Roberts v. Gaskins

• Decision Date: 07 January 1997
• Docket Number: No. 2681,2681
• Citation: 486 S.E.2d 771,327 S.C. 478
• Parties: James A. ROBERTS, Appellant/Respondent, v. Carlton J. "Red" GASKINS, d/b/a Gaskins Commercial Refrigeration Company, Respondent/Appellant. . Heard
• Court: South Carolina Court of Appeals

Page 771

486 S.E.2d 771

327 S.C. 478

James A. ROBERTS, Appellant/Respondent, v. Carlton J. "Red" GASKINS, d/b/a Gaskins Commercial Refrigeration Company, Respondent/Appellant.

No. 2681.

Court of Appeals of South Carolina.

Heard Jan. 7, 1997.

Decided June 16, 1997.

Jeffrey L. Payne and Arthur E. Justice, both of Turner, Padget, Graham & Laney, Florence, for Appellant/Respondent.

W.E. Jenkinson, III and Jennifer R. Kellahan, both of Jenkinson & Jenkinson, Kingstree, for Respondent/Appellant.

HOWARD, Judge.

James A. Roberts (Roberts) brought this action to collect the unpaid portion of a commission earned from the sale of Carlton J. Gaskins's (Gaskins) business to R.H. Hollis Co., Inc. (Hollis). The case was referred to a special referee who concluded the parties orally modified their brokers agreement to provide for installment payments of the commission when the business sold because Gaskins financed a portion of the purchase price. We affirm.

I. FACTUAL BACKGROUND

Gaskins listed his refrigeration business for sale with Roberts in a written agreement dated October 29, 1992. According to Gaskins, Roberts calculated the value of the business at approximately $1,200,000, including real property. The written agreement did not state a value or price and did not include any reference to the real estate. It provided Roberts was to serve as broker in the sale of the business and was to receive five (5%) percent of the total sales price of the business as his fee at the closing.

Roberts then marketed the refrigeration business by advertising it and handling inquiries. He advertised it in the newspaper as "Sales/Distribution Co. Est. 1962. Sales of $1.0MM. Loyal customer base. Florence area." Prior to the contract with Hollis, Roberts received other inquiries and at least one offer to buy the business, which he passed on to Gaskins. The previous offer included the sale of Gaskins's real property as a part of the proposed contract.

In February 1994, Hollis submitted an offer of purchase. Negotiations were initially conducted through Roberts. Hollis did not have enough money to purchase the business outright, nor could he afford to buy the real estate. Ultimately, Hollis and Gaskins negotiated directly with each other to reach an agreement in July 1994. Under the final contract Hollis agreed to pay $600,000 for the business assets, excluding real estate, and to lease the real property from Gaskins for five years with an additional five year option. Gaskins agreed to finance $215,000 of the purchase price over ten years.

Roberts's commission was calculated at closing on the basis of the business asset sales price of $600,000. Roberts was only paid the portion of his commission attributable to the amount paid by Hollis in cash at the closing. This dispute arose over the terms of payment of the unpaid portion of Roberts's commission. Gaskins maintained he only agreed to finance the sale after Roberts agreed to accept his commission in installments as Gaskins was paid. According to Gaskins, he reached this understanding with Roberts prior to entering into the contract with Hollis. Roberts denied this, although he did admit agreeing to give Gaskins a short time following closing to pay the remainder.

When Hollis subsequently defaulted, Roberts brought this action to enforce his commission. Gaskins raised as an additional defense that Roberts was not entitled to a commission because his real estate license had expired, and the lease of real estate was included in the transaction.

II. ISSUES

A. Roberts's issues on appeal

1. Did the special referee err in finding the parties orally modified the listing agreement?

2. Did the special referee err in ruling the oral modification was not barred by the Statute of Frauds?

B. Gaskins's issue on appeal

1. Did the special referee err in finding Roberts was entitled to his commission when neither he nor anyone in his company had a real estate broker's license?

III. SCOPE OF REVIEW

An action for breach of contract seeking money damages is an action at law. Sterling Dev. Co. v. Collins, 309 S.C. 237, 421 S.E.2d 402 (1992). In an action at law, the appellate court will correct any error of law, but it must affirm the special referee's factual findings unless there is no evidence that reasonably supports those findings. Jefferies v. Phillips, 316 S.C. 523, 451 S.E.2d 21 (Ct.App.1994).

IV. DISCUSSION

A. Roberts's appeal

1. Oral modification to broker's contract

Roberts first contends no evidence exists to support an oral modification to the broker's agreement. We disagree.

A contract is an obligation which arises from actual agreement of the parties manifested by words, oral or written, or by conduct. Gaskins v. Blue Cross-Blue Shield of South Carolina, 271 S.C. 101, 245 S.E.2d 598 (1978). The general rule is that a written contract may be modified by an oral agreement. King v. PYA/Monarch, Inc., 317 S.C. 385, 453 S.E.2d 885 (1995). A modification of a written contract must fulfill all of the elements required for a valid contract. Player v. Chandler, 299 S.C. 101, 382 S.E.2d 891 (1989). The necessary elements of a contract are an offer, acceptance, and valuable consideration. Carolina Amusement Co., Inc. v. Connecticut Nat'l Life Ins. Co., 313 S.C. 215, 437 S.E.2d 122 (Ct.App.1993).

The special referee found Roberts agreed to modify his fee agreement and the modified agreement was supported by sufficient consideration. Gaskins testified he would only agree to finance a portion of the purchase price if Roberts was willing to receive installment payments of his brokerage commission as Gaskins was paid. According to Gaskins, he closed the transaction in reliance on his modified commission agreement with Roberts. This testimony provides reasonable evidence to support the special referee's conclusion that Roberts agreed to the modification and that it was supported by valuable consideration.

2. Statute of Frauds

Roberts next contends the special referee erred by ruling the oral modification was not barred by the Statute of Frauds. Again, we disagree.

The Statute of Frauds provides that all agreements not to be performed within one year from their making, shall be in writing and signed by the party to be charged. S.C.Code Ann. § 32-3-10(5) (1991). An oral agreement, including an oral modification, will be barred by the Statute of Frauds if it is incapable of being performed within one year. Player v. Chandler, 299 S.C. at 105, 382 S.E.2d at 894.

It is equally well established that the Statute of Frauds applies only to contracts which are impossible of performance within one year. Joseph v. Sears Roebuck & Co., 224 S.C. 105, 77 S.E.2d 583 (1953) (finding an oral warranty of a pressure cooker was possible of performance within one year, thus removing it from the purview of the Statute of Frauds). A contract having a contingency which may occur within the year need not be supported by a written document. Joseph v. Sears Roebuck & Co., 224 S.C. at 111, 77 S.E.2d at 586. If there is a possibility of performance within a year, the contract is not barred by the Statute of Frauds. Id. The fact that performance within a year is highly improbable or not expected by the parties does not bring a contract within the scope of this clause. Id. at 111, 77 S.E.2d 583.

In Joseph v. Sears Roebuck & Co. our supreme court cited Warner v. Texas & P. Ry. Co., 164 U.S. 418, 432-34, 17 S.Ct. 147, 153, 41 L.Ed. 495 (1896), for the following principle:

It seems to be well settled that, where there is a contingency expressed upon the face of the contract, or implied from the circumstances, upon the happening of which within a year the contract or agreement will be performed, the contract is not within the statute, though it be clear that it cannot be performed within a year except in the event the contingency happens.... If the contingency is such that its happening may bring the performance within a year, the contract is not within the terms of the statute; and this is true whether the parties at the time had in mind the happening of the contingency or not. The existence of the contingency in this class of cases, and not the fact that the parties may or may not have contemplated its happening, is what prevents the agreement from coming within the scope of the statute.

An example of the distinction between a contract impossible of performance within a year and one which is capable of being performed within a year, though only contingently so, is thus explained as follows: If one leases real property for a period of years and agrees to maintain it during the time of the lease, the contract is said to be impossible of performance in less than a year. Joseph v. Sears Roebuck & Co., 224 S.C. at 115, 77 S.E.2d at 588. Conversely, a warranty which runs for the lifetime of a pressure cooker, even though designed to last for many years, is still capable of performance within a year because the cooker might fail of its essential purpose within the year. Id. at 114, 77 S.E.2d 583.

The contingency relevant to this contract is the possibility of prepayment by the purchaser, Hollis. ¹ The special referee hypothesized Hollis could pay the rest of the purchase price within a year, even though not required to do so. He deduced the agreement to pay Roberts the rest of his commission was a contract capable of completion within one year upon the happening of this contingency. Consequently, the contract was not impossible of performance within a year.

Nothing in the record made prepayment by Hollis impossible. Interest rate fluctuations quite often make refinancing and/or prepayment advantageous to a borrower. Prepayment is not at all out of the realm of possibility in transactions of this nature. Therefore, we conclude the master's reasoning is sound.

B. Gaskins's appeal

Roberts was not licensed as a real estate broker at the time of their transaction. Gaskins asserts the activities Roberts performed in the...