Marcotte Realty & Auction, Inc. v. Schumacher, 49040

• Decision Date: 20 January 1979
• Docket Number: No. 49040,49040
• Citation: 589 P.2d 570,225 Kan. 193
• Parties: MARCOTTE REALTY & AUCTION, INC., Appellant, v. Melvin SCHUMACHER, and Schumacher Brothers, Inc., Appellee.
• Court: Kansas Supreme Court

Page 570

589 P.2d 570

225 Kan. 193

MARCOTTE REALTY & AUCTION, INC., Appellant, v. Melvin SCHUMACHER, and Schumacher Brothers, Inc., Appellee.

No. 49040.

Supreme Court of Kansas.

Jan. 20, 1979.

Syllabus by the Court

1. The relationship between a seller and a broker is one of agency.

2. Oral agreements to sell land between a seller and broker are contracts of employment to produce a stated result and do not come within the purview of the Statute of Frauds.

3. The power to adopt rules and regulations is administrative in nature and to be valid must be within statutory authority. An administrative rule and regulation which goes beyond that which the legislature has authorized, or which violates the statute, is void.

Bruce W. Kent of Ryan, Kent & Wichman, Chartered, Hays, argued the cause, and Ross J. Wichman, Harp, was on the briefs for appellant.

John T. Bird, Hays, argued the cause, and Robert F. Glassman, Hays, was on the brief for appellees.

John Anderson, Jr. of Anderson, Granger, Nagels & Lastelic, Chartered, Overland Park, was on the brief for amicus curiae Joseph K. Berglund.

Robert E. Keeshan of Scott, Quinlan & Hecht, Topeka, was on the briefs for amicus curiae, Metcalf View, Inc.

SCHROEDER, Chief Justice:

This is an action by a real estate broker for a commission for selling property in Ellis County, Kansas, under an alleged oral real estate agency contract. The trial court granted summary judgment to the defendant landowners. On appeal the question presented concerns the force and effect of K.A.R. 86-3-8(a) which requires all real estate listing agreements to be in writing.

In March of 1976, Melvin Schumacher (defendant-appellee) contacted Henry Marcotte, owner of Marcotte Realty & Auction, Inc., (plaintiff-appellant) by telephone. The defendant stated he wished to sell a section of land which belonged to the Schumacher Corporation and was located in Ellis County, Kansas, for $350 per acre. Mr. Marcotte testified the two agreed upon a sales commission of six percent of the sale price.

Thereafter plaintiff advertised the real estate for sale in the normal course of its business and attempted to find buyers for the property. Unable to sell the real estate at $350 per acre, however, Mr. Marcotte testified he contacted the defendant on July 1, 1976, and amended the agreement whereby plaintiff would receive a six percent commission for procuring a buyer at $250 per acre. Mr. Marcotte stated the plaintiff received a 30-day exclusive contract. He said a written exclusive listing contract for 30 days was mailed the same day to Mr. Schumacher, but the exclusive listing contract was never returned to his office.

On the morning of July 16, 1976, Mr. Leo Hayden, plaintiff's sales representative, showed the property to Mr. Don Buster, president of G-S-L, Inc., of McCracken, Kansas. Mr. Buster decided to buy the land and signed a real estate purchase contract for warranty deed. He accompanied Mr. Marcotte to the defendant's home to deliver the contract together with a $16,000 down payment at approximately 7 o'clock that same evening. Both Mr. Marcotte and Mr. Buster testified the defendant read the contract and made no objection at that time to the real estate sales agreement or the $16,000 down payment.

Subsequently the contract between the defendants and the buyer, G-S-L, Inc., was closed. Despite plaintiff's demand the defendant refused to deliver a commission of $9,600. Plaintiff then filed this action for the $9,600 commission alleging it procured a ready, willing and able buyer for defendant's real estate. The defendant denied an agreement with the plaintiff for the six percent agent's commission and alleged that any oral agreement would have been contrary to the rules and regulations of the Kansas Real Estate Commission. The disputed $9,600 commission was placed in escrow with the clerk of the District Court of Ellis County pending judgment.

After hearing the plaintiff's evidence, including the testimony of Mr. Buster that he did not agree to pay plaintiff a commission, the trial court granted judgment for the defendants at the close of plaintiff's evidence. The findings provide in part:

"(T)he facts in this case as established by the plaintiff's evidence, are as follows: That there may have been an oral contract to sell real estate at 6%. There is certainly the basis for a quantum meruit recovery. It is clear from the plaintiff's evidence that the plaintiff was the efficient and procuring cause of the consummated sale. It is equally clear there was no written contract. Plaintiff's exhibit # 3 was mailed out without the plaintiff's signature; it never came back with the defendant's signature. There was no testimony that the defendant by any act or conversation on his part ratified this written contract that was signed by nobody. The contract is not a memorandum. It can't be a memorandum unless signed in part by somebody. There is simply not a written contract. Plaintiff has the basis for recovery on oral contract or on quantum meruit, but by the plaintiff's evidence it is not under a written contract. Now, that is what the plaintiff's evidence shows.

"That forces the Court then to consider whether the plaintiff is barred from recovery because he didn't get a written listing. This is not covered by our Statute of Frauds in Chapter 33. Oral broker's contracts have, in the past, been enforceable. It is covered, if at all, by Rule # 86-3-8 of the Real Estate Commission promulgated apparently in 1975, published in the Kansas Administrative Regulations, and for whatever significance, deemed to have the force and effect of law once it is published and filed under K.S.A. 77-425. That administrative regulation prohibits a broker from taking a listing at all unless he takes it in writing.

". . . It is obvious to the Court that the purpose behind 86-3-8 is protection of the public and seller, not the realtor. The concept of a realtor being able to recover in a court of law under a theory and under a contract that would make him eligible for disciplinary action by the Realtor's Commission is disturbing to the Court.

"The Court is going to hold that 86-3-8, an administrative regulation, has the force and effect of law in this state, and that it bars the realtor's recovery in this case. The Court is going to hold that under the authority of the Real Estate Commission to make rules and regulations for the carrying out of the Real Estate Brokers and Salesmen's Act, these rules and regulations become a part of that act. . . .

"Now, in view of that holding the Court is going to sustain the defendant's motion for judgment at the close of the plaintiff's evidence."

The issue raised in this appeal is whether the trial court erred in sustaining the appellee's motion for judgment at the close of the plaintiff's evidence. Specifically the appellant complains K.A.R. 86-3-8(a), which requires all listing agreements to be in writing, operates as Statute of Frauds. We note the regulation has since been amended by the Real Estate Commission.

Kansas has No statutory prohibition concerning an oral real estate contract which applies to the situation here. The Statute of Frauds barrier to the collection of a realtor's commission is not applicable because our cases have consistently construed the agreement between realtor and client as that of employment between principal and agent. Durkee v. Gunn, 41 Kan. 496, 21 P. 637 (1889); see also Lord v. Jackman, 206 Kan. 22, 26-27, 476 P.2d 596 (1970); Hiniger v. Judy, 194 Kan. 155, 158, 398 P.2d 305 (1965); Patee v. Moody, 166 Kan. 198, Syl. P 1, 199 P.2d 798 (1948). The cases have stated the Statute of Frauds at K.S.A. 33-106 has no application to the case at bar. Miller v. Wiley, 86 Kan. 926, 122 P. 888 (1912); see also Oetken v. Shell, 168 Kan. 244, 251, 212 P.2d 329 (1949), Aff'd 169 Kan. 109, 217 P.2d 906 (1950); McCrae v. Bradley Oil Co., 148 Kan. 911, 915, 84 P.2d 866 (1938); Goodrich v. Wilson, 106 Kan. 452, 454, 188 P. 225 (1920); Robinson v. Smalley, 102 Kan. 842, 843, 171 P. 1155 (1918).

Thus, if the appellant is precluded from collecting its commission, it is only because of K.A.R. 86-3-8. The pertinent provision in effect when this action arose provides that "all listing agreements must be in writing."

K.S.A. 58-3030 giv...