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ARTHUR SMITH, d/b/a REAL ESTATE ONE v. H. C. BAILEY COMPANIES

AUGUST 07, 1985

ARTHUR SMITH, d/b/a REAL ESTATE ONE
v.
H. C. BAILEY COMPANIES, ET AL.



BEFORE PATTERSON, HAWKINS AND PRATHER

PRATHER, JUSTICE, FOR THE COURT:

The substantive legal issue of this lawsuit concerns the liability of the (1) surviving co-owner, (2) the devisees of the deceased co-owner and (3) the listing broker for real estate commissions allegedly due to the procuring broker, Arthur Smith.

However, the substantive issue is complicated procedurally by the consolidation of (1) one suit filed in chancery court under the old rules of civil procedure with (2) a subsequent suit filed in the circuit court after the effective date of the new Mississippi Rules of Civil Procedure. In the (3) consolidated case the Circuit Court of Hinds County granted summary judgment to all defendants.

 The plaintiff/appellant Arthur Smith, the alleged procuring broker, appeals from entry of the summary judgment in favor of the defendants/appellees, assigning as error that:

 I. The plaintiff should have been allowed to voluntarily dismiss the circuit court action under the new Mississippi Rules of Civil Procedure, and proceed under the procedural rules in effect on July 15, 1981;

 II. The circuit court was manifestly wrong in granting defendant, George F. Woodliff, summary judgment;

 III. The trial court should have granted plaintiff's motion for reconsideration and overruled the summary judgment previously granted to Woodliff; and

 IV. The circuit court judge was manifestly wrong in granting summary judgment to the Bailey defendants and should have granted partial summary judgment to the plaintiff.

 FACTS

 Sometime in October of 1978, Johnny Gore, a salesman for Real Estate 1, Arthur Smith broker, showed Lomax Anderson a piece of property located at the intersection of Old Canton Road and County Line Road in Madison County, the property being the present site of a Kroger grocery store. The title to the real estate was held by H. C. Bailey, Sr. and George F. Woodliff, each owning an undivided one-half interest. Anderson was in the business of buying parcels of property and developing them for use by large retail food and drug stores. The business name under which Anderson operated was Inverness Construction Co. Anderson also was allegedly a partner in ICC Development Company. The record is not developed to indicate in which capacity Anderson was viewing the property, or whether for both businesses, or either.

 After viewing the property, Gore took Anderson to meet with W. C. Bailey, Jr., of H. C. Bailey Co. who was the listing agent *fn1 under an oral listing from the owner. At this meeting Anderson decided the price at approximately $3.00 per foot was too high, and the meeting was concluded. Apparently not satisfied that the negotiations were concluded, Gore asked Bailey to protect him on his client as a prospective buyer. In response to this request, Bailey supplied Gore with a letter which stated:

 October 24, 1978

 Dear Mr. Gore:

 Regarding our previous conversation concerning our property located on County Line Road and on Old Canton Road, I am hereby protecting you on your client in the event a sale or lease is consummated. The commission would be six percent and the split 50/50 between Real Estate 1 and H. C. Bailey Co. The client's name is Mr. Lomax Anderson of Inverness Construction Co. in Jackson, Mississippi.

 Sincerely,

 H. C. BAILEY COMPANY S/W. C. Bailey W. C. Bailey Vice President

 According to Bailey, even though Anderson was Gore's client, Gore would have to bring him an offer in a reasonable period to secure a commission.

 In the summer of 1979, Gore left Real Estate 1. Subsequently, on April 27, 1980 H. C. Bailey, Sr. died, and his one-half interest in the property was devised to his widow, Jeanette Bailey, and children, Catherine Bailey Ingels, Hugh Coyt Bailey, and Bill Bailey.

 In July of 1980, an option contract was entered into between the owners of the property, the Bailey devisees and George F. Woodliff, with the purchaser, ICC Development Co. ICC is a partnership formed in 1980 and composed of Lomax Anderson, Charles E. Gibson, and Robert Miller. The record is not clear as to whether the ICC Development Company is the same company as Anderson's Inverness Construction Company although it is apparent that Anderson is the dominant figure in each. Gibson is the partnership lawyer and handles the business dealings for the ICC Development Company. Prior to the formation of the partnership, Gibson handled Anderson's business deals.

 In March 1981, the sale of the subject property was consummated between Woodliff and the Bailey devisees to ICC, pursuant to the option contract. The sale price was $849,000.00 or $3.00 per square foot. No commission was paid to the Bailey Company. Included in the option agreement was a clause which stated:

 The parties recognize that negotiations for this option originated between Charles Gibson and George F. Woodliff, neither of whom claims a commission, and buyer agrees to indemnify sellers from any and all claims for real estate commissions by others of whom any of buyers has knowledge.

 Gibson stated in his deposition that he first became aware of the subject property in 1970 through his association with Woodliff. Woodliff and Gibson previously were associated together in a law firm. Gibson also stated that he knew Woodliff and Bailey owned the property together. According to Bailey, Woodliff felt that he had negotiated the sale with Gibson alone, and as such didn't owe anyone a commission.

 In June of 1982, Gore returned to work with Arthur Smith who was now doing business as the Vantage Corporation. According to Gore, Gore was in periodic contact with Smith regarding the subject property even though he no longer worked

 for Smith.

 When Smith and Gore discovered the property had been sold to a partnership which included their client Anderson, Smith, as broker, brought suit to recover his half of the promised commission.

 PROCEDURE

 To facilitate understanding of this case, it is desirable that the procedural aspects be divided into three parts, (1) the chancery suit, (2) the circuit suit, and (3) the consolidated suit.

 (1)

 Arthur Smith, appellant, secured an attorney to file suit to recover his alleged commission. It is needful to say that the first attorney employed is not Smith's present attorney. The first attorney filed on July 15, 1981 a bill for discovery in the Chancery Court of the First Judicial District of Hinds County naming Arthur Smith, d/b/a Real Estate One, Inc. as complainant and H. C. Bailey Company, a corporation, as defendant. This suit sought discovery of the Bailey Company of documents relating to the Bailey devisees/Woodliff sale to ICC. The filing date of this lawsuit procedurally placed the suit under the former rules of civil procedure.

 This lawsuit lay dormant for some time.

 (2)

 Having no results with the first attorney, Arthur Smith secured his present counsel to represent his interests. The new counsel had no knowledge of the filing of the first lawsuit in chancery; therefore, the attorney proceeded to file on January 19, 1982 in the Circuit Court of Hinds County in cause No. 28,270 a suit for breach of contract against (1) the corporation H. C. Bailey Companies (the listing broker), (2) the H. C. Bailey devisees (sellers of a one-half undivided interest in the real estate), (3) the Bailey Company, Ltd., a Mississippi general partnership, and (4) George F. Woodliff (seller of the remaining one-half undivided interest in the realty). The suit sought judgment of $25,470.00 as actual damages for breach of the real estate contract plus interest and $100,000 punitive damages for willful, wanton, and deliberate breach of contract. The contract relied upon by Smith was the letter from W. C. Bailey, Vice President of H. C. Bailey Companies.

 On March 3, 1982, Woodliff filed an answer denying any cause of action against him, denying a listing of the property with Smith or Bailey, and pleading the statute of frauds.

 Following Woodliff's pleading, the Bailey interests filed on March 5, 1982 a third party complaint joining ICC Development Company, a Mississippi partnership, as a third party defendant. *fn2 The factual basis for joining ICC as a third party was the clause in the option contract between ICC, the Baileys and Woodliff requiring ICC to defend and indemnify the Baileys and Woodliff in the event a commission was claimed. The pertinent language of the option provides:

 The parties recognize that negotiations for this option originated between Charles Gibson and George F. Woodliff, neither of whom claims a commission, and Buyer agrees to indemnify Sellers from any and all claims for real estate commissions by others of whom any of Buyers has knowledge.

 Arthur Smith's present attorney realized the existence of the chancery bill of discovery suit when it was transferred by the chancellor over his objection to Circuit Court on February 25, 1982, becoming cause No. 28,414 on the circuit court docket. Smith's attorney immediately moved to voluntarily dismiss under Rule 41 (a)(2) the circuit suit No. 28,270 in order ...


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