Deimler v. Ostler , 200 Mont. 350 ( 1982 )

No. 81-506
IN THE SUPREFE COURT OF THE STATE OF MONTANA
1982
CLARE E. DEIMLER,
Plaintiff and Respondent,
ROBERT E. OSTLER and JENNIE H. OSTLER,
Defendants, Appellants and Cross-
Claimants,
and
LARRY SEMENZA amd J P Z : A. WANKEL,
A.FS
Third Party Defendants.
Appeal from: District Court of the Eighth Judicial District,
In and for the County of Cascade
Honorable W. Wil-liam Coder, Judge presidinq
Counsel of Record:
For Appellants:
Small, Hatch and Doubek, Helena, Montana
Carl Hatch argued and John Doubek argued, Helena,
Montana
For Respondent:
Jardine, Stephenson, Blewett & Weaver, Great Palls,
Montana
K. Dale Schwanke argued, Great Falls, Montana
For Third Party Defendants:
Scott, Linnell & Newhall, Great Falls, Montana
Submitted: June 25, 1982
Decided: September 23, 1982
Filed: September 23, 1982
-q- ,I
b,L*h&~?.?&#
< . ,' , - .
' - . ,-
- - .".-
-
r-
8
I
' Clerk
Mr. Justice Frank B. Morrison, Jr., delivered the Opinion of
the Court.
Appellants, Ostlers, appeal from summary judgment
entered by the Eighth Judicial District of the State of
Montana, Cascade County, in favor of respondent on respondent's
principal claim and against appellants on their counterclaim.
We affirm.
Respondent instituted this action to recover a real
estate commission due on the sale of appellants' ranch
located near Helmville, Montana. Appellants counterclaimed
against respondent and joined the purchasers of the ranch as
third party defendants alleging a claim against both respondent
and third party defendants based upon misrepresentation and
breach of obligation. All parties moved for summary judgment
based upon an extensive factual record developed through
deposition testimony and the submission of affidavits. The
trial judge held that there was no material issue of fact
and found respondent entitled to judgment for the full amount
of commission claimed. Consequently, the relief sought by
the appellants was denied.
The issue presented to this Court is whether the trial
court erred in granting summary judgment. Since disposition
of this issue involves a determination of whether there were
factual issues presented to the trial court, we review
extensively the record upon which summary judgment was
based.
Ostlers owned a ranch near Helmville, Montana, which
they desired to sell. Deimler, a licensed real estate
salesperson working out of Great Falls, Montana, contacted
the Ostlers and was advised that Ostlers would sell their
property for $1,600,000.00. Ostlers advised ~eimlerthat
they would not enter into an exclusive listing arrangement
and that they would only agree to pay a 5% commission for
sale of the ranch. A written contract was not executed.
Sometime later, Deimler contacted the Ostlers and
presented a $1,000,000.00 offer to purchase from Semenza.
Ostlers rejected the offer. Semenza's second offer, transmitted
through Deimler, of $1.4 million dollars was rejected.
Subsequently, Semenza offered Ostlers the full asking price
of $1.6 million.
A meeting was arranged with Deimler, Semenza, Ostlers,
and the Ostlers' counsel, Carl Hatch. A contract to sell
and purchase was executed and recited that Semenza had paid
$50,000.00 to Deimler as earnest money. The contract further
provided that if financing was obtained, closing would be no
later than thirty days following June 1, 1978, and that Ostlers
agreed to pay Deimler a 5% commission on the sale. Semenza
advised Ostlers that he was seeking financing through Western
Farm Management Company of Billings, Montana.
On or about April 6, 1978, Ostlers asked Deimler if he
had actually received $50,000.00 from Semenza as earnest
money and Deimler informed Ostlers that he had not. Meanwhile,
Semenza was attempting to obtain a $50,000.00 loan from
First West Side National Bank of Great Falls, Montana, to
satisfy the earnest money obligation. The bank's loan
committee denied Semenza's loan, advising him that before
the bank could approve the earnest money loan, the contract
to purchase and sell must expressly state that it was contingent
upon securing long-term financing and that if such financing
was not obtained, the earnest money would be returned.
Semenza's attorney, K. Dale Schwanke, forwarded a new
contract contingent upon Semenza obtaining long-term financing.
Thereafter, Hatch informed Schwanke that Ostlers would not
execute the new agreement and advised him that the original
contract failed for lack of consideration in that the earnest
money had not been paid.
On April 29, 1978, the parties had a second meeting in
Hatch's office. A new agreement was executed which specifically
referred to the fact that Semenza was attempting to obtain
long-term financing and that the parties' obligations under
the agreement were conditioned upon a successful mortgage
commitment. The 5% real estate commission was provided for
in the revised agreement. Shortly thereafter, Deimler
received a $50,000.00 earnest money deposit which was placed
in Deimler's trust account. Subsequently, Ostlers and Carl
Hatch received a copy of a May 10, 1978, mailgram from
Western Farm Management Company announcing that a requested
loan of $2.8 million dollars had been approved.
Because of the delay in obtaining a long-term financial
commitment, the original closing date could not be met.
Ostlers and Semenza executed an extension agreement stating
that the closing date of the real estate transaction would
be extended to coincide with the closing date of the loan.
Both closings were completed on August 4, 1978.
At the time of closing, Ostlers disputed Deimler's
claim to an $80,000.00 real estate commission. Deimler and
Ostlers thereafter entered into an agreement whereby the
$50,000.00 earnest money deposit would be held in Deimler's
trust account until the commission dispute was resolved and
that the remaining $30,000.00 claimed to be owed on the real
estate commission would be disbursed from the loan proceeds
and deposited in a trust account in the name of Ostlers and
Deimler pending resolution of the dispute.
Ostlers contend that they do not owe a real estate
commission because: (1) Deimler was not a real estate
broker as he represented at the time Deimler originally
contacted Ostlers about the sale of the ranch; (2) Deimler
misrepresented to Ostlers that a $50,000.00 earnest money
deposit had been made when, in fact, it had not; (3) Deimler
had misrepresented to Ostlers that Semenza was an able
purchaser when he, in fact, was not and ultimately had to
obtain one Wankel as a partner in order to close the transaction;
( 4 ) Deimler was actually representing Semenza, not Ostlers,
and thereby breached the fiduciary relationship that was
owed by the selling agent. In their counterclaim, Ostlers
contend that they were damaged by the delay in closing.
In assessing the appropriateness of the summary judgment
entered, this Court has been asked by appellants to resolve
the following issues:
(1) Whether a commission is owed to one licensed only
as a real estate salesperson at the time of the initial
contact but is a real estate broker at the time of execution
of the contract to sell and purchase.
(2) Whether a real estate broker is entitled to recover
a commission from the seller when the real estate broker is
representing the purchaser.
(3) Whether a real estate broker is entitled to a
commission when the purchaser is not financially able to
consummate the transaction alone, but must associate a partner.
(4) Whether there is a factual issue underpinning
sellers' claim that the real estate broker engaged in fraudulent
and deceitful conduct as well as threats and coercion in
order to induce the sellers to enter into a written agreement
to purchase and sell.
(5) Whether there is a material issue of fact upon
which to base a legal claim for breach of fiduciary relationship.
Section 37-51-401, MCA, provides that a person must
allege and prove that he or she was a licensed real estate
broker or salesperson in this State at the time the claim
arose, before an action can be maintained for collection of
a commission. The undisputed facts are that respondent was
a licensed real estate broker at the time this action arose.
The statutory requirement was satisfied.
Ostlers contend that, notwithstanding the fact Deimler
was a licensed real estate broker at the time the contract
to purchase and sell was executed, he misrepresented his
status at the time of initial contact. However, a fraud
allegation must be based upon proof that there was a misrepresentation
of material fact which was relied upon and which resulted in
detriment. Lee v. Stockmen's National Bank (1922), 63
Mont. 262, 284, 207 P. 623, 630; Poulsen, et al. v. Treasure
State Industries, Inc. and Kenneth K. Knight (1981), Mont.
, 626 P.2d 822, 826, 38 St.Rep. 218, 223. The undisputed
facts in this case show that respondent Deimler produced a
seller willing to pay the full asking price of $1.6 million
and that the transaction was consummated for that figure.
Ostlers received everything for which they bargained.
The essential elements of fraud are absent.
Ostlers contend that Deimler was actually representing
the purchaser and not the seller. Again, respondent produced
sellers who paid the full asking price. There is simply no
factual basis to support a contention that Ostlers were
damaged by a conflict of interest.
Ostlers contend that Semenza was not a qualified buyer,
as represented by Deimler. However, Ostlers subsequently
closed the transaction with both Semenza and James A. ~ a n k e l
as purchasers for the sum of $1.6 million dollars. everth he less,
Ostlers claim to have been damaged by the delay occasioned
by Semenza's inability to close individually. However,
Ostlers, represented by competent counsel, agreed to an
extension of the closing date. Ostlers now are in the
position of having ratified the entire transaction, having
received the full benefit of the bargain, and on the other
hand, while retaining the benefits, claiming to have been
damaged by the delay to which they consented. Ostlers are
clearly estopped. See 12 Am.Jur.2dI Brokers, Section 184,
page 924.
Ostlers claim that they were coerced into closing the
transaction. Ostlers were represented by counsel through-
out. There is no evidence in the record to support a contention
that they were either coerced or deceived to their detriment.
Ostlers do not seek to set aside the agreement, but elect to
stand on it. Their claim on this issue fails for the same
reasons cited in resolving their previous contentions.
Ostlers lastly contend that there was a breach of the
fiduciary duty owed by an agent to the principal. The
existence of a fiduciary relationship between Deimler and
Ostlers would foreclose Deimler from taking advantage of
Ostlers. Ryckman v. Wildwood, Inc. (1982), Mont. , 641
P.2d 467, 472, 39 St.Rep. 378, 384. Section 28-2-406, MCA.
The undisputed evidence in the record shows that Deimler did
not gain a financial advantage over Ostlers as the result of
the principal-agent relationship.
The summary judgment of the District Court is affirmed
in its entirety.
We Concur:
"
Chief ~ustice'
,
' L J f/ . ,/&fit c ,q
; Ad
Justfces /C '
I