Lease's Estate, In re

• Decision Date: 05 February 1974
• Docket Number: No. 247,247
• Citation: 214 N.W.2d 418,62 Wis.2d 230
• Parties: In re ESTATE of D. James LEASE, Decd. THORP SALES CORPORATION, Appellant, v. Mary Jo LEASE, Admnx. of the Estate of D. James Lease, Decd., Respondent.
• Court: Wisconsin Supreme Court

Page 418

214 N.W.2d 418

62 Wis.2d 230

In re ESTATE of D. James LEASE, Decd THORP SALES CORPORATION, Appellant, v. Mary Jo LEASE, Admnx. of the Estate of D. James Lease Decd., Respondent.

No. 247.

Supreme Court of Wisconsin.

Feb. 5, 1974.

Rehearing Denied April 2, 1974.

Whyte, Hirschboeck, Minahan, Harding & Harland, Milwaukee, for appellant; James D. Wing, Milwaukee, of counsel.

La Follette, Sinykin, Anderson & Abrahamson, Madison, for respondent; Christopher J. Wilcox, Jay W. Winter, Madison, of counsel.

CONNOR T. HANSEN, Justice.

This controversy arises out of a particular paragraph contained in an exclusive farm listing contract held by the plaintiff, and which reads as follows:

'If a sale or exchange is made or a purchaser procured by the Broker, by the undersigned Seller, or by any other person, at the price and upon the terms specified herein, or at any other terms and price accepted by the undersigned Seller, during the term of this contract, or if sold or exchanged within six (6) months after the termination of same to anyone with whom the Broker negotiated during the term of this contract and whose name the Broker has submitted to Seller in writing prior to the expiration date of this contract, the Seller agrees to pay Broker a commission of TEN per cent (10%) of the sale price.'

Specifically, this controversy relates to the construction to be given to the six month 'override' provision contained in the foregoing paragraph of the listing contract.

The complaint alleges that Mary Jo Lease, defendant-respondent, is the administratrix of the estate of D. James Lease, deceased; that she is the widow of Lease and was at all times herein and prior to his death his lawful wife; that she was appointed administratrix on January 14, 1970; that on May 31, 1969, D. James Lease, her husband, executed the exclusive listing contract previously referred to, and that at that time the legal and beneficial interest in the real estate was vested in Lease. The term of the contract extended to November 30, 1969. Lease was injured in an automobile accident on October 24, 1969, and died December 1, 1969. The decedent listed approximately 2,060 acres of farm land for a sale price of $550,000. The plaintiff's commission was to be ten percent of the total purchase price.

The complaint further alleges that on or about September 8, 1969, Clifton L. Riley, agent of the plaintiff, commenced negotiations concerning the sale of the property to Boise Cascade Properties, Inc., of Chicago; that plaintiff expended considerable time and sustained considerable expense in the negotiations; that from the date of the accident to the date of his death, the only person who could see Lease was the defendant and that she could see him for a period lasting no more than 10 minutes out of each hour; and that Lease conducted his business through the agency of the defendant; that on October 26, 1969, plaintiff's agent, Riley, was to see Lease but could not do so because of his physical condition; that on October 27, 1969, defendant called plaintiff's agent, Riley, at the request of Lease, to inform him (Rily) of the accident and to inquire about the status of the negotiations on the sale of the Lease farm; that defendant was informed of the negotiations with James Allen of Boise Cascade.

The complaint also alleges that on November 6, 1969, Allen, on behalf of Boise Cascade, executed an option agreement whereby, upon exercise of the option, Boise would pay $500,000 for 1,235 acres of the Lease farm. Defendant was verbally informed of this by plaintiff's agent, and she expressed her approval and said she would inform her husband the next time she visited him. Two hours later, the defendant telephoned plaintiff's agent and demanded that the Lease farm be taken off the market. On November 10, 1969, plaintiff's agent notified Lease, in writing, that it had been negotiating with Boise Cascade and its agent, Allen. On December 22, 1969, Allen telephoned defendant, and defendant told him that plaintiff was not her agent any longer since her name was not on the listing contract; that the contract had expired; and that she would be happy to do business with him (Allen) after she was appointed administratrix on January 14, 1970.

It is further alleged that prior to the expiration of the six months 'override' provision, the defendant, in her capacity as the personal representative of her husband's estate, entered into an agreement with Allen of Boise Cascade. By the terms of the option agreement, Boise Cascade paid $20,000, received an option to purchase approximately 1,205 acres of the Lease farm for $482,000, and further agreed to indemnify the defendant against any loss arising out of any existing liability for payment of a real estate broker's commission, provided Boise Cascade had the exclusive right to conduct the negotiations and the legal defense of any such claim or demand. The option was exercised by Boise Cascade after the expiration of the six months 'override' period and the sale confirmed by the court. On March 11, 1970, the plaintiff commenced this action.

A summary of the foregoing facts presented with the complaint, reflects that a listing contract was entered into between a principal (seller) and a real estate broker. The contract provided that the broker would be entitled to a commission if the property was sold or exchanged within six months after the expiration of the contract to one with whom the broker had negotiated and whose name was submitted to the seller in writing prior to the expiration date of the contract.

Thus, the question involved on this appeal is:

Does the death of the seller after the expiration of the contract terminate the broker's right to a commission?

It has been stated many times that for the purposes of examining a complaint challenged by demurrer, the facts stated therein are assumed to be true.

Recently this court explained in Theune v. Sheboygan (1973), 57 Wis.2d 417, 419, 420, 204 N.W.2d 470, 471, as follows:

'. . . The purpose of a demurrer is to test the legal sufficiency of the pleading. Interstate Fire & Casualty Co. v. Milwaukee (1970), 45 Wis.2d 331, 333, 173 N.W.2d 187.

'Upon demurrer, a court is required to give liberal construction to the allegations of the complaint, and the demurrer for failure to state a cause of action must be overruled when the complaint expressly or by inference states a cause of action. Chudnow Construction Corp. v. Commercial Discount Corp. (1970), 48 Wis.2d 653, 656, 180 N.W.2d 697; Volk v. McCormick (1969), 41 Wis.2d 654, 658, 165 N.W.2d 185.

'When a complaint is tested on demurrer, it is not the duty of the court to hypothesize whether a plaintiff can prove the allegations. It is sufficient that the facts alleged, if proved, spell out a cause of action. Rogers v. Oconomowoc (1962), 16 Wis.2d 621, 634, 115 N.W.2d 635.'

It is generally recognized that '(t)he relation of principal and agent can be terminated only by the act or agreement of the parties to the agency or by operation of law.' 3 Am.Jur.2d, Agency, p. 440, sec. 34.

Also, our attention has been directed to a considerable number of authorities and cases which establish the rule that the death of the agent or principal terminates the agency relationship. See: 2A C.J.S. Agency § 135, p. 754; 3 Am.Jur.2d, Agency, p. 140, sec. 51; 12 Am.Jur.2d, Brokers, p. 818, sec. 63; 2 Restatement, Agency 2d, p. 366, sec. 453.

However, in the instant case, to state the rule is not to answer the question presented. Here the death of Lease did not terminate 'the agency relationship' because 'the agency relationship' had expired by the terms of the contract before he died.

What the respondent argues, and what the trial court found, is that, even though the agency agreement, by its terms, expired before the death of Lease, the six month 'override clause' somehow lapsed, was extinguished or terminated with the death of Lease after the expiration of the listing contract.

In the instant case, the agent did not earn his commission by actually selling the property before the contract terminated. The administratrix ultimately sold the property. If the agent earned the commission under the terms of the agreement it was by negotiating with, and presumably interesting, a certain buyer whose name was submitted to the principal in writing prior to the expiration of the contract in accordance with the provisions of the contract. The ultimate sale of the property after the contract had terminated was not within the control of the agent and required no further authorized action on the part of the agent. Thus, the fact that no 'agency relationship' existed during the override period was immaterial and had no effect upon the agent's right to a commission.

In Klapinski v. Polewski (1963), 19 Wis.2d 124, 119 N.W.2d 424, the court considered a similar provision in a listing agreement relating to the agent's commission. The following language from Dunn & Stringer Investment Co. v. Krauss (1953), 264 Wis. 615, 619, 60 N.W.2d 346, was cited with approval:

"The clause in question provides two conditions, both of which must concur, in order for a commission to be due on any sale made during the six-month period following the expiration date of the listing period. The first condition is that the broker must have negotiated with the subsequent purchaser for the sale of the premises during the listing period. The second condition is that the broker must have filed the name of such subsequent purchaser with the owners prior to the expiration date of the listing period. Actual notice by the owners of the negotiations had between the broker and the subsequent purchaser is not a substitute for the filing requirement.' Klapinski v. Polewski, supra, p. 127, 119 N.W.2d p. 426.

More recently, in E. M. Boerke, Inc. v. Williams (1965), 28 Wis.2d 627, 632, 137 N.W.2d 489, 492, the court again considered the requisites for recovery under a ...