Reilly v. Maw, 10751

• Citation: 146 Mont. 145,405 P.2d 440
• Decision Date: 21 September 1965
• Docket Number: No. 10751,10751
• Parties: Earl J. REILLY and Lyle McKenna, doing business as Reilly-McKenna Agency, Plaintiffs and Respondents, v. Roland R. MAW and Cleone S. Maw, husband and wife, and Camilla Gage, Defendants and Appellants.
• Court: United States State Supreme Court of Montana

Page 440

405 P.2d 440

146 Mont. 145

Earl J. REILLY and Lyle McKenna, doing business as Reilly-McKenna Agency, Plaintiffs and Respondents, v. Roland R. MAW and Cleone S. Maw, husband and wife, and Camilla Gage, Defendants and Appellants.

No. 10751.

Supreme Court of Montana.

Submitted Feb. 15, 1965.

Decided Aug. 12, 1965.

Rehearing Denied Sept. 21, 1965.

John H. Jardine (argued), Whitehall, C. W. Leaphart, Helena, for appellants.

E. J. McCabe, Jr. (argued), E. F. Gianotti, Great Falls, for respondents.

JAMES T. HARRISON, Chief Justice.

This is an appeal from a plural judgment, first against defendants-appellants, Roland R. Maw and his wife Cleone, for $4,000, and secondly, against defendant-appellant Camilla Gage, who does business as Gage Realty, for $4,000, based on two separate claims. Jury trial was waived and the case tried to the District Court in Silver Bow County on June 24, 1963.

Plaintiffs' (Reilly-McKenna Agency) first claim was for $4,000 for 'the reasonable value of services, work and labor performed and done by the plaintiffs, as real estate brokers' alleged to be due and owing from the defendants Maw, owners of the property sold. Plaintiffs' second claim is founded upon the alleged fraud of Camilla Gage in depriving the plaintiffs of their share of a commission for the sale of the Maw property, said fraud allegedly causing plaintiffs $4,000 general damage.

In 1959, Mr. Maw, through the facilities of Gage Realty and an exclusive listing therewith, listed his ranch property for sale. Through various communications sent out by Gage Realty, the plaintiffs were made aware of the availability of this property and in 1961, after the expiration of the exclusive listing of the property with Gage Realty, came forth with a prospective purchaser, Matt Urick.

On April 14, 1961, in the offices of Gage Realty and in the presence of plaintiff Lyle McKenna, an instrument called a 'Receipt and Agreement to Sell and Purchase' was executed by the sellers, the buyer and the sellers' agent, Mr. and Mrs. Maw, Matt Urick and Camilla Gage respectively. The names of the plaintiffs, Lyle McKenna and Earl J. Reilly, do not appear on this instrument, nor does the name of their firm, Reilly-McKenna Agency. The amount of $5,000 is typed into the agreement above the signatures of Mr. and Mrs. Maw as the commission to be due 'to the above named agent' (Gage) for services rendered.

Another typed stipulation in the instrument reads: 'This agreement shall be void and of no effect whatsoever unless purchase and sale contract is executed by the parties hereto within ten days of the date hereof.'

The purchase and sale contract referred to was not executed within the ten days. There is testimony in the record that both the buyer Urick and sellers Maw agreed mutually to waive this condition. The final contract was executed by buyer Urick on April 28, 1961, and by sellers Maw on May 3, 1961.

On May 10, 1961, Mrs. Maw drew a check in the amount of $5,000 payable to 'Reilly & McKenna Agency, Gage Realty.' This check was endorsed by the plaintiffs but has to date not been endorsed by Gage Realty. A few days after making the check, Mrs. Maw stopped payment thereon due to trouble concerning an escrow arrangement. This was later ironed out. However, the check was not reissued, nor have plaintiffs relied upon its execution as being such a written memorandum as would satisfy the statute of frauds. We make no further comment thereon for these reasons. No commission had been paid to either Gage Realty or Reilly-McKenna Agency at the date of trial.

Of the specifications of error which appear, it is necessary only to consider whether the trial court erred in overruling the motion to dismiss entered at the close of plaintiffs' case in chief.

Before turning to that discussion however, we must determine whether, as defendant Gage argues, the 'Receipt and Agreement to Sell and Purchase' was and is void due to the lapse of the ten-day time limitation on its validity; that provision does not run to the benefit of Gage Realty, for voidance of that agreement would terminate the right to a commission upon the sale of the property. Rather, the stipulation runs to the benefit of the sellers Maw and the buyer Urick. It is generally accepted that those who are to benefit from the provisions and conditions of a contract, when party thereto, may, upon mutual agreement, waive such conditions. R.C.M.1947, Sec. 13-907, permits alteration of a written contract either by writing or by an executed oral agreement. Here, the oral agreement was to waive the written time limitation as a condition to the validity of the agreement to sell, and to proceed beyond that time to enable the writing and execution of the Contract for Deed, which was eventually executed by both parties and therefore the execution of the oral agreement to waive the time limitation was effectuated.

The 'Receipt and Agreement to Sell and Purchase' being a valid contract, there is at this time a commission of $5,000 due to the agent thereon authorized to receive it from the sellers, or the persons to be charged, and whose signatures are thereon subscribed.

Turning now to the claims made, the first claim stated against the Maws, owners and sellers of the real estate involved, raises the question of whether the plaintiffs are barred from recovery because of the statute of frauds, and, if so, whether an action in the nature of quantum meruit for services rendered will allow recovery in spite of the Statute.

R.C.M.1947, Sec. 13-606, specifically requires agreements between a landowner and his broker to be in writing, and in relevant part reads:

'What Contracts Must be in Writing. The following contracts are invalid, unless the same, or some note or memorandum thereof, be in writing and subscribed by the party to be charged, or his agent:

* * *

* * *

'(5) An agreement * * * for the sale of real property * * *.

'(6) An agreement authorizing or employing an agent or broker to purchase or sell real estate for compensation or commission.'

Subdivision (6) has been called 'mandatory' in Cobb v. Warren, 64 Mont. 10, 18, 208 P. 928, affirmed in Skinner v. Red Lodge Brewing Co., 79 Mont. 292, 297, 256 P. 173, 175.

In the Skinner case, supra, the court stated that the 'burden rested upon the plaintiff [broker] to show that, at the time he produced a purchaser ready, able, and willing to buy on the defendant's [seller] terms, there was an existing contract of employment between himself and the defendant sufficient to meet the requirements of the statute of frauds. [Citations omitted.]'

This court stated in Gantt v. Harper, 82 Mont. 393, 401, 267 P. 296, 297, that 'Our statute of frauds requires a note or memorandum in writing * * * as a condition precedent to recovery of a broker's commission upon an agreement authorizing or employing an agent or broker to purchase or sell real estate.' (Emphasis ours.)

The above cases were affirmed in 1948 in Featherman v. Kennedy, 122 Mont. 256, 200 P.2d 243. The plaintiffs argue that the Featherman case does not apply to the case at hand because there, no contract existed, while in this case there is a contract. But, as far as the plaintiffs are concerned they are not parties to the 'Receipt and Agreement to Sell and Purchase' contract in evidence in this case. The names of the plaintiffs do not appear therein. To permit the plaintiffs through the use of parol evidence to be made parties to a contract, which under the statute of frauds must contain the names of the parties concerned and the terms and agreements between them within its four corners, would render subdivision (6) of section 13-606, R.C.M.1947, a nullity. Plaintiffs cannot claim that contract as their own, and therefore, they stand in the shoes of the plaintiff in the Featherman Case, i. e., they are attempting to collect a commission for the sale of real estate when they hold no written authorization from the owner of the land to do so.

R.C.M.1947, Sec. 93-1401-7, makes the evidence of such a writing 'indispensable.'

Subdivision (6) of section 13-606, is specifically directed toward prevention of frivolous, fraudulent and unmerited claims by a broker for a commission at the completion of the sale of property.

This brings us to a consideration of whether an action for 'the reasonable value of services, work and labor performed and done by plaintiffs, as real estate brokers' will remove the claim from the statute and the necessity of a writing?

Montana, under the authority of the Featherman Case, supra, holds with the vast majority that an action in quantum meruit, quasi contract, implied contract, or the like will not suffice to give a broker the right to a commission where he has no agreement with the party to be charged in writing. Allowing such an action would virtually nullify the statute of frauds. For a general discussion, see 41 A.L.R.2d 908, and Restatement of Contracts, Sec. 355(3), Illustration 7.

The defendants' motion to dismiss the first claim was well-taken and should have been granted.

The second claim was one of fraud against defendant Gage and judgment was given the plaintiffs for general damages of $4,000.

The language used in the amended complaint is similar to that used in R.C.M.1947, Sec. 13-308, which provides:

'Actual fraud * * * consists in any of the following acts, committed by a party to the contract, or with his connivance with intent to deceive another party thereto, or to induce him to enter into the contract: * * *

'4. A promise made without any intention of performing it; or,

'5. Any other act fitted to deceive.'

Disregarding the fact that the plaintiffs were not named in any contract made mandatory by the statute of frauds, in order to maintain this claim, plaintiffs...