Summary
holding that "the cardinal rule of contract law is to effectuate the intent of the parties, and . . . summary judgment is inapplicable where the question of intent plays a leading role"
Summary of this case from Stonemen Group v. Metalforming TechnsOpinion
Docket No. 29598.
Decided September 21, 1977.
Appeal from Oakland, Robert L. Templin, J. Submitted May 9, 1977, at Detroit. (Docket No. 29598.) Decided September 21, 1977.
Complaint by Burland, Reiss, Murphy Mosher, Inc., against Harry E. Schmidt, III, Ward C. Case, and 363 East Big Beaver Road Company for payment of a real estate broker's commission. Summary judgment for plaintiff. Defendants appeal. Reversed and remanded.
Honigman, Miller, Schwartz Cohn (by Peter M. Alter and Patrick T. Duerr), for plaintiff.
Miller, Canfield, Paddock Stone (by Carl H. vonEnde), for defendants.
Before: N.J. KAUFMAN, P.J., and V.J. BRENNAN and D.C. RILEY, JJ.
Plaintiff Burland, Reiss, Murphy Mosher, Inc., (hereafter, "Broker"), secured a summary judgment in the lower court directing defendants, (hereafter, "Seller"), to pay $59,200 as a commission from the sale of certain realty owned by Seller.
The court below rested its decision on an October 15, 1974, contract under which Seller granted Broker "the exclusive right * * * for an unlimited period of time, to find a purchaser" for the property, subject to either party's right to cancel the contract "by giving 30 days' prior notice". Seller further promised Broker that:
"[i]f a purchaser is obtained therefor, by you or by anyone for me, (including myself), during said period, at the stated price and terms, or upon any other price, terms or exchange to which I consent, or if said property is sold by me or for me, within (3) months after expiration of this Agreement, to a purchaser known to me to have been shown the property during such period, to pay you a commission of four (4) per cent of such sale price."
On July 21, 1975, Seller notified Broker of its intention to cancel the contract, with cancellation effective August 24, 1975. Some time prior to the effective date of cancellation, one Sugarman, the eventual vendee, viewed the subject parcel, and on November 19, 1975, purchased it from Seller. The sale thus occurred after cancellation of the contract, i.e., after the listing period, but within the 3-month post-listing period.
Although informed of the sale prior to its occurrence, Broker did not attend the closing and did not request the 4 percent commission until after the property had been conveyed. Upon Seller's refusal to pay, Broker instituted the present action and, as noted, met with success on a summary judgment. GCR 1963, 117.2(3).
Seller initially disputes the propriety of summary judgment, alleging that material issues of fact remain to be resolved. Based on the contract, the pleadings and the affidavits of the parties, we agree. In his opposing affidavit, Mr. Harry E. Schmidt, III, a defendant and general partner of Seller, expressed his understanding and intent
"that the extension clause contained in the Contract would entitle plaintiff to a commission only if the Property was sold during the extension period to a person to whom plaintiffs had shown the Property prior to cancellation of the Contract."
This interpretation is not inconsistent with the language of the contract and thus should have been considered by the lower court. Union Oil Co of California v Newton, 397 Mich. 486; 245 N.W.2d 11 (1976), Michigan National Bank of Detroit v Holland-Dozier-Holland Sound Studios, 73 Mich. App. 12; 250 N.W.2d 532 (1976). In our view, the commission clause of the contract raises more questions than it settles. The clause's indiscriminate use of the phrases "said period" and "such period" fails to specify whether these words refer to the listing period, the post-listing period, both periods, or one or the other period depending upon the context. From the bare language of the contract, we have no way of knowing what the parties intended by the imprecise use of these terms; but by the same token, neither did the lower court on a motion for summary judgment. Since the cardinal rule of contract law is to effectuate the intent of the parties, and since summary judgment is inapplicable where the question of intent plays a leading role, Durant v Stahlin, 375 Mich. 628, 652; 135 N.W.2d 392 (1965) (SOURIS, J., concurring), we hold the lower court erred reversibly in granting summary judgment to Broker.
Seller also argues that the Broker-Seller contract is unenforceable because it violates Administrative Code, 1973 AACS, R 338.2734(2) and R 338.2731 which provide:
"Rule 34. (1) * * *.
"(2) A listing agreement shall set forth a definite expiration date and shall not contain a provision requiring the party signing the listing to notify the broker of the party's intention to cancel the listing upon or after the expiration date."
"Rule 31. A broker or salesman who does not comply with these rules or any provisions of the act is presumed to be guilty of unfair dealing."
The department of licensing and regulation is authorized "to enumerate by rule what conduct constitutes 'dishonest or unfair dealing' as that term is used in [1919 PA 306, as amended, being MCLA 451.201 et seq.; MSA 19.791 et seq.]" McKibbin v Corporation and Securities Commission, 369 Mich. 69, 75; 119 N.W.2d 557 (1963). In Ranke v Corporation and Securities Commission, 317 Mich. 304; 26 N.W.2d 898 (1947), cited in McKibbin, supra, the Supreme Court upheld a prior, substantially similar version of Rule 34(2).
In reliance on Brown v Marty, 172 Wis. 411; 179 N.W. 602 (1920), Broker responds that the contract conforms with Rule 34(2) since the "definite expiration date" is 30 days after a cancellation notice has been sent to the other party. Brown involved a statute which required every contract for a real estate commission to describe "the period during which the agent or broker shall procure a buyer or seller". There the Court held:
"[W]e think the contract in question is sufficiently definite in expressing the time of duration in that it provides a method by which the duration of the contract may be absolutely fixed, to wit, three months after the giving of written notice by the owner." 172 Wis at 414-415; 179 NW at 603. (Emphasis added.)
Were we faced with language similar to the statute in Brown, we might well arrive at the same conclusion. Rule 34(2), however, is fundamentally different. It requires not a definable expiration date, but one that is definite; it mandates not a manner or method of ascertaining the contract's expiration, but a date certain. We hold, therefore, that the Broker-Seller contract conflicts with the stricture of Rule 34(2).
This holding, however, avails Seller little. The general rule is that where, as here, a statute or regulation creates a duty unknown to the common law, the remedy provided therein for violation of the duty is exclusive. Pompey v General Motors Corp, 385 Mich. 537, 552; 189 N.W.2d 243 (1971). Under MCLA 451.213; MSA 19.803, a broker's violation of any duty imposed by this section or by its attendant rules permits the department of licensing and regulation to "deny, suspend or revoke" the broker's license. While "[t]his act shall not be construed to relieve a person from civil liability * * * under the general laws of this state", MCLA 451.213(k); MSA 19.803(k), one cannot be relieved of a liability that apart from this act does not exist. Accordingly, Broker's violation of Rule 34(2) may not "bar recovery of an [otherwise] earned commission". Greater Bloomfield Real Estate Co v Braun, 64 Mich. App. 128, 135; 235 N.W.2d 168 (1975).
At common law, the failure to state a definite expiration date will not invalidate a contract for a real estate commission. Nolan v Swift, 111 Mich. 56; 69 N.W. 96 (1896).
We need not and do not address the other issues raised, given our resolution of the foregoing questions.
Reversed and remanded for trial on the merits. Costs to abide the result.
N.J. KAUFMAN, P.J., concurred.
I must disagree with the majority's disposition of this case. The regulation under consideration in this case states in part:
"Rule 34.(1) * * *.
"(2) A listing agreement shall set forth a definite expiration date and shall not contain a provision requiring the party signing the listing to notify the broker of the party's intention to cancel the listing upon or after the expiration date." 1973 AACS, R 338.2734(2).
Upon consulting the contract involved in this case, I find the following provision for notice of cancellation by the parties:
"In consideration of your services in offering the following described property for sale, I hereby grant you the exclusive right * * * for an unlimited period of time, to find a purchaser therefor; however, either party may cancel this contract by giving 30 days' prior notice."
In my opinion, the contract clearly satisfies the requirements of the regulation. A date certain for notification of cancellation is provided "by giving 30 days prior notice"; and, by stipulating that "either party may cancel this contract", certainly plaintiff has not cast the burden of notification exclusively upon defendant-seller. I must also disagree with the majority and their assessment of an analogous situation faced by the Wisconsin courts. See Brown v Marty, 172 Wis. 411; 179 N.W. 602 (1920). The majority's attempt to distinguish Brown by the semantic difference between a "definable" expiration date and a "definite" expiration date is not persuasive. The principle and legal reasoning employed in Brown is equally applicable to the situation we face in this case. In short, Brown can be compared with the present question and, when compared, leads to the conclusion that plaintiff-broker no more violated the Michigan Department of Licensing regulation than did the broker in Brown. I find no error in the trial court's grant of summary judgment based on his acceptance of plaintiff's interpretation and argued compliance with the regulation.
As to whether any material issue of fact remained to take to trial, again I do not believe the trial court erred in granting summary judgment to plaintiff. GCR 1963, 117.2(3). I find the language and dates in the listing agreement and cancellation notice is and are clear. Therefore, I would affirm the court's holding that plaintiff complied with his part of the agreement.
Further, having found that plaintiff's contract negotiated with defendant-seller was not legally improper, the facts clearly sustain plaintiff's right to obtain his commission, given that buyer Sugarman did view the property before the expiration date of the 3-month post-listing period and knew it was for sale (advertisements and sign on property) through plaintiff's efforts. These facts being definite, nothing existed but for the trial court to find as a matter of law that plaintiff-broker was entitled by the terms of the contract to a commission for his listing.
Consequently, given the legal propriety of the contractual agreement between plaintiff-broker and defendant-seller and the factual certainty of the events as they occurred pursuant to the legal agreement, the trial court had no choice but to grant plaintiff summary judgment. Our course of action on appeal is equally determined. Defendant was afforded an adequate opportunity to present its case to the trial court. The trial court should be affirmed.