No. 91-496
IN THE SUPREME COURT OF THE STATE OF MONTANA
JAMES LANE, DEANNA LANE, d/b/a REALTY WEST,
LANE ASSOCIATES,
Plaintiffs and Respondents,
H. W. SMITH, JR., and ELIZABETH A. SMITH
and EDWARD C. KIBLER and DIANNA M. KIBLER,
Defendants and Appellants.
APPEAL FROM: District Court of the Third Judicial District,
In and for the County of Powell,
The Honorable James E. Purcell, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
R. J. "Jim1' Sewell, Jr., Smith Law Firm, Helena,
Montana
For Respondent:
Douglas Buxbaum, Poore, Roth & Robinson, Butte,
ntana
1
i%
?:0Vl6 1992 Submitted on Briefs: July 30, 1992
Decided: November 16, 1992
COURT
! $-.
- ?i%p CIJPREME
O F MONTANA
Justice Fred J. Weber delivered the Opinion of the Court.
This is an appeal from a judgment by the Third Judicial
District Court, Powell County, granting plaintiffs' motion for
partial summary judgment and denying defendants' motion for summary
judgment. We affirm.
The issues on appeal are:
1. Was summary judgment appropriate where a realtor ' s
commission was claimed?
2. Did the District Court err in granting summary judgment to
plaintiffs?
3. Did the District Court err in awarding attorney's fees to
plaintiffs?
H.W. Smith, Jr. and Elizabeth Smith (Smiths) owned the AVOn
Family Cafe in Avon, Montana. The Smiths wished to sell this
property and listed it with brokers James Lane and Deanna Lane
(Lanes) who are realtors with Realty West, Lane and Associates.
The Listing Agreement was signed on June 20, 1986 and was to expire
on June 20, 1987 with a 90-day grace period in which the terms were
to be effective. Subsequently, the Lanes advertised the property
and Edward C. and Diana M. Kibler (Kiblers) answered the ad. The
Lanes showed the property to the Kiblers and although interested,
the Kiblers could not afford a downpayment on the property.
The Kiblers were, however, interested in a Lease-Purchase
Agreement which was agreed to within the time parameters of the
Listing Agreement on September 5, 1986, after negotiations with the
Smiths. The Lease-Purchase Agreement, drawn up by the Lanes'
2
attorney and containing a provision that the Lanes receive a
commission if the o p t i o n w a s exercised, w a s effective for two years
ending October 1, 1988. A provision in the Lease-Purchase
Agreement also provided for a partial commission payment of $1,000.
Such partial payment was made. The agreement provided the terms
under which the option could be exercised, and provided for 90
daysr notice to the lessors when the lessees decided to exercise
the option to buy.
The Smiths approached the Kiblers on July 3, 1988, before the
Lease-Purchase Agreement expired, and wanted to know if the Kiblers
intended to exercise their option. Subsequently, negotiations
between the Smiths and Kiblers ensued and a title commitment on the
property was issued on September 28, 1988, two days before the
Lease-Purchase Agreement expired. The closing transaction took
place on October 7, 1988, seven days after the expiration date
specified in the agreement.
The Smiths refused to pay the remaining portion of the
broker's fee. The Lanes initiated this action on October 28, 1988.
The parties filed cross motions for summary judgment. The court
held a hearing on May 17, 1991 and granted summary judgment to the
Lanes on June 3, 1991. The Smiths appeal the summary judgment
entered a g a i n s t them.
1. Was summary judgment appropriate where a realtor's
commission was claimed?
The Smiths argue on appeal that the District Court should not
have considered summary judgment at all because summary judgment is
inappropriate where determination of a realtor's commission is at
issue. The Smiths did not argue this to the ~istrictCourt. We
will not address this issue because it was not raised at the
District Court level. See Weaver v. Law Firm of Graybill, Ostrem,
Warner & Crotty (1990), 246 Mont. 175, 803 P.2d 1089.
Did the District Court err in granting summary judgment
to plaintiffs?
Our standard of review on appeal from a grant of summary
judgment is a two-pronged determination: we consider whether there
are genuine issues of material fact and whether the movant is
entitled to judgment as a matter of law. Payne Realty & Housing v.
First Security Bank of Livingston (1991), 247 Mont. 374, 807 P.2d
177. To be successful, the movant for summary judgment must show
clearly what the truth is. Berens v. Wilson (l99O), 246 Mont. 269,
806 P.2d 14. Once this is done, it is incumbent on the non-moving
party to come forward with substantial evidence demonstrating there
are genuine issues of material fact which preclude summary
judgment. Cecil v. Cardinal Drilling Co. (1990), 244 Mont. 405,
797 P.2d 232.
The District Court determined that the Lanes performed their
obligation under the Listing Agreement by procuring a buyer to whom
the property was sold or conveyed on terms acceptable to the
Smiths. The court found no genuine issues of material fact. We
agree.
The undisputed material facts contained in the contracts
involved are: the Smiths are the sellers who executed an exclusive
4
one-year Listing Agreement with the Lanes as their brokers on June
20, 1986, containing the following pertinent provisions:
In the event that [Lanes], or any other brokers
cooperating with you, shall find a buyer ready and
willing to enter into a deal for said price and terms, or
such other terms and price as I may accept, or that
during your employment you supply me the name of or place
me in contact with a buyer to or through whom at any time
within 90 days after termination of said employment I may
sell or convey said property, I hereby agree to pay you
in cash for your services a commission equal in amount to
six percent of the above stated selling price.
The purchasers were the Kiblers who leased the property first and
finally exercised an option to buy the property. The Lease-
Purchase Agreement in which the option is contained was executed on
September 5, 1986, within the time parameters of the Listing
Agreement, and it contained a provision that the Lanes immediately
receive a partial commission plus the remainder when the purchasers
exercised their option.
The title commitment was issued on September 28, 1988, two
days before the Lease-Purchase Agreement expired and the
transaction was closed on October 7, 1988, seven days after the
expiration date of the Lease-Purchase Agreement. The terms of the
final sale varied somewhat from the Lease-Purchase Agreement. The
Smiths refused to pay the remainder of the commission.
On appeal, the Smiths argue that genuine issues of material
fact preclude summary judgment. We note that argument was not
presented at the District Court level. Smiths argue that there is
a question of fact as to the source from which the commission was
to be paid. We conclude that the determination of that question is
not required in this case. We have reviewed the record and
5
conclude there are no genuine issues of material fact concerning
the contract issues which are presented by this case.
The District Court further determined that the Lanes were
entitled to summary judgment as a matter of law. The court
concluded that the Lanes had performed under their Listing
Agreement because they procured a buyer for the property on terms
which were acceptable to the seller. Further, the court concluded
that the date of the sale must relate back to the time the original
option to purchase was given, which, in this case, was within the
time frame of the Listing Agreement. The court also concluded that
the 90-day notice provision in the Lease-Purchase Agreement was
inserted for lessors' benefit and since the lessor negotiated the
sale, they had notice despite the lack of a formal 90-day notice.
The court concluded finally that because the Smiths refused to pay
the Lanes the remainder of their commission, the Smiths had
breached the Listing Agreement.
Appellants contend that the Listing Agreement is an exclusive
Listing Agreement and, therefore, 'procuring cause ' is an
inappropriate test to use in determining whether a commission is
due. Appellants cite Flinders v. Gilbert (1963), 141 Mont. 442,
378 P.2d 385, for this proposition. The listing agreement in
Flinders was a non-exclusive listing agreement where determination
of the 'procuring cause' among many brokers was a necesasry
determination. Respondents argue, and we agree, that Flinders does
not hold that 'procuring cause' is only appropriate to non-
exclusive listing agreements.
The procuring cause doctrine permits a broker to show that his
or her part of the contract was performed and that the principal
reaped a benefit from the efforts. D. Burke, Jr., The Law of Real
Estate Brokers. 3.4 (1992). The doctrine is not confined to
consideration of non-exclusive listing agreements; it applies in
all situations unless the parties agree otherwise in the listing
contract. Id.
Here, the contract contains no such prohibitive provision.
The District Court determined that because the brokers had
performed their contractual agreement, they were the procuring
cause of the sale. We conclude that the brokers produced the
Kiblers who purchasedthe property during the required period under
the ~isting
Agreement. We further conclude that the Lease-Purchase
contained a provision granting the Lanes their commission and that
the Kiblers bought the property.
Other jurisdictions have used the procuring cause doctrine in
tandem with an exclusive listing agreement. Humphrey v. Knobel
(Nev. 1962), 369 P.2d 872; Fox. v. Stewart (I11.App. 1980), 414
N.E.2d 881. These cases, along with recognized treatises, indicate
that one instance in which procuring cause is appropriate is in
regard to the change of purchase price from a listing agreement to
final sales terms. D. Burke, Jr., Law of Real Estate Brokers, 5
3.4 (1992). The change in the final terms of the purchase does not
automatically eliminate the broker's commission as appellants
contend. All that is necessary for the broker to receive his
commission is that the seller and buyer were brought together by
the broker:
Where an agent contracts to f u r n i s h a purchaser for land
at a stipulated price and such agent does furnish a
purchaser whom the owner accepts, and in the negotiations
of the contract the owner agrees upon and accepts a
different price from that at which the agent was
instructed to sell, still such agent would be entitled to
his compensation . ..
Barrett v. Ballard (l98O), 191 Mont. 39, 47, 622 P. 2d 180, 185;
citing Shober v, Blackford (1912), 46 Mont. 194, 127 P. 329. Both
parties agree that the buyer and seller were brought together by
the ad placed by the Lanes.
The terms of the initial contract clearly state that the Lanes
are due a commission either on the terms listed in the agreement,
or any other terms that the sellers accept. The sellers accepted
the terms of the Lease-Purchase Agreement made within the time
frame of the Listing Agreement. The sellers also accepted the
final terms of the sales contract, agreed to within the time frame
of the Lease-Purchase Agreement, which provided the Lanes a
commission.
We conclude that the Lanes met their responsibilities under
the contract and were the procuring cause of the sale and that the
different final contract terms do not deprive the Lanes of their
commission,
The District Court further concluded that the date of the s a l e
must relate back to the signing of this Lease-Purchase Agreement.
The Smiths argue that this is inappropriate--the transaction was
closed seven days after the termination of the Lease-Purchase
Agreement and the Lanes are not entitled to a commission. The
Lanes argue that other jurisdictions have determined that when an
option is exercised, the date of sale relates back to the time the
option was given.
The Lease-Purchase Agreement granted a commission to the Lanes
if the Kiblers exercised their option to purchase. Basic fairness
dictates that the date of sale relate back to the date the option
was created in the Lease-Purchase Agreement. The payment of the
partial commission to the Lanes demonstrates agreement between the
parties that the Lanes were responsible for the sale to the
Kiblers.
Other jurisdictions have reached the same results. In a case
almost identical to the facts before us, the California Court of
Appeals held that the date of final sale relates back to the date
the option was given:
It is well established that an option is not a sale of
property, but rather a sale of a right to purchase. The
option becomes a contract of sale binding on both parties
only on acceptance of the option by the optionee. This
does not mean. however, that a new contract is in fact
made by and at the time of the acceptance. On the
contrary, the contract has already been made as far as
the optionor is concerned, but is merely subiect to
conditions which are removed by acceptance. [Emphasis
added. ]
Anthony v. Enzler (CA App. 1976), 132 Cal.Rptr. 553, 556. The
court went on to hold that where options to buy property were
granted and executed before the expiration date of the listing
agreement, brokers were entitled to commission when the buyer
exercised the option, even though the option was not exercised
until after the expiration date of the listing agreement.
Anthony, 132 Cal.Rptr. at 557.
We conclude that when negotiated within the time parameters of
a listing agreement, the date on which a lease-purchase agreement
is entered into is the effective date of sale for purposes of
determining a broker's commission.
Appellants further argue that the Lanes are not due a
commission because the Kiblers did not execute a notice of intent
to buy 90 days before the exercise of the option as the contract
requires. The court concluded that the purpose of the provision in
the contract was to notice the lessors (Smiths), and the lack of
notice does not affect the broker's commission.
We conclude that the District Court was correct. The 90-day
notice provision of the Lease-Purchase Agreement was for the
benefit of the Smiths. See Zaniewski v. Mancinone (Conn. 1981),
435 A . 2 d 50. Thus, the lack of notice does not affect the Lanes1
commission because the Smiths knew about the sale as they alone
negotiated the final terms of the agreement.
Finally, we conclude that the Lanes have performed their
duties under the ~istingAgreement by procuring a buyer on terms
acceptable to the smiths and are entitled to their commission. We
further conclude that by refusing to pay the remainder of the
commission owed to the Lanes, the Smiths have materially breached
their contract and the Lanes are entitled to judgment as a matter
of law.
Under these facts, we hold that the District Court did not err
in granting summary judgment to the plaintiffs.
Did the District Court err in awarding attorney's fees to
the plaintiffs?
The District Court concluded that because the Smiths had
breached the Listing Agreement, and because the Lanes were obliged
to enter into litigation to obtain their commission, the Lanes were
entitled to reasonable attorney's fees according to the provision
of the Listing Agreement.
Attorney's fees are properly awarded only when contractually
or statutorily provided. Ehly v. Cady (1984), 212 Mont. 82, 687
P.2d 687. Here, the contract specifically states:
In case of suit or action on this contract, it is agreed
between us that the court, whether trial or appellate,
may allow the prevailing party such sum as may be
adjudged that party's reasonable attorney's fees.
This language is clear and unambiguous. Where the language is
clear, the court need only enforce the contract. Keller v. Dooling
(1991), 248 Mont. 535, 813 P.2d 437.
We hold that the District Court did not err in awarding
attorney's fees to the plaintiffs.
We Concur:
November 16, 1992
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
R.J. "Jim" Sewell, Jr.
Smith Law Firm
P.O. Box 604
Helena, MT 59624
Douglas Buxbaum
Poore, Roth & Robinson
1341 Harrison Ave.
Butte, MT 59701
ED SMITH
CLERK OF THE SUPREME COURT
STATR OF MONTANA