Metropolitan Real Estate Corp. v. Frey

• Decision Date: 17 July 1985
• Docket Number: No. 2-284,2-284
• Parties: METROPOLITAN REAL ESTATE CORP., Edward L. Frickey, Jr. and Charles Coffman, Appellants (Plaintiffs Below), v. Jerry W. FREY and Janice L. Frey, Appellees (Defendants Below). A 61.
• Court: Indiana Appellate Court

Page 267

480 N.E.2d 267

METROPOLITAN REAL ESTATE CORP., Edward L. Frickey, Jr. and Charles Coffman, Appellants (Plaintiffs Below), v. Jerry W. FREY and Janice L. Frey, Appellees (Defendants Below).

No. 2-284 A 61.

Court of Appeals of Indiana,

Second District.

July 17, 1985.

Harold E. Amstutz, Lafayette, for appellants.

James E. Huffer, Obear, Overholser, Smith & Huffer, Delphi, for appellees.

SULLIVAN, Judge.

Metropolitan Real Estate Corporation, Edward L. Frickey, Jr. and Charles Coffman (collectively "Brokers"), appeal the Trial Rule 41(B) ¹ involuntary dismissal of their claim for a real estate commission and the order directing the Brokers to return a $5,000 retainer and commission deposit paid by Jerry W. and Janice L. Frey ("Freys").

The issues presented are combined and rephrased as follows:

(1) Whether the agency relationship existed between Brokers and Freys so as to entitle Brokers to a commission, notwithstanding expiration of a written exclusive agency agreement.

(2) Whether the trial court erred in permitting the filing of Freys' counterclaim which resulted in the affirmative relief granted to Freys.

(3) Whether the Freys were entitled to return of the $5,000 deposit.

In determining the merits of the Motion for Involuntary Dismissal, it was within the trial court's prerogative to weigh the conflicting evidence. Ind.Rules of Procedure, Trial Rule 41(B) effective January 1, 1982. Pursuant to Trial Rule 52(A), the Court entered extensive findings in support of its judgment.

The evidence was as follows: During August, 1980, the Freys contacted Edward L. Frickey ("Frickey") and requested his assistance in preparing an offer to purchase farm property owned by the Kerkhoffs. Frickey was a licensed real estate broker employed by Metropolitan Real Estate Corporation. The Freys and Frickey executed an Exclusive Agency Agreement ("Agreement"), for the period of August 20, 1980, through September 20, 1980. The terms of the Agreement as prepared by the Brokers were not limited to the purchase of the Kerkhoff farm but provided that the Brokers would act as agents for the Freys in locating suitable real estate to be purchased by the Freys. The Freys in turn agreed to pay a five percent commission on the gross purchase price of the property procured by the Brokers. The sum of $5,000 deposited with the Brokers was to be used as "earnest money" on the offer to purchase negotiated by the Brokers or was to be credited toward the amount of commission, if any, earned by the Brokers. However, the deposit was to be returned in full to the Freys "[i]n the event the said Broker fails to earn the commission under the terms of this agreement during the existence of this contract." Agreement, Record at 58.

On Freys' behalf, the Brokers prepared and presented an offer to purchase to the sellers of the farm property (Kerkhoffs) on August 20, 1980. The offer to purchase was neither formally accepted nor rejected by the Kerkhoffs within the term of the Agreement. The offer to purchase expired by its own terms on September 1, 1980. Brokers did not negotiate or prepare a subsequent offer to purchase the Kerkhoff farm or any other farm property. However, Brokers testified they consulted with both Kerkhoffs and Freys after September 20, 1980, about sale of the Kerkhoff farm.

In December, 1980, the Freys executed a final sales contract for the purchase of the Kerkhoff farm, apparently without the Brokers' knowledge or involvement. The Brokers filed their complaint on May 20, 1981, seeking payment of the five percent commission allegedly due on the sale and a declaration that they were entitled to retain the $5,000 deposited by the Freys. The Freys counterclaimed on June 23, 1981, alleging that the Brokers had not performed within the terms of the Agreement and seeking the return of their $5,000 deposit. The trial court entered judgment for Freys upon their counterclaim, and this appeal followed.

At the outset, it should be noted that although Freys have filed a brief with this court, the brief contains nothing more than a lengthy recitation of facts favorable to the Freys. No relevant authority is cited nor is any argument advanced to support the legal theory of the judgment. See Ind.Rules of Appellate Procedure, Appellate Rule 8.3. We, therefore, conduct our review as if no appellee's brief had been filed. Brokers need only demonstrate prima facie reversible error to prevail. Arsenal Savings Association v. Westfield Lighting Co., Inc. (1984) 4th Dist., Ind.App., 471 N.E.2d 322, 325.

I.

The Brokers first assert that the trial judge erred in determining that the Brokers were not entitled to receive their commission pursuant to the Agreement. Brokers allege they continued their efforts to secure acceptance of the Freys' offer on the Kerkhoff farm beyond September 20, 1980, the expiration date of the Agreement. Brokers maintain that these efforts, and the fact that the Freys did not advise Brokers their services were no longer required, constituted an extension of the agency relationship beyond the term stated in the Agreement. Thus they argue the December purchase of the Kerkhoff farm entitled Brokers to receive the five percent commission pursuant to the terms of the Agreement.

The existence of an agency relationship unsupported by a written agreement is a question of fact to be resolved by the trier of fact. See State v. Halladay (1978) 2d Dist., 176 Ind.App. 43, 374 N.E.2d 51. The trial court found that the only agency agreement between the parties was embodied in the Agreement of August 20, 1980, and that there was no extension or continuation of the agency relationship past September 20, 1980. The trial court's finding in this respect is supported by the evidence. Freys testified that they negotiated with Brokers for an agency agreement of limited duration. There was evidence Freys wanted the purchase completed prior to the fall planting season. The offer to purchase was itself conditioned upon closing being held on or before November 15, 1980, and possession being complete in the fall of 1980. Brokers have not shown that the trial court's findings in this respect were clearly erroneous. Although Brokers assert otherwise, the trial court was entitled to conclude that there was no agency relationship between the parties beyond the term specified in the Agreement.

Brokers additionally assert that notwithstanding the expiration of the agency agreement, they earned their commission because the purchase was directly attributable to their efforts on behalf of Freys. In Panos v. Prentiss (1984) 3d Dist., Ind.App., 460 N.E.2d 1014, 1016, this court concluded that, with the exception of the statute of frauds, ² "all other general principles which govern broker's employment contracts apply." In Panos, the broker, who represented the purchaser, had extensively negotiated and obtained a purchase agreement mutually satisfactory to both buyer and seller; however, the buyer repeatedly refused to complete the transaction. The Court of Appeals held the broker was entitled to his commission as he had "secured a customer who was ready, willing, and able to sell or purchase the property upon the terms listed by the principal[.]" Id. See also Abex Corporation v. Vehling (1983) 2d Dist., Ind.App., 443 N.E.2d 1248, 1255 ("[I]f the broker cannot prove that he had effected a sale of the property, he may recover his commission if he can prove either that he had secured a buyer ready, willing and able to purchase property according to the terms listed by the seller or that by and through his procurement, a third party had entered into a valid executory contract ... for the purchase of the property.") In the case at hand, the trial court found that the Freys' purchase of the Kerkhoff farm was not attributable to Brokers' efforts. This finding will not be set aside unless clearly erroneous.

The Brokers testified that they contacted the Freys and the Kerkhoffs on several occasions after the expiration of the Agreement attempting to settle the negotiations, and were never informed their services were no longer required. In addition, Brokers emphasize that the Purchase Agreement presented to the Kerkhoffs was neither accepted nor rejected by the sellers. This evidence, they contend, is proof that, notwithstanding the limited duration of the written Agreement, the Freys' purchase of the Kerkhoff farm was the direct result of the Brokers' efforts.

The testimony on this issue was conflicting and susceptible of different interpretations. The trial court was not required to and clearly did not agree with the Brokers' interpretation because it specifically found that the ultimate sale was not the result of the Brokers' efforts but rather the result of independent negotiations between the Kerkhoffs and Freys.

The evidence in support of the finding is substantial. The Freys testified that they negotiated with the Brokers for a short-term agreement and never agreed to be bound beyond its expiration date. The purchase agreement upon which Brokers place much reliance to support their claim that they were acting pursuant to an existing offer, expired by its own terms on September 1, 1980. In addition, the Freys presented evidence of the terms of the final sales contract, which were substantially different from those contained in the original offer. These terms were negotiated between Freys and Kerkhoffs without the Brokers' assistance.

For example, the final purchase price was higher than originally offered and the down payment was increased by $50,000. Also, the scheduled number of payments was reduced from ten to six, with a corresponding increase in the amount of each payment. Possession of the property did not occur in the fall of 1980 as originally requested by the Freys. The Kerkhoffs' refusal to accept the originally proposed terms cannot reasonably be charged against Freys, absent evidence of collusion between buyer and seller to avoid...