Supreme Court, Appellate Division, First Department, New York.
LEFRAK et al.
April 22, 1952.
Proceeding by William Wenger against Harry Lefrak and another for real estate
broker's commission under agreement that no commission should become payable
unless title were actually transferred. The Supreme Court, New York County,
dismissed the complaint at close of Wenger's case and entered judgment for
Lefrak and co-suitor and Wenger appealed. The Supreme Court, Appellate
Division, Per Curiam, held that there was no evidence that Lefrak and co-suitor
were guilty of bad faith toward Wenger in the procurement of the broker's
Shientag, J., dissented.
65k86(1) Most Cited Cases
In real estate broker's action for commissions under agreement that no
commission should become payable unless title were actually transferred, there
was no evidence that vendors, who allegedly refused to carry out contract of
sale, were guilty of bad faith toward broker in procurement of said agreement.
**872 Samuel M. Sprafkin, New York City, for appellant.
Sylvan D. Freeman, Brooklyn, of counsel (Samuel Kirschenbaum, Brooklyn, on the
brief; Dreyer & Traub, Brooklyn, attorneys) for respondents.
Before PECK, P. J., and GLENNON, DORE, VAN VOORHIS, and SHIENTAG, JJ.
*994 PER CURIAM.
We think that the disposition made of this matter in the decision of the court
at trial term is correct. It is appropriate, however, to add that there is no
evidence nor is it contended that defendants-respondents were guilty of bad
faith toward the broker in the procurement of the broker's agreement that no
commission should become payable unless title were actually transferred. Only
the question of the brokerage commissions is involved herein.
The judgment appealed from should be affirmed with costs to the respondents.
*995 Judgment affirmed with costs. Order filed.
SHIENTAG, J., dissents and votes to reverse and order a new trial.
PECK, P. J., and GLENNON, DORE and VAN VOORHIS, JJ., concur.
**873 *994 SHIENTAG, Justice (dissenting).
Plaintiff sues to recover damages as a result of what he alleges was the
willful refusal of the defendants to execute a contract for the sale of land
with resultant loss of commissions by the plaintiff. The court below dismissed
the complaint at the end of plaintiff's case. Plaintiff's evidence, which must
of course be accepted as correct on this appeal, was as follows.
The defendants engaged the plaintiff and his assignor as licensed real estate
brokers, to sell a piece of property. As purchaser they secured one Alexander
Bisno, who on October 15, 1949, through his lawyer and attorney in fact, entered
into a formal contract with the defendants for the purchase of the premises and
deposited $10,000 with the defendant pending the closing of title. Just prior
to the signing of the contract of sale, and as a condition of defendants going
through with the deal, see Personal Property Law, § 33, they required plaintiff
and his co-broker to sign a brokerage agreement providing, in pertinent part,
that a commission was not to be paid
'in the event that the deed and the full consideration therefor fail actually to
be delivered, received and accepted in accordance with the terms of such
contract (whether any such failure is by reason of any default or act or
omission or commission, intentional or otherwise, by either of the said parties
to said contract * * *).'
After the contract of sale was signed, but before the date set for closing, the
purchaser, Bisno, indicated dissatisfaction with the deal and a desire to assign
his contract. Although the defendants orally agreed to modify the contract to
render it more palatable, they recanted on this commitment when advised that a
potential assignee had been secured. Thereafter, the contract was assigned to
parties willing to carry out the sale on the terms embodied in the original
agreement. When the assignee appeared for the closing, the defendants, first
indicated great unwillingness to carry out the contract. They then changed their
approach and insisted upon an immediate exchange of title and payment,
deliberately refusing to answer all queries concerning representations in the
contract, though the questions were undoubtedly appropriate, and ultimately so
insulting one of the buyers as to cause them to walk out.
On the evidence adduced by the plaintiff, it seems plain that a jury could
reasonably have concluded that the defendants, willfully and in bad faith,
refused to carry out the terms of their contract of sale; that, knowing that
they had no legal basis for so doing, the defendants deliberately undertook to
render the consummation of the sale impossible. The dismissal of the complaint
below can thus be justified only on the theory that the terms of the brokerage
agreement set forth above exempted defendants from their duty to pay commissions
even where failure of title to pass resulted from the conduct herein set forth.
I do not believe **874 that the language of the brokerage agreement requires
such a harsh and one-sided construction. The word 'intentional' in the
brokerage provision is given full effect if we construe it to embrace a knowing
refusal to convey title, where the refusal is based upon an honest, *995 though
mistaken, belief that legal justification exists for so acting. So construed,
the provision is reasonable, fair, and serves an appropriate and legitimate
objective. Construed to protect the seller against the consequences of a bad
faith refusal to carry out his contractual obligations, it violates that
fundamental rule of construction whereunder courts strive to avoid placing one
party to a contract at the mercy of another. Reliable Press v. Bristol Carpet
Cleaning Co., 261 App.Div. 256, 25 N.Y.S.2d 70; Pearce v. Knepper, Sup., 53
N.Y.S.2d 845, 846, affirmed 269 App.Div. 829, 56 N.Y.S.2d 415, leave to appeal
denied 269 App.Div. 929, 57 N.Y.S.2d 841. In the Pearce case, supra, the
following language was held not to exempt a seller from paying commissions where
the seller willfully defaulted on the contract of sale: 'Should the deal not be
consummated and title not pass for any reason whatsoever, there shall be no
commission considered earned.'
The views here advanced are in no sense inconsistent with the doctrine of
Heller and Henretig, Inc. v. 3620-168th Street, Inc., 302 N.Y. 326, 98 N.E.2d
458. In that case the brokerage contract provided that commissions were not
payable to the broker if (1) the contract of sale was not executed for any
reason whatsoever, and (2) title did not pass for any reason whatsoever save the
default of the seller. The contract of sale was not executed. Pointing out
that with respect to passing of title the brokerage contract specifically
provided that commissions were not to be withheld if the seller defaulted, the
court inferred that the same qualification did not apply with respect to the
execution of the contract.
It is one thing to hold, as did the court in the Heller case supra, that effect
should be given to the clearly articulated purpose of the parties that
commissions are not to be paid if the seller decides not to execute the
contract. It is a familiar and reasonable principle that parties on occasion do
not wish to be bound by an agreement until they have seen it reduced to paper,
have had an opportunity to examine it as a whole, and, after such examination
then determine to sign it. It is an entirely different proposition to assert
that one who has signed a formal contract, who has become bound in law and in
justice to fulfill his obligation, can, by a willful violation of the contract,
escape his obligation to pay commissions. No brokerage agreement should be so
construed where a reasonable alternative appears in the language of the contract
and, in my opinion, a reasonable alternative appears here.
The judgment should be reversed and a new trial ordered.
111 N.Y.S.2d 872, 279 A.D. 993
END OF DOCUMENT
Wenger v. Lefrak, 279 A.D. 993, 111 N.Y.S.2d 872 (N.Y.A.D. 1 Dept., Apr 22, 1952)
Supreme Court, Appellate Division, First Department, New York.