Mr. and Mrs. Rubick owned four parcels of land totaling 179 acres. The front 99 acres consisted of 80 acres of wooded farmland, and a 19-acre parcel on which a dilapidated barn was located — these acres had street access and neighbored a farm owned by McKay. The Rubicks’ back 80 acres also bordered McKay’s land, but had no street access (except across the front 99 acres) and were primarily swampland.
Warranting that he possessed the right to sell the property, Mr. Rubick listed the land for sale with the Clancys, real estate brokers, for $1.074 million. The Clancys, who also represented McKay, advised Mr. Rubick that because of the access problems for the rear parcel, that property’s value was limited and would ideally be sold to the owner of a neighboring property. Mr. Rubick rejected two below-asking offers, one of which was from McKay, according to court records.
McKay made another below-asking offer to buy the entire property, which Rubick countered. Eventually, Mr. Rubick and McKay negotiated a contract under which McKay would pay $334,000 for the sale of the rear 80 acres — in which McKay was the most interested — plus a 9-acre buffer strip of land to shield McKay’s property from any encroaching development by the eventual owner of the front 99 acres, according to court records.
The Clancys disclosed their representation of both buyer and seller to both parties, and closing was scheduled.
Mr. Rubick signed another listing agreement for the rest of the property with the Clancys. Soon thereafter, Mr. Rubick attempted to cancel the sale of the rear acreage to McKay and the listing of the front acreage because Mrs. Rubick was threatening to divorce him if he consummated the transaction.
According to court records, Mrs. Rubick and her attorney both contacted the Clancys and informed them that she was unaware of Mr. Rubick’s efforts to sell the property, that she had "dower rights" to veto the sale and that she was taking the rear property off the market. (Mrs. Rubick had never communicated with the Clancys prior to this time.)
Nevertheless, the Clancys presented an offer to purchase the front property for the full asking price of $545,000. The Rubicks failed to sign this offer, and Mr. Rubick failed to attend the closing for the rear property, claiming he was out of town on business, according to court records.
The Clancys filed a lawsuit against Mr. Rubick seeking the commission from the sale of both the rear and the front properties; McKay sued Rubick, too, requesting a court order that Rubick be forced to sell the rear property pursuant to the purchase contract.
The trial court found against Mr. Rubick on both claims, ordering him to close the sale to McKay and to pay the Clancys the commissions they would have earned on McKay’s sale, but not the sale of the front acreage.
The Clancys and Mr. Rubick both appealed.
The Michigan Court of Appeals rejected Rubick’s argument that the sale transaction with McKay should be voided — and no commission awarded thereon — because the Clancys breached their fiduciary duty to Rubick to disclose their representation of both parties.
The appellate court examined the applicable Michigan statute and found that, because the property McKay purchased from Rubick contained no residential building, the Clancys were not required to disclose a dual representation under Michigan law.
Additionally, the court found, the Clancys did in fact disclose the dual agency relationship (i.e., that the Clancys represented both Rubick and McKay) despite the fact that this disclosure was not required by law, and Rubick signed this disclosure at the time he signed the contract.
The court also rejected Rubick’s arguments that he should not be ordered to perform the sale of the rear acreage because of his wife’s dower rights in the property. Because McKay was willing to take the property subject to Mrs. Rubick’s dower rights, Mrs. Rubick’s failure to release her rights or sign the sale documents was not found to bar the sale.
The fact that McKay never obtained the mortgage financing mentioned in his original offer to buy the entire property was held to be irrelevant, because McKay possessed the funds to pay for the rear acreage in cash, which was allowable under the contract.
Similarly, the fact that McKay never tendered the funds for the rear acreage was also deemed irrelevant, given that Mr. Rubick had made clear that he would not cooperate with the closing even if McKay had tendered the funds.
Accordingly, the lower court’s verdict awarding the property to McKay and the commission on that sale to the Clancys was affirmed. However, the lower court’s verdict against the Clancys on the matter of the commission on the front acreage was also upheld, despite the fact that the Clancys had obtained a willing and able buyer for the property.
The appellate court upheld the lower court’s refusal to award this commission on grounds that both Mr. and Mrs. Rubick had instructed the Clancys that the property was no longer for sale before the Clancys presented the purchase offer to them.