Rector-Phillips-Morse, Inc. v. Huntsman Farms, Inc., RECTOR-PHILLIPS-MORS

• Decision Date: 14 November 1979
• Docket Number: No. CA,RECTOR-PHILLIPS-MORS,INC,CA
• Citation: 590 S.W.2d 317,267 Ark. 767
• Parties: , Appellant, v. HUNTSMAN FARMS, INC. et al., Appellees. 79-132.
• Court: Arkansas Court of Appeals

Page 317

590 S.W.2d 317

267 Ark. 767

RECTOR-PHILLIPS-MORSE, INC., Appellant, v. HUNTSMAN FARMS, INC. et al., Appellees.

No. CA 79-132.

Court of Appeals of Arkansas.

Nov. 14, 1979 Released for Publication by the Court of Appeals Dec. 5, 1979.

McHaney & Calhoun, Little Rock, for appellant.

Wright, Lindsey & Jennings, Little Rock, for appellees.

HOWARD, Judge.

The central issue tendered for determination is whether the trial court committed error in denying appellant's claim to a commission purportedly earned as a consequence of producing a buyer who was ready, willing and able to purchase real estate from appellee pursuant to an agreement between the parties.

The pertinent facts are: Sometime during July, 1976, Robert Chowning, Executive Vice President of Rector-Phillips-Morse, Inc., hereinafter called Rector, Inc., was advised that Sidney Weniger was interested in buying the Riviera Apartments which are located on Old Cantrell Road in Little Rock. The apartments were purchased by Harold Huntsman and his wife in 1973 from Rector-Phillips-Morse Realty Fund, a limited partnership and a subsidiary of Rector, Inc., hereinafter referred to as Realty Fund; and Huntsman later conveyed the property to Huntsman's Farm, Inc. A third mortgage was executed, on the apartments, by Huntsman in favor of Realty Fund to secure a note for $584,000.00 which was to mature on September 15, 1976. ¹

Mr. Chowning promptly advised Mr. Huntsman, by telephone, of the interest of Mr. Weniger in acquiring the apartments. Mr. Huntsman informed Mr. Chowning that if the price was right, he would be interested in discussing a sale of the property and extended the privilege to Mr. Weniger to view the property.

On August 4, 1976, Andy Agar, a representative of Rector, Inc., confirmed Mr. Chowning's telephonic conversation with Mr. Huntsman by letter and the communication further stated: "Should a sale be made by you to Mr. Weniger, we feel you should not enter into direct negotiations with Mr. Weniger without our being involved. In any event, and should you sell the property to Mr. Weniger, this is to advise you that we will consider ourselves entitled to commission of 6% Of the total sales price."

On September 16, 1976, Mr. Huntsman and Mr. Weniger entered into an offer and acceptance agreement which provided, among other things: (1) The total sales price would be the outstanding principal balance due on mortgages involving the apartments, plus $150,000.00 cash to the seller, and (2) the agreement is subject to a special condition on Weniger closing a satisfactory mortgage loan to be obtained from First Federal Savings & Loan Association of Pine Bluff, Arkansas. Finalization of the transaction was scheduled for October 31, 1976. The offer and acceptance agreement also specified that "Seller agrees to pay Rector-Phillips-Morse, Inc., agent, a commission pursuant to the agreement between them." While the offer and acceptance agreement was executed on a printed form of Rector, Inc., the agreement was executed by Mr. Weniger and Mr. Huntsman and no one from Rector, Inc. was present during the execution of the agreement.

A rider, dated the same date as the offer and acceptance agreement, was executed, by Huntsman and Weniger, and attached to the agreement. The rider, in material part, provides:

1. On or before December 31, 1976, if title has been acquired by Buyer to the Riviera Apartments, the Seller shall have the option upon 15 days notice to re-purchase said property by assuming any new mortgage financing arranged by the Buyer. (If satisfactory to lending institution) and any existing mortgages, which Buyer may have assumed at time of title, plus the payment to the Buyer of the following.

3. In addition, Seller shall pay to Buyer, the sum of $45,000.00 plus a sum equal to one percent of the amount of new financing arranged by Buyer.

If said new mortgage financing does not exceed nine (9) percent interest, Seller shall pay Buyer an additional sum of one (1) percent of said mortgage.

If said new mortgage financing is more than a 25 year term, Buyer shall pay Seller an additional sum of one (1) percent of the mortgage.

4. It is the express interest of this option agreement, that if exercised by the Seller, the Buyer shall be reimbursed for any and all out-of-pocket costs incurred by Buyer (or nominee) in connection with or on behalf the purchase, financing, and closing of title to the Riviera, its operation from date of title to date of re-purchase, plus the sums referred to in paragraph # 3 above.

On September 24, 1976, an addendum to the agreement was executed by Weniger and Huntsman which provides in relevant part:

1) As an alternative to assuming the new mortgage as set forth in paragraph 1 of the Rider, seller may pay the same in full, including any prepayment penalties.

3) In the event seller pays the mortgage held by RPM Realty Fund in full prior to closing date of this transaction and pays to buyer the sum of $45,000 plus all costs and expenses incurred on account of this transaction (including legal fees, appraisal fees, mortgage application fees, etc.) buyer agrees to void the offer and acceptance and Rider dated September 16, 1976 and to release seller from all obligations thereunder. ²

Mr. Weniger testified that he had made arrangements with First Federal Savings & Loan Association of Pine Bluff, Arkansas, for financing the purchase of the apartments, but when First Federal became aware of the stipulation in the offer and acceptance agreement that Huntsman had the option of repurchasing the property and assuming the mortgage, First Federal refused to agree to the stipulation. Moreover, First Federal stated that it did not want Huntsman as a mortgagor under any circumstances. Consequently, Weniger's arrangements with First Federal for financing the purchase of Huntsman's apartments did not materialize.

On or about October 28, 1976, Huntsman deeded the apartments to Graceland College, an Illinois Institution sponsored by the Church of Jesus Christ of Latter Day Saints; and on October 31, 1976, Graceland College paid off the third mortgage held by Realty Fund. In November, Weniger filed his specific performance action against Huntsman and Graceland College. Rector, Inc. intervened in the action seeking to recover a commission of $75,000.00.

The trial court found that while Rector, Inc. was not afforded a general listing, Huntsman did agree to pay Rector, Inc. a commission, providing the apartments were sold to Sidney Weniger. The trial judge concluded the property was not sold to Weniger, therefore, Rector, Inc. did not produce a ready, willing and able buyer for the property. Consequently, the trial court dismissed appellant's complaint with prejudice.

Appellant's argument for reversal may be summarized as: That appellant has established, by a preponderance of the evidence, that Weniger and Huntsman were brought together by appellant; that this meeting culminated in an agreement acceptable to the seller, Huntsman. Hence, appellant earned its commission effective September 16, 1976, the date the offer and acceptance agreement was executed; and that the ultimate outcome of the transaction cannot vitiate Rector, Inc.'s entitlement to the commission.

First, it is fitting that we set out the scope and range of our responsibility as an appellate court in reviewing a proceeding on appeal from a chancery court. Admittedly, such proceeding is tried De novo. However, it is clear that an appellate court will affirm the action of the trial court when that court's action is supported by a preponderance of the evidence. Alley v. Martin, 250 Ark. 74, 464 S.W.2d 591 (1971); Summers v. Hook, 243 Ark. 368, 419 S.W.2d 810 (1977). Moreover, where credibility as between interested parties in an action is pivotal, the appellate court's practice is to abide by the chancellor's judgment in the matter. Souter v. Witt, 87 Ark. 593, 113 S.W. 800 (...