Slater v. Westland

• Decision Date: 13 July 1976
• Docket Number: CA-CIV,No. 1,1
• Citation: 553 P.2d 1212,27 Ariz.App. 227
• Parties: John B. SLATER, Appellant, v. Frederick D. WESTLAND, Jacqueline H. Westland, and West-Land Development Co., Inc., an Arizona Corporation, Appellees. 2847.
• Court: Arizona Court of Appeals

Page 1212

553 P.2d 1212

27 Ariz.App. 227

John B. SLATER, Appellant, v. Frederick D. WESTLAND, Jacqueline H. Westland, and West-Land Development Co., Inc., an Arizona Corporation, Appellees.

No. 1 CA-CIV 2847.

Court of Appeals of Arizona, Division 1, Department C.

July 13, 1976.

Rehearing Denied Aug. 10, 1976.

Petition for Review Denied Sept. 21, 1976.

Lewis & Roca by Joseph E. McGarry, Cerald K. Smith, Richard N. Goldsmith, Phoenix, for appellant

Jennings, Strouss & Salmon by Thomas J. Trimble, John E. burger, Phoenix, for appellees.

OPINION

HAIRE, Chief Judge, Division 1.

This appeal presents questions concerning the effect of a termination notice given by the appellee landowners (Westlands) pursuant to the provisions of a land development agreement entered into between the landowners and the appellant real estate agent (Slater). The subject of the land development agreement was some 240 acres owned by the Westlands and situated in Maricopa County, Arizona, and in general the agreement's terms obligated Slater 'to serve as developer of and to do all work necessary to supervise the development of such part or all of the (subject) real estate as the parties may agree into salable mobile home lots.'

Paragraph 3 of the agreement provided for payment to Slater of a share of the net profits and a monthly draw as follows:

'Westland shall pay to Slater Five Hundred Dollars ($500.00) per month as a draw to apply against Slater's twenty-five per cent (25%) of the net profits of the development. The net profits of the development of the land will be determined as of the end of each calendar year and Westland will pay Slater's portion thereof less the sum of all prior draws which have not previously been charged against a prior distribution of Slater's portion of the net profits to Slater promptly after such determination has been made. Under no circumstances shall Slater be required to repay to Westland in cash any money paid to him as a draw. In the event of the termination of this agreement under Paragraph 7 hereof or of a sale of real estate under Paragraph 9 hereof, the net profits of the development for the year in which any such event occurs shall be determined to the date of such occurrence and payment of Slater's share, less the sum of all prior draws which have not previously been charged against a prior distribution of Slater's portion of the net profits, shall be made to him in addition to the amounts provided in Paragraphs 7 and 9 hereof.'

At time the agreement was entered into, 80 of the 240 acres were actually in the process of being developed as a mobile home subdivision. As to duration, the agreement provided that it would:

'. . . unless terminated as hereinafter provided, continue for the time necessary to develop and sell the abovedescribed 240 acres of real estate.'

The termination notice which we have referred to above was given by the landowners on November 20, 1972, some 19 months after the agreement was entered into. The termination notice was given pursuant to paragraph 6 of the agreement, which provides:

'6. This agreement may be terminated by the mutual consent of the parties. It may also be terminated, at Westland's option, at any time after Slater's monthly draws which have not been charged against Slater's share of the net profits exceed $6,000.00 or in the event of Slater's failure to perform his duties hereunder or of Slater's death or of Slater's physical or mental disability. Westland shall exercise his option to terminate this agreement by notifying Slater or his guardian or personal representative to that effect. Such notice shall be in writing and shall be considered to have been given when mailed, postage prepaid, to Slater at his last known residence address or such notice may be given in person.' (Emphasis added).

It is undisputed that at the time of the giving of the termination notice, Slater's monthly draws not charged against his share of the net profits totaled $10,500, thereby exceeding the $6,000 figure set forth in paragraph 6.

Paragraph 7 of the agreement sets forth the parties' rights and obligations in the event of a termination, as follows:

'7. In the event of the termination of this agreement, as provided in Paragraph 6, Westland shall promptly pay to Slater the amount of the principal and interest then due on any loan from Slater to Westland. Westland shall also promptly pay to Slater any amount due Slater under Paragraph 3 hereof, and in addition shall pay Slater Twenty Thousand Dollars ($20,000.00) less the total amount of all draws previously paid to Slater which have not been offset against development profits. Such payments shall be accepted by Slater as payment in full under this agreement and thereafter Slater shall have no claim against Westland for any other sums whatsoever except such sums as may have been specifically agreed upon in a separate writing signed by Westland and Slater.'

It was the Westlands' position that paragraph 6 gave them the right to terminate; that under the provisions of paragraph 7 which required them to pay 'any amount due Slater under paragraph 3 hereof,' nothing was due since there has been no net profits, and that therefore their obligation under paragraph 7 was to pay Slater $20,000 less $10,500 (the total amount of all draws previously paid which had not been offset against development profits), leaving a balance of $9,500 due Slater.

After the termination, Slater filed suit against the Westlands, and the first count of his complaint involved the claim which is the subject of this appeal. ¹ In opposition to a motion for summary judgment filed by the Westlands, Slater filed an affidavit showing that at the time of the termination, he had performed most of the development services required of him with...