OLSON v. NEALE

OPINION

EUBANK, Judge.

This is an action for broker's commission arising from the sale of real property. The principal question raised by the parties on appeal is whether an extant broker's listing agreement is a condition precedent to recovery of a sales commission. We hold that a valid agreement must be in force.

The facts of this case are as follows: On March 6, 1965, Gilbert and Hedwig Olson, gave to William G. Neale and Martha H. Neale, d/b/a Neale & Associates (hereinafter "Neale") a written non-exclusive listing to sell the Olson ranch. The listing provided for a "broker's commission," "fixed at five percent (5%) of the purchase price, to be paid as the land is released and paid for." By its terms the listing expired July 15, 1965. On three separate occasions the listing agreement was extended, as follows:

         Listing Contract

Commencement Date   Termination Date

   3-6-65               7-15-65
   7-27-65              1-1-66
   12-29-66             5-31-67
   5-31-67              11-1-67

A sale was ultimately consummated in September, 1969, to Recreation Leisure Land through an agent, A.A. McCollum, who had first seen the property through Neale during the summer of 1967. McCollum, however, was an officer (and agent) of an entirely different corporation in 1969 than in 1967, as he was representing Development Services, Inc. in 1967 and Recreation Leisure Land in 1969.

Appellees assert that the Olsons waived any requirement of a listing contract by continuing to meet with Neale and McCollum on four separate occasions in 1968 for the purpose of furthering the ultimate sale. We refuse to accept the doctrine of implied waiver.

Arizona has a Statute of Frauds requirement for brokerage contracts which has been strictly enforced. A.R.S. § 44-101.7 states:

Cases interpreting that statute have said that neither partial nor complete performance will take an oral contract between broker and seller out of the Statute of Frauds, Gibson v. W.D. Parker Trust, 22 Ariz.App. 342, 527 P.2d 301 (1974); a real estate broker is presumed to know that an oral contract of employment for rendition of services in negotiating a sale of real estate for compensation or a commission is invalid, Gray v. Kohlhase, 18 Ariz.App. 368, 502 P.2d 169 (1972); and that Arizona does not recognize the applicability of the doctrine of estoppel to real estate listing agreements, see Gibson v. W.D. Parker Trust, supra. While these cases do not pertain to the specific question at hand, they are indicative of the strict requirements placed upon Arizona real estate brokers who seek their commissions.

The listing contract terminating on November 1, 1967, involved in this case, is set forth in the Appendix attached hereto. The contract does not purport to grant commissions to the broker following termination of the contract and is therefore distinguishable from the contracts in Hyde Park-Lake Park, Inc. v. Tucson Realty & Trust Co., 18 Ariz.App. 140, 500 P.2d 1128 (1972) and Limberopoulos v. Tom Fannin and Associates, 17 Ariz.App. 35, 495 P.2d 475 (1972) both of which provided that in the event a sale was made within 90 days after expiration of an exclusive agreement to a party whose name had been submitted to the vendor in writing during the term of the listing agreement, the commission would be earned.

This situation sub judice is also distinguishable from the situation in Mohamed v. Robbins, 23 Ariz.App. 195, 531 P.2d 928 (1975). In Mohamed the real estate contract contained a protective clause, under which the defendant agreed to pay a commission if the property was sold to any person with whom the plaintiff was negotiating or dealing upon expiration of the listing. No time period was specified as to the duration of the clause and it was held that a period in excess of one year was not so unreasonable as to preclude recovery. The court found that the broker was the "procuring cause" of the sale and therefore was entitled to the commission. Here, however, there is no purported agreement giving the broker a commission after termination of the listing contract and so the question of whether the broker was the "procuring cause" is irrelevant.

This case is also distinguishable from other cases which have held the vendor liable for the commission upon finding that the broker was the "procuring cause" of the sale. In those cases the vendor had either deliberately bypassed the broker, e.g., Bowser v. Sandige, 74 Ariz. 397, 250 P.2d 589 (1952), Fornara v. Wolpe, 26 Ariz. 383, 226 P. 203 (1924); or the action involved a contest between two brokers for the right to a commission, e.g., Garver v. Thoman, 15 Ariz. 38, 135 P. 724 (1913), Leadville Mining Co. v. Hemphill, 17 Ariz. 146, 149 P. 384 (1915), Fink v. Williamson, 62 Ariz. 379, 158 P.2d 159 (1945), Porter v. Ploughe, 77 Ariz. 33, 266 P.2d 749 (1954). See also Hearrold v. Gries and Realty Executives, 115 Ariz. 560, 566 P.2d 1036 (filed July 7, 1977).

Moreover, even though McCollum was the acting purchaser's agent for both the ultimate purchaser and the original prospective party, we feel that appellees cannot be considered the procuring cause when the ultimate purchaser of the property was a different entity from the original prospective party.

The sole question then, is whether the owner of the property waived his right to rely on the expiration date of the listing agreement, or stated another way, whether an extant contract is a condition precedent to receipt of the broker's commission. While many other states have adopted the principle of waiver by conduct (see 27 A.L.R.2d 1348), we refuse to do so. We feel that the policy of this state with respect to real estate brokers was properly stated in Gray v. Kohlhase, supra:

This position is further supported by the rules of the Real Estate Commission which, in part, read:

Taken together, it seems to us that the public policy of this State is that brokers, in order to collect a commission, must have a written listing, that the listing must contain a definite expiration date, and the listing agreement shall be deemed to cancel automatically on that date.2 The only exception being that described in Mohamed v. Robbins, supra. This conclusion is inescapable in light of the extensive statutory qualifications required of licensees (A.R.S. § 32-2124), and article 26, § 1 of the Arizona Constitution which authorizes brokers and salesmen to engage in limited law practice involving real property transactions. If a broker can practice law in the area of real property sales, it is reasonable to hold him to a full understanding of the implications and ramifications of the Statute of Frauds.

For the foregoing reasons, the judgment in favor of the appellees as to their claim for a commission is reversed. Having decided that appellees are not entitled to a commission, other issues raised by appellants need not be considered.

Judgment reversed, and case remanded for entry of judgment in favor of appellant.

WREN, Acting P.J., and FROEB, C.J., concur.

Appendix to follow.

APPENDIX A

Dear Mr. Olson:

Our listing on Mountain Shadows of Colorado expires as of today. I am taking the liberty of typing that last listing in the context of this letter and your extension of that listing will be approved by you when you attach your signature below.