Zwick v. United Farm Agency, Inc.

• Citation: 556 P.2d 508
• Decision Date: 26 November 1976
• Docket Number: No. 4616,4616
• Parties: Dwight ZWICK (Defendant, Cross-claimant and Third-party Plaintiff below), and Zwick Ranch, Inc., a Minnesota Corporation (Third-party Plaintiff by joinder below), Appellants, v. UNITED FARM AGENCY, INC., a Minnesota Corporation (Third-party Defendant below), Appellee.
• Court: United States State Supreme Court of Wyoming

Page 508

556 P.2d 508

Dwight ZWICK (Defendant, Cross-claimant and Third-party Plaintiff below), and Zwick Ranch, Inc., a Minnesota Corporation (Third-party Plaintiff by joinder below), Appellants, v. UNITED FARM AGENCY, INC., a Minnesota Corporation (Third-party Defendant below), Appellee.

No. 4616.

Supreme Court of Wyoming.

Nov. 26, 1976.

Robert A. Hill, of Kirven & Hill, Buffalo, for appellants.

Lawrence A. Yonkee, of Redle, Yonkee & Arney, Sheridan, for appellee.

Before GUTHRIE, C. J., and McCLINTOCK, RAPER, THOMAS and ROSE, JJ.

ROSE, Justice.

FACTS

Appellants-third-party plaintiffs, Dwight Zwick and Zwick Ranch, Inc., filed their amended complaint in the District Court in and for Campbell County, Wyoming, on the 26th day of September, 1974, against United Farm Agency, Inc., appellee-third-party defendant, a real estate broker, in which Zwich and Zwick Ranch, Inc., claimed damages for negligence and misrepresentation of facts. While numerous parties were involved in the suit below, only Zwick and United are interested in this appeal.

Zwick owned a ranch in Minnesota and in February, 1966, listed it for sale with real estate broker, United, at its Erskine, Minnesota office operated by Jerry and Hazel Bernard. On Friday, April 15, 1966, potential buyers Gregg and Bartz made telephone contact with United about Zwick's ranch and came to Erskine the next day, Saturday, April 16th, to inspect it. On the last mentioned day Gregg and Bartz were introduced to Zwick and expressed an interest in acquiring the property for a corporation which was identified as Acoma West, Inc.

On Sunday, the 17th of April, the Bernards called V. R. Gillingham, the district manager of United, to aid in consummating the transaction, whereupon Gillingham came to Erskine that afternoon and the deal was finalized through execution of a 'Deposit Receipt and Agreement for Sale' showing Acoma West, Inc., to be the purchaser-Dwight Zwick the seller-and the purchase price to be $600,000.00. No payment was made on April 17, but $175.000.00 was to be paid on the purchase price on June 15, 1966, it being agreed the transaction would be closed on that date, or sooner if title was found to be satisfactory.

It was further agreed:

'As expression of good faith, the buyers shall temporarily convey title to a certain trailer park located in Gillette, Wyoming into trust, to be deeded back upon completion of the terms of the contract.'

The trailer park referred to was the 'Westward Ho' located at Gillette, wyoming and owned by Gregg, who was to convey it to Zwick in return for Acoma stock. Bartz was to furnish the $175,000.00 down payment and the Westward Ho deed was to be held in trust by United, to be released to Zwick if the deal was not consummated but returned to the grantor if it was.

Gregg testified that upon signing the agreement on April 17, 1966, he executed a warranty deed to Acoma for the Westward Ho property, depositing it in the custody of Beal, attorney for Acoma. This instrument was never recorded and was subsequently returned to the possession of Gregg, who, in December, 1966, caused to be recorded a deed conveying the Westward He to Nellie B. Gregg, with Gregg shown therein as the grantor. On April 29, 1966, Bernards of United received a deed from Acoma to United for Westward Ho, dated April 20, 1966, which was recorded in Campbell County on June 9, 1966. At the time when the Acoma deed was executed, delivered and recorded, Acoma did not have record title to the property since the aforementioned deed from Gregg to Acoma was never recorded and was returned to Gregg, the grantor.

United, through Bernard, wrote Zwick on April 30, 1966, informing him that United had received the Westward Ho deed, showing Acoma as grantor and United as grantee and acknowledging that Bernard understood the agreement to have been that the conveyance was to have transferred Westward Ho from Gregg to Zwick, with United holding the deed in trust subject to the applicable terms of the Deposit Receipt and Agreement of Sale. The Bernards, in the same letter, said they planned to call the Gillette bank holding the mortgage on Westward Ho and inquire about the title.

The evidence showed the call revealed the Westward Ho appraised walue to be $38,000.00, with a first mortgage in the amount of $12,000.00 and a second mortgage in the amount of $1,000.00. The bank represented to Bernard that Gregg was basically honest. This information was timely conveyed to Zwick.

United ordered a Dun and Bradstreet report on Gregg, Bartz and Acoma. The response, dated April 27, 1966, and other reports obtained about this time were generally negative which information was, upon receipt, immediately conveyed to Zwick in May, 1966. Soon afterward Bartz vanished, inquiry revealing him to be totally without assets; in May of 1966 Gregg advised that Acoma could not perform its obligations.

In June of 1966, Gregg Became associated with one Billy Joe Griffity, and together they attempted to renegotiate the purchase of Zwick's ranch. A written offer was made which included a tendered deed to the Westward Ho property. At this time United was holding the Acoma deed to Westward Ho in trust for Zwick, but Gregg's original unrecorded deed of Westward Ho to Acoma had, by then, been returned to him. Zwick did not, however, exectue a contract with Gregg and Griffith for the sale and purchase of the ranch property and, in January, 1967, Zwick sold the ranch to others. Zwick and Gregg thereupon asked United for a conveyance of the Westward Ho property and in 1968 United did execute a quit claim deed which purported to quit claim any interest it may have had in the Westward Ho to Zwick. This deed was recorded in Campbell County January 31, 1968.

ISSUES UPON APPEAL

The issues framed by appellants' brief are:

'1. Did United Farm Agency breach its fiduciary duty to its principals, Dwight Zwick and Zwick Ranch, Inc. for which damages should be awarded?

'2. Was the action of the plaintiffs barred by the four-year statute of limitations as provided by Section 1-18, W.S. 1957?'

HOLDING

We hold that there was no negligence and no breach of United's alleged fiduciary duty to Zwick and therefore affirm the trial court. Since this holding is decisive of the case, we have no need to inquire into the second issue enumerated above, namely, whether or not the appellants' claims are barred by the statute of limitations. ¹

In pursuit of its fiduciary-trust theory, appellants Zwick charge United with these kinds of breaches:

The broker did not determine the buyer's ability to pay.

The broker misrepresented the value of the Westward Ho trailer park and misrepresented whether it was encumbered.

The broker's agent prepared the contract and acting as a lawyer failed to furnish the principal with adequate legal protection.

The broker failed to disclose the failure of the contract between Acoma and Zwick and to timely disclose the fact of default.

The broker failed to divest itself of the trust asset-the deed to Westward Ho-at a time when such divestiture would have been of value.

The relationship extant between United and Zwick at all times material here was that of broker and principal. A broker is an agent of his principal, which relationship we have defined as one of representation by one for another in contractual negotiations or transactions akin thereto. ²

Essentially, the duties and obligation owed by a broker to his employer are the same as those owed by any agent to his principal. ³ It is the broker's duty to exercise ordinary care under the circumstances. ⁴ A broker is obligated to make full, fair and prompt disclosure to his principal of all the facts within his knowledge which are or might be material to the purpose of the agency. ⁵ The broker is bound to the highest degree of good faith. ⁶ In fact he usually acts as a fiduciary. ⁷ We have observed that, while a broker as a trustee must act in good faith, the trustee's good-faith obligation to his cestui que trust may be greater than that a broker owes to his principal, absent a trust relationship. ⁸ Included within these duties and obligations is the duty to transmit offers to the principal ⁹, as well as the duty to disclose the purchaser's financial condition if the broker has this knowledge. ¹⁰

The broker is not, however, liable for alleged duties not performed which are not within the contemplation of the contract ¹¹, and he has no obligation to his principal by reason of the nonperformance of the contract by the other party. ¹² He is not liable for a mere mistake in judgment which does not result from a failure to know or do that which a person of ordinary prudence under similar circumstances would know or do. ¹³

With these concepts as our backdrop, we resolve the contentions of this appeal as follows:

The trial court found by its judgment, which was general in nature, that United timely disclosed to its principal, Zwick, all facts it had with respect to ownership and title to the trailer park, the manner by which it would be conveyed and held in trust, its encumbrance, and its value. ¹⁴ As soon as reasonably possible, inquiry and disclosure were made and given relative to the financial condition of Acoma, Gregg and Bartz. While the facts were in controversy concerning these disclosures and inquiries, the trial court made a general finding in favor of United and it must therefore be presumed that all controverted issues of fact were resolved in favor of the appellee. A general finding is one of every special thing necessary to sustain the judgment. ¹⁵ This court must assume the truth of the evidence in favor of United and give it every favorable inference that may be reasonably drawn. ¹⁶

In the appellants' brief it is argued that United did not search for a buyer as it was its duty to do. This was not an issue in the trial court and we will not consider it ¹⁷, except to make the following observations: There was a subsequent...