Backer v. Ratkowsky

Ingraham, P. J. : This action was to recover for services rendered by the plaintiff for the defendant, the complaint alleging that the plaintiff and one Markowitz procured a proposition to trade certain real property situated on Ninetieth and Ninety-first streets and Central Park West for certain real property on the easterly side of Gramercy Park in the city of New York, in which said premises the defendant had an interest, and that Markowitz had assigned his claim against the defendant to the plaintiff. The defendant denies the allegations of the Complaint except that he admits that in May, 1905, he was one of .the owners of a plot of ground on the easterly side of Gramercy Park in the city of New- York. On the trial the plaintiff testified that he was a real estate broker and knew the defendant; that between February and April, 1905, he had a-conversation with the defendant, in which the defendant said that his Gramercy Park property did not produce anything, and he would like to change it for something that was productive; that he wanted nothing but high-class property, elevator apartment houses, to be of fireproof construction, and that if the plaintiff succeeded in this he would pay him one per cent commission. After this con versation plaintiff submitted several pieces of property to the — 561 — defendant, which the defendant declined, when the plaintiff said to the defendant ■ that he would not do any more business with him; ' that the defendant again proposed to the plaintiff to do what he called “ business,” and said: “ No matter who makes the deal, I will ring you in on the commission;” that after this the plaintiff submitted to the defendant a building called the El Dorado, an apartment house on .Ninety-first street and Central Park West, which defendant went to see, and stated that it was just what he wanted. This El Dorado apartment house was owned by one Signed. Signed wanted $1,250,000 for the El Dorado, but finally came down to $1,200,000, offering to pay $17.5,000 for the Gramercy Park property. The El Dorado was subject to several mortgages, the amounts of which are not stated. Signed told the defendant that he was offered a mortgage of $800,000, but was pretty sure lie could get $900,000. Signed then said he would take the equity in the Gramercy Park property at $100,000, the defendant to pay $25,000 on the execution of the contract, $25,000 on taking • title, and $50,000 in the defendant’s note, secured by the mortgage, and a mortgage of $100,000 on the El Dorado, payable $20,000 each year. There was also to be an additional mortgage if Signed could not get more than $800,000 on the mortgages. Plaintiff testified that both parties were satisfied with this proposition. After they had all talked it over the defendant said he would have his lawyer, a Hr. Bbgers, at' the office of Signell’s lawyer the next day when they could sign the contract. The next day the plaintiff and Mr. Bogers were present at Mr. Weschler’s office, but the defendant did not appear and the transaction was postponed for four days. The plaintiff claimed a commission as for a sale of the Gramercy Park property, of $1,750. On cross-examination the plaintiff testified that he had an agreement with Signed to have one per cent on the price fixed for the El Dorado property of $1,200,000, which commission would be $12,000 if the deal went through. Plaintiff further testified that he had some conversation with the defendant as to his arrangement to get the $12,000 commission from Signed, but does not state when this conversation took place. Signed, the owner of the El Dorado, was called as a witness by the plaintiff and testified that he met — 562 — the defendant, who said there was a $75,000 mortgage on the Gramercy Park property, and the balance was equity; that he told the defendant that the mortgages were not then placed on his buildings, but negotiations were pending for placing mortgages ; that he was trying to get $450,000 on each corner, making a total of $900,000. in all, but if he could not place that amount he was going to take $400,000. Signed stated the terms of the proposition substantially as the plaintiff, and that these' terms were talked over between the witness and the defendant and were satisfactory to the witness; that they agreed upon everything; that the defendant said his attorney would be Mr. Bogers, and' they were to meet at Mr. Weschler’s office on the following day ; that defendant did not appear at this meeting, and it was subsequently stated that the contract was off; that about a month after this conversation ■ with the defendant he actually got a, mortgage of $400,000 on each building for five years, .and at the same time he placed two other mortgages on the property amounting to $100,000. . On behalf of the defendant testimony was offered that while the parties negotiated about the purchase of this building it was all dependent upon the amount of the mortgages that' Signed could get, and that the defendant expressly said that it would be quite ' impossible for him to pay any considerable amount in cash at- that time. Mr. Bogers, the attorney who appeared at the office the day after this conversation, testified that he was a relative of the defendant ; that he has no recollection of being at the lawyer’s office at the' time and had no recollection of the transaction at all. The defendant testified that Signed had telephoned to him that the deal was off because lie, Signed, could not get the mortgages that were contemplated. Signed was recalled and testified' that he had no recollection of having sent such a message to tlie defendant, and that he did not know positively whether he telephoned him or not; that he could not ted. At the end of ad the testimony the defendant made a motion to dismiss the complaint which was denied, and the defendant excepted. The court then charged the jury that if the plaintiff did produce a man who was willing to exchange his property for the defendant’s Gramercy Park property who .agreed with defendant’s- terms so that both parties were satisfied and there was nothing left to do to carry out this contract which existed verbally — 563 — between them except to sign the papers, then plaintiff was entitled to his commission. There was no exception to this charge and no requests to charge by either party. The only question presented is whether this verdict was sustained by the evidence, and I am inclined to think it was not. The plaintiff was required to produce a man who was willing to exchange his property for defendant’s Gramercy Rark property upon terms to which the defendant would agree. It is quite evident that he did not procure a man who was able and willing to make such an exchange. The defendant owned a piece of' property valued at $175,000, which was subject to a mortgage of $75,000. The customer that plaintiff produced was to convey an apartment house for $1,200,000, subject to a mortgage of $900,000; defendant to give additional mortgages of $100,000; was to pay $50,000 in cash and $55,000 in notes which were also to be secured by a mortgage upon the property. It. is quite clear that the purchaser procured by the plaintiff was not at the time of the negotiations able to convey the property subject to this mortgage. He had not secured the $900,000 mortgage upon the property and he never did secure that mortgage. It is true that condition was discussed and it was understood that the defendant was. to give an additional mortgage of $100,000 if Signell was unable to obtain a mortgage for more than $800,000, but it is quite clear that there were no definite terms fixed upon which the properties could be exchanged. It was still a tentative proposition which had not been positively accepted by either party and which either party was entitled to refuse to cany out. There is testimony that it was the customer procured by the plaintiff who stated to tlie'defendant that the deal was off and that customer when called would not contradict that statement. Taking the whole testimony together it seems to me. that it is impossible to say that any definite arrangement was arrived at so that it could be said that the plaintiff procured, a customer who was ready and willing to carry out the exchange upon the defendant’s terms.' Thus upon well-settled principles of law plaintiff was not entitled to recover. Signell was not as a matter of fact able to carry out-this contract or really to make a contract upon the terms proposed as he did not have mortgages on his property for either $800,000 or $900,000. — 564 — The condition which must exist to impose an obligation upon an owner of property to pay commissions to a broker for its sale is that the broker must produce a purchaser ready and willing' to enter into a contract on the employer’s terms ( Wylie v. Marine Nat. Bank, 61 N. Y. 416), and until the broker has faithfully discharged the obligation assumed in his contract with the principal he is not entitled to his agreed commissions and that obligation is completed only when he produces a party ready to make the purchase at a satisfactory price. (Moses v. Bierling, 31 N. Y. 462.) The fundamental and correct doctrine is that the duty assumed by the broker is to get the minds of the buyer and seller together for • a sale and the price and terms upon which it. is to be made and until that is done his right to Commissions does not accrue. (Sibbald v. Bethlehem Iron Co., 83 N. Y. 382.) It was further said in this latter case: “ It follows, as a necessary deduction from the estab- ■ lished rule, that a broker is never entitled to commissions for unsuccessful efforts. The risk of failure is wholly his. The reward comes only with his success. That is the plain contract and1 contemplation of the parties. The broker may devote his time and labor, and expend his money with ever so much of devotion to the interests of his employer, and yet if he fails, if without effecting an agreement or accomplishing a bargain, lie abandons the effort, or his authority is fa'irly and-in good faith terminated, he gains'no right to commissions. He loses the labor and effort which was staked upon success.” In the late case of Mutchnick v. Davis (130 App. Div. 417) the rule is stated: “ In an action by a broker to recover commissions upon a proposed exchange of real property it is necessary for him to show that the customer pr'óducéd by him was the owner of the property offered to be exchanged as, well as that after the terms of the exchange had been agreed upon the client refused to carry them out.” And of course, having a good title to the property includes that it was subject to such incumbrances as would enable the customer, produced to carry out the contract as, it was proposed, by the defendant. A person is not bound to enter into. a contract which the other party tó the contract is not then able to perform merely because the other party expects to be able or is willing' to obligate himself to perform. It seems to me there must be presented to entitle a broker to commissions a customer — 565 — who is capable of carrying out the contract at the time that it is proposed that one be executed. The obligation to be assumed by this defendant in carrying through this contract was a very heavy one. He had to become liable for a very large sum of money besides losing his property in which he apparently had &■ conceded equity of $100,000. It would seem to be entirely unjust to subject a party to the penalty of being compelled to either execute a contract which it did not appear the other party was able to carry out or make himself liable for broker’s commissions as if the broker had produced a customer who was not able to carry out such a contract. This is not a case where the plaintiff produced a customer with whom a contract was ultimately concluded, nor is it a case where the plaintiff was employed to produce a customer who was willing to pay a cash price for the property. The proposition here was for an exchange of property the success of which depended upon the character of the property offered in exchange for the defendant’s property and a satisfactory arrangement being made about the amount of money to be actually paid. It seems to be undisputed that the defendant had said that he was not able to pay any considerable amount of money on the execution of the contract of exchange. The property which the plaintiff proposed to the defendant as an exchange was valued at $1,200,000, while all the defendant had to offer was this equity in the Gramercy Park property of $100,000. The method by which the difference of $1,100,000 was to be provided for required considerable manipulation in view of the fact that the defendant was unable to pay any considerable amount in cash. The means by which this was to be accomplished were discussed, and it may be that the defendant had expressed himself as satisfied with the proposition made by the customer produced by the plaintiff ; but I do not think it can fairly be said that the mere expression of such satisfaction was such an acceptance of the proposed customer produced by the plaintiff as bound the defendant to make the contract or rendered him liable to pay the plaintiff’s commission for such a transaction if for any reason the subsequent negotiations fell through and no contract of exchange was made. It seems to me from the undisputed evidence that this is a case in which there was an unsuccessful effort of the plaintiff to procure a customer who could carry out a contract of exchange upon the defendant’s — 566 — terms, and as no such exchange was actually made, and no services were rendered that were of the slightest value to the defendant, the finding that the plaintiff performed the conditions which would entitle him to recover commissions was not sustained by the evidence.' ■ For that reason the judgment and order appealed from must be reversed and a new trial ordered, with costs to the appellant to abide the event. McLaughlin and Dowling, JJ., concurred; Laughlin and Miller, JJ., dissented.