CHARLES E DRURY V HAROLD C KIESS
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STATE OF MICHIGAN
COURT OF APPEALS
CHARLES E. DRURY and SHARON M. DRURY,
UNPUBLISHED
November 23, 1999
Plaintiffs-Appellees,
v
No. 204670
Alcona Circuit Court
LC No. 96-009474 CH
HAROLD C. KIESS,
Defendant-Appellant.
Before: Sawyer, P.J., and Hood and Whitbeck, JJ.
PER CURIAM.
Defendant appeals as of right from the trial court’s order granting summary disposition for
plaintiffs in this action for specific performance of a real estate contract. We affirm.
The basic issue presented in this appeal concerns who must bear the loss of defendant’s real
estate broker absconding with plaintiffs’ down payments totaling $40,000 and plaintiffs’ payment of
$527.19 for prorated real estate taxes. Defendant contends that he is responsible only for $5,000 of
the funds embezzled by the broker because the broker was only authorized to receive an earnest
deposit of $5,000 on defendant’s behalf. We disagree.
The purchase agreement signed by defendant authorized the broker to hold “[a]ll deposits”
relating to the transaction. While the agreement only required plaintiffs to deposit a total of $5,000 of
the purchase price upon defendant’s acceptance of the purchase agreement, nothing in the agreement
limited the broker’s authority to receive and hold additional deposits on the purchase price. Indeed,
defendant indicates that he did not question or protest the broker’s action when the broker advised him
that she had received plaintiffs’ additional payments because the broker had told him the additional
monies were being held as an “increased … earnest deposit.” Defendant’s claim that his broker was
only authorized to accept $5,000 in deposits is belied by his own course of conduct.
This case was submitted to the trial court for summary disposition on stipulated facts pursuant to
MCR 2.116(A). This Court reviews the denial or grant of a motion for summary disposition de novo.
Spiek v Dep’t of Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998).
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Although we do not disagree with defendant’s contention that the broker’s authority to sell did
not include the authority to convey the property on defendant’s behalf, this does not affect our
determination of the broker’s authority to receive plaintiffs’ payments. Defendant’s reliance upon the
rule that an agent’s unlawful acts are presumed to be outside of the scope of the agency is also
misplaced. There is nothing unlawful about the act of a licensed real estate broker receiving and holding
a purchaser’s down payment deposits on a real estate transaction, in and of itself. That the broker used
fraud to accomplish this otherwise lawful act within the scope of her authority does not relieve defendant
of responsibility where i nocent parties have reasonably relied upon the agent’s actual or apparent
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authority. See, e.g., Margolis v Benton, 343 Mich 34, 39; 72 NW2d 213 (1955); Stolberg v
Oakman, 233 Mich 92; 206 NW 488 (1925); Karibian v Paletta, 122 Mich App 353 ,356; 332
NW2d 484 (1983).
Finally, we note that defendant’s reliance on the distinction between the authority to sell and the
authority to transfer is not decisive in this case. “Unless otherwise agreed on, an agent’s authority to
transfer the principal’s property for sale includes authority to receive the purchase price.” Brooks v
January, 116 Mich App 15, 32; 321 NW2d 823 (1982), citing Restatement of Agency 2d, § 56, p
162.
Affirmed.
/s/ David H. Sawyer
/s/ Harold Hood
/s/ William C. Whitbeck
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