Maynes Real Estate, Inc. v. McPherron

353 N.W.2d 425
CourtSupreme Court of Iowa
DecidedSeptember 18, 1984
Docket83-578
StatusPublished
Cited by13 cases

This text of 353 N.W.2d 425 (Maynes Real Estate, Inc. v. McPherron) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Maynes Real Estate, Inc. v. McPherron, 353 N.W.2d 425 (iowa 1984).

Opinions

[426]*426LARSON, Justice.

These plaintiffs sued to collect a real estate commission allegedly due under an oral listing agreement for the sale of farmland owned by the defendants Miller. The district court denied recovery under a claim of quantum meruit based on its finding that the plaintiffs efforts did nothing to promote the sale. On appeal, the case was transferred to the court of appeals, which affirmed, but on a different basis: that our decision in Milholin v. Vorhies, 320 N.W.2d 552 (Iowa 1982), which held oral listing contracts to be unenforceable, must logically be extended to preclude quantum meruit recovery as well. On further review, we affirm the court of appeals and the district court.

The facts relevant to the issue on appeal are not disputed. Plaintiff Oxley was a licensed real estate salesman employed by plaintiff Maynes Real Estate, Inc. Defendants Miller owned three parcels of Iowa farmland, two of which were involved in this case. In the summer of 1979, another real estate company, Doan Real Estate, advertised the three Miller farms for sale. Plaintiff Oxley contacted Doan and inquired whether he might receive a commission if he produced a buyer for the Millers’ land. After showing the property with no success on several occasions, plaintiff found a client who showed some interest. Upon recontacting Doan Real Estate, plaintiff was directed to the defendant, McPher-ron, who was managing the farms. Although defendant McPherron informed the plaintiff Oxley that he fully intended to sell the farms himself, plaintiff alleged McPherron agreed orally to pay plaintiff 2.5% of the sale price as commission if a buyer were produced. No written agreement was ever drafted.

The evidence reflects that the Muff brothers, two area grain and livestock farmers, and Oxley were in contact with one another over the purchase of farmland, and that Oxley, on one occasion, drove the Muffs past the Miller land. Later, when the Muffs took a stronger interest in the Miller land, Oxley obtained a key to the gate of one of the parcels from McPherron and drove Robert Muff over the land. Ox-ley told the Muff brothers that if they had any questions they could contact the manager, McPherron. Oxley then went on a short vacation.

The Muffs did contact McPherron and eventually negotiated a sale with him. Both Muff brothers testified at trial that they told defendant that Oxley had originally shown them the farm, but it is undisputed that Oxley took no part in the negotiations, and that he spent no more than “the better part of a morning” with the Muffs.

Plaintiffs originally sued only on the oral listing contract between Oxley and McPherron. Based on our decision in Mil-holin, however, the trial court sustained defendants’ motion for summary judgment. The plaintiffs then amended their petition to assert the theory of quantum meruit, and the case went to trial on that issue alone. The district court did not address the question of whether quantum meruit would lie in such a case; it apparently assumed that if such a theory were viable, the plaintiffs’ services were nonetheless insufficient to justify a recovery.

While this court had previously recognized the enforceability at common law of oral brokerage agreements, McHugh v. Johnson, 268 N.W.2d 225, 227 (Iowa 1978), it has also held that where it is within the statutory authority of the agency, a rule has the force and effect of a statute. Milholin, 320 N.W.2d at 553 (citing Davenport Community School District v. Iowa Civil Rights Commission, 277 N.W.2d 907, 909 (Iowa 1979)).

Iowa Code section 117.9 authorizes the Iowa Real Estate Commission to promulgate rules for implementing chapter 117, which relates to the sale of real estate. The commission responded by enacting section 1.23, Iowa Admin.Code chapter 700, which provides:

All listing agreements shall be in writing, properly identifying the property and containing all of the terms and conditions under which the property is to be sold, including the price, the commission [427]*427to be paid, the signatures of all parties concerned and a definite expiration date.

In Milholin, this court upheld section 1.23 as within the commission’s delegated authority to safeguard the public and to regulate the sales of real estate. 320 N.W.2d at 554. In doing so, this court analogized the rule to a statute of frauds. Id. (citing Restatement (Second) of Contracts, Statutory Note at 285, § 110(5), and Comment b to § 126 (1979)). This court also compared and discussed a rule containing almost identical language about which the Vermont Supreme Court said:

Ostensibly, the purpose of this rule is for the protection of the public to establish fair dealings between parties, standardize the procedure and practices in the real estate business and to prevent fraud. Its purpose is similar to that of the statute of frauds, which, ... “is to prevent a party from being compelled, by oral and perhaps false testimony to be held responsible for a contract he claims he never made.” Green Mountain Realty, Inc. v. Fish, 133 Vt. 296, 299, 336 A.2d 187, 189 (1975).

Milholin, 320 N.W.2d at 554.

We noted the Iowa Real Estate Commission’s broad authority to determine what practices are harmful or detrimental to the public and concluded that section 1.23 was a proper exercise of the commission’s statutory authority to safeguard the public and to provide rules for brokers and agents. Id. The effect was to make oral brokerage listing agreements unenforceable upon proper objection.

Recognizing this, plaintiffs nevertheless request this court to hold that quantum meruit relief is available to them; that they should be compensated notwithstanding the written-agreement requirement of section 1.23. Resolution of this issue turns on whether the legislative intent underlying section 1.23 was to forbid any recovery by a broker or sales agent under an oral agreement. Under the plaintiffs’ theory, it would make little difference whether the statutory requirement of a writing had been complied with or not if they could fall back on the theory of quantum meruit. Clearly, the result would defeat the purpose of the rule as recognized in Milholin.

The general rule is stated by one authority:

In support of the very generally accepted rule ... that the failure to satisfy a statute requiring a broker’s contract to be in writing precludes recovery in quantum meruit also, it has been stated in a number of cases that to hold other-wise would be [to] nullify the intent of the statute.

41 A.L.R.2d 901, 910 (1955) (citing Beahler v. Clark, 32 Ind.App. 222, 227, 68 N.E. 613, 614 (1903)) (true intent of the statute was that there should be no recovery of compensation for the services of a broker except upon a written contract); Selvage v. Talbott, 175 Ind. 648, 653, 95 N.E. 114, 116 (1911) (where the law makes an oral contract for services invalid, it will not create by implication a liability for that service); Harris v. Blasberg, 30 Ohio App. 100, 106, 164 N.E.

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Maynes Real Estate, Inc. v. McPherron
353 N.W.2d 425 (Supreme Court of Iowa, 1984)

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353 N.W.2d 425, Counsel Stack Legal Research, https://law.counselstack.com/opinion/maynes-real-estate-inc-v-mcpherron-iowa-1984.