Winkelman v. Allen
| Decision Date | 02 March 1974 |
| Docket Number | No. 46977,46977 |
| Citation | 519 P.2d 1377,214 Kan. 22 |
| Parties | Chester WINKELMAN, Appellee, v. J. R. ALLEN, Appellant. |
| Court | Kansas Supreme Court |
Syllabus by the Court
1. The general rule is that a real estate agent or broker is entitled to a commission if (a) he produces a buyer who is able, ready and willing to purchase upon the proffered terms or upon terms acceptable to the principal; (b) he is the efficient and procuring cause of a consummated deal. The latter is subject to a qualification where failure in completion of the contract, or closing title, results from the wrongful act or interference of the principal.
2. In order for a real estate broker to recover a commission under the rule stated in the foregoing syllabus, the burden is upon the broker to prove that he obtained a customer who was able, ready and willing to meet the terms offered by the owner.
3. Where a real estate broker does not produce an able, ready and willing buyer upon terms acceptable to the owner, the real estate agent is not entitled to a commission.
4. The term 'able' in the general rule that entitles a real estate agent or broker to a commission, if he produces a buyer who is able, ready and willing to purchase upon the proffered terms or upon terms acceptable to the principal, in the context of the rule means more than mere mental competence to make a contract or physical ability to sign it. The term 'able' refers to the financial ability of the broker-produced purchaser to complete the transaction.
5. A prospective purchaser meets the legal standard of 'ready, willing and able' to buy, although he does not have the cash in hand, if he is able to command the necessary funds to complete the purchase within the time fixed for performance.
6. Where the only available source from which the greater part of the money is to come, to make the purchase of real estate possible by a broker-produced customer, is, to the knowledge of the broker, admittedly in the ownership and possession of a third person, and its use in the interest of the purchaser is subject to the gratuitous consent of such third person, who is in no way bound by or a party to the purchase agreement, such a purchaser cannot be considered one able to buy the principal's property.
7. Generally speaking, a purchaser of real estate is financially ready and able to buy: (1) If he has the needed cash in hand, or (2) if he is personally possessed of assets-which in part may consist of the property to be purchased-and a credit rating which enable him with reasonable certainty to command the requisite funds at the required time, or (3) if he has definitely arranged to raise the necessary money-or as much thereof as he is unable to supply personally-by obtaining a binding commitment for a loan to him for that purpose by a financially able third party.
8. For a real estate broker to be entitled to a commission for producing a purchaser 'able, ready and willing' to purchase the property, the broker has the obligation to inquire into the prospect's financial status and to establish his adequacy to fulfill the monetary conditions of the purchase. With this burden cast upon the real estate broker, the owner may accept the prospective customer without being obligated to make an independent inquiry into his financial capacity, and the owner is not estopped to assert lack of financial capacity on the part of the prospective customer simply because he 'accepted' the buyer in the course of negotiations.
Harold K. Greenleaf, Jr., of Smith & Greenleaf, Liberal, argued the cause, and was on the brief for the appellant.
Ted F. Fay, Jr., Hugoton, argued the cause, and Bernard E. Nordling, and Leland E. Nordling, Hugoton, were with him on the brief for the appellee.
This is an action by a real estate broker to recover a commission on the ground that he produced a purchaser who was ready, willing and able to purchase the defendant's 9,000 acre South Dakota ranch upon terms previously agreed by the parties, where the owner who had listed the ranch with the broker refused to sign the contract upon tender of the down payment. The case was tried to a jury which returned a verdict for the broker in the sum of $15,000. The defendant has duly perfected an appeal.
The action was defended on the ground that the broker never produced a qualified purchaser willing to meet the terms and conditions upon which the owner desired to sell his South Dakota ranch.
Although numerous points are asserted on appeal our decision hinges upon the issue whether the broker produced a qualified purchaser.
In the early part of September, 1970, J. R. Allen (defendant-appellant) went to the office of a real estate broker, Chester Winkelman (plaintiff-appellee) and orally listed his South Dakota ranch consisting of approximately 9,000 acres for sale at $40 an acre. The total purchase price at $40 per acre figured $356,800. During the conversation Winkelman informed Allen his commission would be 5% of the sale price. Winkelman told the appellant he would find a qualified buyer, which meant 'someone able to handle it'. The listing of the real estate was non-exclusive and the listing was not put in writing.
By reasons of Winkelman's efforts to sell the land he found Russell Bird who was interested in the property. Winkelman then consulted with Allen and procured his authorization to show the ranch in South Dakota to Bird. Allen inquired about the prospective purchaser and was told by Mr. Winkelman that the Bird family were farmers and they were one of the most prominent farming families in southwest Kansas.
Russell Bird testified that he was a resident of Ellington, Missouri, a farmer, 22 years of age and married. He stated his net worth during the months of September and October, 1970, was approximately $6,000, and that he was working for wages at Moscow, Kansas, for $550 per month. He stated for the year 1970 his gross wages totaled $7,158, and for the year of 1969 his gross wages totaled $5,059.
Roger Bird is the brother of Russell. The only thing in the record concerning Roger is that he accompanied Russell and his father to see the South Dakota ranch on the second visit.
Randall Bird is the father of Russell and Roger. Randall testified he farmed approximately 5,000 irrigated acres of land in southwest Kansas, and he was a stockman and owned a feed lot with a 2,000 head capacity.
Throughout the record there is confusion concerning the dates upon which events transpired. The record establishes the South Dakota ranch was shown to Russell Bird sometime during the middle of September 1970, and to Randall Bird, Russell Bird and Roger Bird on the second visit, which apparently occurred September 24, 1970. Mr. Winkelman was the only other person with the Birds on these trips.
When Mr. Winkelman told Mr. Allen the Birds wanted to inspect the South Dakota ranch a second time and sought his permission to view the property, Mr. Winkelman told Mr. Allen that Russell Bird wanted to show the place to his father and brother and that they would be working in a 'partnership type thing'.
On the return trip from South Dakota on the second occasion, September 25, 1970, Russell Bird offered Mr. Winkelman $320,000 for the South Dakota ranch upon terms discussed during the return trip.
The next day, September 26, 1970, Mr. Winkelman together with Randall Bird and Russell Bird met with Mr. Allen at his farmyard. This was the only occasion Allen conferred with the Birds during the entire negotiations.
Mr. Winkelman testified that it was on or about the evening of the 26th day of September, 1970, that a figure of $340,000 was discussed with Mr. Allen and that Mr Allen was informed that Mr. Winkelman (the Thunderbird Agency) 'had a check for $1,000.00 as earnest deposit to hold on it.' He then asked Allen 'how he wanted it paid and so on and so forth to see if the sale could be worked out.'
Mr. Winkelman also testified that on the way back from the second trip to South Dakota, on or about October 6, 1970, Russell Bird made an offer of $320,000 with $20,000 down and the purchaser to make payments in an amount sufficient to meet the Prudential Insurance Company mortgage payments, and to pay Mr. Allen $5,000 per year on his equity, plus interest on the unpaid portion of his equity, for ten years with the balance due and payable at that time. This offer was made after Russell conferred with his father and brother on the way back from South Dakota.
Prior to Mr. Winkelman taking the Birds to South Dakota on the second occasion he had consulted with Mr. Allen and had his own attorney prepare a contract which is marked defendant's Exhibit No. 1. This exhibit is a typewritten contract of sale. It has a blank space for the date, a blank space for the description of the real estate and blank spaces in the paragraph providing for the terms of payment of the remaining balance of $300,000. The significance of this exhibit is that the seller is described as J. R. Allen and the buyers are collectively described as 'BELLA FOURCHE RANCH, INC., (a corporation to be formed)'. At the end of this typewritten contract of sale is a blank space for the seller's signature and three blank spaces for the signatures of the buyers followed by 'BELLA FOURCHE RANCH, INC.' with a blank space for the signature of the one signing for the corporation to be formed.
The purchase price recited in defendant's Exhibit No. 1 is $320,000, to be paid in the following manner:
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