Clodfelter v. Plaza Ltd.

698 P.2d 1, 102 N.M. 544
CourtNew Mexico Supreme Court
DecidedApril 8, 1985
DocketNo. 15119
StatusPublished
Cited by3 cases

This text of 698 P.2d 1 (Clodfelter v. Plaza Ltd.) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clodfelter v. Plaza Ltd., 698 P.2d 1, 102 N.M. 544 (N.M. 1985).

Opinion

OPINION

SOSA, Senior Justice.

This cause of action is brought by plaintiff Clodfelter, a real estate broker, against defendant partnership, Plaza Limited (Owners), to recover the commission due on the sale of certain property in Taos. The trial court awarded Clodfelter the agreed upon commission on the property sale. We affirm the trial court.

The determinative question to be answered is whether, in an agreement between a broker and a property owner, either an “exclusive right to sell” or an “exclusive agency” clause restricts the right of a property owner to engage the services of another broker.

Clodfelter and all of the partner-Owners signed a letter of agreement on September 5, 1979. The agreement contained an “exclusive right to sell” provision and another provision allowing a sale to be made by the Owners. A second agreement, a printed form from the Multiple Listing Service (MLS) entitled “Exclusive Right to Sell,” was signed September 26, 1979 by Clodfelter and one of the general partners. Clodfelter prepared brochures, advertised widely and showed the property.

In May or June 1980, the Owners signed a real estate agreement for the property with a new broker, Muchmore. The sale of the property was arranged and a “contract for sale” was entered on August 11, 1980, between the Owners and a buyer Much-more obtained. On August 27, 1980 the Owners requested and obtained a letter from Clodfelter in which he agreed he was not entitled to a commission if the property was “sold solely through the efforts of the owners.” The Muchmore sale closed September 4, 1980 and Muchmore received a 6% commission. There is testimony disclosing that Clodfelter was never told by any of the partner-Owners that their agreement was terminated or that a new broker had been engaged to sell the property.

The following issues are raised by the Owners: (1) Whether the September 5, 1979 agreement was enforeeablé; (2) If the September 5 agreement is found to be enforceable, whether or not it binds the Owners; (3) Whether the letter of August 27, 1980 released the Owners from paying a commission; (4) whether Clodfelter sufficiently performed under the agreement to make it binding on the Owners; and (5) whether the MLS printed form is binding when only one partner signed it.

In answering issues one through four, we need not reach whether the Owners are bound by the second, more restrictive, MLS contract which includes both “exclusive right to sell” and “exclusive agency” clauses.

The trial court found that on September 5, 1979 all parties entered into an agreement giving the broker the right to sell the Owners’ property. This agreement included a 6% commission plus New Mexico gross receipts tax, and an “exclusive right to sell” provision, which the trial court concluded was valid and binding upon the parties. It contained no termination date and was to:

remain valid until such time as the property is sold, taken off the market or by reason that our firm has not performed the necessary functions to market the property.

Additionally, the agreement stated in the last paragraph:

If you are in agreement with the foregoing, then this letter shall serve as an agreement with this firm. Your signature below will affirm said agreement.

The agreement included a handwritten provision, “This agreement is exclusive of any sale made by owners of their property.” The agreement was signed by Clodfelter, as the broker, and by all five of the partners-Owners.

Clodfelter claims he had an “exclusive right to sell” contract which precluded the Owners from selling the property through another broker. The Owners claim that the provisions for a sale by the Owners in both the September 5, 1979 agreement and the later letter of August 27, 1980, allowed them to contract with other brokers to sell the property.

The issue to be decided is whether, under the terms of the September 5, 1979 agreement, the owners could engage the services of another broker to sell their property while the contract with the first broker was still in effect. To decide this, the effect of the handwritten provision of September 5, excluding the owners from the “exclusive right to sell” provision must be determined.

There are two types of exclusive agreements commonly used in real estate contracts, the “exclusive agency ” agreement and the “exclusive right to sell ” agreement. Carlsen v. Zane, 261 Cal.App.2d 399, 67 Cal.Rptr. 747 (1968); see also Annot., 88 A.L.R.2d 936 (1963) (distinguishing “exclusive agency” and “exclusive right to sell” clauses and explaining their restrictions on the owner’s right to sell.)

The “exclusive agency” agreement prohibits an owner from selling the property through another broker during the listing period, but allows the owner to sell his property through his own efforts. White v. Ragle, 82 N.M. 644, 485 P.2d 978 (Ct.App.1971); Carlsen v. Zane.

In comparison, the “exclusive right to sell” provision is more restrictive in that by contract it precludes the sale of the property by anyone, including the owner, thus, protecting the broker from any sale other than one he arranges. Talley v. Security Service Corp., 99 N.M. 702, 663 P.2d 361 (1983). White v. Ragle; Carlsen v. Zane. See also Annot., 88 A.L.R.2d 936 (1963).

In the instant case, the parties agreed to an “exclusive right to sell” provision in the contract, but by modifying the agreement to allow the Owners to sell their property, they created an “exclusive agency” contract. See White v. Ragle; Carlsen v. Zane. Virtually all jurisdictions agree with New Mexico in recognizing that an “exclusive agency” provision:

does not preclude the owner from selling the property himself without the aid of any broker ... [but it] precludes the owner from selling through the agency of another broker.

Annot., 88 A.L.R.2d 936 at 947 (1963) (emphasis added). See White v. Ragle, Carlsen v. Zane; MacKnight v. Pansey, 122 R.I. 774, 412 A.2d 236 (1980); Foltz v. Begnoche, 222 Kan. 383, 565 P.2d 592 (1977).

Here the owners sold their property through the agency of another broker. That action constituted a breach of contract between the first broker, Clodfelter, and the Owners.

There is no evidence in the record showing any attempt on the part of the Owners to revoke the contract with Clodfelter prior to the August 27, 1980 letter allowing the Owners to sell their property. That letter provided that if the property was “sold solely through the efforts of the owners with no intervention by [Clodfelter],” a commission would not be paid to him. We interpret “solely” in this letter to mean the Owners themselves arrange for the sale. This would not include a sale that is the result of the efforts of another broker. See White v. Ragle; Carlsen v. Zane.

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Cite This Page — Counsel Stack

Bluebook (online)
698 P.2d 1, 102 N.M. 544, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clodfelter-v-plaza-ltd-nm-1985.