holding that “it would be very prejudicial to the plaintiff to construe defendant’s passing references in the depositions and trial brief to plaintiff's inadequate efforts as a trial by implied consent of the defense of failure of consideration”
How later courts described this case
- holding that “it would be very prejudicial to the plaintiff to construe defendant’s passing references in the depositions and trial brief to plaintiff's inadequate efforts as a trial by implied consent of the defense of failure of consideration”
- upholding realtor’s sales commission of 6%
Written by the judges who cited it.
Later courts went against this
Superseded by statute, as recognized in Orr v. Cook
256 N.W.2d 887, 890 (S.D. 1977), superseded on other ground by statute as recognized in Orr v. Cook, 2001 S.D. 31 , 800 N.W.2d 353
The opinion
WOLLMAN, Justice
(dissenting).
In view of the rather casual manner in which this case was prepared and submitted by both parties, I would hold that defendant’s adverse examination of plaintiff’s witnesses, together with defendant’s trial brief, sufficiently raised the issue of failure of consideration so that that issue can be said to have been tried by implied consent of the parties. SDCL 15-6-15(b).
The question, then, is whether plaintiff is entitled to recover under the terms of the listing agreement in the absence of proof that it had performed some substantial services under the terms of the agreement. I would hold that it cannot.
In the case of Ladd v. Teichman, 359 Mich. 587 , 103 N.W.2d 338 , the Supreme Court of Michigan stated that:
*893 “Thus it appears that where a contract to sell real estate contains a provision for exclusive sale rights and a reasonable time limit, and the broker is able to show substantial performance of the duties imposed upon him by the contract (even though he does not produce a buyer), when the owner makes the sale within the contract dates, the contract is held to be enforceable and the broker entitled to his commission.” 359 Mich. at 595 , 103 N.W.2d at 343 .
In the case of Huchting v. Bahn, 179 Wis. 50 , 190 N.W. 847 , the listing agreement provided in part that, “I agree to pay a commission to you of five per cent of the sale price of the property, if sold or exchanged before this agreement is terminated, regardless of who negotiates the sale. . ” In holding that the evidence supported the jury’s finding that the real estate broker had not exercised the proper degree of care, diligence, skill and good faith in the execution of his agency, the Supreme Court of Wisconsin stated:
“In this connection is also to be noted the general rule requiring all agents to exercise reasonable care, skill, and diligence in the performance of their obligations as agents. Clearly under the authorities referred to, an agent under an exclusive agency contract cannot sit idly by, doing nothing, or substantially nothing, during the period of his agency, and claim a commission where the sale is effected through the efforts of the owner. The contract in the instant case covers a period in excess of six months. In executing this contract the owner extends a valuable right to the agent, under and pursuant to which he is afforded an opportunity to earn a substantial compensation in the form of commissions.” 179 Wis. at 54 , 190 N.W. at 848 .
This holding was followed by the Wisconsin Supreme Court in Genske v. Christensen, 189 Wis. 520 , 208 N.W. 467 , and in Starszak v. Kochanik, 199 Wis. 473 , 227 N.W. 21 , and was recognized by the Iowa Supreme Court as setting forth the proper test of performance by a broker. Kuehnle v. Schromen, 258 Iowa 989 , 140 N.W.2d 188 .
In Covino v. Pfeffer, 160 Conn. 212 , 276 A.2d 895 , the Supreme Court of Connecticut stated that:
“. . . During the life of an exclusive sale contract, an agreement between the owner and the ultimate purchaser to sell and buy, whether or not specifically enforceable, gives rise to a cause of action on the part of an exclusive broker who uses reasonable efforts to sell the property. . . .” 160 Conn. at 215 , 276 A.2d at 897 .
The rule in California appears to be similar to those in the cases set forth above, for in Charles V. Webster Real Estate v. Rickard, 21 Cal.App.3d 612 , 98 Cal.Rptr. 559 , the Court of Appeal for the Fifth District stated:
“In Kimmell v. Skelly, 130 Cal. 555, 559 , 62 P. 1067 , it is held that the consideration for the covenant of the owner to pay a commission upon her own sale during the existence of the listing was the performance of services by the broker in attempting to find a buyer. Where the broker has used diligence, he is entitled to compensation even though he was not the procuring cause of the sale. . . .” (citations omitted) 21 Cal.App.3d at 615 , 98 Cal.Rptr. at 561 .
More recently, the Supreme Court of North Dakota construed an exclusive right-to-sell listing agreement that provided that the broker agreed to use diligence in procuring a purchaser, and held that:
“. . . The listing agreement provided that the commission would be due whether the property was sold by Bowman Real Estate, another broker, or by the Krugers themselves. This type of provision, however, has not been interpreted to entitle the broker to a commission under all circumstances. Rather, there must be some proof of consideration for the contract by performance of services by the real estate agent. The broker must show substantial performance of the duties imposed on him by the contract, even if he does not produce a buyer to be eligible for a commission. *894 Ladd v. Teichman, 359 Mich. 587 , 103 N.W.2d 338 (1960) ... To recover a commission even under an exclusive right-to-sell provision, clear evidence of expenditure of time, effort, or money by the broker must be presented. Where such a showing is absent the listing agreement has the characteristics of a unilateral contract, which is not binding for lack of sufficient consideration.” Kruger v. Soreide, 246 N.W.2d 764, 773 .
The court went on to hold that because the record revealed at best only a perfunctory effort by the brokers to sell the property during the renewal period, they were not entitled to recover the commission because of the absence of substantial performance under the agreement.
The foregoing cases set forth the rule that should be applied in interpreting the provisions of the listing agreement in question. Granted that the listing agreement does not provide that the plaintiff would use its “best efforts” or “diligent efforts” to find a purchaser, I believe that such a promise on the part of plaintiff is implied, for if it were not then plaintiff could sit idly by and do nothing, or substantially nothing, and yet be entitled to a commission as a result of defendant’s diligent efforts to secure a purchaser on his own. Huchting v. Rahn, supra.
When measured against this test of performance, plaintiff’s efforts are wanting. As noted in the majority opinion, the evidence was submitted to the trial court by way of depositions, and thus it is reviewed on appeal as though presented to us for the first time and is not subject to the “clearly erroneous rule” of SDCL 15-6-52(a). Geo. A. Clark & Son, Inc. v. Nold, 85 S.D. 468 , 185 N.W.2d 677 . Plaintiff chose not to submit any evidence whatsoever with respect to any matters raised by the pleadings, but instead submitted the case to the trial court on the basis of defendant’s pretrial adverse examination of plaintiff’s president and one of its agents. Plaintiff’s president testified that he did not remember whether the property was listed with the Rapid City Multiple Listing Service. He testified that he had showed the premises by driving by the property with “people,” although he could not recall the names of those persons and did not indicate when this showing occurred. He testified that he had advertised the property in the Rapid City Journal, although he did not indicate how many times or in what type of advertisements the property was advertised. * This witness was unable to recall how much his company had spent in advertising the property, even to the point of not knowing whether it was more or less than $100.00. The only testimony that plaintiff’s agent was able to offer was that he had made some long-distance telephone calls from the office, but here again the witness did not elaborate on when these calls were made or to whom.
What the North Dakota Supreme Court said in the Kruger case, supra, is applicable to the instant case, in that at best the record reveals a perfunctory effort by plaintiff to sell the property. Accordingly, I would reverse the judgment.
I am authorized to state that Chief Justice DUNN joins in this dissent.
Plaintiff contends in its brief that the property was advertised on no less than ten separate occasions in the Rapid City Journal, and cites pages in the settled record to support this assertion. Unfortunately, there is absolutely nothing in the cited pages of the settled record to substantiate plaintiffs contention.