Koller v. Belote, 756--III

• Decision Date: 04 December 1974
• Docket Number: No. 756--III,756--III
• Citation: 528 P.2d 1000,12 Wn.App. 194
• Parties: Owen F. KOLLER et al., Appellants, v. Ivy L. BELOTE and Marjorie R. Belote, husband and wife, Respondents.
• Court: Washington Court of Appeals

Page 194

12 Wn.App. 194

528 P.2d 1000

Owen F. KOLLER et al., Appellants, v. Ivy L. BELOTE and Marjorie R. Belote, husband and wife, Respondents.

No. 756--III.

Court of Appeals of Washington, Division 3.

Dec. 4, 1974.

Henry E. Savage, Savage & Nuxoll, Colfax, for appellants.

Kenneth B. Myklebust, Irwin, Friel & Myklebust, Pullman, for respondents.

GREEN, Chief Judge.

Plaintiff brought this action to recover a real estate commission. ¹ Defendants counterclaimed for damages alleging that plaintiff acted as a dual agent without their knowledge or consent and failed to reveal facts material to their relationship. Appeal is taken from a judgment dismissing plaintiff's complaint and awarding damages to the defendants upon their counterclaim.

The sole issue presented is whether the trial court's findings are supported by substantial evidence. This factual question will be considered in the context of the general legal obligations imposed upon a real estate broker acting as agent for both buyer and seller.

The law on this point is clear:

This dual agency relationship, while extremely delicate, is permissible when both parties have full knowledge of the facts and consent thereto.

Brandt v. Koepnick, 2 Wash.App. 671, 674, 469 P.2d 189, 190 (1970). In order to comply with the test stated in Brandt, there must be a clear and express disclosure of the dual agency relationship. Investment Exchange Realty, Inc., v. Hillcrest Bowl, Inc., 82 Wash.2d 714, 513 P.2d 282 (1973); See Annot. 48 A.L.R. 917; 12 Am.Jur.2d Brokers §§ 87, 89 (1964). Mersky v. Multiple Listing Bureau of Olympia, Inc., 73 Wash.2d 225, 437 P.2d 897 (1968), is illustrative of a real estate broker's duty of loyalty and full disclosure to his principal. In denying a commission to a broker who sold his principal's property to his sister, the court, in Mersky at page 228, 437 P.2d at page 899, noted that from the agency relationship between broker and principal

springs the duty and the obligation upon the part of the listing broker, as well as on the part of his subagents, to exercise the utmost good faith and fidelity toward his principal, the seller, in all matters falling within the scope of his employment and further held that one in the position of a broker has a duty to:

(S)crupulously avoid representing any interest antagonistic to that of the principal in transactions involving the principal's listed property, or otherwise self-dealing with that property, without the explicit and fully informed consent of the principal; and to make, in all instances, a full, fair, and timely disclosure to the principal of all facts within the knowledge or coming to the attention of the broker or his subagents which are, or may be, material in connection with the matter for which the broker is employed, and which might affect the principal's rights and interests or influence his actions.

and concluded that:

(T)he duties of undivided loyalty, good faith and full disclosure, running from the broker and his subagents to the principal, embraces the obligation to timely reveal to the principal any close ties of kinship which may exist between the broker, or a participating subagent, and a prospective and proffered buyer or seller as the case might be.

Finally, where a broker is found to have breached this fiduciary duty, his commission will be forfeited. Ramsey v. Sedlar, 75 Wash.2d 901, 454 P.2d 416 (1969); Wesco Realty, Inc. v. Drewry, 9 Wash.App. 734, 515 P.2d 513 (1973). ² In light of these standards, we consider the following material facts for which there is substanial evidence in the record.

Defendant Marjorie Belote and one Lois Hanson were each owners by inheritance of an undivided one-half interest in over 1,000 acres of wheat land in Whitman County. On May 19, 1970, Mrs. Hanson gave a written 90-day listing to plaintiff upon her interest in the land 'subject to concurrent listing for sale of interest held . . . by Marjorie R. Belote and Ivy L. Belote . . . for . . . $500 per acre cash . . .' On the same date, defendants gave plaintiff a written 90-day non-exclusive listing on the property 'for the best price and upon the best terms available.' Both listings provided for a real estate commission.

On May 25, 1970, plaintiff telephoned defendants in California to ascertain if they would be willing to trade their interest in the farm for a building in Lewiston, Idaho. Defendants stated they were not interested in the trade but wanted an outright sale. During June 1970 plaintiff contacted the defendants several times regarding the proposed exchange and sent them a brochure on the building. After much insistence by the plaintiff, defendants flew to Lewiston in July and with their attorney inspected the building. Defendants requested certain information on the operation of the building, which was not forthcoming, and they departed for California after arranging through counsel to have the building appraised. Plaintiff learned of the appraisal, obtained it and after marking certain portions sent it to the defendants who received it on August 13, 1970. On the following day, plaintiff telephoned the defendants and advised them that the figures in the appraisal were wrong. Defendants became very upset over the fact that plaintiff intercepted the appraisal, as they paid $300 for it and considered it privileged information. Thereafter, negotiations continued through defendants' counsel and in early September a contract of sale covering a trade of properties was prepared. This contract was never executed and defendants had no further contact with plaintiff.

In October negotiations began between defendants and the owner of the building, Gerald Anderson, for direct purchase of defendants' property without a...