Case Name: Levi Cook, Appellant, v. John F. Phillips, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1874-04-07
Citations: 56 N.Y. 310
Docket Number: 
Parties: Levi Cook, Appellant, v. John F. Phillips, Respondent
Judges: 
Reporter: New York Reports
Volume: 56
Pages: 310–314

Head Matter:
Levi Cook, Appellant, v. John F. Phillips, Respondent
(Argued March 30, 1874;
decided April 7, 1874.)
The statute restricting the brokerage for negotiating loans to one-half of one per cent on the amount loaned (1 B. S., 709) applies to all loans without regard to time, and a contract to pay a greater sum for procuring a loan for more than a year is void. (Bapallo, J., dissenting.)
While it may be allowable to pay for extra services, not usually necessary in procuring loans, in addition to the prescribed brokerage, it should be separated, so that it may be seen whether the compensation is reasonable or only a cover for demanding a larger commission
Appeal from order of the General Term of the City Court of Brooklyn, reversing a judgment in favor of plaintiff, entered upon the report of a referee and granting a new trial.
This action was brought by plaintiff to recover commissions for his services as a broker, in procuring a loan for defendant.
The facts found by the referee were substantially as follows :
Defendant employed the plaintiff to go to a farm belonging to him, and situated some miles from the city of New York, to examine the same and to estimate the value thereof, and also to procure a loan to be secured by a mortgage on the said farm. The defendant authorized the plaintiff to obtain a loan for $20,000, if he, the plaintiff, could obtain that amount; and if he could not obtain that amount, the defendant agreed to take $10,000. The plaintiff in pursuance of this agreement, visited the said farm, and estimated the value thereof; and, having made such estimate, he endeavored to procure a loan of $20,000 for the defendant, but succeeded only in procuring a loan of $10,000, to be secured by a mortgage on said farm. The defendant in the agreement promised to pay to the plaintiff, for all services, at the rate of two and one-half per cent, on the loan to be by him obtained. The defendant refused to accept the loan of $10,000.
As a conclusion of law, he found that plaintiff was entitled to recover the percentage agreed upon with interest.
Benjamin Estes for the appellant.
The written agreement is valid to the full extent or it is void in toto. (De Beerski v. Paige, 36 N. Y., 537; Williams v. Fitzhugh, 37 id., 444; Leavitt v. Palmer, 3 id., 19; Crawford v. Morell, 8 J. R., 253; Thayer v. Booh, 13 Wend., 53; Barton v. P. J. & U. F. P. R. Co., 17 Barb., 397.) If the written agreement is void, plaintiff may recover on the agreement as it was in fact, it being consistent with the law. (Cook v. Barnes, 36 N. Y., 520 ; Winsted Bk. v. Webb, 39 id., 325; F. & M. Bk. of Genesee v. Joslin, 37 id., 353; Rice v. Welling, 5 Wend., 595; Hammond v. Hopping, 13 id., 505; Seneca Co. Bk. v. Lamb, 26 Barb., 595; Carson v. Ingalls, 33 id., 657.) Evidence of what the original agreement was was competent. (Mason v. Lord, 40 N. Y., 476.) This is not such a case as the statute contemplates in limiting the commission to one-half per cent. (Thurston v. Cornell, 38 N. Y., 281; Eaton v. Alger, 2 Keyes, 41.) A promise to pay illegal compensation does not affect the broker’s right to legal compensation. (Vanderpool v. Kearns, 2 E. D. S., 170.) The exceptions to the referee’s report being general it will be presumed that he found all the facts necessary to sustain the judgment. (Ashley v. Marshall, 29 N. Y., 494; Smith v. Coe, id., 670; Newell v. Doty, 33 id., 83; Brainard v. Dunning, 30 id., 211; Van Slyke v. Hyatt, 46 id., 259; Grant v. Morse, 22 id., 323; Morgan v. Coe, 49 id., 57; Morgan v. Mulligan, 50 id., 665; Viele v. T. & B. R. R. Co., 20 id., 184; Fabbri v. Kalbfleisch, 52 id., 28; Lefler v. Field, 50 Barb., 407.) As the order of the General Term does not state that the reversal was on questions of fact, it must be assumed to have been on questions of law only, and this court can only look to see what errors of law were committed. (Code, §§ 268, 272; Phelps v. Vischer, 50 N. Y., 69.; Sheldon v. Sheldon, 51 id., 354; Vermilyea v. Palmer, 52 id., 471.) Defendant’s exceptions to the admission or exclusion of evidence were in general terms, and were not available upon review. (Fountain v. Pelter, 38 N. Y., 184 ; Walsh v. Wash. Ins. Co., 32 id., 427; Valton v. N. F. L. A. Co., 20 id., 32; Briant v. Trimmer, 47 id., 96; Shaw v. Smith, 3 Keyes, 316.)
Clement D. Newman for the respondent.
The contract cannot be severed and it is therefore void in toto. (Clarke v. Sheehan, 47 N. Y., 188; De Beerski v. Paige, 36 id., 537.) The judgment should not be modified under section 12 of the Code. (Hitchings v. Van Brunt, 38 N. Y., 335.) Where the findings of a referee are not sustained by the evidence, and are contrary to what undisputed evidence requires, a legal error is committed. (McCabe v. Brayton, 38 N. Y., 196; Draper v. Stouvenal, id., 219.)

Opinion:
Church, Ch. J.
If the statute restricting the brokerage for negotiating loans is applicable to this case, we concur with the General Term that the agreement for two and a half per cent was a violation of it. It may be allowable to pay for extra services not usually necessary in procuring loans, in addition to the prescribed brokerage; but it should be separated, so that it may be seen whether the compensation is reasonable, or only a cover for demanding a larger commission. The statute limits the compensation for obtaining the loan to one-half of one per cent, while the plaintiff's evidence is, that because the property was out of the city, and it might be necessary to visit it, he charged, and the defendant agreed to pay two and a half per cent commission; and the same commission was to be paid, whether $10,000 or $20,000 was obtained. If the lesser sum, the plaintiff would receive $200 for his extra labor in visiting the property; while if the larger sum was obtained he would receive $400 for the same labor. The arrangement, whether we take the verbal agreement or the written contract, was a clear violation of the statute, if it embraces this transaction. The statute is as follows: "Ho person shall, directly or indirectly take or receive more than fifty cents for a brokerage, soliciting, driving, or procuring the loan or forbearance of $100 for one year, and in that proportion for a greater or less sum, nor more than thirty-eight cents for making or renewing any bond, bill, note or other security given for such loan or forbearance, or for any counter bond, bill, note or other security concerning the same." This loan was to be for three or five years. Several constructions have been suggested :
1st. That it should be taken literally; in which case it would only apply to loans for one year.
2d. That it should be held to apply only to loans for one year or under.
3d. That the prescribed commission should be the rate per year, or for each year.
4th. That the words, "for one year," should be disregarded; in which case the rate prescribed would apply to all loans.
To adopt the literal construction would render the statute utterly ineffective and useless, as it would only apply when the loan was for precisely one year; while either of the other constructions requires the interpolation of words not in the statute, or the omission of words found there. Whatever might be our views as an original question there are two adjudications involving the precise point, one in the Superior Court of the city of New York, and the other in the Supreme Court of that district, which I think, under the circumstances, are entitled to controlling weight. The case of Corp v. Brown (2 Sand. [S. C. R.], 293), was decided in December, 1848, and Broad v. Hoffman (6 Barb., 177), was decided in March, 1849. The decision in each case appears to have been made independently, and not on the authority of the other; and they both hold that the statute applies to all loans, without regard to time; thus practically disregarding the words " for one year; " and there is great force in the reasoning of the learned judges who delivered the opinions; and the result at which they arrived, probably, effectuates the real purpose and intent of the legislature. These decisions were made by different courts in the city of New York, where the business which this statute affects is largely transacted; and the construction thus established seems to have been acquiesced in for a quarter of a century, without question, by the courts, the legislature or the public. Under these circumstances, we do not think it should be disturbed. This construction entitled the plaintiff to no more than fifty dollars for negotiating this loan; and, if he could have recovered that sum, he has waived it by stipulating that if the order granting a new trial should be affirmed, judgment absolute against him might be rendered. He elected to have the whole or none, and must abide by his decision.
The order should be affirmed, and judgment absolute for the defendant.
All concur, except Rapallo, J., dissenting; Folger, J., concurring in result.
Order affirmed, and judgment accordingly