Jesse and Sandra King v. James Arnold

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

JUDGE JOSEPHINE LINKER HART

DIVISION IV

JESSE and SANDRA KING

APPELLANTS

V.

JAMES ARNOLD

APPELLEE

CA01-853

April 10, 2002

APPEAL FROM THE PHILLIPS COUNTY CIRCUIT COURT

[NO. CIV-98-199]

HONORABLE HARVEY LEE YATES,

CIRCUIT JUDGE

REVERSED AND DISMISSED

Appellants, Jesse and Sandra King, appeal from a judgment entered by the circuit court following a bench trial awarding $3,537 in damages, with interest and costs, to appellee, James Arnold, in appellee's action to collect a broker's commission from appellants. Appellants argue that because appellee did not extend the closing date of a real estate contract in the manner provided under the contract, they had no contractual duty to pay appellee a commission. We reverse the trial court and dismiss.

Appellants, as the sellers of their residence, and appellee, as the real estate broker, entered into a written agreement in which appellants agreed to pay appellee a fee of $3,300 for professional services rendered in "securing" a real estate contract in which the buyer, Shirley Jarrett, agreed to purchase appellants' residence. Below Jarrett's written offer found near the end of the contract, was the relevant clause, signed by appellants and appellee, providing that "[t]he above offer is accepted on [April 20], 1997, at 4:00 p.m. Seller agrees

to pay Agent a fee of $3,300 for professional services rendered in securing this contract." The clause further provided that "[i]f for any reason the earnest money provided for herein is forfeited by Buyer, at Agent's option, same may be divided equally between Seller and Agent after payment of incurred expenses." In pertinent part, Jarrett's written offer provided as follows:

CLOSING: Closing is the date and time at which the Seller delivers the executed deed. The closing date is designated as 7-15-97, provided there are no unforeseen delays such as obtaining financing or clearing title. If by the date of the designated closing date ... if Buyer is unable to obtain financing as specified in Paragraph 3, the closing date may be extended by the Listing Agent provided both Buyer and Seller receive notice at least three business days in advance of the extended closing date. However, time is of the essence, and, in no event shall closing be later than fifteen (15) calendar days after designated closing date, unless an extension is agreed upon in writing between the Buyer and Seller. If the sale is not consummated within the deadline of this paragraph, the parties shall have the remedies available to them in equity or at law....

Only appellee testified at trial. He stated that in March of 1997, Jesse King called him and asked if he could sell the King residence. They set a sales price of $55,000, and Jesse King agreed to pay him a 6% commission. After appellee secured a buyer for the house, Jarrett, a real estate contract was executed by Jarrett and appellants on April 20, 1997.

Appellee testified that after the contract was executed, Jarrett went to the bank to get a loan. He explained that Jarrett was from California, and it took longer than anticipated to obtain the loan. Although the loan was not approved by the designated closing date of July 15, 1997, as set out in the contract, Jarrett was later approved for a loan. After the loan was approved, appellee obtained an update of the termite contract and paid $160 for a survey and $77 for an update of the abstract.

Appellee testified that the closing did not occur on the designated closing date of July 15. He stated, "[W]e run over about a week or ten days, and I'm not sure about those dates." Appellee acknowledged that there was no written extension of the contract past July 15; however, he asserted that he and Jesse King had talked over the phone. When asked if he had communicated any extensions to Jesse King, appellee replied that Jesse King was aware of the situation, and he was aware that there was a delay. Appellee further testified that after July 15, a closing date was scheduled "a couple of times," but he did not remember the dates. He did not know why Jesse King failed to show at the closings, as he was aware of it and just did not show. According to appellee, Jarrett attended the closing. Appellee testified that with the loan approved, Jarrett was ready, willing, and able to buy the property.

The trial court found that appellee found a buyer for appellants' residence and arranged a closing for the sale, and appellants failed to show at the closing and complete the contract. The court thus concluded that appellants breached the contract and consequently awarded appellee damages in the amount of his commission plus expenses and costs. On appeal, appellants argue that the court erred in concluding that they owed appellee a commission because appellee failed to present any evidence that appellee extended and rescheduled the time for closing in the manner permitted under the contract. Appellee replies that he "earned his real estate commission when he found a ready, willing[,] and able buyer" to purchase appellants' residence. He also argues that "[t]he trial court found that the closing date was either not a condition precedent to [a]ppellee receiving his commission or the closing date was orally extended by the parties."

Appellants and appellee assert that the terms of the contract unambiguously support their respective positions. Accordingly, we must first examine the terms of the contract to determine whether closing was a condition precedent to appellee earning his commission. In that determination, we are guided by the following:

When contracting parties express their intention in a written instrument in clear and unambiguous language, it is our duty to construe the written agreement according to the plain meaning of the language employed. However, where the meaning of a written contract is ambiguous, parol evidence is admissible to explain the writing. .... However, the initial determination of the existence of an ambiguity rests with the trial court, and if ambiguity exists, then parol evidence is admissible and the meaning of the term becomes a question for the factfinder. While we do not set aside a trial court's finding of fact unless it is clearly erroneous, Ark. R. Civ. P. 52, the determination of whether a contract is ambiguous is a matter of law.

Coble v. Sexton, 71 Ark. App. 122, 125, 27 S.W.3d 759, 761-62, (2000)(citations omitted). If the contract is not ambiguous, its construction is a matter of law. Tackett v. McDonald's Corp., 68 Ark. App. 41, 45, 3 S.W.3d 340, 343 (1999). We further note that "[a]lthough the meaning of an ambiguity may become a question for the fact-finder if parol evidence has been admitted to resolve that ambiguity, where the meaning of the language of a written contract does not depend on disputed extrinsic evidence, the construction and legal effect of the contract are questions of law." Smith v. Prudential Prop. and Cas. Ins. Co., 340 Ark. 335, 341, 10 S.W.3d 846, 850 (2000)(citations omitted).

In determining whether the sale closing in the time set forth in the contract was a condition precedent to appellee earning his commission, we note that the contract provides, "Seller agrees to pay Agent a fee of $3,300 for professional services rendered in securing this contract." It is not apparent to this court what was meant by the clause "securing thiscontract." For instance, "securing" could mean "acquiring" the contract, suggesting that the closing was not a condition precedent to appellee earning his commission. Alternatively, "securing" could mean "effecting" the contract, suggesting that closing was a condition precedent to appellee earning his commission. Thus, we must determine what was meant by the clause, "securing this contract."

We first seek resolution of ambiguities by examining the wording of the instrument. Hancock v. Tri-State Ins. Co., 43 Ark. App. 47, 51, 858 S.W.2d 152, 154 (1993). In examining the remainder of the clause regarding payment of appellee's commission, we note it provides that if for any reason the buyer, Jarrett, forfeited her earnest money, then appellee could divide it equally between himself and appellants. In our view, this provision, which provides a remedy for appellants and appellee in the event of Jarrett's failure to perform, indicates that appellee's commission was contingent upon Jarrett's performance of the contract. Jarrett's performance would include, as provided in the contract, closing in the time provided under the contract. Thus, we conclude that closing was a condition precedent to appellee earning his commission.

Moreover, if we concluded that the language used in the contract was ambiguous as a matter of law, and we considered extrinsic evidence to determine its meaning, then based on that extrinsic evidence, we would likewise conclude that closing was a condition precedent to appellee earning his commission. We note that the only testimony presented at trial was the testimony of appellee, so the meaning of the language in this written contract does not depend on disputed extrinsic evidence, and therefore the construction and legaleffect of the contract are questions of law. Smith, supra. Further, we note that in interpreting a contract, if there is an ambiguity in a contract, we accord considerable weight to the construction the parties give to the contract as evidenced by subsequent statements, acts, and conduct. Sturgis v. Skokos, 335 Ark. 41, 53, 977 S.W.2d 217, 223 (1998). Here, appellee testified regarding his efforts to prepare the loan for closing, including his obtaining a termite contract, an abstract, and a survey. Appellee's conduct in preparing for closing indicates that his commission was not earned until closing, further supporting our conclusion that closing the contract was a condition precedent to appellee earning his commission.

Our next question then, as alternatively argued by appellee, is whether the closing occurred within the time provided under the contract. As previously noted, we do not set aside a trial court's finding of fact unless it is clearly erroneous. Ark. R. Civ. P. 52. By the terms of the contract, appellee could extend the closing by notifying the buyer and seller at least three business days in advance of the extended closing date, and if the closing was to be later than fifteen calendar days after designated closing date, an extension had to be agreed upon in writing between the buyer and seller. Here, appellee testified that the closing was scheduled to close within a week to ten days of July 15, so we must determine whether there is any evidence from which we may conclude that appellee gave appellants notice at least three business days in advance of the extended closing date.

Appellee did not specifically testify that he provided notice to appellants three days before July 15 by notifying appellants of his intention to extend the closing date or that he notified appellants of a closing date. Instead, he merely testified that appellants were awareof the closing. Thus, appellee failed to present any testimony that he gave the requisite notice to extend the closing date so that the closing could have occurred in the manner provided by the contract. Consequently, we conclude that the trial court erred in finding that appellants breached the contract.

Appellant Sandra King also argues that the circuit court erred in entering a judgment against her without any evidence or testimony in the record establishing that she breached the contract. In view of our disposition of the first point, we do not address this point on appeal.

Reversed and dismissed.

Robbins and Baker, JJ., agree.