Reference no: EM131472012

Question: David Lowe signed a nonexclusive right to sell agreement with Einer Johnson, a real estate agent for Antrim, Piper, Wenger, Inc. (Antrim), to sell the Lowes' ranch near Sedan, Kansas. This contract allowed Antrim to list and sell the property with a commission of 5 percent. Alan Lewis called Johnson to inquire about the ranch but told Johnson not to come to the ranch because he just wanted to look around. Johnson then stated that he gave Lewis directions to the ranch but Lewis seemed confused. After talking to Lewis, Johnson called the Lowes and spoke to Lowe's wife, Deborah. He told her that people interested in the property were staying at the Ranch Motel in Sedan and that she might want to help them find the ranch. Deborah called the Ranch Restaurant, which is next to the hotel, and gave them her number. Around noon, Lewis and Logan entered the restaurant and the waitress gave them the number. Once they arrived, David showed them around the land. When Lewis decided to buy the property, David wrote a contract for sale, which Lewis signed. Later that evening, Johnson called and spoke to David, who told him that Lewis and Logan bought the property. Although Johnson offered to write a contract for the sale, David refused his assistance.

The parties closed the sale of the ranch, but the Lowes refused to pay Antrim a commission on the sale. In June, Antrim sued the Lowes. Antrim moved for summary judgment, which the court granted ordering the Lowes to pay Antrim its commission. Justice GREEN delivered the opinion of the court: On March 31, 2004, David W. Lowe signed a nonexclusive right to sell agreement with Einer Johnson, a real estate agent for Antrim, Piper, Wenger, Inc. (Antrim), to sell the Lowes' ranch near Sedan, Kansas. The Lowes contend that the trial court erred in granting Antrim's motion for summary judgment. The Lowes first argue that summary judgment was inappropriate because they had retained the right to personally sell the property to an interested buyer. David showed the property and wrote the contract for sale. Deborah helped find the buyers and directed them to the ranch. Therefore, David maintains that Antrim did not earn a commission because he and Deborah completed the actual sale. Because the brokerage contract between Antrim and David was a nonexclusive right to sell, David retained the right to sell his property. Nevertheless, this rule does not apply when the owner uses a buyer procured by a real estate agent hired by the owner. If the agent efficiently produces a buyer who is ready, willing, and able to purchase the property and if the agent is the procuring cause of the deal, the agent is entitled to receive a commission.

The agent is not required to introduce the parties or to bring them together personally. Nor is the agent required to procure a binding contract signed by the purchaser. Here, despite the fact that the Lowes found the buyers in Sedan, showed them the property, and wrote the contract for sale, the key undisputed fact remains that the Lowes knew that Lewis and Logan had been sent to them through the efforts of Johnson, Antrim's salesperson. Moreover, without Antrim's website listing, Lewis would not have learned of the ranch. Without the website, Lewis would not have called Johnson and Johnson would not have alerted Deborah to the fact that buyers were in the area. Antrim was the procuring cause (a term apparently used interchangeably with "efficient cause" and "proximate cause") of the Lowes' deal with Lewis. David cannot defeat Antrim's right to a commission by closing the deal himself. Therefore, since the Lowes do not dispute that they sold the property to a purchaser whom they knew was sent to them by Antrim's salesperson, there is no genuine issue of material fact and summary judgment was appropriate.

The Lowes next argue that the agreement allows Antrim to receive its commission only if the contract closed before November 22, 2004. The agreement, which expired on August 22, 2004, stated: "In addition, if within ninety (90) days after the expiration or termination of this Agreement ... Seller enters into an agreement to sell or exchange said property to any person ... with whom Broker has negotiated for the purchase or exchange of such property during the term hereof, and Seller shall have knowledge of such person and negotiations, Broker shall be entitled to receive the full brokerage fee." (Emphasis added.) Thus, contrary to Lowes' contentions, the language does not require the sale to be completely closed. It requires only an "agreement to sell or exchange." In summary, there is no doubt that ordinarily when an owner of property lists the property with a broker for sale, and the broker produces a buyer to whom the owner's terms of sale are satisfactory, the owner expects to pay the brokerage fee indicated in the brokerage contract. The Lowes' other argument asserts that Johnson did not have the permission of Deborah to list and sell the ranch even though she had a one-half ownership interest. The Lowes argue that the trial court abused its discretion in granting summary motion since an issue of fact exists on whether Antrim would be entitled to a commission on Deborah's interest in the property because it never had her consent for the sale.

The Lowes did not raise the issue of Deborah's interest in the property before the trial court. Generally, issues not raised before the trial court cannot be raised upon appeal. There are several exceptions to this general rule:

(1) where the newly asserted theory involves only a question of law arising on proved or admitted facts and is finally determinative of the case;

(2) where consideration of the theory is necessary to serve the ends of justice or to prevent denial of fundamental rights; and

(3) where the judgment of the trial court may be upheld on appeal although that court may have relied on the wrong ground or assigned a wrong reason for its decision. None of those exceptions apply here. Because Deborah's alleged lack of consent to the sale of the ranch was not before the trial court when it entered the summary judgment, the trial court properly resolved this case Affirmed.

For Critical Analysis

1. This case could be interpreted as a contract law case as much as it is a real estate law case. How did the customs and practices of the real estate industry influence how the court interpreted the contract?

2. This case involved a nonexclusive right to sell agreement. If it had been an exclusive right to sell, would there have been any issue? Can you concisely describe the line the court drew where this sale fell under the broker's right to sell contract?

3. If the buyer had merely seen a listing or a webpage created by the broker but had completed all communications solely with the seller, do you think this court would still have held for the broker?