Stewart Title of the Midwest, Inc. v. Reece & Nichols Realtors, Inc., No. 103,233.

CourtUnited States State Supreme Court of Kansas
Writing for the CourtThe opinion of the court was delivered by LUCKERT
Citation276 P.3d 188,294 Kan. 553
PartiesSTEWART TITLE OF THE MIDWEST, INC., d/b/a Stewart Title of Kansas City, Plaintiff, v. REECE & NICHOLS REALTORS, INC., Appellee, and Patrick E. McGrath, Appellant.
Docket NumberNo. 103,233.
Decision Date11 May 2012

294 Kan. 553
276 P.3d 188

STEWART TITLE OF THE MIDWEST, INC., d/b/a Stewart Title of Kansas City, Plaintiff,
v.
REECE & NICHOLS REALTORS, INC., Appellee,
and
Patrick E. McGrath, Appellant.

No. 103,233.

Supreme Court of Kansas.

May 11, 2012.


[276 P.3d 189]



[294 Kan. 553]Syllabus by the Court

1. K.S.A. 2011 Supp. 58–3062(a)(10) of the Kansas Real Estate Brokers' and Salespersons' License Act, K.S.A. 58–3034 et seq., prohibits a licensee from paying a commission to any person, not licensed under the Act, for performing any activity for which a license is required under the Act. This prohibition is not absolute, however, and a commission may be split with anyone who performs activities that are exempt from application of the Act.

2. K.S.A. 2011 Supp. 58–3037(c), the attorney exemption to the Kansas Real Estate Brokers' and Salespersons' License Act, K.S.A. 58–3034 et seq., does not allow an attorney to engage generally in the business of a real estate broker but does allow an attorney to perform some activities a broker would perform if the attorney's activities are encompassed within and incidental to the practice of law, are within the context of an attorney-client relationship, and are consistent with the attorney's professional duties.

3. K.S.A. 2011 Supp. 58–3037(c), the attorney exemption to the Kansas Real Estate Brokers' and Salespersons' License Act, K.S.A. 58–3034 et seq., does not exempt an attorney from the prohibition in K.S.A. 58–3062(a)(10) against splitting a brokerage commission with a nonlicensee because a commission is not earned by primarily performing services that are encompassed within the practice of law and because sharing in a brokerage commission would be inconsistent with the professional duties of an attorney.


Patrick E. McGrath, of Overland Park, argued the cause and was on the briefs for appellant.

Robert S. Caldwell, of Caldwell & Moll, L.C., of Overland Park, argued the cause and was on the brief for appellee.


The opinion of the court was delivered by LUCKERT, J.:

[294 Kan. 554]This case arose as an interpleader action to settle the rights to one-half of a brokerage commission resulting from a residential real estate transaction. Reece & Nichols Realtors, Inc. (RAN), the listing broker, refused to split the brokerage commission with Patrick E. McGrath, who acted as the broker for the buyer. McGrath is a licensed Kansas attorney but is not licensed under the Kansas Real Estate Brokers' and Salespersons' License Act (KREBSLA), K.S.A. 58–3034 et seq. RAN contended it is statutorily prohibited from paying a commission to any person not licensed under the KREBSLA. McGrath, on the other hand, maintained that, as an attorney, he is exempt from the requirements of the KREBSLA. Both parties filed summary judgment motions arguing their respective positions. The district court granted RAN's motion for summary judgment, and McGrath appeals.

We affirm, holding that an attorney is exempt from the provisions of the KREBSLA, including the prohibition in K.S.A. 2011 Supp. 58–3062(a)(10) against splitting a fee with a nonlicensee, only to the extent he or she is performing activities that are encompassed within or incidental to the practice of

[276 P.3d 190]

law, are within the context of an attorney-client relationship, and are consistent with the attorney's professional duties. This attorney exemption does not create an exception to the commission-splitting prohibition of KREBSLA because: (1) a brokerage commission is earned by producing a ready and willing buyer or seller and not by primarily performing services encompassed within the practice of law and (2) splitting a brokerage commission is inconsistent with several provisions of the Kansas Rules of Professional Conduct governing attorneys and, therefore, is inconsistent with an attorney's professional duties. Consequently, an attorney who is not licensed under the KREBSLA cannot share in a real estate brokerage commission.

Facts and Procedural Background

RAN's and McGrath's motions for summary judgment were based on the following joint stipulation of facts:

“1. This case began as an interpleader action filed by Plaintiff Stewart Title.... As a title company, it held in escrow a portion of a commission earned in a residential real estate contract in the sum of $13,802.91 (the ‘Funds').

[294 Kan. 555]“2. The Funds represent one-half of the commission paid by Defendant J–Right, Inc. (‘J–Right’) on the sale of a lot and residence to Gregory J. Lausier (‘Lausier’). The property is located at 21311 W. 96th Terrace, Lenexa, Kansas (the ‘Property’).

“3. The total commission, or six percent (6%) of the Property's sales price, was calculated pursuant to the terms of an Exclusive Right to Sell Contract (the ‘Listing Agreement’) and was $27,605.82. The Listing Agreement is attached as Exhibit 1 and incorporated by reference.”

The Listing Agreement states, in part:

“a) Seller agrees to pay Reece & Nichols Realtors a Broker's Administrative Commission of $175.00 and a sales commission of 6% of the selling price.... The commission is due and payable if BROKER or anyone else, including SELLER, produces or finds a purchaser ready, willing, and able to purchase the Property at the price and terms offered now or at the price and terms acceptable to SELLER at a later date. Seller authorizes the payment of the commission to BROKER from SELLER'S proceeds at closing.

“b) BROKER shall offer a commission split of 3% listing side and 3% selling side.”

RAN and McGrath further stipulated:

“4. The full amount of the commission was paid to Stewart Title for distribution in accordance with the real estate transaction documents and Kansas law.

“5. As the listing broker, RAN was paid one-half of the commission or $13,802.91. RAN objected to the release of the remaining commission to McGrath and it was held by Stewart Title.”

In June 2007, Stewart Title of the Midwest, Inc., d/b/a Stewart Title of Kansas City (Stewart Title) filed in district court an interpleader action asking the court to require McGrath and RAN to be interpleaded in the action and to settle the rights to the funds. The district court ordered Stewart Title to deposit the funds with the clerk of the district court. The order stated:

“6. Stewart Title has paid the Funds into Court. See Journal Entry filed June 29, 2007.

“7. Following the deposit of the Funds, Plaintiff Stewart Title was dismissed. Defendant J–Right has also been dismissed from this action. Defendant McGrath and Defendant RAN are the only remaining parties.

“8. Both Defendant McGrath and Defendant RAN claim a right to the Funds.”

The parties' joint stipulation then set out the legal basis for each party's claim to the funds and their agreements about how the case [294 Kan. 556]should be resolved depending on which legal argument was accepted by the district court. Specifically, the parties stipulated:

“13. In the event that KREBSLA does not preclude RAN from paying the commission to McGrath, then RAN admits that McGrath is entitled to the funds held by the Court in full satisfaction of the commission due and owing for his services as a buyer's agent.

[276 P.3d 191]

“14. In the event that KREBSLA does preclude RAN from paying the remaining commission to McGrath, then McGrath admits that RAN is entitled to the funds held by the Court in full satisfaction of the commission due and owing under the Listing Agreement.

....

“16. McGrath is an attorney licensed to practice in the State of Kansas. For the purposes of this case, McGrath acted as an agent for Lausier and rendered legal professional duties and services as an attorney to Lausier (said legal professional duties and services included negotiating and contracting for the purchase and construction of Lausier's new home; as well as the rendition of professional services requiring the knowledge and application of legal principles and technique to serve the interests of Lausier at Lausier's request). McGrath and Lausier had an attorney-client relationship and it was contemplated between McGrath and Lausier that McGrath's professional services would be compensated solely out of the 3% commission. Lausier is, and has always been, extremely satisfied with the services McGrath provided with respect to this real estate transaction.

“17. RAN's only objection to paying McGrath the 3% commission at issue in this case is that RAN believes it is barred from doing so under KREBSLA.”

The district court adopted the parties' Joint Stipulation of Facts. The court noted that prior to McGrath's involvement in the transaction, RAN was already acting as the listing broker for the property; thus, McGrath was aware that a brokerage was involved in the real estate transaction. The court found the attorney exemption contained in K.S.A. 2011 Supp. 58–3037(c) is limited to those professional activities that are encompassed within and incidental to the practice of law in the context of an attorney-client relationship. The court ruled that this limited exception does not permit McGrath to act as a “ ‘licensed real estate agent’ ” thereby entitling him to a commission.

The district court also found that the language of K.S.A. 2011 Supp. 58–3062(c)(1) clearly and unambiguously provides that RAN, as a broker, shall not pay a commission to a nonlicensee. Further, the court quoted K.S.A. 2011 Supp. 58–3062(a)(10) and ruled: [294 Kan. 557]“There is nothing in the language of the KREBSLA that would exempt RAN from this requirement and permit it to pay a commission to a non-licensee regardless of whether the non-licensee is an attorney.” Accordingly, the court entered summary judgment in favor of RAN.

McGrath timely appeals. This court transferred the appeal from the Court of Appeals pursuant to K.S.A. 20–3018(c).

Standard of Review

This court has de novo review of cases decided on the basis of documents and stipulated facts. In re Trust D of Darby, 290 Kan. 785, 790, 234 P.3d 793 (2010); see Thomas v. Benchmark Ins. Co., 285...

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21 practice notes
  • State v. Tapia, No. 100,596.
    • United States
    • United States State Supreme Court of Kansas
    • November 2, 2012
    ...to speculate and cannot read into the statute language not readily found there. Stewart Title of the Midwest v. Reece & Nichols Realtors, 294 Kan. 553, 557, 276 P.3d 188 (2012); Robinson v. City of Wichita Retirement Bd. of Trustees, 291 Kan. 266, 280, 241 P.3d 15 (2010); State v. Bonner, 2......
  • Cady v. Schroll, No. 103,499.
    • United States
    • United States State Supreme Court of Kansas
    • January 24, 2014
    ...not grant deference to the district court's interpretation of a statute. See Stewart Title of the Midwest v. Reece & Nichols Realtors, 294 Kan. 553, 557, 276 P.3d 188 (2012).Summary Judgment Appropriate on Claim of Vicarious Liability Applying these standards to Cady's first claim that Wome......
  • Siruta v. Siruta, 105,698.
    • United States
    • United States State Supreme Court of Kansas
    • April 24, 2015
    ...301 Kan. 762Martin v. Naik, 297 Kan. 241, 247, 300 P.3d 625 (2013) ; Stewart Title of the Midwest v. Reece & Nichols Realtors, 294 Kan. 553, 557, 276 P.3d 188 (2012).K.S.A. 60–1901 provides that “[i]f the death of a person is caused by the wrongful act or omission of another, an action may ......
  • N. Natural Gas Co. v. Oneok Field Servs. Co., No. 104,279.
    • United States
    • United States State Supreme Court of Kansas
    • March 15, 2013
    ...to divine the legislature's intent and construe the statute accordingly.” Stewart Title of the Midwest v. Reece & Nichols Realtors, 294 Kan. 553, 564–65, 276 P.3d 188 (2012). However, even if the language of the statute is clear, we must still consider various provisions of an act in pari m......
  • Request a trial to view additional results
22 cases
  • State v. Tapia, No. 100,596.
    • United States
    • United States State Supreme Court of Kansas
    • November 2, 2012
    ...to speculate and cannot read into the statute language not readily found there. Stewart Title of the Midwest v. Reece & Nichols Realtors, 294 Kan. 553, 557, 276 P.3d 188 (2012); Robinson v. City of Wichita Retirement Bd. of Trustees, 291 Kan. 266, 280, 241 P.3d 15 (2010); State v. Bonner, 2......
  • Cady v. Schroll, No. 103,499.
    • United States
    • United States State Supreme Court of Kansas
    • January 24, 2014
    ...not grant deference to the district court's interpretation of a statute. See Stewart Title of the Midwest v. Reece & Nichols Realtors, 294 Kan. 553, 557, 276 P.3d 188 (2012).Summary Judgment Appropriate on Claim of Vicarious Liability Applying these standards to Cady's first claim that Wome......
  • Siruta v. Siruta, 105,698.
    • United States
    • United States State Supreme Court of Kansas
    • April 24, 2015
    ...301 Kan. 762Martin v. Naik, 297 Kan. 241, 247, 300 P.3d 625 (2013) ; Stewart Title of the Midwest v. Reece & Nichols Realtors, 294 Kan. 553, 557, 276 P.3d 188 (2012).K.S.A. 60–1901 provides that “[i]f the death of a person is caused by the wrongful act or omission of another, an action may ......
  • N. Natural Gas Co. v. Oneok Field Servs. Co., No. 104,279.
    • United States
    • United States State Supreme Court of Kansas
    • March 15, 2013
    ...to divine the legislature's intent and construe the statute accordingly.” Stewart Title of the Midwest v. Reece & Nichols Realtors, 294 Kan. 553, 564–65, 276 P.3d 188 (2012). However, even if the language of the statute is clear, we must still consider various provisions of an act in pari m......
  • Request a trial to view additional results

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