Opinion
September 5, 1967. —
October 3, 1967.
APPEAL from a judgment of the circuit court for Racine county: ELMER D. GOODLAND, Circuit Judge. Affirmed.
For the appellant there was a brief by Camp Camp of Wauwatosa, and oral argument by Mark M. Camp.
For the respondents there was a brief by Brown, Black Riegelman of Racine, and oral argument by Harley Brown.
This is an action for an accounting to recover profits and punitive damages arising out of real estate transactions. The plaintiff alleged that the defendant, Freeman, was its agent and breached its fiduciary relationship to the financial detriment of the plaintiff. The defendant denied that it was the plaintiff's agent.
The plaintiff-appellant, Estfred Corporation, is a real estate brokerage, investment, and development firm located in West Allis. Rudolph Zivnuska is the secretary of the Estfred Corporation. Mr. Zivnuska handled all of the transactions for the Estfred Corporation. The plaintiff will be referred to as "Estfred" or "Zivnuska" interchangeably.
The defendant-respondent, Leon L. Freeman, Inc., also is a real estate brokerage and development firm located in Racine. The defendant-respondent, Leon L. Freeman, is the principal stockholder and officer of the corporation. The defendants will be referred to as "Freeman."
In June of 1957, Freeman entered into real estate listing agreements with Mr. and Mrs. Tenuta and Mrs. Mattioli to sell a square block of commercially zoned property in the city of Kenosha known as Tenuta Dells. The Tenutas owned all of Tenuta Dells except Lot 14 which was owned by Mrs. Mattioli. (One corner lot of Tenuta Dells was owned by a petroleum company but that fact is of no significance in this litigation.) cause of street access and parking facilities it was highly desirable, if not necessary, that Lot 14 be included in the sale of Tenuta Dells if the property was to be developed into a supermarket type of facility.
Estfred, acting through Zivnuska, was interested in purchasing land in Kenosha and hired Crescent Realty, a Kenosha real estate brokerage firm, as its purchasing agent. Crescent brought Zivnuska to Freeman and on June 8, 1957, Estfred contracted to purchase Tenutas' parcel for $18,000, and Lot 14 from Mrs. Mattioli for $2,500. Estfred paid Crescent for its services and the Tenutas and Mattioli were to pay Freeman. The sale of the Tenuta lots was completed on or about July 27, 1957, but the sale of Lot 14 was not completed because of a cloud on Mrs. Mattioli's title. Estfred returned the deed to Lot 14 and obtained return of its check for the balance of the purchase price, except the down payment of $500 which was left with Freeman.
On August 17, 1957, Freeman advised Zivnuska that the title to Lot 14 had been cleared and suggested a closing date of August 28th. Estfred failed to complete the purchase on the suggested date.
On two occasions before October 3, 1957, Freeman wrote to Zivnuska seeking completion of the sale but no reply was received.
On October 2d or 3d, Zivnuska delivered a note and mortgage to Freeman together with checks for documentary stamps and recording fees, claiming to have made arrangements for payment of Lot 14 with Mrs. Mattioli personally. Freeman wrote to Mrs. Mattioli requesting confirmation of this arrangement and authorization to deliver the deed to plaintiff, but received no reply from her. Freeman notified Zivnuska that a confirmation had not been received from Mrs. Mattioli.
On October 25, 1957, Freeman wrote to Zivnuska sending a copy of the letter to Mrs. Mattioli and her attorney advising that the arrangements outlined by Estfred were not satisfactory but that Mrs. Mattioli had agreed to extend the closing date to January 17, 1958. An extension of the original purchase offer was enclosed. No word was received from Estfred. Later two copies of the extension agreement signed by Mrs. Mattioli were sent to Zivnuska with a request that they be signed and one returned to defendant. He failed to comply. On November 18, 1957, Freeman again wrote to Zivnuska inquiring into the matter but no reply was received. On December 23, 1957, Freeman again wrote to Zivnuska advising that the seller would be ready to close on January 17, 1958. Estfred failed to respond to this letter, and failed to complete purchase on January 17th.
After another letter, Zivnuska advised Freeman that Estfred wanted to sell the entire parcel (including Lot 14). Freeman replied that he thought a buyer could be found. There is a conflict in the testimony as to whether Freeman was to receive a commission if he found a buyer. Zivnuska testified that it was orally agreed Freeman was to receive a 10 percent commission on the sale. Freeman testified that there was no such agreement, but that he agreed to use his efforts to find a buyer for the entire parcel so that Estfred would be able to complete purchase of Lot 14, and Freeman could fulfill his obligation to Mrs. Mattioli. In any event, on February 3, 1958, Freeman wrote to Zivnuska informing him a buyer for the entire parcel had been located; that Estfred could now complete purchase of Lot 14; and that no commission would be charged Estfred since Freeman obtained his commission from Mrs. Mattioli. Shortly thereafter this buyer withdrew his offer and Zivnuska was so advised in a letter written by Freeman's assistant secretary.
On February 18, 1958, Freeman notified Zivnuska that he had secured a further extension of Lot 14. The new closing date was to be March 15, 1958.
Between February 18 and March 15, 1958, there were several conversations between Zivnuska and Freeman concerning Lot 14. Freeman testified that he told Zivnuska that he felt an obligation to Mrs. Mattioli to find a purchaser for Lot 14 and if Estfred did not buy the lot he (Freeman) would. Zivnuska testified that he recalled Freeman's mention of finding another purchaser, but did not recall Freeman saying he would buy it himself.
Estfred did not complete the purchase of Lot 14 by March 15, 1958. Freeman then purchased Lot 14 for the contract price of $2,500 and took title in his name.
Zivnuska testified that on April 14, 1958, he called Freeman informing him of negotiations between Estfred and a Mr. Callan, and that plaintiff would take over the sale of the property. Zivnuska also testified he advised Freeman on April 18th that he had entered into a contract with Callan and would now be able to complete purchase of Lot 14. Freeman then informed Zivnuska he had taken title to Lot 14. On April 21st Freeman advised Zivnuska in writing of his purchase of Lot 14 from Mrs. Mattioli. Enclosed with the letter was the note for $2,000 left with Freeman on October 2 or 3, 1957, along with the checks for revenue stamps and recording the mortgage, and a check for the $500 originally deposited by plaintiff for the purchase of Lot 14. Freeman refused to convey title to Lot 14 to Estfred.
Callan subsequently brought an action for specific performance which Estfred successfully defended upon the ground that it did not have a legally enforceable right to convey Lot 14. (See James L. Callan, Inc., v. Estfred Corp. (1963), 21 Wis.2d 1, 123 N.W.2d 446.
Subsequently Zivnuska offered Estfred's interest in Tenuta Dells to Freeman and after several conversations prepared for Freeman an offer to purchase Tenuta Dells, excepting Lot 14. The offer was prepared by Estfred or its agent. On June 30, 1958, the sale of Tenuta lots to Freeman was completed at a price of $24,000, $6,000 in excess of what Estfred had paid. Later Freeman sold the entire premises, including Lot 14, to Jewel Tea for $35,000.
It appears that plaintiff had no objection to Freeman's negotiations with Jewel Tea at any time until after Freeman had completed the sale to Jewel Tea. The trial court, after a hearing without a jury, found that Freeman was not an agent of Estfred, and entered judgment dismissing the complaint. Estfred appeals.
The determinative issue is whether Freeman was the agent for Estfred at the time he acquired title to Lot 14 and when he sold the entire parcel to Jewel Tea.
Estfred contends that the material facts upon which this issue must be resolved are not in dispute and that in this court's review of the record the trial court's findings of fact are not conclusive but can be reviewed as a conclusion of law.
Weigell v. Gregg (1915), 161 Wis. 413, 154 N.W. 645; Saylor v. Marshall Ilsley Bank (1937), 224 Wis. 511, 272 N.W. 369; Will of Mechler (1944), 246 Wis. 45, 16 N.W.2d 373; and General Automotive Mfg. Co. v. Singer (1963), 19 Wis.2d 528, 120 N.W.2d 659.
A careful review of the entire record convinces us that many material facts are in dispute and that our standard of review must be conducted as set forth in Mitchell v. Western Casualty Surety Co. (1966), 30 Wis.2d 419, 421, 141 N.W.2d 212:
"Since the trial court tried the case without a jury, its findings will not be upset on appeal unless they are contrary to the great weight and clear preponderance of the evidence and it is not necessary the evidence in support of the findings constitutes the great weight or clear preponderance of the evidence. Nor is it sufficient that there is evidence to support a contrary finding. To command a reversal, such evidence although sufficient to support a verdict must constitute the great weight and the clear preponderance of the evidence. Druml Co. v. Capitol Machinery Sales Service Co. (1965), 29 Wis.2d 95, 138 N.W.2d 144; Columbia Stamping Mfg. Co. v. Reich (1965), 28 Wis.2d 297, 137 N.W.2d 45; Estate of Perssion (1963), 20 Wis.2d 537, 123 N.W.2d 465; State ex rel. Isham v. Mullally (1961), 15 Wis.2d 249, 112 N.W.2d 701."
From our review of the record, we conclude without hesitation that the trial court's findings are not contrary to the great weight and clear preponderance of the evidence.
There is no dispute that until the defect in the Mattioli deed was discovered Freeman was solely the agent of Mrs. Mattioli and the Tenutas. Crescent Realty was plaintiff's agent and was paid by Estfred for its services.
After failure to complete the sale of Lot 14 due to the defective title, Freeman obtained several extensions of the closing date. Estfred points to these efforts as indication of an agency relation between plaintiff and defendant. Estfred's argument, apparently, is that Freeman's duties to Mrs. Mattioli were fulfilled when he found plaintiff as purchaser of Lot 14, and that defendant's further efforts toward completion were acts on behalf of plaintiff.
In support of this contention plaintiff cites the case of Wauwatosa Realty Co. v. Paar (1956), 274 Wis. 7, 79 N.W.2d 125. That case merely holds that a broker is entitled to his commission when he has procured a purchaser, negotiations are complete., and there has been a meeting of the minds of the principal and the customer. Unless the contract provides otherwise, the broker's compensation is not dependent on final consummation of the transaction. The case in no way holds that the agency relationship between the broker and his principal is necessarily complete when a purchaser is found. There is nothing in that opinion requiring the conclusion that a broker cannot carry the transaction through to completion in an agency capacity and certainly that opinion does not support a conclusion that acts toward the consummation of the transaction performed by a broker after he has secured a purchaser for his principal are, as a matter of course, acts on behalf of the purchaser as a new principal.
Estfred further contends that defendant's undertaking to sell plaintiff's interest in Tenuta Dells establishes an agency relationship. The evidence clearly supports the trial court's finding that the reason Freeman undertook to find a buyer for Estfred was to assist Estfred in completing the purchase of Lot 14 in pursuance of Freeman's obligation to Mrs. Mattioli. Zivnuska testified that he had orally agreed to pay Freeman a 10 percent commission if he found a buyer. At the trial Freeman denied there was such an agreement. Freeman's letter of February 3, 1958, written to Zivnuska advising him a buyer had been found, stated in part:
At a pretrial adverse examination Freeman testified the commission was 10 percent but at the trial, after going over his records, denied he had an agreement with Zivnuska.
"It is understood that we are making no charge for any selling commission to you as we obtained our commission from the original seller to effect your purchase."
In view of this letter, the trial court was justified in rejecting Zivnuska's testimony of the commission arrangement.
Estfred also argues an agency relationship may be established regardless of compensation. Under certain circumstances one volunteering services may be a servant of one accepting such services even though there is no agreement for or expectation of compensation. Heims v. Hanke (1958), 5 Wis.2d 465, 93 N.W.2d 455. However, it is difficult to see how a broker assumes a gratuitous fiduciary relationship on behalf of a buyer simply because his acts as agent for the seller also benefit the buyer.
The existence of the commission arrangement between Freeman and Mrs. Mattioli (and the Tenutas) is evidence that Freeman was acting on her behalf and not plaintiff's.
Further evidence of the nonexistence of an agency relation is present in the record. Mr. Freeman testified that during the last extension period he informed Zivnuska he would buy the lot himself if plaintiff did not. Zivnuska testified that he could not recall this., but he did recall some mention of Freeman finding another buyer for Lot 14. Assuming Zivnuska's version is accurate, it should have clearly indicated to him that Freeman considered himself Mrs. Mattion's agent. Someone else purchasing Lot 14 could be no less inconsistent with Estfred's interests than Freeman buying the property himself. Zivnuska's failure to register an objection, or confirm his willingness to complete purchase at this point indicated it was doubtful that plaintiff would ever complete the transaction in view of the fact that plaintiff had failed to meet closing date after closing date. The transaction had been in suspension for several months with Estfred giving little or no indication it was ready or able, at any time after July of 1957, to complete the purchase. In fact, all indications were to the contrary.
The trial court's findings of fact leading to the conclusion of law that Freeman was not an agent of Estfred is clearly supported by the evidence in the record.
By the Court. — Judgment affirmed.