Campbell v. Vencel

CONOVER, Judge.

Defendants-Appellants Horace R. and Helen P. Campbell (Campbells) appeal the entry of summary judgment and damages in favor of Plaintiff-Appellee Steve Vencel (Venecel) for the Campbells breach of a real estate listing contract with Vencel, a real estate broker.

We reverse.

The issues presented by this appeal are:

1. whether the Campbells were fraudulently induced to enter into the listing contract by broker Vencel, and
2. whether the Campbells entered into it by mistake.

The court sua sponte determines another issue must be discussed, namely:

3. whether Vencel is entitled to recover a real estate commission, prejudgment interest, attorney fees, and filing fees for the Campbelis' alleged breach of the listing contract.

The facts here are undisputed. Brief of Appellee at 3. The Campbells owned a farm in Greene County which they had been attempting to sell for several years both through realtors, including Vencel, and by themselves when no listing contracts were outstanding. Being of advance-ing years, they wanted to retire, They themselves had posted a "for sale" sign and shown the farm to several interested parties at various times on their own when the farm was not listed with a broker. The Campbells considered four people of the many to whom they had shown their farm, including their grandson and Ivan Sparks, the ultimate purchaser, to be potential purchasers.

Vencel, a realtor, solicited the Campbells to again list the farm for sale with him in March, 1987. During negotiations, the Campbells told Veneel they had four potential buyers for the property and wanted them exempted from commission payment if sale to any one of them was consummated. Although they mentioned their grandson as one of the four, the Campbells refused to name the other three, including Sparks. Vencel orally agreed to exempt all four, but the written contract he prepared merely provided:

Q. FURTHER - CONDITIONS: If grandson purchases all or part there shall be no real estate commission[.]

(R. 50). The Campbells then read the listing contract, a printed form approved by the Bloomington Board of Realtors whose blanks Vencel filled in with a ballpoint pen, and signed on March 4, 1987.

On April 2, 1987, the Campbells themselves sold the farm to Sparks, one of the four potential purchasers to whom they had shown the farm before signing with Vencel, for $114,000. Vencel in the meantime had produced no buyers. The Camp-bells then informed Vencel by telephone they had sold their farm to Sparks. Vencel later produced a contract to purchase the *809Campbells' farm for $140,000, but the Campbells turned down the offer because it had been sold to Sparks. Vencel then sued the Campbells for his commission on the Sparks sale, attorney fees, prejudgment interest and other damages, based upon his March 7, 1987, listing contract with the Campbells.

The trial court entered summary judgment for Vencel and later awarded him a money judgment in the sum of $15,081.66, representing Vencel's commission on the Sparks sale, his one-third contingent attorney's fee, prejudgment interest, and filing fees in the trial court. The Campbells appeal.

In reviewing the grant of a motion for summary judgment, our standard of review is well settled. We consider the contents of the pleadings, affidavits, answers to interrogatories, responses to requests for admission, and depositions in a light most favorable to the non-moving party to determine whether any genuine issue of material fact exists, and whether the moving party is entitled to judgment as a matter of law. When a motion for summary judgment is granted, the non-moving party is denied his day in court; therefore, the trial court's decision must be carefully seruti-nized on appeal. In reviewing the granting of a motion for summary judgment this court stands in the shoes of the trial court and applies the same applicable standard. Progressive Constr. v. Ind. & Mich. Elec. (1989), Ind.App., 583 N.E.2d 1279, 1282.

This case presents a curious appellate posture. Although the record unquestionably demonstrates the trial court committed reversible error by granting Ven-cel's motion for summary judgment and awarding him $15,081.66, appellants have failed to raise and argue the fundamental issue upon which we base reversal. Clearly, neither issue the Campbells raise has merit. They only argue (a) Veneel obtained the listing contract by fraud, or (b) they entered into it by mistake. Neither ground is sufficient to reverse the trial court. The record clearly demonstrates the questioned listing contract was entered into after arm's length negotiations and the Camp-bells were given an opportunity to read and understand its contents. Without doubt the contract provides the only party to whom the Campbells could sell their farm without paying a broker's commission was their grandson. There was no fraud in the procurement because

Every person is presumed to know the contents of the agreement which he signs, and has, therefore, no right to rely on the statements of the other party as to its legal effect.

Plymale v. Upright (1981), Ind.App., 419 N.E.2d 756, 764. Also, Mr. Campbell unequivocally testified he understood only sale to his grandson was commission-free under that agreement.

Further, while equitable relief may be granted where a contract has been entered into because of a mutual mistake of material fact, Hancock v. Kentucky Cent. Life Ins. Co. (1988), Ind.App., 527 N.E.2d 720, 728, trans. denied, it is axiomatic there was no such mistake here. The Campbells read and understood the contract's contents. There was no mistake. Thus, their second issue fails and our discussion would normally end at this point because those were all the issues the appellants presented to this court.

However, our discussion does not end here. Under the extraordinary circumstances present in this appeal, it cannot. When we deem it necessary, we may raise a fundamental issue sua sponte, although issues not raised or adequately briefed are normally treated as waived. Castillo v. Ruggiero (1990), Ind.App., 562 N.E.2d 446, 451, trans. denied; Ind. Appellate Rule 8.3(A)(7). As Judge Tremain said many years ago:

The rule forbidding the discussion of points not originally suggested by appellant is made for the protection of the court, and only operates to excuse the court from considering questions that are not shown to have any material bearing upon the rights of the parties. Not withstanding the failure of counsel to present the question, the court may consider and decide a question presented by the record, and may go outside the briefs *810of counsel for reasons upon which to base the decision, in order to do justice to the parties. (Citing cases).

White v. White (1935), 208 Ind. 314, 196 N.E. 95, 96. We are not required to close our eyes to that which is apparent on the record. Id. Were we so limited, we would be frequently in the unhappy situation of "lending tacit approval to [precedent] palpably bad on its face, and this could only result in confusing the law and misleading the profession." L.S. Ayres & Co. v. Hicks (1942), 220 Ind. 86, 41 N.E.2d 195, 196; Big Creek Stone Co., et al. v. Seward, et al. (1895), 144 Ind. 205, 42 N.E. 464, reh. denied, 144 Ind. 205, 48 N.E. 5, 6. We are here confronted with such a situation, and must discuss the issue we raise because of it.

The rights of a real estate broker are exclusively determined by the terms of his brokerage contract. The mere fact a broker has an exclusive right to sell property "would not entitle him to recover the commission he was to receive in the event he made a sale. Under such circumstances, his right of action, if one existed, would be for damages, resulting from a breach of the contract, and not for the amount earned in the performance of services thereunder." - Thomas v. Hennes (1922), 78 Ind.App. 275, 185 N.E. 392, 395. In such case the broker may recover only his resulting damages, i.e., all money spent in advertising and showing the property together with the value of his time spent would be the measure of the broker's damages. Brown v. Maris (1958), 128 Ind.App. 671, 150 N.E.2d 760, 762. The broker must be the producing cause of a sale, or at least must furnish a customer who is ready, willing, and able to purchase the land on the terms the owner and the broker have agreed upon before he is entitled to recover his commission. Thomas, supra, 185 N.E. at 394, We must determine from the listing contract itself what Vencel's rights were.

In this regard, the listing contract executed on March 7, 1987, provided:

This contract is entered into ..., in consideration of services to be performed. REALTOR is hereby appointed as the OWNER'S agent with irrevocable and exclusive right to sell the Property, within the period for the price and terms stated herein.
A. TERM: This Contract begins on the 4th1 day of March, 1987, and ... [ends] on the 4th day of Sept., 1987, ...
B. PROFESSIONAL SERVICE FEE: OWNER agrees to pay REALTOR a fee of 7% of selling or exchanged price which shall be paid upon the occurrence of any of the following events:
1. At the time of closing the sale, when title to or an interest in the Property is transferred to a Purchaser; or
* * * * * *
8. At the time REALTOR procures a written offer to purchase from the Purchaser who is ready, willing, and able to purchase the Property according to the terms therein, but the OWNER refuses to accept the offer; or
4. At the time OWNER sells the Property to a Purchaser procured in whole or in part by the efforts of REALTOR, a cooperating Broker or the OWNER during the term of this Contract, if such sale occurs within 180 days after this Contract terminates; provided however, this paragraph # 4 shall not apply if this Contract terminates and the Property is listed exclusively with another licensed Broker.
C. PRICE: OWNER offers the Property for sale at a price of $150,000.
D. FINANCING: Said Property may be sold for cash or by using any of the following financing methods circled: (Conventional) (Insured Conventional) (FHA) (VA) (Assumption) (ARM) (Contract) (Other)
Q. FURTHER - CONDITIONS: If grandson purchases all or part there shall be no real estate commission
OWNER ACKNOWLEDGES THAT:
*8111. He has read and understands the contract.
2. This contract contains the entire agreement ...
4. This contract is binding upon the parties hereto, ...
5. He has received a copy of this contract.
6. If it becomes necessary for the REALTOR to retain an attorney or initiate any legal proceedings in order to secure payment of the aforesaid professional service fee, then, ..., the REALTOR shall also be entitled to recover court costs and reasonable attorney fees. [Signatures of Vencel and the Campbells].

A real estate broker's contract must be treated as a whole. Brown, supra, 150 N.E.2d at 764. As with any other contract, the primary object when doing so is to "give effect to the intention of the parties, greater regard being given to such intent, when clearly revealed, than to any particular words used in expression thereof." Coldwell Banker & Co. v. Karlock (7th Cir.1982), 686 F.2d 596, 602; accord, Brown, supra. A listing agreement permitting a broker to sell property, but placing no obligation on him may be revoked at any time.2 McKenna v. Turpin (1958), 128 Ind.App. 686, 151 N.E.2d 303, 306.

From the record before us it is clear Vencel did nothing with regard to selling this real estate prior to its sale to Sparks by the Campbells Assuming it was an enforceable contract at that time (but see note 2), the essential question becomes what was Vencel's measure of damages for the Campbells' breach of the listing contract?

It is well settled that under such contracts the payment of a commission is dependent upon the success of the broker's efforts, and not upon the amount of work done or expenses incurred by the broker. Thomas, 185 N.E. at 394. Since Vencel here produced no buyer ready, willing, and able to purchase the Campbell farm for the price and on the terms contained in the listing contract, Vencel may only recover resulting damages, i.e., all money spent in advertising and showing the property together with the value of his time spent in so doing. Thomas, Brown, McKenna, supra. Under the record now before us, Vencel incurred no such expenses prior to the Campbells' sale of their real estate to Sparks, and so is entitled to nothing.

Also, Vencel produced only an offer to purchase the farm for $140,000, not the $150,000 required by the listing contract during its term. Vencel never produced a buyer willing to buy the property "at and for the price and terms" stated in that contract. Generally, absent an agreement to the contrary, a broker earns his commission when he secures a buyer on the seller's terms. Abex Corp. v. Vehling (1983), Ind.App., 443 N.E.2d 1248, 1255. Thus, Vencel was not entitled to his commission nor to attorney fees, filing fees, or prejudgment interest.

Vencel filed a motion for entry of a money judgment against the Campbells. (R. 884). It requested judgment against them for:

(a) commission on the Sparks sale-$115,000 x 7% = $8,050,
(b) prejudgment interest for 4 years-$8,050 x 15% x 4 years = $8,220,
(c) one-third contingency attorney fees-[$8,050 -+ $3,220] $11,270 x ¥& = $3,756.66, and
(d) trial court filing fees-$55,

*812totaling $15,081.66. (R. 334). That figure is the precise amount of the trial court's money judgment rendered herein. Because it obviously awards Vencel a commission, prejudgment interest, attorney fees, and court filing fees, that judgment is contrary to law.

Clearly, the ultimate purchaser Sparks was not procured through any effort expended by either Vencel or any cooperating broker. Nor was Sparks procured through any effort of the owners, the Campbells, "during the term of this Contract." This restriction specifically limits application of the clause regarding payment of a full commission. (R. 287).

Under the facts most favoring the Camp-bells, the only time the Campbells expended any efforts to procure Sparks as a purchaser of the farm was before they entered into the brokerage contract with Vencel.

Reversed and remanded for further proceedings consistent with this opinion.

Chezem, J., concurs. Sharpnack, J., concurs with separate opinion.

. Underlined portions in text indicate blanks in form contract filled in by Vencel.

. An argument could be made the listing contract here is a nudum pactum, at worst, or unilateral in nature, at best, and unenforceable under the facts before us. As to consideration, his listing agreement merely states Vencel is appointed as the Campbells agent "in consideration of services to be performed...." (Emphasis supplied). (R. 50). Under these terms, Ven-cel was not presently obligated to do anything which would have been a detriment to himself or a benefit to the Campbells, the minimum requirement for "promise for promise" consideration. Further, for the broker to be entitled to his commission under these circumstances, the listing agreement must have affirmatively provided the owner reserved unto himself the right of sale, but if he did, the broker was to be paid his fee the same as if he had found the purchaser himself. Singleton v. O'Blenis (1890), 125 Ind. 151, 25 N.E. 154, 156. However, so as not to unduly lengthen this opinion, we pass these questions without discussion.