Stika v. Albion

• Decision Date: 22 July 1986
• Docket Number: No. 1,CA-CIV,1
• Citation: Stika v. Albion, 150 Ariz. 521, 724 P.2d 607 (Ariz. App. 1986)
• Parties: George STIKA dba George Stika Realty, Plaintiff-Appellee, v. Arthur L. ALBION and Margaret L. Albion, his wife, Defendants-Appellants. 8548.
• Court: Arizona Court of Appeals

Page 607

724 P.2d 607

150 Ariz. 521

George STIKA dba George Stika Realty, Plaintiff-Appellee, v.Arthur L. ALBION and Margaret L. Albion, his wife, Defendants-Appellants.

No. 1 CA-CIV 8548.

Court of Appeals of Arizona Division 1, Department C.

July 22, 1986.

Tupper, Schlosser, Schulz & Spaw, P.A. by Peter S. Spaw, Phoenix, for plaintiff-appellee.

Karasek, Haddy & Rayes by David J. Karasek, Phoenix, for defendants-appellants.

OPINION

PAUL G. ULRICH, Judge Pro Tem.

AppellantsArthur L. Albion(Albion) and Margaret L. Albion appeal from a judgment following a trial to the court awarding appelleeGeorge Stika, dba George Stika Realty (Stika), a real estate commission pursuant to an "extension clause" in a listing agreement between the parties.We find the evidence and the agreements involved do not support the trial court's judgment and therefore reverse.

The relevant facts and agreements are undisputed.On May 29, 1982, Albion signed an open listing agreement with Stika for the sale of a cocktail lounge business.Stika's commission was to be any amount offered over $65,000 or 12%, whichever was greater.The business consisted of a number 6 liquor license, furniture and equipment.The listing agreement also provided for a 15-year lease on the building from Albion at $2,400 per month.The agreement thus did not relate exclusively to purchasing the liquor license, furniture and equipment.Instead, purchasing these items was to be part of a larger transaction including leasing the building as it then stood.Nothing in the listing agreement suggests purchasing the business assets could occur separate and apart from leasing the building as well.

When the listing agreement was entered into, the building was in a run down, dilapidated condition.The business was also closed and had not been operated for several months.During the listing period, Stika showed the business to one Elaine Collis.Collis, the ultimate purchaser, was totally uninterested in buying the property when she first saw it in June, 1982 because of the "mess" the building was then in.Although she testified the price at the time was "very reasonable to get in,"she was not interested in acquiring the property since it would "take a lot to get it in working order."She further testified she"couldn't handle" the monthly rental payment at that time.

After expiration of the listing agreement, Albion remodeled the interior and made improvements to the building.He then advertised the business for sale along with the real estate.Collis thereafter saw the property again in November 1982.She decided to buy it at that time because of the opportunity to purchase the land and because "the bar was improved so much."At that time, workmen were still "remodeling it over," but it "looked very nice."In Collis' opinion, the business "went from total disaster to total improvement."She also testified that because the land was also for sale it completely changed her opinion of the business.She and her partner therefore purchased both the land and the business assets from Albion for $300,000, $210,000 of which was allocated for the land and building and $90,000 for the business assets.Albion testified the $90,000 figure was determined as a result of the improvements he had made.Collis confirmed the allocation was made by the seller.

When Stika learned of the sale, he sued to recover a real estate commission of $25,000 pursuant to a one-year extension clause in the listing agreement which provides in part:

Owner agrees that if the property is sold ... within one (1) year from the termination date of this agreement to any person referred to the business by the Broker or with whom negotiations began during the listing period, Owner shall pay the commission to the Broker.

The trial court rejected appellants' contention that Albion and Stika intended to market and sell the business in an "as is" condition, that the listing price in May 1982 was indicative of the condition at that time, and that substantial improvements were made to the business and business premises thereafter that made it saleable at a higher price.Instead, the trial court found any improvements Albion made were not to the business assets themselves, so that the business Collis was shown by Stika was substantially the same as the one she later purchased.The court further found Stika was entitled to a $25,000 commission pursuant to the listing agreement's extension clause.

This court is free to substitute its analysis of the record for the trial court's where the case turns upon the interpretation to be applied to undisputed facts.Goodyear Aircraft Corp. v. Arizona State Tax Comm'n, 1 Ariz.App. 302, 402 P.2d 423(1965).Interpretation of legal instruments is also a question of law to be determined by this court independent of the trial court's findings.LeBaron v. Crismon, 100 Ariz. 206, 412 P.2d 705(1966).

Applying this standard of review, we believe the trial court focused its attention too narrowly when it considered solely the business assets portions of the listing agreement and the ultimate sale transaction, respectively.According to Smith v. Melson, Inc., 135 Ariz. 119, 121-22, 659 P.2d 1264, 1266-67(1983), "a contract should be read in light of the parties' intentions as reflected by their language and in view of all the circumstances....[T]he purpose of an agreement is to be divined from the entire instrument and the surrounding circumstances and not from the label the parties attach to it."Accord, ...