Opinion
Rehearing Denied Jan. 21, 1975.
Page 768
Alter, Zall & Haligman, Ronald I. Zall, Denver, for plaintiff-appellant.
Michael M. Laden, Denver, for defendant-appellee.
SMITH, Judge.
This was an action to recover a real estate commission. Although several claims for relief were asserted, the only one on which an appeal has been taken is plaintiff's eighth claim for relief on which the jury returned a verdict in favor of defendant. The major issue upon review is whether the trial court erred in instructing the jury that plaintiff had the burden to prove its claim by clear and convincing evidence.
On August 3, 1967, plaintiff and defendant entered into a ninety-day exclusive listing agreement pursuant to which plaintiff, as a real estate broker, attempted to sell defendant's land. Upon expiration of this agreement, a subsequent listing agreement, for an identical time period, was entered into by the parties. Following expiration of the latter listing agreement, plaintiff was verbally authorized by defendant to continue his efforts to obtain a purchaser. Plaintiff continued to advertise and to try to sell the property.
Representatives of Century 21 Corporation (Century) contacted plaintiff in January of 1970 and expressed an interest in purchasing the property. Following negotiations conducted by plaintiff, a contract was prepared and executed on January 28, 1970, by defendant as seller and Century as buyer. Defendant thereupon orally agreed to pay plaintiff a ten percent commission based upon the gross sales price. The sales contract provided that Century could extend the closing date for successive thirty-day periods by giving notice to defendant and payment of $3,360 for each extension. Century made only four payments for extensions, although approximately fourteen extensions were, in fact, granted.
Ultimately, at the closing scheduled for December 30, 1970, Century announced that it had not been able to raise the purchase price, whereupon defendant, acting through one of its corporate officers, told plaintiff that plaintiff was relieved of his responsibility for selling or handling the property. Defendant's attorney then asked plaintiff to sign a release of any claim to commissions relative to sale of the subject property. Plaintiff refused to execute any release. He then attempted to contact both Century and defendant to see if the sale could not be worked out, but was ignored by them.
Defendant and Century continued negotiations on their own and on February 4, 1971, entered into a new agreement wherein Century was granted an option to purchase the property during 1971 for the same price as specified by the contract of January 28, 1970. The option contract also provided that Century would indemnify defendant against any claim plaintiff might have for a real estate commission. Century and defendant then entered into a 99-year lease on the property which included the above option and indemnity provision.
On September 19, 1971, plaintiff commenced the instant action by serving a copy of the summons and complaint upon defendant. While this suit was pending, on June 10, 1972, defendant entered into a new agreement with Century for the purchase and sale of the property. This contract also included an indemnity provision similar to that contained in the previous option agreement. Defendant and Century closed the sale on September 12, 1972, for the purchase price of $650,000. Upon learning of the closing, plaintiff, on October 27, 1972, filed a second amended complaint which contained plaintiff's eighth claim for relief. This claim in brief, alleged that plaintiff was the efficient procuring cause of the sale consummated on September 12, 1972, and prayed for plaintiff's real estate commission of $65,000, ten percent of the purchase price.
Upon trial to a jury, the court ruled that the cause of action of plaintiff's eighth claim for relief accrued to plaintiff on February 4, 1971, the date defendant and Century entered into the option to purchase the property for the same price as in the January 28, 1970 agreement. The court then instructed the jury that plaintiff's burden of proof as to the eighth claim for relief must be by clear and convincing evidence.
1971 Perm.Supp., C.R.S.1963, 52--1--28 provides, in pertinent part:
'(1) . . . a plaintiff in any civil action shall be required to prove his case by a preponderance of the evidence.
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(4) This section shall take effect July 1, 1971, and shall apply only to civil actions which accrue on or after such date.'
A real estate broker is not entitled to his commission for finding a buyer who is ready, willing and able to complete the purchase of real estate as proposed by the owner until the buyer has entered into a binding agreement, or until the pending sale is defeated by the refusal or neglect of the owner consummate the sale as agreed upon. C.R.S.1963, 117--2--1. Here, plaintiff would not have been entitled to compensation where he merely procured a third person to take an option on the property. That is, plaintiff would not have been entitled to a commission on the February 4, 1971, option agreement. A broker's right to compensation accrues only when the optionee subsequently exercises the option; or, in the alternative, is willing and able to exercise it, but is prevented from doing so solely by refusal or neglect of the owner. Gray v. Blake, 128 Colo. 381, 262 P.2d 741. Finnerty v. Stratton's Estate, 53 Colo. 17, 123 P. 667.
Therefore, because plaintiff could not have demanded his commission until June 10, 1972, the date Century and defendant finally entered into a binding purchase and sale agreement, his cause of action did not accrue until then. Thus, the court erred in not instructing that plaintiff's burden of proof as to the eighth claim for relief should have been by a preponderance of the evidence.
Judgment reversed and cause remanded for a new trial on plaintiff's eighth claim for relief.
COYTE and PIERCE, JJ., concur.