Wheeler v. Waller, 54963
| Decision Date | 11 May 1972 |
| Docket Number | No. 54963,54963 |
| Citation | 197 N.W.2d 585 |
| Parties | Don WHEELER, Appellant, v. John WALLER et al., Appellees. |
| Court | Iowa Supreme Court |
Piper & Mumm, Missouri Valley, for appellant.
Woodford R. Byington, Malvern, for appellees Waller.
Edgar E. Cook, Glenwood, for appellee Nelson.
The question to be decided is whether, under the circumstances alleged in the petition, a realtor is entitled to share in a real estate commission when the owners of land sell the land through a second realtor who was asked by the first realtor to show the property to a prospect.
The appeal is from orders sustaining motions to dismiss the petition. We therefore examine the petition to determine whether 'it appears to a certainty plaintiff has failed to state a claim on which any relief may be granted under any state of facts which could be proved in support of the claims asserted by him.' Osbekoff v. Mallory, 188 N.W.2d 294, 299 (Iowa). Since a motion to dismiss admits the allegations of the petition attacked, we assume the truth of such allegations--but only, of course, for the purpose of the motion. Plaintiff Don Wheeler alleges the following in the petition before us.
Wheeler and defendant Clifford Nelson held Iowa real estate brokers' licenses. Defendants John and Ethel Waller owned a large farm in southwest Iowa. Wheeler obtained from the Wallers an exclusive ten-day written listing to sell the farm for $496,000. Wheeler was to receive a 5% Commission on the list price or on any other price that the Wallers accepted during the ten days or within 90 days thereafter if they sold to a person to whom Wheeler had shown the property during the ten days and whose name he had given the Wallers in writing. The Wallers specially requested that Wheeler notify Nelson of the listing. Wheeler (and apparently the Wallers too) knew that a Montana banker named Nichlos was attempting through Nelson to buy a large Iowa farm.
Wheeler promptly informed Nelson, through Nelson's wife, of his exclusive listing and inquired whether Nelson would like to show the farm to Nichlos. Nelson accepted Wheeler's offer and contacted the Wallers and Nichlos. The Wallers believed that Nelson was cooperating with Wheeler.
From previous dealings and usages of the trade, both Wheeler and Nelson understood that realtors split the commission if a broker who has a property listed asks a second broker to help sell it and the second broker sells it.
Wheeler and Nelson were in frequent contact during the ten days of the listing, but during such period Nelson prevented Nichlos from seeing the farm and did so with the intention of defrauding Wheeler out of his share of the commission by waiting until Wheeler's listing expired.
After the ten days had elapsed, Nelson effected a sale of the farm by the Wallers to Nichlos. In order to do so, Nelson persuaded the Wallers to take less than the list price and he himself accepted less than 5% Commission.
Wheeler demands $12,250 of Nelson and the Wallers as half of the commission, and also $7,500 of Nelson as punitive damages.
The parties argue a number of legal questions, but we find two issues to be determinative. Under the allegations of the petition, did Nelson violate a duty to Wheeler by waiting to show and sell the farm to Nichlos until the ten-day written listing had expired? Did the Wallers violate a duty to Wheeler rendering them liable to him for half of the commission?
I. Nelson's Liability. As a general rule, when a broker has a property listed for sale and asks a second broker to help him sell it and the latter accordingly sells it and collects a commission, the second broker must divide the commission with the first broker. The second broker owes a duty of good faith and cannot place his own interests ahead of those of the first broker. Cases of that kind are numerous. Anno. 171 A.L.R. 1012, 1014; see 46 Am.Jur.2d Joint Ventures § 22 at 44--45; 12 C.J.S. Brokers § 81 at 176--178.
Usually the facts are such as to bring the two brokers within the relationship of joint adventurers or of principal and agent, where a fiduciary duty is well established. E.g., Dillard v. Wheelock, 215 Ala. 195, 110 So. 278 (joint venture); Mann v. Jones, 233 S.W. 989 (Tex.Civ.App.) (principal and agent). Here, however, Wheeler had the farm listed for sale, Nelson had a prospect, Wheeler simply asked if Nelson wanted to show the farm to that prospect, and Nelson accepted. We doubt that on such allegations a joint venture or agency in the conventional sense would arise. See Pay-N-Taket, Inc. v. Crooks, 259 Iowa 719, 145 N.W.2d 621. Does this mean that Nelson was under no duty of good faith toward Wheeler? We cannot accept such a proposition.
When a broker invites a second broker to show a property, he takes the second broker into his confidence to some extent. If the second broker accepts, the first broker has a right to expect that the second broker will not breach that confidence but will act in their mutual interest. This duty of good faith is not limited to the familiar categories such as partnership, joint venture, and agency; it permeates the law wherever a relationship of trust and confidence exists. As stated in 37 Am.Jur.2d Fraud & Deceit § 15 at 38--39:
Where a confidential or fiduciary relationship exists, it is the duty of the person in whom the confidence is reposed to exercise the utmost good faith in the transaction, to make full and truthful disclosures of all material facts, and to refrain from abusing such confidence by obtaining any advantage to himself at the expense of the confiding party.
See also 37 C.J.S. Fraud § 2c(2) at 213.
Statements of the principle have been made in terms broader than partnership, joint venture, or agency--although the particular connection between the two individuals is sometimes described as akin to those relationships. The court said this regarding two brokers, in Moore v. Sussdorf, 421 S.W.2d 460, 465 (Tex.Civ.App.):
It has also generally been held that the relationship thus created is in the nature of a particular partnership and is governed by most of the same principles which apply to partnerships, including a fiduciary relationship, requiring each member to exercise the highest degree of good faith toward the other.
See in addition Nutter v. Bechtel, 6 Ariz.App. 501, 505, 433 P.2d 993, 997 (); Arnold v. Humphreys, 138 Cal.App....
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