Rekhi v. Olason

• Citation: 626 P.2d 513,28 Wn.App. 751
• Decision Date: 03 April 1981
• Docket Number: No. 4707-II,4707-II
• Court: Washington Court of Appeals
• Parties: Joginder S. REKHI and Paramjit K. Rekhi, his wife, Respondents, and Cross-Appellants, v. Bjarni L. OLASON, Appellant, Gardis I. Olason; Richard H. Mietzner and Jane Doe Mietzner, his wife, d/b/a Advance Properties; John M. Darrah and Jane Doe Darrah; and Terry M. Barton and Jane Doe Barton, Respondents.

Page 751

28 Wn.App. 751

626 P.2d 513

Joginder S. REKHI and Paramjit K. Rekhi, his wife, Respondents, and Cross-Appellants, v. Bjarni L. OLASON, Appellant,

Gardis I. Olason; Richard H. Mietzner and Jane Doe Mietzner,

his wife, d/b/a Advance Properties; John M. Darrah

and Jane Doe Darrah; and Terry M. Barton

and Jane Doe Barton, Respondents.

No. 4707-II.

Court of Appeals of Washington, Division 2.

April 3, 1981.

William L. Bishop, Jr., Seattle, for appellant.

William M. Robinson, George W. Schoonmaker, Marlin L. Vortman, William R. Hickman, Seattle, for respondents.

PEARSON, Judge.

The primary issue on this appeal is whether a client's oral authority to his attorney to enter into a real estate transaction is binding on the client where the attorney neglected to complete a form power of attorney that the client had signed in blank. The appeal also challenges a contempt order entered against both the attorney and the client who refused to convey clear title to the purchasers after specific performance of the contract was ordered, and while that order was pending on appeal. We affirm on both issues and also hold on the purchasers' cross appeal that the trial court should have allowed consequential damages to them.

This specific performance action was brought by the purchasers Rekhi against the sellers, Bjarni and Gardis Olason, John Darrah, Mr. Olason's attorney, and both the listing and selling real estate agents. The case was tried to the court. After a lengthy trial, the court found and concluded that the client, Bjarni Olason, was bound by the acts of his attorney and that a decree of specific performance should be issued, to be performed by February 15, 1979. The court denied the purchasers' request for consequently damages, finding that although the delays had caused an estimated loss of $3,500 to Rekhis, the loss would not be awarded because in the interim the property had increased in value. When Mr. Olason, on the advice of another attorney, Mr. Ordal, refused to give the requisite deed by the time decreed, the court found them both in contempt, which was subsequently purged by an appropriate deed. The court also allowed certain payments to be deducted from the proceeds of closing to secure attorney's fees and costs to certain of the parties, the real estate commission, a dissolution lien to Mrs. Olason, and the mortgage of record.

The appeal has been brought on a short record without a complete verbatim report of proceedings. Accordingly, the trial court's findings of fact are accepted as verities. Gaupholm v. Aurora Office Bldgs., Inc., 2 Wash.App. 256, 467 P.2d 628 (1970). Also, none of the findings of fact are challenged by plaintiffs.

The undisputed findings establish that Mr. and Mrs. Olason owned the property in question prior to the dissolution of their marriage in January 1978. Both Mr. Olason and his counsel, Mr. Darrah, believed it was necessary to sell the residence to satisfy the dissolution settlement. Olason approached a listing agent for that purpose. Because Olason was planning to leave for Spain on June 16, 1977, he told his attorney on June 14 that the listing agent had recommended that Darrah have a power of attorney to negotiate a sale in his absence. On June 15, Olason executed a general power of attorney form for that purpose. None of the blanks on the form were ever completed, and the instrument was never acknowledged.

On the above facts, the court found that "Mr. Darrah reasonably understood that he was to utilize the power of attorney to negotiate a sale of said residence in Mr. Olason's absence at any price Mr. Darrah felt was reasonable under the circumstances." ¹

While Olason was abroad, Darrah signed an earnest money agreement as attorney in fact for Olason ² to sell the property to the Rekhis for $90,000. Although the property was listed for $112,500, the court found that Olason and Darrah, acting upon the recommendation of the listing agent, desired to list the residence for sale at $105,000, and to effect a sale at approximately $99,500. The higher listing price was occasioned as a compromise with Mrs. Olason and her attorney.

In connection with the $90,000 selling price, the trial court found:

Although Mr. Darrah felt that $90,000 was a little low, Mr. Darrah knew that Mr. Olason was anxious to conclude the dissolution proceeding and reasonably believed that Mr. Olason was not concerned about a difference to Mr. Olason of approximately $5,000, less income taxes ...

The closing date was set for September 20.

Olason returned from Spain on June 30, and was informed by Darrah on July 1 of the terms of the sale. After securing a copy of the agreement on about July 11, he expressed no objection to the agreement until August 4, when he discovered it would be more expensive than he thought to acquire another home. However, Olason did not question Darrah's authority to close the sale, nor did he indicate at any time prior to the closing date that he would not proceed with the sale.

Following a five-day trial in November 1978, the court ordered specific performance. The rationale of the court's conclusions which are challenged on appeal was that in spite of the fact the executed power of attorney had never been completed or acknowledged, Olason had a clear intent to grant Darrah authority to act for him in the sale of the residence. The court concluded that the power of attorney should be reformed by completion of the necessary blanks. ³ The court also ordered Olason to pay attorney's fees to the purchasers, and attorney's fees to the realtors, as well as their commission. The court denied Darrah's cross claim against Olason for attorney's fees incurred in his defense, but allowed dissolution attorney's fees to be paid from the proceeds of the sale. The purchasers were denied attorney's fees from Mrs. Olason.

Olason's primary argument on appeal is that the earnest money agreement is not in compliance with the statute of frauds, and therefore unenforceable, since neither he nor any lawfully authorized person signed it. He also contends that the incomplete power of attorney conferred no authority on Darrah, that parol evidence could not be used to supply the crucial terms, and that without the acknowledgment the instrument is a nullity which may not be reformed.

We need not reach these issues, nor need we address the waiver and estoppel grounds which Olason also propounds. It is well settled that an agent who has oral authority to sell real estate may bind his principal with respect to the rights of third parties without violating the statute of frauds. Restatement of Agency (Second) § 30 (1958). Peirce v. Wheeler, 44 Wash. 326, 87 P. 361 (1906); Wolley v. Butts, 19 Wash.App. 876, 578 P.2d 80 (1978). There is no reason the rule should apply with less force where the oral authority to sell real estate is given to an attorney in connection with a dissolution proceeding. Attorneys are held to the highest standards of fidelity in handling their client's affairs, and while written authority is prudent, as evidenced by this case, the court's findings show that Olason was neither overreached nor misled by his counsel's actions. Darrah's oral authority was clearly established by the findings. Those findings are buttressed by Olason's signature on the general power of attorney form, and we hold the oral agency agreement binding upon him as to the innocent third-party purchasers.

We next address the contempt citation. On February 2, 1979, the day the decree of specific performance was entered, Mr. Ordal of Dodd & Coney, substituted attorneys for Olason, informed ...