Opinion
No. WD 56441
Date: March 21, 2000
APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, HONORABLE PEGGY STEVENS MCGRAW, JUDGE.
J. Michael Murphy, Liberty, MO., for Appellant.
Douglas Keith Dezube, Overland Park, KS., for Respondent.
Before Paul M. Spinden, Presiding Judge, Harold L. Lowenstein, Judge, and Robert G. Ulrich, Judge.
Distribution Services and Storage, Inc., appeals the circuit court's judgment ordering it to pay $13,518.36 in broker fees to Winbury Realty of K.C., Inc. Winbury Realty claimed a $4107.50 fee for finding a sublessee for part of Distribution Services' warehouse space. The remainder of the judgment was to satisfy Winbury Realty's claim that it was due a fee because Distribution Services' landlord released Distribution Services from its lease of the warehouse. We reverse the circuit court's judgment.
Winbury Realty's invoice to Distribution Services reflected a claimed fee of $9758.52; however, at trial, Winbury Realty acknowledged that the amount should be $9410.86. This amount, plus $4107.50, totals a dime less than the circuit court's judgment. We assume that the dime difference resulted from an addition error. To avoid confusion, we refer to the amount as $9410.76 to be consistent with the circuit court's judgment.
The dispute arose when Distribution Services decided that it needed to sublease part of its warehouse space in North Kansas City and, in March 1996, retained Winbury Realty to find a sublessee. Distribution Services agreed to pay Winbury Realty "a commission fee of six percent . . . of the total rentals and other payments due to [Distribution Services] under the sublease." Although the agreement was labeled, "Exclusive Right to Sublease Agreement," and recited in its opening paragraph that its subject matter was the listing of Distribution Services' warehouse space for subleasing, Winbury Realty contends that a sentence at the end of a long paragraph providing for how to calculate Winbury Realty's fee also made Distribution Services liable for a fee if Distribution Services' landlord released Distribution Service from the warehouse lease. That sentence said, "In the event [Distribution Services] elects to cancel this [l]ease with [o]wner, and [Distribution Services] is released from its obligation of payment to [o]wner, [Distribution Services] shall pay [Winbury Realty] 6% of the amount of rent savings to [Distribution Services]."
We added the emphasis. The parties refer to this provision as the "rent savings clause."
On April 16, 1996, while Distribution Services's exclusive agreement with Winbury Realty was in effect, Distribution Services subleased 31,000 square feet of its warehouse space to Data Destruction Services, LLC. The sublease agreement declared that Winbury Realty was to share a commission of $4107.50 with another realty firm. Distribution Services did not pay the commission.
Four months later, in August 1996, Distribution Services was behind in its lease payments. The warehouse owner found another tenant for the space and told Distribution Services that it was willing to release Distribution Services from the lease, effective August 31, 1996, so the other tenant could move into the space. This released Distribution Services six months before the lease's scheduled termination. Earlier, Distribution Services agreed with Data Destruction Services to terminate the sublease on July 31, 1996.
Winbury Realty contended that the rent savings clause of its exclusive agreement with Distribution Services obligated Distribution Services to pay it six percent of the rent saved after being released from the lease, or $9410.76. The circuit court agreed and awarded Winbury Realty, not only the $4107.50 owed in connection with the sublease to Data Destruction Services, but $9410.76 as six percent of the rent that Distribution Services did not have to pay after being released from the lease.
We are doubtful of Winbury Realty's claim for $9410.76 for "rent savings," but we need not reach the issue because the circuit court erred in considering Winbury Realty's lawsuit. It did not have jurisdiction and should have dismissed its petition.
The rent savings provision was the final sentence in a long paragraph devoted to determining how to calculate Winbury Realty's commission for its only obligation, to find "a prospect ready, willing and able to sublease" Distribution Services' warehouse space. The rent savings provision referred to "this [l]ease:" "In the event [Distribution Services] elects to cancel this [l]ease. . . ." "This" typically refers to an earlier mention of the object — in this case to an earlier mention of "lease." The agreement referred to no other lease than the contemplated sublease by Winbury Realty's prospect. In the first half of the paragraph, the sublease was called a sublease, but, suddenly, in the sentence immediately before the rent savings clause, the contract referred to the sublease as "the lease." Hence, when the rent savings provision referred to "this lease," it seemed to be referring to the sublease; however, it contemplated that Distribution Services would elect to cancel it "with [o]wner." The paragraph began by obligating Distribution Services to pay Winbury Realty a commission and then explained how forfeited deposits were to be divided. It then provided that Distribution Services was obligated for the full commission "on all amounts paid to [Distribution Services] under any extensions and/or renewals of the lease term and for enlargement or substitution of the leased premises[.]" "The lease" could refer only to the sublease because it was only the sublease that would generate payments to Distribution Services. The rent savings provision, with its reference to "this lease," came next. Having contemplated what was to happen in the case of an enlarged period, it was logical that the paragraph would explain what was to happen in the case of a cancellation of the sublease, but, in the absence of parole evidence which the circuit court refused to hear, we cannot be certain that this was the parties' intent. The provision is ambiguous and confusing. This and doubts that parties would be inclined to make an agreement as described by Winbury Realty and bury it in a contract which purports to have but one, unrelated subject makes us doubtful of Winbury Realty's position.
In § 339.160, RSMo 1994, the General Assembly has mandated:
No . . . corporation . . . engaged within this state in the business or acting in the capacity of a real estate broker . . . shall bring or maintain an action in any court in this state for the recovery of compensation for services rendered in the . . . leasing . . . upon any real estate without alleging and proving that such . . . corporation . . . was a licensed real estate broker . . . at the time when the alleged cause of action arose.
We added the emphasis.
The Supreme Court has declared that the judiciary is to enforce this statute "strictly" and characterized the General Assembly's purpose to "closing the courts of this state" to those who do not heed it. Miller Nationwide Real Estate Corporation v. Sikeston Motel Corporation, 418 S.W.2d 173, 177 (Mo. 1967). As we stated in CB Commercial Real Estate Group, Inc. v. Equity Partnerships Corporation, 917 S.W.2d 641, 644 (Mo.App. 1996), "A failure to plead [the facts required by § 339.160] leaves the petition fatally defective in that the plaintiff has failed to establish subject matter jurisdiction."
The circuit court recognized that Winbury Realty's failure to plead that it was licensed as a real estate broker created a jurisdictional issue, but it endeavored to cure the problem by reopening Winbury Realty's case so the firm could prove that it was licensed. Having received evidence that Winbury Realty was licensed, the circuit court deemed the pleadings to conform to the evidence and pronounced the requirements of § 339.160 satisfied. This was reversible error.
This court said long ago:
[P]roof of facts that would show jurisdiction cannot cure the defects in a petition which fails to state the facts necessary to confer jurisdiction upon the court. Even though the court in determining the case would find that the jurisdictional facts did exist and recited them in the decree, nevertheless their omission from the allegations of the petition would invalidate the whole proceeding. . . .
. . . .
. . . If there was no jurisdiction of the subject matter such as we find in this case on account of defects in the petition, the court had no power or right to find or determine the existence of jurisdictional facts for the simple reason that the trial judge was not invested with any authority to entertain the cause. There was no case legally pending, and the only power the trial court had was to refuse to entertain it and to dismiss the action. It is clearly our view in the pending case that jurisdiction of the subject matter was not a triable issue.
Gooding v. Gooding, 197 S.W.2d 984, 986-87 (Mo.App. 1946); see also Phelps v. Phelps, 246 S.W.2d 838, 840-41 (Mo.App. 1952). Indeed, the Supreme Court codified this holding in Rule 55.27(g)(3) which says, "Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action." We understand "shall" in Rule 55.27(g)(3) to mean that the circuit court has the power only to dismiss. We recognize that we reached the opposite conclusion in CB Commercial Real Estate Group, 917 S.W.2d at 644-45. To the extent that we held that the circuit court was free to try the case and to deem the pleadings to be conformed to the evidence, we erred.
In Berry v. Chitwood, 362 S.W.2d 515, 517 (Mo. 1962), however, the Supreme Court held, "It is a sound and uniform rule that the parties cannot create jurisdiction of a court over the subject matter by agreement when it otherwise does not exist. . . . However, the parties may admit the existence or waive the formal proof of a fact essential to vest the court with authority to exercise existing jurisdiction of the subject matter." Distribution Services did not admit that Winbury Realty was licensed or waive the requirements of § 339.160 requiring Winbury Realty to allege that it was licensed.
The circuit court did not have the power to hear Winbury Realty's lawsuit in the first place, much less have the power to order that the case be reopened. Winbury Realty did not seek to amend its pleadings. It first contended erroneously that the issue was a matter of an affirmative defense to be raised and pleaded by Distribution Services. After failing to persuade the circuit court of that notion, it still did not seek to amend its pleadings but argued instead for a right to reopen its case to prove that it was licensed. The circuit court should have dismissed rather than permitting Winbury Realty to proceed. We, therefore, reverse the circuit court's judgment and dismiss Winbury Realty's petition as failing to plead facts that confer jurisdiction.
All concur.