Widing v. Jensen

• Decision Date: 31 July 1962
• Citation: 373 P.2d 661,231 Or. 541
• Parties: Don J. WIDING and J. M. Girtier, Appellants, v. Robert J. JENSEN, Real Estate Commissioner for the State of Oregon, Respondent.
• Court: Oregon Supreme Court

Page 661

373 P.2d 661

231 Or. 541

Don J. WIDING and J. M. Girtier, Appellants, v. Robert J. JENSEN, Real Estate Commissioner for the State of

Oregon, Respondent.

Supreme Court of Oregon, Department 2.

Argued and Submitted April 13, 1962.

July 31, 1962.

William A. Martin, Portland, argued the cause for appellants. On the briefs were Davis, Jensen, Martin & Robertson, Portland.

H. William Barlow, Assistant Attorney General, Salem, argued the cause for respondent. With him on the brief was Robert Y. Thornton, Atty. Gen., Salem.

Before McALLISTER, C. J., and WARNER, SLOAN and O'CONNELL, JJ.

WARNER, Justice.

This is an appeal from a judgment of the Circuit Court for Marion County affirming a decision and order of Robert J. Jensen, State Real Estate Commissioner. The Commissioner's order suspended the real estate license of petitioner Widing for 15 days and the license of petitioner Girtler for 60 days. The hearing before the Commissioner was had pursuant to ORS ch. 183 and the review by the circuit court in the manner provided by ORS 183.480.

Petitioner Widing does business in Portland, Oregon, under the assumed business name of Certified Realty Co. Girtler was a real estate salesman employed by Widing.

James R. Conway and Edna A. Conway, in November, 1960, filed a complaint with the Real Estate Department of the state alleging that on or about June 27, 1960, Certified Realty Co. (hereinafter called the Company) purchased certain real property from the Conways for $11,466.73. It was a parcel the Conways had listed with the Company on January 29, 1960; that prior to the time of the sale by the Conways to the Company, the Company had received an offer of purchase from Mr. and Mrs. H. R. Darrow for a price of $13,000, but had never submitted the Darrow offer to the Conways; and that the Company subsequently sold the Conway property to the Darrows for $13,000.

At the conclusion of the two hearings had on the Conway complaint the Commissioner made the following findings of fact:

'That defendants Don J. Widing and J. M. Girtler, while acting as agents for complaints for the sale of certain real property, did purchase said real property from complainants without advising them of an outstanding and existing offer for the purchase of said premises by Harold R. Darrow and Pauline H. Darrow; that said defendants later sold said premises to the Darrows.'

Based upon these findings, the Commissioner concluded that petitioners violated ORS 696.300(1)(q) ¹ and thereafter entered the suspension order from which petitioners appealed to the circuit court.

ORS 696.300(1)(q) embodies a statutory statement of the long-recognized common-law rule of the fiduciary relationship thrust upon a real estate broker exacting duties and obligations to his principal and as more recently stated in Prall v. Gooden, 226 Or. 554, 561, 360 P.2d 759, 762 (1961), is as follows:

'It also must be kept in mind that a real estate broker stands in a fiduciary relationship with his customer or client and is thus bound to protect his clients' interests. He must, therefore, make a full, fair and understandable explanation to the client before having him sign any contracts, particularly when those contracts are with the broker himself. Sexton v. Kelly, 185 Or. 1, 9, 200 P.2d 950; 12 C.J.S. Brokers § 41, p. 96; 8 Am.Jur., Brokers 1035, § 86.'

See, also, Parker v. Faust, 222 Or. 526, 529-530, 353 P.2d 550 (1960). For a succinct statement see Restatement, 2 Agency 2d, 208, § 390, and quoted with approval in Prall v. Gooden, supra, 226 Or. at 563, 360 P.2d 759. It is a relationship which also casts upon the broker the burden to show that there was a full and complete disclosure and that the broker did not reap a secret profit. Parker v. Faust, supra, 222 Or. at 530, 353 P.2d 550 and cases there cited.

The questions presented for our decision are: (1) Does the evidence substantiate the findings of the Commissioner and the circuit court that petitioners purchased the Conway property while acting as their agents and without advising them there was an existing offer from the Darrows for the purchase of the property at the time of its purchase from the Conways by petitioners? (2) Did the acts of petitioners in their dealings with the Conways constitute 'bad faith, incompetency or untrustworthiness, or dishonest, fraudulent or improper dealings' within the meaning of ORS 696.300? Based upon the following summary of the facts, we conclude that each of these questions must be answered in the affirmative.

On January 29, 1960, the Conways executed a listing agreement employing Certified Realty Company to sell their residence for $13,500. This listing was obtained by petitioner Girtler. It conformed in all respects to the Statute of Frauds (ORS 41.580(7)). The termination date of the listing was April 30, 1960. During the intervening 90-day period the Company, acting through Girtler, advertised the property and diligently endeavored to sell it, but received no offers. But notwithstanding, Girtler continue, with the acquiescence of the Conways, to advertise and show the property, still without success.

On June 18, 1960, Mrs. Conway and Girtler discussed the possibility of petitioners purchasing the property and on June twenty-first both the Conways met with Girtler and discussed further the terms of such a sale.

Two days later the Conways again met with Girtler and at that time signed an earnest money agreement again listing the property with Certified Realty Co. and agreeing to sell for a price that would net $1,600 cash to the Conways. That amount represented their equity in their property as computed by Girtler. It was figured on a value of $12,750. However, in settling upon the recited sale price of $11,466.73 (previously referred to) Girtler deducted from $12,750 a figure estimated as the FHA mortgage discount, and also $750 or $780 as a commission to the Company. At the same time Girtler accepted the listing in behalf of the Company and gave the Conways his promissory note for the amount of $1,600. On June twenty-seventh petitioner Widing on his return to the city signed the 'agreement to purchase' portion of the earnest money agreement in behalf of the Company. ² On July 8, 1960, Certified Realty sent the Conways a check for $1,594. ³

At least a week prior to the time that the Conways sold their property to petitioners the Darrows had been shown the Conway property twice and had consulted with Girtler concerning it. On June 25, 1960, Girtler filled out another earnest money agreement which was signed by the Darrows. In this they agreed to buy the Conway property for $13,000. The Darrows evidently did not have sufficient cash with which to purchase the Conway residence, but they did have an equity in other property owned by them which they conveyed to the Company. The equity of the Darrows was placed at $1,000 and used as a down payment for the purchase of the Conway parcel from the Company.

The Darrow's earnest money agreement discloses that the offer to sell the property to them was made by Girtler on June 25, 1960. The Darrow's offer to purchase was accepted by petitioner Widing on June twenty-seventh, the same date he accepted the Conway's offer to sell.

Mr. Darrow testified that about a week before he signed the earnest money agreement he had called Girtler and told him he was interested in the house and wanted to 'work out some kind of a deal.' There is nothing in the record to indicate that the display of interest by the Darrows as potential purchasers was ever communicated to the Conways until after the two sales of their property had been consummated, i. e., the sale from the Conways to the Company and the almost coincidental resale of the same parcel by the Company to the Darrows. It was not until July 1, 1960, or thereafter, that petitioners informed the Conways of the sale to the Darrows.

Petitioners rest their defense primarily upon the representation that there was no brokerage relationship subsisting between them and the Conways after April 30, 1960, the termination date of their first listing agreement. This assertion is without merit.

A provision in a contract terminating it as of a given date, like the one in the present case, is for the benefit of the principal, and like all other provisions in favor of a party, may be waived if he chooses, either expressly or impliedly. Wallace v. Oregon Engineering Co., 90 Or. 31, 36, 174 P. 156, 175 P. 445 (1918); Smith v. Martin, 94 Or. 132, 138, 185 P. 236 (1919); Cross v. Campbell, 173 Or. 477, 493, 146 P.2d 83 (1944); 17 C.J.S. Contracts § 405, p. 894; 12 Am.Jur. 1030, Contracts § 449.

The time of performance specified in a broker's contract, as in other contracts, may be waived by the principal where he, after the time limit has expired, urges and encourages the broker to continue his efforts and the broker does so continue with the knowledge, approval and encouragement of the principal. Rawlings Mfg. Co. v. Red Run Golf Club, 220 Mich. 30, 189 N.W. 877, 879 (1922); Gulf Trading Co. v. Radcliff, 216 Ala. 645, 114 So. 308, 315 (1927); Moran v. Bair, 304 Pa. 471, 156 A. 81, 82 (1931); Baker v. Curtis, 105 Cal.App.2d 663, 234 P.2d 153 (1951); Ridgway v. Chase, 122 Cal.App.2d 840, 265 P.2d 603, 609 (1954). The time limit of a brokerage contract may be waived or impliedly extended by the seller. Annotation, 27 A.L.R.2d 1355 (1923), and cases there cited.

In Everson v. Phelps, 104 Or. 288, at 295, 206 P. 306, at 308, 26 A.L.R. 780 (1922) when considering a brokerage contract, we said:

'The principal waives performance within the time limit when he accepts the services of the broker and recognizes and treats the contract as still in force: * * *.'

There is, however, no absolute test for the ascertainment of waiver or extension of time; such is a question of fact for the determination of the court. Kraemer v. Smith, 179 Cal.App.2d 52, 3 Cal.Rptr. 471 (1960); Filante v. Kikendall, ...