Richard Brown Auction & Real Estate, Inc. v. Brown

• Decision Date: 21 June 1991
• Citation: Richard Brown Auction & Real Estate, Inc. v. Brown, 583 So.2d 1313 (Ala. 1991)
• Parties: RICHARD BROWN AUCTION & REAL ESTATE, INC., and Jimmy Parcus, v. Herman L. BROWN, et al. 89-1830.
• Court: Alabama Supreme Court

Page 1313

583 So.2d 1313

RICHARD BROWN AUCTION & REAL ESTATE, INC., and Jimmy Parcus, v. Herman L. BROWN, et al.

89-1830.

Supreme Court of Alabama.

June 21, 1991.

Daniel C. Boswell of Wolfe, Jones & Boswell, Huntsville, for appellants.

Alphonso Beckles, Huntsville, for appellees.

HORNSBY, Chief Justice.

Richard Brown Auction & Real Estate, Inc. (hereinafter "Auction & Real Estate"), and Jimmy Parcus sued Herman L. Brown, alleging breach of a real estate sales contract. Parcus was the agent of Auction & Real Estate who negotiated the real estate contract at issue in this case. Parcus's claims are the same as those of Auction & Real Estate. Therefore, we will generally refer only to Auction & Real Estate. Auction & Real Estate also sued ERA Rosenblum Realty (hereinafter "ERA"), alleging fraud, misrepresentation and deceit, intentional or gross and reckless fraud, and fraudulent suppression of material fact. This case was tried without a jury, and the evidence was presented ore tenus; on July 23, 1990, the trial court entered a judgment in favor of Herman L. Brown and ERA. We affirm in part, reverse in part, and remand.

Herman L. Brown owned an interest in real property in Madison County, Alabama. In March 1988, he contacted William Shinault, a real estate agent with ERA, about selling that property. On April 1, 1988, Herman L. Brown entered into a real estate listing agreement with ERA. Under the terms of this agreement, ERA was given the exclusive right to sell the property and was to receive a 10% commission when it was sold. This agreement also stated that Herman L. Brown would "furnish the purchaser a good and merchantable title and warranty deed free from any and all encumbrances."

In April 1988, after a prospective purchaser had made an offer to buy the property, Shinault discovered that Herman L. Brown was not its sole owner. A tax notice that Shinault obtained listed Herman L. Brown, Loreane T. Brown (Herman L. Brown's ex-wife), Ethel Jenkins, and Hovis Turner as having ownership interests in the property. ¹ Mr. Brown's divorce judgment ordered that he sell the property immediately and then divide the proceeds with his ex-wife. Herman L. Brown did not accept the first offer to purchase the property, and the prospective buyer did not accept Brown's counteroffer.

On April 28, 1988, Shinault published the listing agreement between Herman L. Brown and ERA in the publication of the Multiple Listing Service For Huntsville and Madison County ("MLS"). Although Shinault knew of the interests of Loreane Brown, Jenkins, and Turner in the property, he listed Herman L. Brown as the sole owner. Shinault received two responses to this listing. The first response was from Loreane Brown, who informed Shinault that she was upset that he had listed the property for sale and that she probably would not agree to sell it.

The second response Shinault received was from Auction & Real Estate. Auction & Real Estate subsequently entered into a contract with Herman L. Brown on April 29, 1988, to purchase the property for $121,589.20. In this contract, Herman L. Brown promised to "furnish [Auction & Real Estate] a good and merchantable title and warranty deed free from all encumbrances except ad valorem taxes, existing restrictions, easements of record and applicable zoning ordinances." This contract was prepared by Jimmy Parcus, an agent for Auction & Real Estate, based upon the information published in the MLS publication. Under the terms of this contract, ERA was the listing broker. In additional provisions to the contract, Auction & Real Estate and ERA agreed to "co-broker" the transaction, i.e., to split the 10% commission. Auction & Real Estate also agreed to pay for a survey of the property, and it paid $10,000 in earnest money.

On August 9, 1988, before completing the purchase of the Herman L. Brown property, Auction & Real Estate entered into a contract with Darwin Construction, Inc., to sell it the Herman L. Brown property. Under this contract, Darwin agreed to pay Auction & Real Estate $141,128 for the property, and it paid $10,000 in earnest money. Auction & Real Estate agreed to furnish Darwin Construction with "good and merchantable title and warranty deed free from all encumbrances."

Herman L. Brown was subsequently unable to provide Auction & Real Estate with a good and merchantable title and warranty deed, because Loreane Brown refused to consent to the sale of the property, and neither Ethel Jenkins nor Hovis Turner could be located. As a result, on February 10, 1989, Auction & Real Estate filed this action against Herman L. Brown, alleging breach of contract, fraud, misrepresentation and deceit, intentional or gross and reckless fraud, and fraudulent suppression of a material fact. Auction & Real Estate claimed as damages $1,150 for survey expenses, $20,690.80 in lost profits from the lost sale to Darwin, and $6,709.36 for the 5% in lost commission. ² Herman L. Brown filed a third-party complaint against Shinault and ERA, alleging that they had been negligent in preparing the sales agreement and that they were liable for any damages that had resulted. His answer alleged that Auction & Real Estate had itself caused any loss it had suffered. Auction & Real Estate later amended its complaint to include Shinault and ERA as defendants and asserted against those defendants claims alleging fraud and suppression of material facts. All parties moved for summary judgment, and the trial court denied each party's motion.

After an ore tenus hearing, the trial court held in favor of the defendants, Herman L. Brown, Shinault, and ERA. The trial court also held in favor of the third-party defendants, Shinault, and ERA. The trial court made no findings of fact and gave no reason for its holding. Auction & Real Estate and Parcus appeal.

BREACH OF CONTRACT

This case was heard by the trial court without a jury. Where the court has heard ore tenus evidence, its findings of fact based on that evidence are presumed correct and those findings will not be disturbed unless they are clearly erroneous, without supporting evidence, manifestly unjust, or against the great weight of the evidence. Gaston v. Ames, 514 So.2d 877, 878 (Ala.1987); Cougar Mining Co. v. Mineral Land & Mining Consultants, Inc., 392 So.2d 1177 (Ala.1981). However, when the trial court improperly applies the law to the facts, no presumption of correctness exists as to the court's judgment. Gaston, supra; Smith v. Style Advertising, Inc., 470 So.2d 1194 (Ala.1985); League v. McDonald, 355 So.2d 695 (Ala.1978).

The record shows that there was no dispute among the parties regarding the relevant facts of this case. Therefore, we must determine whether the trial court correctly applied the law to the facts in this case. We first address the breach of contract claim against Herman L. Brown.

The record shows that Auction & Real Estate contracted with Herman L. Brown to purchase approximately 50 acres of land. Herman L. Brown promised to furnish Auction & Real Estate with good and merchantable title, and Auction & Real Estate agreed to pay him $121,589.20. His inability to obtain the consent of his ex-wife, Jenkins, or Turner to sell the property prevented him from conveying title. Consequently, he breached his contract and Auction & Real Estate is entitled to sue for damages. Greenberg v. Ray, 214 Ala. 481, 108 So. 385 (1926).

Herman L. Brown argues that he should not be held liable for the breach because Auction & Real Estate and ERA were "co-brokers" and, therefore, he says, the knowledge that ERA had regarding the status of the property should be imputed to Auction & Real Estate. Although he has failed to cite any supporting authority, see, Rule 28(a)(5), A.R.App.P., and Stover v. Alabama Farm Bureau Ins. Co., 467 So.2d 251 (Ala.1985), we conclude that this argument is without merit because the mere rendering of a commission does not create an agency relationship. Bay Shore Properties, Inc. v. Drew Corp., 565 So.2d 32, 34 (Ala.1990). Therefore, we hold that Herman L. Brown's "co-broker" defense does not relieve him of liability for his breach of the contract when he failed to deliver good and merchantable title to the property as required under the contract.

We do not address the issue of damages, because the trial court made no findings in that regard. The judgment of the trial court is reversed insofar as it held in favor of Herman L. Brown on the breach of contract claim, and this case is remanded for an award of damages to Auction & Real Estate.

FRAUDULENT SUPPRESSION OF MATERIAL FACT

On appeal, Auction & Real Estate does not argue its claims of fraud, misrepresentation and deceit, and intentional or gross and reckless fraud; thus, those issues are waived. Bogle v. Scheer, 512 So.2d 1336 (Ala.1987). Auction & Real Estate does argue its claim of fraudulent suppression of a material fact, and that is the theory we may consider in the context of the original fraud claim. Auction & Real Estate says that it established all of the elements of an action based on fraudulent suppression of a material fact as defined under Ala.Code 1975, § 6-5-102. Section 6-5-102 states...