Benjamin Funk and Betty Lou Funk v. Ward Tifft D/B/A the Tifft Agency and Pendor-Idaho Corporation

515 F.2d 23 Benjamin FUNK and Betty Lou Funk, Plaintiffs-Appellants, v. Ward TIFFT d/b/a the Tifft Agency and Pendor-Idaho Corporation, Defendants-Appellees. No. 73-1785. United States Court of Appeals, Ninth Circuit. Jan. 22, 1975. As Amended on Denial of Rehearing May 28, 1975. Stephen Bistline (argued), Sandpoint, Idaho, for plaintiffs-appellants. Hardy C. Lyons (argued), Sandpoint, Idaho, for defendants-appellees. Before LUMBARD, * MERRILL and WRIGHT, Circuit Judges. OPINION LUMBARD, Circuit Judge: 1 Plaintiffs Benjamin and Betty Lou Funk appeal from a judgment of the District Court of Idaho entered on November 10, 1972, by J. Blaine Anderson, J., dismissing their complaint. The principal issue presented by this diversity of citizenship case is whether a licensed real estate broker in Idaho owes a fiduciary duty to a prospective buyer not to purchase a tract of land for himself while his prospective buyer's offer to buy that land is outstanding. The district court found that there had been no breach of duty and refused to impose a constructive trust in favor of plaintiffs. We reverse. 2 In 1968, defendant Ward Tifft was a licensed real estate broker doing business as the Tifft…

Plaintiffs Benjamin and Betty Lou Funk appeal from a judgment of the-District Court of Idaho entered on November 10, 1972, by J. Blaine Anderson, J., dismissing their complaint. The principal issue presented by this diversity of citizenship case is whether a licensed real estate broker in Idaho owes a fiduciary duty to a prospective buyer not to purchase a tract of land for himself while his prospective buyer’s offer to buy that land is outstanding. The district court found that there had been no breach of duty and refused to impose a constructive trust in favor of plaintiffs. We reverse.

In 1968, defendant Ward Tifft was a licensed real estate broker doing business as the Tifft Agency in Sandpoint, Idaho. On August 22, 1968, the plaintiffs, Benjamin and Betty Lou Funk, who were residents of California, came into the Tifft Agency and asked to see some property. Salesman Ron Fillion showed them the Godfrey property, which is the subject matter of this suit. The following day the Funks made out a check for $100 to the Tifft Agency as an earnest money deposit and signed an agreement to purchase the property for $30,000, with $1,000 to be paid upon acceptance of the offer…

(dissenting):

I must dissent. The decision of my brothers is supported neither by the weight of precedent nor the unequivocal findings of the district court. Even if the courts of Idaho were to ignore the weight of authority in other states and hold that Mr. Tifft owed a fiduciary obligation to the Funks, the plaintiffs have failed to sustain their burden of showing they were injured by the alleged breach.

The district court found that an Idaho real estate broker did not owe a duty to a prospective buyer for his client’s property requiring him to inform the buyer that he was bidding on the property himself. The rule of this circuit is that

Douglas v. Beneficial Finance Co. of Anchorage, 469 F.2d 453, 455 (9th Cir. 1972).

There is no Idaho case in point. However, the courts in other states which have considered - similar facts have concluded that a broker for the seller can, with the seller’s knowledge, outbid prospective buyers, Ries v. Rome, 337 Mass. 376 , 149 N.E.2d 366, 371 (1958); Klotz v. Fauber, 213 Va. 1 , 189 S.E.2d 45 (1972); DiBurro v. Bonasia, 321 Mass. 12 , 71 N.E.2d 401 (1947); cf. Fish v. Teninga, 330 Ill. 160 , 161 N.E. 515 (1928); Jacoby v. Shell Oil Co., 196…