This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).







Dean Buesing,





James M. Resop, d/b/a Resop Realty,




Filed January 21, 2003


Anderson, Judge


Yellow Medicine County District Court

File No. CX0130


Keith E. Ekstrom, 810 East Lake Street, Wayzata, MN  55391 (for appellant)


Robert L. Gjorvad, Esq., 533 West Main Street, P.O. Box 1043, Marshall, MN  56258-0843 (for respondent)


            Considered and decided by Shumaker, Presiding Judge, Anderson, Judge, and Wright, Judge.


U N P U B L I S H E D  O P I N I O N



This is an appeal by a real estate broker from a commission forfeiture ordered by the district court.  Appellant challenges a judgment holding that he failed to adequately disclose, or respondent did not ratify or consent to, an investment by appellant in the buyer’s proposed real estate development before the transaction between buyer and respondent closed.  Because the district court did not address the issue of the materiality of the nondisclosure, we remand.


            Appellant, James Resop, is a real estate broker specializing in the sale of undeveloped land.  In September 1997, respondent, Dean Buesing, a Marshall resident, agreed to list his Mendota Heights property with appellant.  Appellant contacted the Moen Leuer Corporation, owner of land adjacent to respondent’s property, to determine if there was any interest in buying respondent’s land.  Moen Leuer (buyer) agreed to purchase the land for nearly three dollars a square foot, a dollar more per square foot than the listing price.  The parties signed a purchase agreement in January 1998 and scheduled the closing for June 1998. 

            On June 4, 1998, Mike Leuer, a principal with buyer, invited appellant to invest in the development of the property.  Appellant called respondent that day to discuss Leuer’s proposition.  At trial, appellant testified that he called respondent and told him that he wanted to invest in buyer’s development of the property, but was concerned about a potential conflict of interest and dual-agency issues.  Respondent testified that it was possible that appellant mentioned his financial involvement in the project, but thought appellant’s involvement would be limited to “spearheading the Moen Leuer project through the city after the closing.” 

            Additionally, appellant sent respondent a letter dated June 4, 1998, that attempted to memorialize their conversation.  The letter read in part:

I appreciate the thoughts you expressed during our telephone conversation this noon hour regarding the position I face due to an offer by Mike Leuer.  Mike states he wants me to continue to work with him on the property.  He feels I can add a positive influence to the remaining work to develop the land and wants a financial commitment from me.  As disclosed during our conversation, this creates a dilemma because I am a licensed real estate broker and represent you as the seller.  To mitigate a dual agency or other problematic condition, I will not enter into a formal relationship with the buyer until after he closes his deal with you.  However, I feel that as long as the intent to become a principal now exists, it must be disclosed to you.


(Emphasis added.)

            On June 11, 1998, appellant sent buyer a check for $26,750 as an investment in the buyer’s proposed development.  That same day appellant also sent respondent a proposed amendment to the purchase agreement that stated: “It is understood and agreed that James M. Resop is a real estate broker and will have an interest in this parcel.”  In the accompanying cover letter appellant told respondent the amendment pertained to appellant’s “anticipated future interest” in the property and may not have been necessary but was appropriate in light of appellant’s offer from buyer.  Neither the letter nor the proposed amendment mentions the $26,750 investment appellant made that same day.  Appellant sent respondent a similar proposed amendment in October 1998.  Respondent never signed either proposed amendment. 

In January 1999, after a series of postponements in the closing dates, appellant sent respondent’s attorney a closing statement that lists the $26,750 payment made on June 11, 1998.  This closing statement does not explain what these funds would be used for or even the source of the funds.  After receiving this information, respondent contacted his lawyer expressing concern about appellant’s role in the transaction.  In his initial correspondence with his attorney, respondent seems to have been under the impression that the buyer had paid appellant $26,750. 

On January 14, 1999, respondent’s attorney faxed appellant proposed amendments to the purchase agreement that provided in part:

If this sale closes by March 15, 1999, seller shall consent to and allow James M. Resop, seller’s realtor, to be a buyer or purchaser of and participate in the development of the property.


Appellant maintains that he only made this concession in order to “close the deal.”  Further, respondent asserts that although he understood that there was “some money exchanged,” and that some investment had been made, respondent was not sure “exactly what [appellant] was doing with it I wasn’t positive.  [Appellant] never totally divulged what he was investing into the property, what his total involvement was.” 

            In March 1999, the closing was again postponed.  In September 1999, respondent sued buyer for specific performance in Dakota County District Court and an order for default judgment was entered requiring buyer to specifically perform on or before January 31, 2000.  On October 6, 1999, respondent’s attorney sent appellant a letter alleging appellant had breached his fiduciary duties by acquiring an interest in the property, terminated appellant’s representation of respondent, demanded nearly $50,000 in earnest money the appellant held in trust and declared appellant’s commission forfeited.  Respondent also filed a complaint with the Department of Commerce.

            Appellant subsequently sought a return of his investment from buyer.  Respondent offered to withdraw his complaint if appellant discounted his commission, which appellant refused to do.  In December 2000, respondent filed suit in Yellow Medicine County District Court seeking return of his earnest money.  Following a bench trial, the district court ruled respondent neither consented to nor ratified appellant’s conflict of interest, and therefore, the district court concluded appellant forfeited his commission.  This appeal followed.


Appellant argues that the district court erred in finding (1) that respondent did not consent to appellant’s investment, (2) that even if respondent did not consent, respondent’s actions ratified the investment and (3) that respondent could condition his consent to the investment on the date of the closing.  Whether based on oral or documentary evidence we will not set aside findings of fact unless clearly erroneous, and “due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.”  Minn. R. Civ. P. 52.01.  In applying Minn. R. Civ. P. 52.01, “we view the record in the light most favorable to the judgment of the district court.”  Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999) (citation omitted).  This court will not reverse the district court’s judgment merely because we view the evidence differently.  Id.; see Vangsness v. Vangsness, 607 N.W.2d 468, 474 (Minn. App. 2000) (stating “that the record might support findings other than those made by the [district] court does not show that the * * * findings are defective”). 

Rather, the court’s factual findings must be clearly erroneous or “manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole” to warrant reversal.  Id.  (quotation omitted).  “Findings of fact are clearly erroneous only if the reviewing court is left with the definite and firm conviction that a mistake has been made.”  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quotation omitted).  And “[i]f there is reasonable evidence to support the district court’s findings, we will not disturb them.”  Rogers, 603 N.W.2d at 656 (citation omitted).  “The standard for review of a bench trial is broader than the standard for jury verdicts.”  Runia v. Marguth Agency, Inc., 437 N.W.2d 45, 48 (Minn. 1989). 

Generally, a broker is entitled to compensation when he or she has performed all that the broker undertook to perform.  Greer v. Kooiker, 312 Minn. 499, 510, 253 N.W.2d 133, 141 (1977).  To maintain a claim for commission, a real estate broker hired to sell a piece of property must (1) find a buyer ready, willing and able to purchase the property on the terms proposed by the principal; (2) bring or cause the buyer and seller to come together; and (3) the buyer must purchase the property on the seller’s terms.  Schimmelpfennig v. Gaedke, 223 Minn. 542, 545, 27 N.W.2d 416, 419 (1947). 

In Jensen v. Aaby, the supreme court determined that a broker who had found a customer for the seller’s home and brought the buyer and seller together was entitled to his commission, where the sale was completed on terms sought by the home owner even though another real estate agent finalized the deal.  Jensen v. Aaby, 261 Minn. 278, 281, 111 N.W.2d 779, 781-82 (1961).  The buyers in Aaby wanted to purchase the seller’s home on the terms sought by the seller.  Id. at 279, 111 N.W.2d at 780.  The buyer, however, did not want to deal with the seller’s agent and finalized the sale through a second real estate agent.  Id.  The court concluded that because the real estate agent “found the customer; that he caused the customer and owner to come together; and that the customer purchased the property on the terms proposed by” the seller, the broker was entitled to his commission.  Id. at 281, 111 N.W.2d 781-82. 

Clearly, a commission can be forfeited if the broker violates a fiduciary duty.  Real Estate Dynamics, Inc. v. Richards, 392 N.W.2d 250, 252 (Minn. App. 1986).  It is the duty of the real estate broker to disclose to the principal all facts that he or she has knowledge of that may affect the principal’s rights or interests.  Village of Burnsville v. Westwood Co., 290 Minn. 159, 166, 189 N.W.2d 392, 397 (1971).  This rule, which prevents the agent “from compromising their principal’s right and interest in favor of their own” as well as removes “the temptation of agents to be disloyal to their principals, is enforced rigorously as a matter of public policy.”  Doyen v. Bauer, 211 Minn. 140, 145-46, 300 N.W. 451, 455 (1941).  The broker need not disclose every detail of the transaction, just those material facts the seller would consider important in deciding whether to consent to the conflict of interest.  White v. Boucher, 322 N.W.2d 560, 567 (Minn. 1982).  Without the seller’s consent or ratification of the conflict of interest, the broker is not entitled to a commission.  Handy v. Garmaker, 324 N.W.2d 168, 173 (Minn. 1982).  Where there is a clear conflict of interest the seller’s consent cannot be implied.  Real Estate Dynamics, 392 N.W.2d at 252. 

It appears appellant “earned” the commission in January 1998 when the purchase agreement was signed.  Appellant entered into a purchase agreement with respondent to sell a particular parcel of land that respondent owned, at a particular price.  Appellant solicited potential buyers.  It was appellant who found the buyer, brought the buyer and seller together and got the buyer to agree to pay nearly 50% more than respondent was asking and thus earned his commission.  See Gaedke, 223 Minn. at 545, 27 N.W.2d at 419.

But the district court ruled that appellant lost the right to his commission by obtaining an interest in the property without respondent’s knowledge and consent.  The district court concluded that appellant’s investment in the development of the property created a clear conflict of interest and because appellant did not fully disclose the conflict, he forfeited his right to the commission.  The district court further held that because respondent did not have full knowledge of all the facts surrounding appellant’s investment, it was impossible for respondent to consent to the investment. 

The district court’s conclusion is supported by multiple appellate decisions.  For example, in Real Estate Dynamics, this court held that a broker was not entitled to a commission when one of its employees sought to buy the property on the seller’s terms in the absence of a special agreement acknowledging and waiving the conflict of interest.  Real Estate Dynamics, 392 N.W.2d at 252.  The Real Estate Dynamics court held that a seller cannot consent to or ratify their broker’s conflict of interest unless the broker fully discloses and discusses a clear conflict of interest with their client.  Id.  Mere notice alone is not enough and consent cannot be implied.  Id.  Similarly, in Handy v. Garmaker,a broker was denied his commission for failing to disclose to his client, the seller, that he also represented the buyer as well as the seller.  Handy, 324 N.W.2d at 173.  Finally, in White v. Boucher a brokerage was denied its commission when it failed to reveal to its client the true nature of the buyer’s financial status.  White, 322 N.W.2d at 567. 

Here, appellant was asked by the buyer to invest in this transaction on June 4, 1998.  Both appellant and respondent agree that appellant called respondent that day to discuss the pending sale, although the details of this conversation are disputed.  Appellant maintains that he disclosed his financial investment to respondent and that respondent consented to the investment so long as respondent got his price.  Respondent does not deny he may have said this, but he maintains that he believed appellant’s investment would not occur until after the closing.  The letter appellant sent respondent that same day, in an attempt to memorialize the conversation, is not a model of clarity and supports both versions of that conversation.  The letter discloses a conflict of interest, and mentions a financial commitment by appellant, but also declares he will not create a formal relationship until after the closing.

Undercutting appellant’s claim is his failure to disclose in that letter that he had already or was about to invest $26,750 in the project that same day.  It is a curious omission, to say the least, that appellant failed to mention in either the June 11 letter, or the subsequent proposed amendments to the purchase agreement, the undisputed fact that he had already made a substantial investment in the buyer’s property development.  Although appellant listed the investment in various closing statements, he never explicitly disclosed the investment to his client.  Indeed, respondent’s correspondence with his lawyer seems to demonstrate that, at least as of January 1999, respondent did not understand the nature of appellant’s investment in the development of respondent’s property.  Respondent was under the mistaken belief that the buyer had paid the appellant the $26,750.  Appellant made only oblique references to his investment and never plainly disclosed in writing to respondent, his client, the full nature of his involvement in the development of respondent’s land.  These multiple omissions of undisclosed facts support the district court’s conclusion that appellant had breached his fiduciary duty. 

But even if a breach of fiduciary duty has occurred, that breach must be material.  Id.  In White v. Boucher, following a jury trial, the supreme court held that it was a breach of the broker’s fiduciary duties not to disclose the true nature of the buyer’s finances to the seller.  Id.  The court, however, remanded the case to the district court to determine whether this breach was material: would the seller have completed the sale if the withheld information had been disclosed?  Id. (citing  Fulsom v. Egner, 248 Minn. 156, 79 N.W.2d 25 (1956) (allowing a forfeiture upon a showing that the seller would not have entered into a contract with the buyer had the true facts been known); Wold v. Patterson, 229 Minn. 361, 39 N.W.2d 162 (1948) (defendant did not disclose to plaintiffs fact that purchaser’s ability to raise balance of purchase price depended on certain unfulfilled contingencies and that plaintiffs executed contract without knowledge of such fact and would not have done so had they known); Hare v. Bauer, 223 Minn. 285, 26 N.W.2d 359 (1947) (failure of broker to disclose that buyer could only raise purchase money with an unsecured note and inability to find any other purchaser ready, willing and able to purchase the property justified denying the broker’s commission)).[1] 

Here the district court made no determination as to whether appellant’s breach was material, and the record before us does not allow this court to make such a determination.[2]  Because the record does not contain enough information for this court to address the issue of materiality, we remand the matter to the district court for the limited purpose of determining whether appellant’s failure to disclose his financial involvement in the future development of respondent’s property was material.



[1] Appellant argues that he need not show injury where dual agency exists.  See Anderson v. Anderson, 293 Minn. 209, 216, 197 N.W. 2d. 720, 724 (1972).  “A dual agency occurs when one broker or salesperson represents both parties to a transaction.”  Minn. Stat. § 82.197, subd. 4 (2002).  But the facts in the record before us do not show that appellant was representing both the buyer and the seller at the same. 


[2] There is only limited evidence in the record touching on the issue of materiality.  Respondent appeared satisfied with the purchase price and sought specific performance of the purchase agreement to enforce the sale at the terms negotiated by appellant.  On the other hand, there are hints in the record that as seller sought to enforce the purchase agreement, appellant’s involvement in those discussions may have been more supportive of buyer than seller.  But it is impossible to tell on the record before us whether the nondisclosure was material.