
                        IN THE SUPREME COURT OF IOWA

                              No. 21 / 04-1323

                            Filed March 24, 2006


LARRY STEWART d/b/a
LARRY STEWART REALTY,

      Appellant,

vs.

JEFFREY P. SISSON,

      Appellee.

________________________________________________________________________
      Appeal from the Iowa District Court for Floyd County, James  M.  Drew,
Judge.

      A real estate broker appeals from a summary  judgment  dismissing  all
claims for recovery of a commission from the sale of a business  based  upon
an oral agreement.  REVERSED AND REMANDED.

      Judith M. O’Donohoe of Elwood, O’Donohoe, Stochl,  Braun  &  Churbuck,
Charles City, attorney for appellant.

      Joel J. Yunek of Yunek Isaacson,  P.L.C.,  Mason  City,  attorney  for
appellee.

CADY, Justice.
      In this appeal, we must decide whether an  oral  agreement  between  a
property owner and a real estate broker for the broker to  procure  a  buyer
for the property  without  listing  it  constitutes  a  “listing  agreement”
within  the  meaning  of  a  real  estate  commission  rule  requiring  such
agreements to be in writing.   We  conclude  such  an  agreement  is  not  a
“listing agreement” and, therefore, reverse the  judgment  of  the  district
court and remand for further proceedings.
      I.    Background Facts and Proceedings
      Jeffrey Sisson owned a sports bar and restaurant in Charles City.   In
early 1999,  he  contacted  Larry  Stewart  about  selling  the  restaurant.
Stewart is a licensed real estate broker in Charles City.  According to  the
facts accepted for the purpose of summary adjudication, Sisson told  Stewart
he wanted a sales price around $615,000, and he would pay  him  ten  percent
of the sales price if he found  a  buyer.   However,  Sisson  did  not  want
Stewart to list the property because he thought  he  would  lose  sales  and
value from the business if the public were aware it was for  sale.   Stewart
agreed to find a buyer, but the  parties  never  reduced  the  agreement  to
writing.
      Stewart began looking for a buyer for the  property.   One  person  he
contacted was Michael Walter, who Stewart thought  would  be  interested  in
the business.  Stewart obtained financial  information  about  the  business
from Sisson and told Sisson he intended to disclose it to  Walter.   Stewart
required Walter to sign an agreement to keep  the  information  confidential
and to prevent him from negotiating directly with Sisson.
      On November 13, 2001, Sisson  sold  the  business  to  Walter  without
notifying or involving Stewart.   Stewart  subsequently  learned  about  the
sale and wrote Sisson to inquire about his commission.  Sisson  replied  and
asked Stewart for written documentation to verify  the  agreement.   Stewart
could not provide a writing, and further  efforts  to  resolve  the  dispute
failed.
      Stewart filed an action against Sisson for breach of contract in March
2002.  Sisson responded by filing a motion  to  dismiss.   He  claimed  Iowa
Administrative Code rule 193E—1.23 [now  rule  193E—11.1]  barred  Stewart’s
claim.  See Iowa Admin. Code r. 193E—1.23 (1997)  (“All  listing  agreements
shall be in writing, properly identifying the property  and  containing  all
of the terms and  conditions  under  which  the  property  is  to  be  sold,
including the price, the commission  to  be  paid,  the  signatures  of  all
parties concerned and a definite expiration date.”).  Stewart  resisted  the
motion  and  filed  an  amended  petition,  adding  claims   of   fraudulent
misrepresentation, reckless misrepresentation, breach of  implied  contract,
and unjust enrichment.  The district court dismissed the  breach-of-contract
claim in the original petition, as well as  the  additional  claims  in  the
amended petition.
      Stewart appealed.  We transferred the case to the  court  of  appeals.
The court of appeals reversed the district court and remanded the  case  for
further proceedings.  Without explanation, the court  of  appeals  concluded
“the district court was in error to  grant  defendant’s  motion  to  dismiss
plaintiff’s claims.”
      After remand, Sisson filed an answer  to  Stewart’s  amended  petition
and denied most of the allegations.  Sisson then filed a motion for  summary
judgment.  He again  claimed  rule  193E—1.23  barred  Stewart’s  claims.[1]
Stewart resisted the motion.  He claimed his agreement with Sisson  was  not
subject to the writing  requirement  of  the  rule  because  it  was  not  a
“listing  agreement,”  and  in  any  event,  the  rule   was   invalid   and
unconstitutional.
      The district court granted summary judgment in favor  of  Sisson.   It
held that the oral agreement between Stewart and Sisson was subject  to  the
writing requirement of the rule.  In addition, the court held the  rule  was
not  unconstitutional.   Finally,  the  court  concluded  Stewart  was   not
permitted to recover under any theory because the purpose of the rule  would
be defeated.  Stewart appealed.
      II.   Standard of Review
      We review rulings granting summary judgment for correction  of  errors
at law.  Otterberg v. Farm Bureau Mut. Ins. Co., 696  N.W.2d  24,  27  (Iowa
2005) (citing In re Estate of Graham, 690 N.W.2d 66, 69-70 (Iowa 2004)).

      A motion for summary judgment should only be granted if,  viewing  the
      evidence in the light most favorable  to  the  nonmoving  party,  “the
      pleadings, depositions, answers to interrogatories, and admissions  on
      file, together with the affidavits, if any,  show  that  there  is  no
      genuine issue as to any material fact and that  the  moving  party  is
      entitled to a judgment as a matter of law.”

Id. (quoting Iowa R. Civ. P. 1.981(3); citing Wernimont  v.  Wernimont,  686
N.W.2d 186, 189 (Iowa 2004)).
      III.  Discussion
      The premise for the district court’s decision was that  the  agreement
between Stewart and Sisson was a “listing agreement” under  rule  193E—1.23.
We have previously held that this administrative  rule  makes  oral  listing
agreements  unenforceable  upon  proper   objection.    Hubbell   Commercial
Brokers, L.C. v. Fountain Three, 652 N.W.2d 151,  156  (Iowa  2002)  (citing
Milholin v. Vorhies, 320 N.W.2d 552, 554 (Iowa 1982)).  The  district  court
considered the motion for summary judgment as an objection and  relied  upon
this authority  to  dismiss  the  contract  claim,  as  well  as  all  other
companion claims.  See Maynes Real Estate v. McPherron, 353 N.W.2d 425, 426-
27 (Iowa 1984) (holding brokers cannot  recover  for  quantum  meruit  under
properly-objected-to oral  listing  agreement;  reasoning  “the  legislative
intent underlying section 1.23 was to forbid any recovery  by  a  broker  or
sales  agent  under  an  oral  agreement”  (emphasis   added)).    But   see
Restatement (Second) of  Torts  § 530  cmt.  c,  at  64-65  (1977)  (stating
misrepresentation claims are still viable when contract  and  quasi-contract
claims fail due to the lack of a writing); W. Page Keeton  et  al.,  Prosser
and Keeton on the Law of Torts § 109, 764 &  n.7  (5th  ed.  1984)  (opining
that rules barring recovery on oral  contracts  should  not  also  bar  tort
claim  of  misrepresentation  because  “the  policy  which  invalidates  the
promise is not directed at cases of dishonesty in  making  it”).   Thus,  we
must decide if the district court properly applied the law.   See  Westfield
Ins. Cos. v. Econ.  Fire  &  Cas.  Co.,  623  N.W.2d  871,  876 (Iowa  2001)
(stating when we review for correction  of  errors  at  law,  “we  determine
whether the district court correctly applied  the  law”  to  the  undisputed
facts).
       Rule  193E—1.23,  entitled  “Listings,”  is  an  administrative  rule
promulgated by the Iowa Real Estate Commission pursuant  to  its  rulemaking
authority under Iowa Code section 543B.9 (1999).  “[R]ules properly  adopted
by the  commission  have  the  force  of  a  statute.”   Hubbell  Commercial
Brokers, L.C., 652 N.W.2d at 155 (citing Milholin, 320 N.W.2d at  553).   In
construing an  administrative  rule,  “[a]s  with  a  statute,  we  seek  to
ascertain and give effect to the intent of the drafters”  and  “construe  it
liberally ‘to promote its  objects  and  assist  the  parties  in  obtaining
justice.’ ”  Rodgers v. Baughman, 342 N.W.2d 801, 805 (Iowa  1983)  (quoting
Iowa Code § 4.2 (1983)).
      Rule 193E—1.23 provides:

      All listing agreements shall be in writing, properly  identifying  the
      property and containing all of the terms and  conditions  under  which
      the property is to be sold, including the price, the commission to  be
      paid,  the  signatures  of  all  parties  concerned  and  a   definite
      expiration date.  It shall contain  no  provision  requiring  a  party
      signing the listing to  notify  the  broker  of  the  listing  party’s
      intention to cancel the listing after such definite  expiration  date.
      An exclusive agency or exclusive right to sell listing  shall  clearly
      indicate that it is such  an  agreement.   A  legible  copy  of  every
      written listing agreement or  other  written  authorization  shall  be
      given to the owner of the property by a licensee as soon as reasonably
      practical after the signature of the owner is obtained.

Iowa Admin. Code r. 193E—1.23.  Thus, at  least  with  respect  to  “listing
agreements,”  the  rule  changes  the  common  law,  which  recognized   the
enforceability of oral brokerage agreements.  Maynes Real Estate, Inc.,  353
N.W.2d at 426 (citing McHugh v. Johnson, 268 N.W.2d 225, 227  (Iowa  1978)).
We have said that rule 193E—1.23 “is analogous  to  the  statute  of  frauds
applicable to contracts.”  Hubbell Commercial Brokers, L.C., 652  N.W.2d  at
156 (citing Milholin, 320 N.W.2d at 554); see also Rodgers,  342  N.W.2d  at
805 (“[L]ike a statute of frauds the rule is intended to be available  as  a
shield and not a sword.” (citing Warder & Lee  Elevator,  Inc.  v.  Britten,
274 N.W.2d 339, 342 (Iowa 1979))).   “The  rule  essentially  means  that  a
broker must normally comply with the requirements of the rule to  recover  a
commission.  The rule both protects the public  and  provides  guidance  for
brokers in their business dealings with  the  public.”   Hubbell  Commercial
Brokers, L.C., 652 N.W.2d at 156 (citing Milholin, 320 N.W.2d at 554).
      In Hubbell, we observed that “[t]he term ‘listing agreement’ is not  a
defined phrase under chapter 543B or the commission  rules.”   Id.   We  did
not define the term, but concluded that  it  did  not  encompass  agreements
between brokers.  Id. at 157.  We also noted:



      The language of the rule as a whole  is  consistent  with  the  common
      definition of  a  listing  agreement  as  “[a]n  agreement  between  a
      property owner and an agent, whereby the agent agrees to try to secure
      a buyer or tenant for a specific property at a certain price and terms
      in return for a fee or commission.”

Id. (quoting Black’s Law Dictionary 943 (7th ed. 1999)).
      The primary, and dispositive, issue presented on appeal is whether  an
agreement to procure a buyer without  listing  the  property  is  a  listing
agreement under rule 193E—1.23.  The structure of the  rule  itself  reveals
that it is not.  The definitional provision of the real estate  commission’s
rules provides different  definitions  for  “listing  broker”  and  “selling
broker.”  Compare Iowa Admin. Code r. 193E—1.1 (“‘Listing broker’ means  the
real estate broker who obtains a listing of real estate or  of  an  interest
in a residential cooperative housing  corporation.”),  with  id.  (“‘Selling
broker’ means a real estate broker who  finds  and  obtains  a  buyer  in  a
transaction.”).  In addition,  while  rule  193E—1.23  applies  to  “listing
agreements,”  a  different   rule—rule   193E—1.42—applies   to   “brokerage
agreements.”   Rule  193E—1.42  similarly  provides  that  “[a]ll  brokerage
agreements shall be written.”   Id.  r.  193E—1.42  (1997).   Rule  193E—1.1
defines “brokerage agreement” as “a contract between a broker and  a  client
which establishes the relationship between the parties as to  the  brokerage
services to be performed.”  Id. r. 193E—1.1; accord Iowa Code  §  543B.5(8).
The Code defines “brokerage services” as:

             1.  Sell[ing],  exchang[ing],   purchas[ing],   rent[ing],   or
      leas[ing] real estate.

           2.  List[ing], offer[ing], attempt[ing], or agree[ing]  to  list
      real estate for sale, exchange, purchase, rent, or lease.

           3.  Advertis[ing] or hold[ing] oneself out as being  engaged  in
      the business of selling, exchanging, purchasing, renting, leasing,  or
      managing real estate.

           4.  Negotiat[ing], or offer[ing], attempt[ing], or agree[ing] to
      negotiate, the sale, exchange, purchase,  rental,  or  lease  of  real
      estate.

           5.  Buy[ing], sell[ing], offer[ing] to buy or sell, or otherwise
      deal[ing] in options on real estate or improvements on real estate.

           6.  Collect[ing], or offer[ing], attempt[ing], or agree[ing]  to
      collect, rent for the use of real estate.

           7.  Assist[ing] or direct[ing] in the  procuring  of  prospects,
      intended to result in the sale, exchange, purchase, rental, or leasing
      of real estate.

           8.  Assist[ing]  or  direct[ing]  in  the  negotiation  of   any
      transaction intended  to  result  in  the  sale,  exchange,  purchase,
      rental, or leasing of real estate.

           9.  Prepar[ing]  offers  to  purchase  or  purchase  agreements,
      listing contracts, agency disclosures, real property  residential  and
      agricultural  rental  agreements,  real  property  commercial   rental
      agreements of one year or less,  and  groundwater  hazard  statements,
      including  any  modifications,  amendments,  or  addendums  to   these
      specific documents.

Iowa Code § 543B.3; see id.  §  543B.5  (defining  “brokerage  services”  as
“those activities listed in sections  543B.3  and  543B.6”);  see  also  id.
§ 543B.6 (incorporating acts set out in section 543B.3).
      This scheme is instructive.  The distinction made between selling  and
listing brokers and the broad definition of brokerage  services  shows  that
listing property for sale is just one of  many  brokerage  services  that  a
broker can provide to a client.  See id.  § 543B.3(1)-(8).   This  indicates
that a listing agreement is just one type of brokerage agreement  between  a
broker and a client.  Clearly, the rules and  statutes  distinguish  between
“listing” property and other brokerage  services,  and  we  must  give  this
distinction meaning in defining agreements relating to the services.   Thus,
the statutory and  regulatory  framework  reveals  that  the  term  “listing
agreements” under rule 193E—1.23 would not encompass  agreements  between  a
broker and a client in which the parties agree not to “list”  the  property.
To conclude otherwise would render  the  listing-agreement  rule  a  virtual
nullity because listing agreements  would  necessarily  be  covered  by  the
brokerage-agreement rule.  See In re  Interest  of  G.J.A.,  547  N.W.2d  3,
6 (Iowa 1996) (“The ‘statute should not be construed so as to make any  part
of it superfluous unless no other construction is reasonably possible.’   We
will presume the legislature enacted each part of the statute for a  purpose
and intended that each part be given effect.   [Furthermore,  w]e  will  not
presume that the legislature intended  words  in  the  statute  be  given  a
redundant meaning.”  (Citations omitted.)); Messina v.  Iowa  Dep’t  of  Job
Serv., 341 N.W.2d 52, 56 (Iowa 1983) (“Generally,  the  rules  of  statutory
construction  and  interpretation   also   govern   the   construction   and
interpretation  of  rules  and  regulations  of  administrative   agencies.”
(Citation omitted.)).  Agreements to perform brokerage services  other  than
“listing” the property are “brokerage agreements” under rule 193E—1.42,  but
are not “listing agreements” under rule 193E—1.23.
      The remaining question is what it means to  “list”  a  property.   The
Minnesota  Supreme  Court  has  held  that  “listing,”  in  the  context  of
Minnesota’s  real-estate-license  statute,  means  using  a   compiled   and
published list of properties and their  descriptions  “for  the  purpose  of
attempting to meet the individual  needs  of  some  specifically  identified
seller, buyer, landlord, or tenant.”   State  v.  Beslanowitch,  248  N.W.2d
286, 288 (Minn.  1976).   Other  authorities  are  in  agreement.   See  Leo
Eisenberg & Co. v. Payson, 732 P.2d 1128, 1130 (Ariz.  Ct.  App.  1987)  (“A
listing agreement is a form of agency agreement and employment in which  the
agent agrees to expose a property to the market in consideration of  payment
of his commission if a sale or lease is made.”   (Citation  omitted.));  Jae
K. Shim et al., Dictionary of Real Estate 168 (1996)  (defining  “list”  as:
“To secure a listing by  a  real  estate  agent  for  a  certain  parcel  of
property”; defining “listing” as:  “Legal contract  with  a  property  owner
empowering a real estate  agent  in  selling,  leasing,  or  mortgaging  the
principal’s property.  A listing has a legal description  of  the  property,
is valid for a specified time and gives the details  of  the  sale.”).   See
generally Grempler v. Multiple Listing Bureau of Harford County,  Inc.,  266
A.2d 1, 3 (Md. 1970) (“Multiple listing is a device used by the real  estate
broker  to  give  wide  exposure  to  properties  listed  for  sale.    Each
cooperating  broker  informs  all  other  participating   brokers   of   the
properties listed with him, thus an individual home for  sale  is  available
to purchasers at several different brokers’ offices.”).   These  authorities
reveal that real  estate  would  not  be  “listed”  when  a  broker  is  not
permitted to disclose the sale of the property to the  general  public,  but
is only permitted to privately  disclose  the  sale  to  those  persons  the
broker considers to be potential buyers.
      Applying this principle to this case, we conclude rule  193E—1.23  did
not apply to the agreement between Stewart and Sisson.   An  agreement  that
provides the property is not to be “listed” is not  a  “listing  agreement.”
A listing “agreement is called a  ‘listing’  agreement  because  the  broker
obtains the right to place the seller’s property on  the  broker’s  list  of
properties for sale.”  George Lefcoe, Real Estate Transactions  63  (2d  ed.
1997).
      Stewart stated in his  affidavit  resisting  the  motion  for  summary
judgment that Sisson did not want to “list” his restaurant  because  he  did
not want to detract from his daily business.  We must accept  this  as  true
for purposes of summary judgment.  INNK Land & Cattle  Co.  v.  Kenkel,  493
N.W.2d 818, 819 (Iowa 1992).  Viewing the facts in the light most  favorable
to Stewart, we conclude the district court erred in concluding  Stewart  and
Sisson  had  a  listing  agreement.   Consequently,   rule   193E—1.23   was
inapplicable to the case, and the district court erred  in  concluding  that
it barred Stewart from recovery.  Likewise,  this  same  error  reveals  the
district court erred in dismissing the companion claims.
      As  previously  observed,  rule  193E—1.42  also  requires  “brokerage
agreements” to be in writing.  Thus, it is possible to proceed to  determine
if the oral agreement in this case is a  “brokerage  agreement”[2]  and,  if
so, to then decide if  the  failure  to  reduce  the  agreement  to  writing
precludes  enforcement  of  the  agreement,  as  with  listing   agreements.
However, in his motion for summary  judgment,  Sisson  did  not  raise  rule
193E—1.42 as a ground to deny enforcement of the agreement,  or  argue  that
the  oral  agreement,  if  not  a  listing  agreement,  should   be   denied
enforcement as a brokerage agreement.  In addition, Sisson did not make  any
argument in his statement of undisputed facts  or  memorandum  of  law  that
rule  193E—1.42  barred  Stewart’s  claims.   Sisson’s  claim  for   summary
judgment was based solely on rule 193E—1.23.  The  district  court  did  not
rule on the  issue,  but  rather,  based  it  decision  to  dismiss  all  of
Stewart’s claims on the applicability of rule 193E—1.23.
      Our limited role as an appellate court acts to constrain  our  ability
to decide issues not presented to the district court.  See Estate of  Harris
v. Papa John’s Pizza, 679 N.W.2d 673,  679 (Iowa  2004)  (reversing  summary
judgment because the  sole  ground  raised  in  the  motion  was  erroneous,
declining to consider issue not raised in motion, and remanding for  further
proceedings); DeVoss v. State, 648 N.W.2d 56, 61  (Iowa  2002)  (holding  we
can affirm on a ground not relied on by the district court, but only if  the
ground was raised in district court); Conkling  v.  Standard  Oil  Co.,  138
Iowa 596, 600, 116 N.W. 822, 824 (1908) (“[T]he case must be  considered  in
this court following the line of the theory on which it  was  tried  in  the
court below; and this we feel constrained to say, although the point is  not
made by counsel for appellee.  In justice to  the  trial  court,  if  on  no
other ground, we will not permit a party to mend his hold after coming  into
this court, and seek to advantage himself on grounds not  suggested  on  the
trial below.”); cf. In re Detention of Hodges, 689  N.W.2d  467,  469  (Iowa
2004) (“The general rule is ‘that  an  appellate  court  will  not  consider
grounds for a motion for directed verdict which the  movant  did  not  place
before the trial court.’ ” (quoting Podraza  v.  City  of  Carter Lake,  524
N.W.2d 198, 202 (Iowa 1994))).  This constraint is  based  on  fairness  and
provides the essential symmetry and balance to our judicial process.[3]   It
is not for us to decide substantive issues not raised by  the  parties,  but
to decide issues first  presented  to  the  district  court.   See  Pond  v.
Anderson, 241 Iowa 1038, 1049, 44 N.W.2d 372,  379 (1950)  (“[O]ur  duty  is
merely to pass upon the errors assigned and not to review  the  evidence  de
novo nor decide the case as we might think it should be decided.”).
      IV.   Conclusion
      The  agreement  between  Stewart  and  Sisson  was  not   a   “listing
agreement.”  Rule 193E—1.23 did not apply, and the district court  erred  in
dismissing the claims by Stewart on that basis.  We reverse the judgment  of
the district court and remand for further proceedings.
      REVERSED AND REMANDED.
-----------------------
      [1]Sisson acknowledged in his motion for summary judgment that he  had
contacts with Stewart concerning the sale of the business and  presumed  for
purposes of summary judgment  that  he  and  Stewart  had  an  agreement  as
alleged by Stewart.  However, Stewart does not  argue  on  appeal  that  the
agreement is removed from the coverage of  rule  193E—1.23,  as  a  judicial
admission of the existence of an oral contract, which can by analogy  remove
a contract from the statute of frauds.  See Catamount Slate Prods., Inc.  v.
Sheldon, 845  A.2d  324,  328 (Vt.  2003)  (“Under  the  judicial  admission
exception, a court can enforce an  otherwise  unenforceable  oral  agreement
when the party against whom enforcement is sought admits  the  existence  of
the agreement.” (citing 10 Richard A. Lord, Williston on Contracts §  27:10,
at 69-70 (4th ed. 1999))); accord E. Allan Farnsworth, Contracts §  6.7,  at
396-97 (3d ed. 1999) (discussing exception);  73  Am.  Jur.  2d  Statute  of
Frauds § 478, at 166 (2001) (“[A] defendant waives the right to  assert  the
statute of frauds if the defendant’s counsel stipulates  the  facts  showing
that an agreement has, in fact, been reached.”);  cf.  Gardner  v.  Gardner,
454 N.W.2d 361, 363 (Iowa 1990) (applying exception).   Accordingly,  we  do
not need to decide whether there is such an  exception  to  the  rule.   See
Aluminum Co. v. Musal, 622 N.W.2d 476, 479  (Iowa  2001)  (“It  is  a  well-
established rule of appellate  procedure  that  ‘[t]he  scope  of  appellate
review  is  defined  by  the  issues  raised  by  the  parties’   briefs.’ ”
(Citations omitted.)).

      [2]In arguing that the oral agreement was  not  a  listing  agreement,
Stewart acknowledged it was  a  brokerage  agreement.   Notwithstanding,  he
claimed it was not required to  be  in  writing  because  the  current  rule
covering brokerage agreements, rule 193E-11.3, did not go into effect  until
September 4, 2002.  Stewart is correct that the effective date of  the  rule
was after the date of the oral agreement, but rule 193E-11.3 was not  a  new
rule in 2002; it was just renumbered.  Its predecessor, rule 193E-1.42,  was
in effect in 1999 when Stewart and Sisson made their  agreement.   See  Iowa
Admin. Code r. 193E—1.42 (1997).

      [3]The fairness rationale is readily apparent in this  case.   Stewart
alternatively argued  that  rule  193E—1.23  was  unconstitutional.   If  we
proceeded to apply rule 193E—1.42 to resolve the appeal, Stewart  would  not
only be deprived of the opportunity to make arguments specifically  directed
at rule 193E—1.42 but would be deprived of the opportunity to challenge  the
application of the rule as  unconstitutional.   Appellate  courts  will  not
address a claim that a statute is unconstitutional when  it  was  not  first
raised  at  trial.   Fairness  dictates  that  both  parties  be  given   an
opportunity to reframe their arguments in light of our determination that  a
listing agreement was not involved in this case.


