Jones v. Best, 65157-4

• Decision Date: 20 February 1998
• Docket Number: No. 65157-4,65157-4
• Citation: 950 P.2d 1,134 Wn.2d 232
• Court: Washington Supreme Court
• Parties: John Paul JONES, d/b/a J.P. Jones Realty, Petitioner, v. Cecelia M. BEST, Personal Representative of the Estate of Peter C. Best, Respondent.

Page 232

134 Wn.2d 232

950 P.2d 1

John Paul JONES, d/b/a J.P. Jones Realty, Petitioner, v. Cecelia M. BEST, Personal Representative of the Estate of Peter C. Best, Respondent.

No. 65157-4.

Supreme Court of Washington En Banc.

Argued Oct. 28, 1997.

Decided Jan. 29, 1998.

As Amended Feb. 20, 1998.

Walters, Whitaker, Finney & Falk, Michael D. Finney, Yakima, for petitioner.

Talbott, Simpson, Gibson & Davis, P.S., Blaine G. Gibson, Yakima, for respondent.

DOLLIVER, Justice.

The Plaintiff in this case is John Paul Jones, a Realtor, who sued for his full $37,000 commission following the $740,000 sale of real property in Yakima County. The Defendant is the estate of Peter C. Best, who owned and sold the orchard Mr. Jones listed. Following a bench trial, the Honorable Robert N. Hackett Jr. found for the Plaintiff, awarding him his full commission, less $500, which he found the Plaintiff had agreed to deduct. The trial court also awarded Plaintiff prejudgment interest and attorney fees. The Court of Appeals reversed, finding Mr. Jones was estopped from claiming his full commission, and instead awarded him $18,000 and prejudgment interest. The Court of Appeals awarded attorney fees to the Defendant. The Plaintiff's petition for review was granted.

John Paul Jones, the Plaintiff, is a licensed real estate agent in the State of Washington. Peter Best, the Defendant, was the owner of a 96-acre orchard in Zillah, Washington. In January 1989, Mr. Best approached Mr. Jones about selling the orchard. Mr. Best had sold and repossessed the orchard several times, so Mr. Jones was familiar with the property and had an acquaintance of several years with Mr. Best. On January 26, 1989, the two men entered into a one-year exclusive listing agreement: The orchard was listed for $800,000, and Mr. Jones had the right to sell it for that price or any other to which Mr. Best agreed. Mr. Jones would receive five percent of the sale price as his commission, whether he or someone else sold the property.

Two or three months after the agreement was made, Mr. Jones learned that Pacific Fruit Growers & Packers, Inc. was a potential purchaser of the orchard. Earl Nordberg, a Realtor with whom Mr. Jones had worked in the past, was working for Pacific Fruit. Mr. Best informed Mr. Jones at that time that he was considering Pacific Fruit's offer of $735,000 or $740,000. At their next meeting, Mr. Best told Mr. Jones he had made a deal on the orchard. Figuring that five percent of the purchase price of $740,000 was $37,000, Mr. Jones told Mr. Best, "Pete, I'll take $18,000, and you take care of Nordberg." Verbatim Report of Proceedings at 16. Although he knew he was entitled to the full $37,000, Mr. Jones intended to take a little less than half of the commission owing and have the remainder paid to Mr. Nordberg who, though not the listing agent, had procured the buyer. In similar transactions involving Mr. Nordberg, Mr. Jones stated they each took half of the commission--"50 percent for the seller and 50 percent for the lister"--and that was what he had expected would occur, through Mr. Best, in this sale. Verbatim Report of Proceedings at 21. Mr. Jones testified Mr. Best shook hands and "was evidently well pleased." Verbatim Report of Proceedings at 20.

In mid-June 1989, Mr. Jones heard the sale of the orchard had closed. He called Mr. Best to ask for the $18,000 commission. Mr. Best was hostile and stated, "[Y]ou don't have any commission coming.... [Y]ou didn't sell the orchard." Verbatim Report of Proceedings at 17. Mr. Jones did not respond; he knew, however, that he had an exclusive listing agreement to receive five percent of any selling price. Ten minutes later, Mr. Best called back and asked Mr. Jones to show the listing agreement to E. Frederick Velikanje, Mr. Best's lawyer. He did. Around that same time, Mr. Nordberg informed Mr. Jones that he had never received a commission.

Soon, Mr. Jones received a phone call from Mr. Velikanje, who wanted to know whether he had agreed, with Mr. Best, to take $18,000 for his commission. Mr. Jones replied that he had, "as long as [Mr. Best] took care of Nordberg." Verbatim Report of Proceedings at 18. On June 21, 1989, Mr. Jones and Mr. Nordberg each received a letter from Mr. Velikanje. It stated that he would send a check for $18,000 upon receipt of a release, signed by both Mr. Jones and Mr. Nordberg, showing that the $18,000 was a complete settlement.

Mr. Jones wrote back on June 29, 1989, stating that, as the exclusive listing agent, he was entitled to the full five percent of the purchase price, or $37,000. He indicated he would accept $18,500, plus interest and costs, as a full release of his claims under the agreement, but would need the full $37,000 to get a release from Mr. Nordberg. He stated the interest was $6 per day, dating from May 31, 1989, and that legal consultation had cost him $150.

Mr. Jones received a final letter from Mr. Velikanje, along with a check for $18,000. The letter stated the check was forwarded as a means of settlement and compromise, upon Mr. Jones's representation that he had an exclusive listing, despite the fact he did not sell the property. The letter reiterated the check was meant "as a final and complete disposition and settlement of this matter." Ex. 10. Mr. Jones then sued for the full $37,000.

Mr. Best died during the pendency of this case. Mr. Velikanje testified he had been Mr. Best's attorney for several years. In April 1989, he learned Mr. Best was interested in Pacific Fruit's offer of $740,000. Mr. Velikanje also testified Mr. Best "would not go ahead with this unless he could work something out with John Paul Jones as to the commission." Verbatim Report of Proceedings at 29. In fact, Mr. Best was going to offer $15,000 "as a settlement." Verbatim Report of Proceedings at 29. (The trial court admitted this testimony, which was hearsay, only to show Mr. Best's state of mind--willingness to negotiate a deal--not for the truth of the matter asserted.) Mr. Best later told Mr. Velikanje they had met and agreed to $18,000. Mr. Velikanje testified he then called Mr. Jones, who said he had agreed to take $18,000. Mr. Jones never cashed the $18,000 check, but returned it before suing Mr. Best.

In oral findings following argument, Yakima Superior Court Judge Robert N. Hackett Jr. stated the problem in this case arose because Mr. Jones and Mr. Best "weren't communicating," and the conversation between the two men was "never an agreement." Verbatim Report of Proceedings at 70. The trial court went on, however, to find that "what the agreement meant was that the share owed to Mr. Jones would be $18,000.00[,]" a figure premised on Mr. Jones's belief that Mr. Nordberg would be entitled to some payment for his efforts. Verbatim Report of Proceedings at 71.

In his written findings and conclusions, Judge Hackett found Mr. Best "hoped the real estate commission would be substantially reduced" were he to accept a $740,000 offer. The court also appeared to have accepted Mr. Jones's version of the facts, finding, "Mr. Jones told Mr. Best that Jones would accept a commission of $18,000 and that Best would have to 'take care of Nordberg.' " Clerk's Papers at 16. The trial court further found "[t]here was never a complete agreement between Jones and Best regarding the entire commission being reduced to $18,000." Clerk's Papers at 17. He concluded Mr. Jones had not waived a commission greater than $18,000, but had agreed to reduce his commission by $500 (when he offered to accept $18,000, instead of $18,500, which would have been one half of $37,000). The trial judge awarded Mr. Jones $36,500, prejudgment interest, and attorney fees.

The Court of Appeals, Division Three, reversed in an unpublished opinion, holding that Mr. Jones should be estopped from claiming more than the $18,000 commission and that he was not entitled to attorney fees because he was no longer the prevailing party, but did award Mr. Jones prejudgment interest.

While this case appears to be fact-specific and easily resolved by application of well-settled contract principles, the trial court and Court of Appeals confused several theories in their attempts to resolve the issues. The evidence showed Mr. Jones and Mr. Best had a valid written contract--the exclusive listing agreement--which would give Mr. Jones five percent of the sale price of Mr. Best's orchard. Nobody has claimed the listing agreement was incomplete or in any way invalid. The confusion arose over the intended effect of Mr. Jones's "conversation" with Mr. Best, in which Mr. Jones told Mr. Best, "Pete, I'll take $18,000, and you take care of Nordberg." Verbatim Report of Proceedings at 16. The trial court did not find that Mr. Best replied, although Mr. Jones testified the two men shook hands and Mr. Best was pleased.

The trial court correctly found this conversation did not constitute an agreement. Inexplicably, however, the trial court then went on to conclude Mr. Jones agreed to reduce his commission by $500. The problem with the trial court's analysis is that the only time an "agreement" could have come about was during the ambiguous conversation related above. If there was no agreement as to a reduction of Mr. Jones's commission to $18,000, then it necessarily follows there was no agreement to a $500 reduction.

The Court of Appeals first held, correctly and as a matter of law, that Mr. Best could not owe Mr. Nordberg a commission because only Mr. Jones was entitled to a commission under the listing agreement. Although Mr. Jones and Mr. Nordberg may have had a practice of sharing commissions, such practice would only give rise to a claim by Mr. Nordberg against Mr. Jones, not Mr. Best. Jones v. Best, No. 14634-1-III, slip op. at 5-6 (Wn.App. Dec. 3, 1996).

The court then went on to hold, however, that Mr. Jones should be estopped from claiming more than $18,000. After discussing whether promissory or equitable...