforced. Robertson v. Hansen, 89 Idaho 107, 403 P.2d 585 (1965); Carney v. McGinnis, 68 N.M. 68, 358 P.2d 694 (1961); Owen v. Hendricks, 426 S.W.2d 955 (Tex.Civ.App.1968), aff'd 433 S.W.2d 164; See Annot. 9 A.L.R.2d 754 § 5 (1950), and cases cited therein.

We recognize that there is a minority view followed in California that the amount of commission may be shown by parol where there is a sufficient memorandum to show the Fact of employment. See Beazell v. Schrader, 59 Cal.2d 577, 30 Cal.Rptr. 534, 381 P.2d 390 (1963). It is true that in Maricopa Realty & Trust Co. v. VRD Farms, Inc., supra, we indicated that the Chief element required to be shown in writing is the Fact of employment. We did not, however, as the parties to this litigation believed, endorse the admission of parol evidence to show the amount of commission. In fact, we stated:

'These escrow instructions constituted a sufficient memorandum of the promise sought to be enforced since the subject matter of the realty commission was stated with reasonable certainty. (citations omitted).' 10 Ariz.App. at 527, 460 P.2d at 198.

A memorandum, in order to satisfy a contract within the Statute of Frauds, must state the terms and conditions of all the promises constituting the contract and any deficiency in this regard cannot be supplied by parol. Durham v. Dodd, supra. The instrument involved in Oregon Home Builders v. Crowley, 87 Or. 517, 170 P. 718, reh. den. 87 Or. 536, 171 P. 214 (1918) was held sufficient to satisfy the Statute of Frauds, but the court stated:

'It is true that the writing must state the amount of the commission agreed to be paid to the broker, but it is also true that this requirement is predicated upon the fact that the amount of the commission agreed upon constitutes one of the terms of the contract which must be in writing: . . . Subdivision 8 (the Oregon counterpart of our A.R.S. § 44--101(7)) was designed as a remedy for a twofold evil: (1) Brokers claiming commissions when they had never been authorized to sell; and (2) brokers claiming excessive rates although authorized to sell. The conclusion . . ., that the writing must state the amount or rate of commission to be paid, is justified by the history and purpose of the statute.' 170 P. at 721, 722.

We hold, therefore, that the memoranda relied upon by appellees were insufficient to satisfy the Statute of Frauds for lack of an essential element, i.e., the Amount of commission. Such deficiency cannot be remedied by resort to parol evidence Custis v. Valley Nat'l Bank, 92 Ariz. 202, 375 P.2d 558 (1962), nor is parol evidence available to supply a missing term by labeling an agreement 'ambiguous.' Lyon v. Big Bend Dev. Co., 7 Ariz.App. 1, 435 P.2d 732 (1968).

We also find no merit in appellees position, as asserted in their pre-trial memorandum, that appellants were estopped from invoking the Statute of Frauds as a defense. It is true that one may be estopped to assert the defense of the statute when he had induced or permitted another to change his position to his detriment in reliance upon an oral agreement within the operation of the statute. O'Malley Inv. and Realty Co. v. Trimble, 5 Ariz.App. 10, 422 P.2d 740 (1967); Custis v. Valley Nat'l Bank, supra. However, the evidence necessary to invoke the doctrine of equitable estoppel is measured by the detriment sustained by the party invoking it in acting upon the oral agreement or altering his position and not merely the benefits he would have received under the oral agreement. Custis v. Valley Nat'l Bank, supra; Funk v. Anderson-Rooney Operating Co., 423 P.2d 465 (Okl.1967).

Appellants were not estopped to plead the Statute...