Widdoss v. Donahue

331 N.W.2d 831, 1983 S.D. LEXIS 292
CourtSouth Dakota Supreme Court
DecidedApril 6, 1983
Docket13783
StatusPublished
Cited by7 cases

This text of 331 N.W.2d 831 (Widdoss v. Donahue) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Widdoss v. Donahue, 331 N.W.2d 831, 1983 S.D. LEXIS 292 (S.D. 1983).

Opinions

FOSHEIM, Chief Justice.

Plaintiffs executed an exclusive listing agreement for the sale of their ranch with Defendant Patrick L. Donahue in which plaintiffs agreed to pay him a $39,000 commission if a purchaser was found or a sale was made. Patrick Donahue found a purchaser, Howard Franz, to whom plaintiffs sold the ranch by contract for deed dated March 18, 1977. Plaintiffs brought this action to recover the $39,000 they paid Patrick Donahue. The trial court entered judgment against plaintiffs and awarded defendants their expenses for taking a deposition. Plaintiffs appeal. We affirm.

Plaintiffs claim the exclusive listing agreement was breached. They argue that because Mr. Franz did not promptly make the May 1st and November 1st payments he proved himself to be less than an able buyer. Plaintiffs cite Larson v. Syverson, 84 S.D. 31, 166 N.W.2d 424, 426 (1969), which states:

A broker effecting a sale of property can recover a commission only by virtue of the contract with his principal, either express or implied. Thus, when he is employed to find a purchaser, the broker earns his commission and becomes entitled thereto when he produces a purchaser who is ready, able, and willing to purchase at a price and upon the terms specified by the principal or satisfactory to him. (citations omitted)

The contract for deed signed by plaintiffs and Mr. Franz contained a default clause which provided, in part, that, “[u]pon default, Sellers shall give Buyers notice in writing of the default and Buyer shall have 30 days within which to remedy said default by paying the principal and interest then due and owing.”

The trial court found that Mr. Franz did not pay the May 1, 1977, or the November 1, 1977, contract payments when due and payable but also found that plaintiffs’ attorney mailed Mr. Franz a notice of default for the May 1st payment on May 3, 1977, and for the November 1st payment on November 2, 1977, and that Mr. Franz cured these defaults with accepted pay-[833]*833merits within the default grace period. After accepting the November 1, 1977, payment, plaintiffs agreed to Mr. Franz’s assignment of the contract for deed to a third party. The trial court concluded that Patrick Donahue did not breach the listing agreement and that plaintiffs received precisely what they bargained for. We agree. Mr. Franz made the contract payments within the stipulated time. They were accepted by plaintiffs. If Mr. Franz performed according to the contract he could be no less than an able buyer. Patrick Donahue accordingly earned his commission under the exclusive listing agreement.

As an alternative theory, plaintiffs contend they are entitled to recover the commission because Donahue Realty was not licensed as a real estate partnership or association. Plaintiffs base this argument on SDCL 36-21-14, -21.4,1 and Schmidt v. Earl, 83 S.D. 245, 158 N.W.2d 184 (1968). The facts in the companion cases of Schmidt and Dunhill of Fargo, Inc. v. Lahman Manufacturing Co., Inc., 317 N.W.2d 824 (S.D.1982), are distinguishable. Schmidt held that a real estate broker who is not licensed under SDCL eh. 36-21 cannot collect a commission. In Dunhill we held that an employment agency’s failure to procure a license under SDCL ch. 60-6A likewise precluded it from collecting a commission.

The trial court found that Patrick Donahue was a licensed real estate broker doing business as Donahue Realty and that John Donahue, his father, was also a licensed real estate broker doing business as Donahue Realty. The trial court found that while Patrick and John Donahue used the same trust account and the same business checking account, they had no partnership agreement, did not share profits, did not intend to be partners, and did not hold themselves out as partners to third parties. The trial court also found they did not file a partnership tax return, nor individually contribute capital to a partnership venture. The court further found there was no evidence of joint management, administration or control of the business. Based on these facts, the trial court concluded that Patrick and John Donahue were not partners. Partnership is a question of fact. Weidner v. Lineback, 82 S.D. 8, 140 N.W.2d 597 (1966); Munce v. Munce, 77 S.D. 594, 96 N.W.2d 661 (1959). Our review of the evidence draws the conclusion that the trial court’s findings on the existence of a partnership are not clearly erroneous. In Re Estate of Hobelsberger, 85 S.D. 282, 181 N.W.2d 455 (1970); SDCL 15-6-52(a).

This does not end the inquiry, however, because plaintiffs also argue that even if the finding of no partnership is not clearly error, Donahue Realty is an “association” within the meaning of SDCL 36-21-14 and -21.4 and therefore must be licensed and that the lack of this license entitles plaintiffs to recover the commission. We agree with the trial court that regardless of whether Donahue Realty is an association within the meaning of those statutes, plaintiffs are not entitled to recover the commission. The trial court cited Annot., 74 A.L. R.3d 637, to support its position.

In the absence of a statute providing for recovery, the cases generally hold that one who has paid money to an unlicensed person in consideration of the performance of a contract by such person is not entitled to recover back the money so paid on the ground that ... equity and the principles of restitution do not require that the money be paid back.
In this latter connection recovery is denied on the ground that the compensation was a voluntary payment, that any [834]*834misapprehension in the payment constituted a mistake of law by which the payor is bound, and that there is no equitable reason for making restitution to a plaintiff who gets the exchange which he expected, (footnotes omitted)

Id. at 642-644. See also 12 C.J.S. Brokers § 190. Unlike Schmidt and Dunhill, supra, this is not an action by an unlicensed broker or agency to collect a commission. Plaintiffs voluntarily paid Patrick Donahue for finding them an able buyer who purchased their property. Since Patrick Donahue fully performed under the contract, there is no equitable reason for ordering restitution to plaintiffs who got the exchange they expected.

Plaintiffs next challenge the trial court’s finding that defendants did not fraudulently induce plaintiffs to execute the contract for deed. Based on detailed findings, the trial court concluded that there was no fraud and that “the contract was negotiated between [plaintiffs] and Franz. Both parties were represented by counsel.

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Widdoss v. Donahue
331 N.W.2d 831 (South Dakota Supreme Court, 1983)

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Bluebook (online)
331 N.W.2d 831, 1983 S.D. LEXIS 292, Counsel Stack Legal Research, https://law.counselstack.com/opinion/widdoss-v-donahue-sd-1983.