Southern Idaho Realty of Twin Falls, Inc.-Century 21 v. Larry J. Hellhake & Associates, Inc.
Southern Idaho Realty of Twin Falls, Inc.-Century 21 v. Larry J. Hellhake & Associates, Inc.
Opinion of the Court
The underlying dispute concerns the right to receive a real estate sales commission from the sale of certain real property owned by West Side Farms, a partnership. Plaintiff-appellant is Southern Idaho Realty of Twin Falls, Inc. — Century 21 (Century 21). Defendants-respondents are Larry J. Hellhake and Associates, Inc. (Hellhake) and William J. Peters. Peters worked with Hellhake in setting up the sale of the property; in trade parlance, Peters is a “listing broker” and Hellhake is a “selling broker.” West Side Farms is composed of seven partners, one of whom is Donald B. Robertson. Don Robertson also acted as a real estate agent for Century 21 at certain times in the present action.
On October 23,1978, three of the partners of West Side Farms, including the aforementioned Donald Robertson, signed a listing agreement, entitled “Exclusive Authorization and Right to Sell,” with Century 21 for the sale of partnership property. This agreement listed an expiration date of January 23, 1979, and provided for a 6% commission to be paid to Century 21 upon sale of the property within the term. Don Robertson, after signing this agreement as a partner, then signed the agreement as the agent for Century 21.
At some time subsequent to the October 23 listing agreement, respondent Hellhake became aware of the offering for sale of the West Side Farms property and upon locating a potential buyer, contacted Century 21 as regards splitting the sales commission. An agreement was not reached as to
On November 18,1978, all of the partners of West Side Farms, Don Robertson included, signed an earnest money agreement for the sale of the partnership property. This agreement provided that Hellhake, as broker, would receive the sales commission. On the following December 27, 1978, an “Agreement of Sale” was entered into. Again, all the partners signed and provision was made for payment of the commission to Hellhake. Accordingly, the commission was paid to and retained by respondents.
Century 21 filed suit alleging interference with its rights under the listing agreement. In response to respondents’ motion and following a hearing and submission of documents, the district court dismissed Century 21’s complaint for failure to state a cause of action upon which relief could be granted. The court basically concluded that Century 21 was estopped to deny the agent status of Don Robertson and that Century 21, through Robertson’s subsequent signings of the earnest money agreement and the sales agreement, vitiated the listing agreement and released any rights of Century 21 to the sales commission. Century 21 appeals. On other grounds, we affirm.
Regardless of the merit in the district court’s theory of agency as the basis for its dismissal, we are of the opinion that another theory was present in the case which should have been addressed initially and which is dispositive of the case. It is a well-established rule that where the order of the lower court is correct but entered on a different theory, the order will be affirmed on the correct theory. Matter of Revello, 100 Idaho 829, 606 P.2d 933 (1979); Robison v. Compton, 97 Idaho 615, 549 P.2d 274 (1976); City of Weippe v. Yarno, 96 Idaho 319, 528 P.2d 201 (1974).
I.C. § 53-309, a section of Idaho’s uniform partnership law, provides in part:
“Partner agent of partnership as to partnership business. — 1. Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has knowledge of the fact that he has no such authority.
2. An act of a partner which is not apparently for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners.”
In the instant case, Century 21’s amended complaint alleges as a cause of action contract interference, specifically that conduct on the part of respondents “caused a breach of said listing agreement to take place on the part of the Westside Farms partnership.” The initial question, therefore, is whether, pursuant to I.C. § 53-309, there existed a valid and binding contract. Without such contract, there can be no interference and the cause of action must fail.
We are guided in this matter by the recent case of Hodge v. Garrett, 101 Idaho 397, 614 P.2d 420 (1980), wherein this Court discussed the application of I.C. § 53-309 and the interconnected I.C. § 53-310, and held that a single partner with no actual authority could not bind the whole partnership through a unilateral act which was not in the usual business of the partnership. This Court stated that an affirmative appearance of actual authority or the conducting of partnership business in the usual way would be required before such unilateral act could be considered as binding of the partnership. While the Hodge case dealt specifically with a contract of sale of partnership land, and the instant action concerns a listing agreement, the reasoning of Hodge is instructive.
Simply put, Century 21 alleges as its sole cause of action interference with a contract. Century 21 fails, however, to show that a contract ever existed. To the contrary, the record discloses that the listing agreement was void ab initio. There was never a “meeting of the minds” between Century 21 and the whole partnership of Westside Farms either before the signing of the listing agreement or after. Thus, Century 21 has failed to establish the prima facie requirement of the existence of a contract, as must be done with the tort of interference with contract, Barlow v. International Harvester Company, 95 Idaho 881, 893, 522 P.2d 1102, 1114 (1974),
. In treating the motion as a motion for summary judgment, the court specifically noted that it had “considered the pleadings, affidavits, memoranda of counsel, and other documents filed herein....” While Hellhake’s affidavit was submitted prior to the motion to dismiss, it was clearly considered by the court in granting summary judgment, and all parties were informed well in advance that it would be so considered.
. Barlow provides:
“A prima facie case of the tort [of interference with contract] is established where the plaintiff adduces proof of these elements: (a) the existence of a contract, (b) knowledge of the contract on the part of the defendant, (c) intentional interference causing a breach of the contract, and (d) injury to the plaintiff resulting from the breach.” Id. (citations omitted).
.We are not unmindful of this Court’s statement in Barlow, supra, that with the tort of interference with contract, “[protection is extended against unjustifiable interference with contract even though the contract is voidable or unenforceable in an adversary proceeding.” Id (citatations omitted). However, as was noted in Barlow, id., n. 2, the rule is otherwise with regard to contracts void ab initio. See W. L. Prosser, Handbook of the Law of Torts § 129, p. 931 (4th ed. 1971). See also Annot., 96 A.L.R.3d 1294 (1979).
Dissenting Opinion
dissenting:
I dissent. First, the majority decides this case on an issue not considered below. Second, the record does not support the
I
The majority disposes of this case by holding that the three partners who signed the initial listing agreement between the partnership and Southern Idaho Realty did not have authority to bind the partnership. A review of the proceedings below will disclose that this issue was not presented to or considered by the trial court.
On January 16, 1979, Century 21 filed its original “Complaint for Declaratory Judgment, Writ of Possession, and Damages.” Basically, the complaint asked that the commission be split between Century 21 and the defendants. The complaint was loosely based on either an alleged agreement between the parties or custom and trade in the real estate industry. Also, on January 16, the plaintiff Century 21 succeeded in obtaining a show cause order from the trial judge, directing defendants Hellhake and Peters to appear to show cause why a writ of possession (for one-half of the commission) should not enter. Both Hellhake and Peters responded with motions to dismiss for failure to state a claim. No specific grounds were set forth in the defendants’ motions. Hellhake also filed an answer, counterclaim, motion to quash the order to show cause, and an “Affidavit in Support of Motion to Quash Order to Show Cause.” It is this affidavit upon which the majority so heavily relies. In addition to the matters alluded to in the majority opinion, Hell-hake’s affidavit states that it is customary to split the commission fees only where there is an agreement or multiple listing service and, further, that there was no agreement for the fee sharing between Century 21 and Hellhake.
On February 13,1979, Judge Ward granted the defendants’ motions to dismiss for failure to state a claim. Again, no specific grounds were set forth. In his order, Judge Ward granted the plaintiff fifteen days to file an amended complaint.
On or about February 14, 1979, Century 21 filed an amended complaint. In this second complaint, it abandoned its original theories and instead chose to proceed upon a theory of tortious interference with contract, although nowhere in the complaint is it specifically denominated as such. Again, both defendants responded with motions to dismiss for failure to state a claim.
The case was argued before Judge Granata on May 21,1979, and taken under advisement. On May 30, 1979, Judge Granata issued an “Opinion in re Motions to Dismiss by Defendants and Counterclaimant.” In that opinion, the judge addressed only the issue of estoppel and Don Robertson’s dual agency status. Again, the court did not mention the problem of lack of authority on the part of the three partners signing the initial listing agreement. Nor did the opinion mention anything about summary judgment. It merely granted the defendants’ motion to dismiss and further directed counsel for Peters to prepare “an appropriate order.”
That “appropriate order” turned out to be a summary judgment signed by the court on June 5,1979. Insofar as the record reflects, it is the first time that the court indicated it was entering a summary judgment, having considered matters outside the pleadings.
Century 21 appealed that summary judgment, arguing that there exist material issues of fact with respect to the application
II
Even assuming for argument’s sake that this issue is properly before this Court, there are nonetheless material questions of fact regarding the partners’ authority which would preclude issuance of summary judgment. As the cases of Hodge v. Garrett, 101 Idaho 397, 614 P.2d 420 (1980) and Marshall Bros., Inc. v. Geisler, 99 Idaho 734, 588 P.2d 933 (1978), make clear, the mere fact that less than all of the partners signed the listing agreement does not mean that the signing partners were without authority to bind the partnership. The signing partners may have express, implied, or apparent authority to bind the partnership. Issues concerning an agent’s authority must be resolved by the trier of fact. E. g., Clark v. Gneiting, 95 Idaho 10, 501 P.2d 278 (1972). The extent and nature of an agent’s authority do not pose questions of law to be decided by this Court, especially on this meager record.
The only evidence to which the majority can point in support of its conclusion is found in Hellhake’s affidavit.
Ill
Apart from the fact that the majority is reaching factual issues which it shouldn’t and resolving them without support in the
The same cannot be said of contracts entered into by agents acting in excess of their authority. It is well established, for example, that such contracts can be affirmed and ratified by the principal, Clark v. Gneiting, 95 Idaho 10, 501 P.2d 278 (1972), thus retroactively curing any defect in authority. Indeed, ratification of an unauthorized transaction can be inferred from a failure to repudiate it. Restatement (Second) of Agency § 94 (1958).
Thus, even applying the law which the majority applies, this agreement was at most only voidable, and thus would properly be the subject of an interference claim under the Barlow case.
“[T]he term voidable contract is appropriate if ratification by one of the parties would terminate his power of avoidance and make the contract enforceable against him. . . . Moreover, action may be necessary in order to prevent the contract from producing the ordinary legal consequences of a contract; often such action in order to be effectual must be taken promptly.” Restatement (Second) of Contracts 13, comment e (Tent. Draft 1973) (emphasis added).
For these reasons, I respectfully dissent. In my opinion, factual questions regarding the existence of Robertson’s agency relationship with Century 21 preclude entry of summary judgment on that basis, the only ground relied on by the court below. I would reverse the trial court, but permit defendants Peters and Hellhake to again move for summary judgment on other grounds not discussed in the trial court’s written opinion.
on entry of the Court’s Order denying rehearing, issued the following opinion:
Continuing to agree that nothing in the record establishes that a contract between Century 21 and Westside Farms, the partnership, ever existed, I conclude it well to add that even were it assumed that there existed a valid contract, it is not readily seen how it was in any way interfered with. The listing agreement itself, as do most exclusive listing agreements, certainly contemplates that there may be a sale of the property by a party other than Century 21. Section 3 of the agreement provides:
“Compensation to Agent. I hereby agree to compensate agent as follows: (a) 6% of the selling price if the property is sold during the term hereof ... by Agent ... or through any other person, or by me .... ” (Emphasis added.)
“[r]eal estate brokers . . . will learn with surprise that they expose themselves to liability in damages under such circumstances ....
“Our attention, however, needs to be focused not on the Bramble-Lynch agreement, but on the Brambles’ agreement with Seth to pay him commissions when he had performed his service. It is for the alleged interference with the latter agreement that Seth sued Mrs. Horn.
“As we see it, Seth has proved no case against her and has suffered no damage from her conduct. His right of action against the Brambles, if it arose at all, has remained complete. Mrs. Horn’s activities did not weaken Seth’s claim against the Brambles. Whatever effect these activities of Mrs. Horn may have had on the oral agreement (if any) between the Brambles and Lynch, they were innocuous as to the agreement between Brambles and Seth.
“There is no suggestion in the record that the Brambles would be unable to meet any judgment against them for commissions and no proof of special damage. Seth simply declined to sue the property owners for reasons undisclosed by the testimony .[1 ] If he preferred not to sue them and has allowed limitations to run, this is no fault of Mrs. Horn.
“The mere fact that in this case the owners may have deliberately obligated themselves to two brokers, and may be disinclined to pay one of them, is immaterial. They could have been made to pay Seth, if he procured a customer on their terms, and it is by no means certain that if he had made demand upon the Brambles they would not have paid without suit.
“Recognizing that Seth cannot maintain a suit if he has suffered no damage, it is suggested in the opinion that his damage consisted in that he was put to the necessity of suing the Brambles. The answer is that there is nothing to indicate that Mrs. Horn advised the Brambles not to pay Seth, or that she even discussed his commisssions with them.” Id. at 316-17 (Sobeloff, C.J., dissenting)'(emphasis added).
I am not aware of anything, either in this particular listing or in the law of agency in general, which prohibits a seller from selling through a second agent and thus becoming liable for two commissions. Since Hell-hake and Peters did nothing which interfered with Westside Farms’ (alleged) contractual relations with Century 21, I simply cannot see how liability arises. In fact, were it not for the sale brought about by the efforts of Peters and Hellhake, Century 21 would not have a claim for any commission from anyone. If the underlying listing agreement were valid, Century 21 would actually have received a benefit resulting to it from the actions of Peters and Hellhake. I find it more than a little ironic that Century 21 is now suing, for tortious interference with contract, the very people who created Century 21’s alleged right to receive the benefit of its alleged listing contract with Westside Farms.
. Neither defendant answered the second complaint, however.
. At oral argument on appeal, Hellhake’s and Peters’ attorneys argued that it was Century 21’s submission of the Robertson affidavit (not Hellhake’s affidavit) which required that the motion to dismiss be treated as a motion for summary judgment.
. The lack of evidence on this issue should not surprise anyone considering the procedural history of this case as set out in Part I of this dissent.
. The same principle was ably set forth by Peters in his respondent’s brief (page 17), wherein he argues that Century 21 was obliged to repudiate Robertson’s agency if indeed Robertson was not acting as an agent for Century 21 in signing the earnest money agreement and sales contract. Here, the issue is on the other foot.
. In the instant case, one need not ponder long to discern why the listing agent, Century 21, might have been reluctant to sue Westside Farms for the commission. Not only had Don Robertson, an agent for Century 21, signed the deed of sale as one of the partner/owners of the farm, but, as noted above, Century 21 had no valid listing agreement with Westside Farms.
Reference
- Full Case Name
- SOUTHERN IDAHO REALTY OF TWIN FALLS, INC.-CENTURY 21, Plaintiff, Counterdefendant and Appellant, v. LARRY J. HELLHAKE AND ASSOCIATES, INC., and William H. Peters, Defendants, Counterclaimants and Respondents
- Cited By
- 14 cases
- Status
- Published