Duross Co. v. Evans

McNally, J. Involved on this appeal is the sufficiency of the first cause of action. A test of the sufficiency of the pleading is whether it gives notice of the transactions relied on and the material elements of a cause of action. (Foley v. D’Agostino, 21 AD 2d 60; CPLR 3013.) The first cause of action fairly alleges plaintiff, a real estate broker, was employed by the defendants to locate a parcel of real estate within a certain area of the Borough of Manhattan. Plaintiff located and submitted to defendants several parcels, one of which was selected by defendants who authorized plaintiff to submit an offer therefor in their behalf to the owner of the selected parcel. Plaintiff submitted the offer which was accepted by the owner. The owner caused a contract of sale to be prepared and at the same time entered into a brokerage agreement to pay to the plaintiff commissions of $6,000 upon the closing of title. Defendants knew at all times that plaintiff would be entitled to receive brokerage commissions from the owner upon the closing of title. Implicit in the allegations of [574] the first cause of action is the agreement on the part of the defendants to purchase on the basis of the alleged offer. (West-hill Exports v. Pope, 12 N Y 2d 491; Starr, Inc. v. Blumenthal, 132 Misc. 222.) The defendants arbitrarily refused to enter into the contract of sale and to consummate the transaction and plaintiff thereby was damaged because he was deprived of the brokerage commission of $6,000. It is the general rule that a prospective purchaser of real estate is not liable for failure to accept an offer unless it appears that the broker was employed by the purchaser. (Niesen v. Galewski, 211 App. Div. 858, affd. 240 N. Y. 652.) There is no legal obligation as between the owner and a purchaser despite oral acceptance of an offer by the purchaser unless and until a written contract is executed. The intervention of a broker does not enlarge the purchaser’s legal obligation 'in respect of his failure to perform in accordance with an offer orally accepted. The additional factor of the loss of a broker’s commission contingent on the consummation of the sale does not serve to create a liability on the part of the purchaser to the broker. However, where there is a contract of employment between the purchaser and the broker, the breach thereof on the part of the purchaser results in the latter’is liability for damages. (Parker v. Simon, 231 N. Y. 503, 507-508.) “ Each case in which allegations of employment are made must be decided on the particular facts.” (Grossman v. Herman, 266 N. Y. 249, 253.) The defendants’ breach of their contract with the plaintiff entitles it to damages, the nature and extent of which do not affect the sufficiency of the first cause of action. Whether plaintiff is to recover damages or on quantum meruit, a cause of action is stated and it may not be dismissed for insufficiency. (Darling v. Moscowitz, 159 N. Y. S. 672 [App. Term, 1st Dept.].) It is evident, however, that the measure of damages will be a vital issue. We therefore make the following observations: ‘ Where * * * the employer of the agent itself prevents the earning of the commission by refusing to deal on the basis which was offered to the agent, the purchaser is obligated to pay after the agent has procured a seller on the terms and for the consideration, quantity and quality proposed by the purchaser (Pease & Elliman v. Gladwin Realty Co., 216 App. Div. 421).” (Westhill Exports v. Pope, 12 N Y 2d 491, 496, supra.) (James v. Home of Sons & Daughters of Israel, 153 N. Y. S. 169; McKnight v. McGuire, 117 Misc. 306.) Although a proposed purchaser does not undertake to pay the commission, he may be liable for consequential damages by [575] reason of the breach of his contract with the broker, which damages include compensation for the deprivation of the commission the broker would have been paid by the owner of the property. (Ackman v. Taylor, 296 N. Y. 597.) The cases (Mulhall v. Bradley d Currier Co., 50 App. Div. 179; Darling v. Moscowitz, supra) relied on in the dissenting opinion do not support the proposition that plaintiff is limited to a recovery in quantum meruit. In Darling, it was held immaterial to the sufficiency of the cause of action whether plaintiff’s measure of damages was reasonable value of the services rendered or the commission of which plaintiff was deprived. The Mulhall case involved an abortive exchange of real estate in respect of which the plaintiff broker alleged two causes of action against his employer—the first in quantum meruit based on services relative to the property of the employer and the second in damages representing the commission he would have earned from the third party had the defendant executed the exchange. Mulhall elected to proceed in the first cause of action on quantum meruit. Hence, the court was not required to and did not decide whether Mulhall might have sought damages as to the first cause of action measured by the commission he would have earned had defendant sold his property. The introduction of the second cause of action involved the broader question of whether and under what circumstances a broker may seek double commissions in an exchange of real property. This question was passed on in Fox Co. v. Wohl (255 N. Y. 268). In Fox, the complaint stated two causes of action. The first for commissions earned for procuring a purchaser of defendant’s property. The second for damages based on the loss of commissions plaintiff would have earned if defendant had executed an exchange as arranged. The court held (p. 272) that double commissions are ‘ ‘ not the natural or probable consequence of a brokerage exchange contract and are not, generally speaking, within the contemplation of the parties when a simple brokerage contract is made ”. To sustain a claim for double commissions it is not enough that the broker’s employer had knowledge of and was agreeable to the broker’s receipt of double commissions; it must appear that the employer undertook to assure compensation to the broker to the extent of double commissions. Mulhall v. Bradley & Currier Co. (supra) is cited in Fox (p. 272) for the proposition that the employer’s willingness that the broker might earn double commissions does not in itself sustain an obligation therefor. [576] The Fox ease discussion of the broker’s right to a double commission alluded to the cases of James v. Home of Sons & Daughters of Israel (153 N. Y. S. 169, supra) and Pease & Elliman v. Gladwin Realty Co. (216 App. Div. 421, supra) as if they involved exchange transactions, which is not the fact. These cases involved, respectively, one parcel and a single commission, the loss of which was the probable consequence of the defendant’s breach of contract with the broker. The reference in Fox concerning James v. Home of Sons & Daughters of Israel (supra) and Pease & Elliman v. Gladwin Realty Co. (supra) was explained in Ackman v. Taylor (185 Misc. 807, 808) where the court said: “Defendant urges that the broker has no recourse unless the prospect not only agreed ’ but agreed to pay ‘ commissions ’. However, on careful reading of the authorities and on principle, it would seem sufficient that the prospect expressly ‘ contracted ’ with the broker, whoever is to pay the commissions * * *. The authority of Fox Co. v. Wohl (255 N. Y. 268) would seem in any event limited to cases of exchange of property.” Ackman was affirmed (269 App. Div. 1025) and a certified question as to the sufficiency of the complaint answered in the affirmative (296 N. Y. 597). Any residual doubt after Ackman as to the subsistence of the principle of James v. Home of Sons & Daughters of Israel (supra) and Pease & Elliman v. Gladwin Realty Co. (supra) was resolved by Westhill Exports v. Pope (supra, p. 496) where the principle was unequivocally restated and the latter case cited with approval. The order dismissing the first cause of action should be reversed, on the law, with costs and disbursements to plaintiff-appellant, and the motion denied.