Hoyt R. Matise Co. v. Zurn
| Decision Date | 04 March 1985 |
| Docket Number | No. 84-1106,84-1106 |
| Citation | 754 F.2d 560 |
| Parties | HOYT R. MATISE COMPANY, Plaintiff-Appellant, v. Stanley ZURN, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Michael Braden, Dallas, Tex., for plaintiff-appellant.
Black & Roberts, George C. Black, Jr., Randy Roberts, Dallas, Tex., for defendant-appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before GEE, POLITZ, and HIGGINBOTHAM, Circuit Judges.
Hoyt R. Matise Co. (Matise), a licensed real estate broker, sued Stanley Zurn to recover a real estate commission. Matise based its claim on alternate theories: (1) that it had procured a purchaser who had entered into an enforceable contract of sale for Mr. Zurn's property, or (2) that it had procured a purchaser who was ready, willing, and able to purchase the property on Mr. Zurn's terms. After a bench trial, the district court entered judgment for defendant Zurn.
Matise moved for a new trial on the ground that the would-be purchaser, Michael Mullen, who could not be located at the time of trial, had been located and would testify in a manner directly contrary to the district court's finding of fact. The district court denied the motion, and Matise appealed the adverse judgment and the denial of the motion for new trial.
We conclude that the contract of sale between Mr. Zurn and Mr. Mullen was valid and enforceable and that the district court clearly erred in finding that Matise was at fault in the sale's failing to close. Therefore Matise is entitled to its commission as provided in the contract of sale. 1 Accordingly, we reverse and remand for findings as to the amount of the commission provided by the contract. Because we hold that the district court acted within its discretion in denying Matise's motion for new trial, the district court need not reopen testimony on the damages issue.
Marie Turner, a licensed real estate broker employed by Matise, contacted Mr. Zurn in early 1981 concerning the sale of a parcel of rental property located in Dallas County, Texas. Miss Turner acted on behalf of her client, Mr. Mullen, who was interested in purchasing the property. Mr. Zurn held an option to purchase the property which was due to expire March 15, 1981.
On March 2, 1981, Miss Turner presented Mr. Zurn with a contract of sale that bore the signatures of Miss Turner and Mr. Mullen, whose name had been signed by Miss Turner. 2 The contract of sale consisted of Matise's standard printed contract of sale form, an attached addendum, an attached exhibit covering financing terms, and an attached copy of a page from the city of Dallas plat books on which the outlines of the property were marked with heavy black lines and which bore the notation "subject property." The contract stated that Matise was acting as the seller's agent.
Mr. Zurn required that changes be made in the contract to reduce the broker's commission and alter the manner of its payment, to require the purchaser to expedite inspection of the property and examination of existing notes and deeds of trust, to eliminate the seller's right to terminate if the purchaser did not produce the earnest money after notification that the seller had received an offer from another purchaser, and to give the seller more favorable terms on three promissory notes to be executed by the purchaser. Miss Turner personally marked these changes on the contract. Mr. Zurn initialed these changes and signed the contract.
After Miss Turner's meeting with Mr. Zurn, Mr. Mullen initialed all of Mr. Zurn's changes. Counterpart originals of the contract introduced by Matise and Mr. Zurn bear the initials of both Mr. Mullen and Mr. Zurn affirming Mr. Zurn's changes. No representative of Matise initialed the changes.
The contract introduced in evidence by Matise also shows an additional change to part C of the addendum, initialed by Mr. Mullen but not by Mr. Zurn. Part C had allowed Mr. Zurn seven days after the execution of the agreement to deliver to Mr. Mullen copies of utility bills, existing notes and deeds of trust on the property, and the current rent roll for the property. The change initialed by Mr. Mullen required the documents to be delivered the day after execution of the contract. The copy of the contract introduced by Mr. Zurn shows no such change and bears no one's initials beside the text of part C of the addendum.
A letter agreement dated March 4, 1981, but executed on March 5, refers to the March 2 contract of sale and provides that Mr. Mullen's attorney must approve all of the financing documents for the transaction. Mr. Zurn, Mr. Mullen, and representatives of Matise signed this letter.
On March 5, Mr. Mullen paid into escrow the $10,000 earnest money recited in the contract of sale. Thereafter, Mr. Mullen continued to request more favorable financing arrangements from Mr. Zurn. Mr. Zurn testified that Miss Turner at one point conveyed to him Mr. Mullen's intention not to proceed with the transaction if financing could not be arranged according to his proposal. No closing documents were ever prepared and the sale never closed. In April 1981, Mr. Mullen's earnest money was returned, and Mr. Mullen and Mr. Zurn executed mutual releases of the contract of sale. Matise was not a party to those releases.
Mr. Mullen did not testify at trial because counsel for Matise was unable to locate him during the three days in which testimony was taken. Although Matise had announced "ready" for trial subject to Mr. Mullen's availability, Matise neither requested a continuance during trial nor moved to reopen testimony after trial when it located Mr. Mullen, who had been out of the city when the case was heard.
In its conclusions of law, the district court held, among other things, that the contract adequately described the property but was unenforceable because Matise never initialed the changes to the contract and because Matise did not establish that Mr. Mullen had authorized Miss Turner to sign the contract for him. The court further held that the contract expired by its own terms when the transaction did not close on March 15, 1981. The court concluded that Mr. Zurn was ready, willing, and able to close the contract within the prescribed time limits and that neither Mr. Mullen nor Matise was ready or able to close. The district court also held that even if the contract was enforceable and did not expire by its own terms, the contract required Matise to look only to the earnest money for its commission if the purchaser breached the contract.
The district court held that no contract was formed because the parties had specifically provided in the contract of sale document that all parties had to initial any changes. Since Matise did not initial any of the changes handwritten in by Miss Turner, the court reasoned that the document was merely evidence of a series of offers and counteroffers in a continuing negotiation. We hold that the court erred in reaching this conclusion. Matise's failure to initial the changes did not preclude Matise's ratifying the agreement by its subsequent action. All parties to the contract signed the March 4, 1981, letter agreement which expressly referred to and amended the contract of sale. By doing so, they recognized themselves to be bound by the earlier contract. See Gateway Cable T.V., Inc. v. Vikoa Construction Corp., 253 So.2d 461 (Fla.Dist.Ct.App.1971) (); see generally Templeton v. Nocona Hills Owners Assoc., 555 S.W.2d 534, 538 (Tex.Civ.App.--Texarkana 1977, no writ) (dictum); City of Ingleside v. Stewart, 554 S.W.2d 939 (Tex.Civ.App.--Corpus Christi 1977, writ ref'd n.r.e.); Taylor Construction Co. v. Clynch, 196 S.W.2d 700 (Tex.Civ.App.--Amarillo 1946, no writ); Hollums v. Hancock, 180 S.W.2d 209 (Tex.Civ.App.--Amarillo 1944, no writ); 17 C.J.S. Contracts Sec. 69 (1963).
Moreover, Miss Turner's having handwritten the changes into the contract satisfied the underlying purposes of the initialing requirement. Two provisions of the contract are relevant to the modification issue. The first provision states that "[m]odification shall be made in writing only and signed by all parties hereto, and by reference made part hereof." The second provides: "Each party, his heirs, successors and assigns is bound when he signs this contract, except that any modification hereof caused by a counter-offer must be initialed by Purchaser, Seller, and Matise." As we read the contract, the first of these clauses applies to agreements embodied in a separate document that alter the terms of the executed agreement. It requires that separate agreements be separately signed. The second clause covers alterations on the printed form itself. It requires that any alteration marked on the standard form before or after the parties sign at the bottom of the page be separately initialed. 3 In that way the parties could be sure that no party would be bound by a material alteration not brought to his attention. They could also avoid litigating whether a particular modification was part of the contract at the time that a party placed his signature on the document. The essence of the provision is that no party will be required to perform under a provision to which he has not assented or when he doubts whether other parties are bound to perform under that provision. We therefore reject Matise's contention that its representatives were not required to initial the "modifications" because they were...
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