866 N.W.2d 679
Wis.2015Background
- Ash Park listed vacant land with Re/Max under a standard WB-3 one-party listing agreeing to pay 6% if seller "sells or accepts an offer which creates an enforceable contract."
- During the listing, Alexander & Bishop offered $6.3M; Ash Park accepted. The offer contained a lease contingency, was terminated, then reinstated and ripened into a binding purchase contract on September 20, 2007.
- Alexander & Bishop failed to close; Ash Park sued for and obtained a judgment ordering specific performance, which was upheld on appeal, but Alexander & Bishop never paid or conveyed; ultimately Ash Park settled for $1.5M (holding costs).
- Re/Max intervened asserting it had earned its 6% commission because Ash Park had entered an "enforceable contract" with the buyer and recorded a broker lien; the circuit court granted Ash Park summary judgment discharging the lien.
- The court of appeals reversed, awarding commission and remanding for interest, costs, fees, and consideration of reinstating the broker lien; the Wisconsin Supreme Court granted review limited to whether the purchase contract was an "enforceable contract" under the listing.
- The Supreme Court affirmed the court of appeals: because a remedy (specific performance) was available and awarded, the purchase contract was "enforceable" for purposes of the listing and Re/Max earned its commission.
Issues
| Issue | Plaintiff's Argument (Ash Park) | Defendant's Argument (Re/Max) | Held |
|---|---|---|---|
| Whether the purchase contract between Ash Park and Alexander & Bishop is an "enforceable contract" under the listing so as to obligate seller to pay broker commission | The contract was not "enforceable in fact" because buyer could not be compelled to perform and never paid; "enforceable" should mean actually enforceable (performance obtained) | "Enforceable" means enforceable in law—i.e., a remedy for breach is available; specific performance was awarded, so the contract is enforceable and commission is earned | Court held the contract is "enforceable" because a legal remedy (specific performance) existed and was awarded; Re/Max earned its commission |
| Whether interpreting "enforceable contract" to mean enforceable in law violates public policy or produces unfair results for seller | Requiring commission despite no consummation imposes harsh, unintended burden and may deter sellers from enforcing contracts | Listing language controls; broker performed by procuring a buyer whose offer created an enforceable contract; seller could have negotiated a different term | Court rejected public-policy argument; enforcement follows the written listing and precedent unless parties contract otherwise |
| Whether the listing's separate clause on a "valid and binding contract" renders "enforceable" redundant | "Enforceable" should be read as different (requires actual ability to force performance) to preserve distinctions in the contract | "Valid and binding" concerns formation; "enforceable" concerns availability of a legal remedy—both have distinct meanings | Court held the terms have different legal connotations; interpreting "enforceable" as meaning a remedy is available does not render other clauses surplusage |
| Whether seller's failure to collect purchase price or to obtain performance negates broker's right to commission | Because the buyer never paid, seller received no benefit and thus should not owe commission | Payment/non-consummation does not negate a broker's commission when an enforceable contract was entered | Court held broker's entitlement is determined by contract language and remedies available, not by ultimate satisfaction of judgment or collection of purchase price |
Key Cases Cited
- Wauwatosa Realty Co. v. Paar, 274 Wis. 7, 79 N.W.2d 125 (1956) (broker earns commission when buyer and seller enter contract unless listing conditions state otherwise)
- Kruger v. Wesner, 274 Wis. 40, 79 N.W.2d 354 (1956) (broker entitled to commission despite buyer's later default or financial inability absent contractual stipulation)
- Winston v. Minkin, 63 Wis. 2d 46, 216 N.W.2d 38 (1974) (reaffirming that broker earns commission when a valid and enforceable contract is entered into)
- Ash Park, LLC v. Alexander & Bishop, Ltd., 324 Wis. 2d 703, 783 N.W.2d 294 (2010) (Wis. Sup. Ct.) (upholding specific performance on the purchase contract — supports finding the contract was enforceable)
- Henrikson v. Henrikson, 143 Wis. 314, 127 N.W. 962 (1910) (distinguished by the court as involving no valid and enforceable contract)