Case Name: KNAUSS v. GOTTFRIED KRUEGER BREWING CO
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1894-04
Citations: 31 Abb. N. Cas. 454
Docket Number: 
Parties: KNAUSS v. GOTTFRIED KRUEGER BREWING CO.
Judges: 
Reporter: Abbott's New Cases
Volume: 31
Pages: 454–464

Head Matter:
KNAUSS v. GOTTFRIED KRUEGER BREWING CO.
N. Y. Court of Appeals;
April, 1894.
[Reversing 62 Hun, 46.]
1. Brokers.] A real estate broker,'who is merely employed to find a purchaser for property upon terms and conditions to be determined by the seller when he meets the purchaser, may accept a similar employment from a proposed purchaser; and he is entit'ed to commissions from each party on the bargain being struck, although he has not informed either of his employment by the other.
2. The same.] Nor, in such a case, can it be inferred from the mere fact that the broker stated to the seller that the purchaser was responsible, that such confidence was imposed as would preclude the broker from accepting 'employment from the purchaser, where such statement was made in answer to an inquiry, which was made for the purpose of merely finding out whether it was worth while to take the subject into consideration, and not for the purpose of determining whether or not to make a sale, or its terms and conditions, if one should be made.
3. The sa-ns.] The New Jersey statute which prohibits real estate brokers from claiming commissions, unless their authority to sell" is in writing, applies only where the broker is himsejf authorized to make the sale or exchange of the lands, and not to a transaction in which he has no such authority.
Appeal by plaintiff from a judgment of the General Term of the Supreme Court, first department, affirming a judgment, entered upon a direction of the court at circuit, dismissing the complaint.
The action was brought by William H. Knauss, a real estate broker, to recover commissions for procuring a purchaser for the brewery of defendant, the Gottfried Krueger Brewing Company.
The trial cotirt granted defendant’s motion to dismiss the complaint on the ground that, if there was any employment of plaintiff by the defendant company, it was in New Jersey and no authority in writing had been shown in accordance with the requirements of the New Jersey laws ; and also upon the ground that plaintiff had shown by his own testimony that he was in the employment of the person whom he claims to have been the purchaser, and that he did not notify or advise the defendant that he was in his employ.
The General Term affirmed the judgment dismissing the complaint, holding that as plaintiff was employed as a broker to act for the defendant in effecting the sale of defendant’s property, and defendant had entered into the negotiations relying on the assurance of plaintiff as to the responsibility and character of those with whom he had to deal, defendant’s secret agreement by which he was to receive compensation from the purchaser precluded him from recovering from the defendant.
The further facts are fully stated in the opinion.
Andrew Wesley Kent (John Cummins, attorney), for appellant.
I. No agreement express or implied was made in New Jersey (Citing Waldron v. Ritchings, 9 Abb. Pr. n. s. 359; Jewell v. Wright, 30 N. Y. 259; Dickinson v. Edwards 77 Id. 573); and in any case the defense of the statute was not available under a general denial (Citing Monroe v. Douglass, 5 N. Y. 447; Angell v. Van Schaick, 56 Hun, 247; Rothschild v. Rio Grande R. R. Co., 59 Id. 454; Fagan v. Strong, 7 N. Y. Supp. 919; Graves v. Cameron, 9 Daly, 152).
II. Plaintiff’s relation to both buyer and seller was that of middleman (Citing Story on Agency, § 31; Jarvis v. Schaefer, 105 N. Y. 289; Dearing v. Sears, 3 N. Y. Supp. 31; Empire State Ins. Co. v. American Central Ins. Co., 138 N. Y. 446, 449).
III. Plaintiff's relation to the buyer and the seller being that of middleman, he may receive compensation from either, even without knowledge of the other (Citing Rupp v. Sampson, 16 Gray, 398; Siegel v. Gould, 7 Lans. 179; Herman v. Martineau, 1 Wis. 136; Stewart v. Mather, 32 Id. 844; Barry v. Schmidt, 57 Id. 172; Orton v. Schofield, 61 Id. 382; Ranny v. Donovan, 78 Mich. 318; Montross v. Eddy, 94 Id. 100; Manders v. Craft, 32 Pac. Rep. 836; Mullen v. Kietzleb, 7 Bush, Ky. 253; Walker v. Osgood, 98 Mass. 348; Rice v. Wood, 113 Id. 133; Holcomb v. Weaver, 136 Id. 235).
IV. The averments of the complaint are sufficient to justify a recovery as middleman (Citing Velie v. Newark City Ins. Co., 12 Abb. N. C. 309; Note on Pleadings, 24 Id. 338; Rogers v. New York & Texas Land Co., 134 N. Y. 197; Knapp v. Simon, 96 Id. 284; McBride v. Langan, 18 Civ. Pro. R. 201; Moffat v. Fulton, 132 N. Y. 507).
Louis Marshall (Guggenheimer & Untermyer, attorneys), for respondent.
I. Plaintiff’s undisclosed employment by the purchaser precludes him from recovering commissions from the seller (Citing Carman v. Beach, 63 N. Y. 97; Story on Agency, 31; Farnsworth v. Hemmer, 1 Allen, 494; Claflin v. Farmers’ & Citizen’s Bank, 25 N. Y. 293; N. Y. Central Ins. Co. v. National Prov. Ins. Co., 14 Id. 85; Ewell's Evans on Agency, 14; Greenwood v. Spring, 54 Barb. 375; Neuendorff v. World Mutual Life Ins. Co., 69 N. Y. 389; Raisin v. Clark, 41 Md. 148; Walker v. Osgood, 98 Mass. 348; Smith v. Townsend, 109 Id. 500; Rice v. Wood, 113 Id. 133; Bellman v. Loomis, 41 Conn. 581; Everhart v. Searle, 71 Pa. St. 256; Morrison v. Thompson, L. R. 9 Q. B. 480).
II. The contract of employment was made in New Jersey and is void by the Statute of Frauds (Citing Arnold v. Angell, 62 N. Y. 508).
III. It was not necessary for defendant to affirmatively allege by the way of defense, that plaintiff occupied towards the purchaser such a relation as to dis-entitle him to compensation from defendant (Citing Griffin v. Long Island R. R. Co., 101 N. Y. 354; Weaver v. Barden, 49 Id. 286; Hier v. Grant, 47 Id. 278; Knapp v. Roche, 94 Id. 333; Gilman v. Gilman, 111 Id. 205; Terry v. Munger, 49 Hun, 560).
IV. Respondent has the right, in support of the judgment, to urge any sufficient ground appearing from the record which he might have raised in the court below, which could not have been obviated (Citing Scott v. Morgan, 94 N. Y. 508, 515; Allard v. Greasert, 61 Id. 4; Simar v. Canaday, 53 Id. 298; Newcomb v. Clark, 1 Den. 226; Stevens v. Hyde, 32 Barb. 171).
V. Assuming that plaintiff acted as a middleman, yet since he was not entirely indifferent to the parties, and without defendant’s knowledge acted as the active adviser of the purchaser for a consideration, he forfeited his right to compensation from the defendant (Citing Mechem On Agency, § 973).
VI. Defendant need not show actual injury in consequence of plaintiff's double dealing (Citing Harrington v. V. G. D. Co., L. R. 3 Q. B. Div. 549).
See note on the pleadings at the end of this case.
Section 10 of the New Jersey Statute of Frauds (passed March 27, 1874), provides that “ No broker or real estate agent selling or exchanging land for or on account of the owner, shall be entitled to any commissions for the sale or exchange of any real estate unless the authority for selling or exchanging such land is in writing, and signed by the owner, and the rate of commission on the dollar shall have been stated in such apthority.”

Opinion:
Peckham, J.
This action was brought to recover for services alleged by plaintiff to have been performed by him for defendant in regard to the sale of the brewery owned by the defendant, to one Robert Bliss or his assignee.
The answer put the employment in issue and denied that any service had been performed by, or that any sum was due to the plaintiff touching the subject of such sale. The complaint was dismissed upon the trial, and the General Term has affirmed the judgment of dismissal.
Upon looking through the record containing the evidence given on the trial, it is clear that the admission made by counsel for respondent in his brief, "that the action was, in fact, tried upon the evidence in disregard of the pleadings," has a good deal of support. We think it is too late to claim that the plaintiff must be judged entirely by his complaint, as if it had alleged his employment by defendant as a broker in the strict sense of the word, to obtain a purchaser of the brewery upon terms in regard to which he had some discretion. His evidence upon the subject given at the trial does not prove any such contract, and there was no evidence given which contradicted him. It showed that he was claiming compensation from the defendant because of his having introduced the president of defendant to Mr. Bliss, with whom or with whose assigns the defendant subsequently completed a' sale of the brewery for the sum of $1,822,000.
It is our duty to review the case in the light of the evidence given for the plaintiff, and if there were evidence of any employment substantially within the general scope of the allegations of the complaint, we think it should have been submitted to the jury, unless there were some other facr which also appeared and1 which constituted a defense to che action. The record shows there was evidence of the employment of the.plaintiff for the mere purpose of bringing the possible buyer and seller together, and with the understanding that if a sale-were to result, the plaintiff was to have some compensation from the defendant for his services. The plaintiff testified that he was to have nothing to do with fixing the price or the terms' of sale ; the principals were to do that part of the business; all he had to do was to bring them together, and if through their subsequent negotiations a sale should result, the plaintiff was to be entitled to some compensation. The real defense which is sought to be maintained is that while acting for the defendant in a matter in which trust and confidence were reposed in him, and where defendant relied upon his unbiased judgment, the plaintiff was at the same time, but unknown to the defendant, in the employment of the proposed purchaser and bound by his duty to such purchaser to do all he could to forward the interests of the purchaser as against the seller. There was another defense interposed upon the trial which consisted of a New Jersey statute relating to brokers selling real estate, and which prohibited them from claiming commissions unless their authority for selling was in writing. The brewery which was the subject of sale in this case was situated in New Jersey, and it was urged that the statute applied to the contract proved.
On this point we are of opinion that the statute has no application. It in terms refers to those brokers who are themselves authorized to make the'sale or exchange of the lands, and here the proof is uncontradicted that the plaintiff had no such authority. " «
Upon the other question we think the defendant is clearly right as to the law, but we also think there is nothing in the evidence to make it applicable here.
We agree perfectly with the cases of Carman v. Beach (63 N. Y. 97), and Murray v. Beard (102 Id. 505, 508). The cases upon the subject are also collected in the late one of Empire State Insurance Co. v. American Central Insurance Co. (138 N. Y. 446). It is undeniable that where the broker or agent is invested with the least discretion, or where the party has the right to rely on the broker for the benefit of his skill or judgment, in any such case an employment of the broker by the other side in a similar capacity, or in one where by possibility his duty and his interest might clash, would avoid all his right to compensation. The whole matter depends upon the character of his employment. If A. is employed by B. to find him a purchaser for his house upon terms and conditions to be determined by B. when he meets the purchaser, I- can see nothing improper or inconsistent with any duty he owes B. for A. to accept an employment from C. to 'find one who will sell his house to C. upon terms which they may agree upon when they mee. t. And there is no violation of duty in such case in agreeing for commissions from each party upon a bargain being struck, or in failing to notify each party of his employment by the other.
Now, this, in substance, is what, according to the plaintiff's evidence, he contracted to do with these parties. He was employed by Bliss to see if he could not obtain cusr tomers who would sell their breweries upon terms to be agreed upon by the principals themselves, and he was employed by defendant to introduce its president to someone who wished to purchase, but the terms and all else regarding the contract were to be agreed upon between defendant and the purchaser. There is a piece of evidence which defendant claims is fatal to this view, and shows that the plaintiff violated his duty in concealing or in not mentioning his position with regard to Bliss. When the plaintiff came to the president of the defendant for the purpose of entering upon a discussion of the business and to learn whether he was desirous of selling, the plaintiff was inquired of by the president as to the responsibility of the parties the plaintiff spoke of as desiring or proposing to purchase, for it was said by the president that he did not care to go on with the matter or present it to others unless he knew they (the persons mentioned by plaintiff) were responsible parties. The plaintiff says he assured the president that they were responsible. From that interview others followed, and finally the plaintiff introduced the president to Mr. Bliss, and the negotiations were thereafter conducted between them, and lasted for quite a long time (a number of weeks) before they finally resulted in a sale effected upon terms made up and agreed upon entirely between the parties, without the slightest aid from or interference on the part of the plaintiff.
The defendant urges that the statement of plaintiff that the parties who were intending purchasers were responsible, was a statement upon which defendant was entitled to rely, and to think that the plaintiff was giving the defendant the benefit of his own honest judgment uninfluenced by any concealed interest of his own in having the sale accomplished. We think this is an erroneous view of the situation. It is clear that the remark of the plaintiff in reference to the question of defendant's president was merely incidental, and that the question itself was in reality wholly beside the main question of sale. It was plainly an interrogatory for the purpose of learning in substance whether it was worth while to take the subject into consideration, or whether it might not be mere irresponsible talk by men who had not the slightest intention or even power to carry out a sale. It had no bearing and was not asked for the purpose of obtaining knowledge upon the question whether or not to make a sale, or the terms or conditions of the sale, if one were to be made. No reliance was placed upon the statement as a foundation for any condition of any contract subsequently made, nor was the question asked for any such purpose. This, we think, is apparent from' the nature of the question and the circumstances under which it was asked, and the facts that subsequently occurred. On its face the question manifestly had nothing to do with the subsequent transactions or with the material facts in the case.. It was entirely preliminary in its nature and purpose. The answer might have determined the defendant's president to see the parties and then to make up his own opinion as to whether to go on or not, and as to the terms and conditions of the sale to be made.
The case differs so widely in its facts from that of Holcomb v. Weaver (136 Mass. 265), that we cannot think it necessary to lengthen this opinion by referring to all the material facts in the case cited. In regard to the subject of the double employment, if it be of a nature where by possibility the interests of the parties may be diverse, we agree that it cannot be upheld if concealed from knowledge. There is nothing of that kind appearing in the contract or agreement with either party as testified to by plaintiff. The fact that the sale was after-wards arranged between the parties exclusively upon terms and conditions agreed upon between them and without any reference to any previous statement of plaintiff, shows that it was wholly immaterial and was not put or answered upon any supposition that it could or would in any manner influence the conduct of the defendant after entering upon the negotiations. The defendant claims the sale was not in fact made to Bliss, but to a third party. We think the evidence shows the sale was effected between the parties as contemplated in the contract, and that upon such sale the plaintiff became entitled to a reasonable compensation for the services rendered. He admits in his evidence that the president never said to him what particular sum of money would be paid him, or what rate of commissions, and his compensation will have to be decided upon by the jury at a sum which shall be reasonable for the labor performed. All this has been said as to the case which the plaintiff made out upon the trial. The evidence for the defendant has not been heard, and, of course, no opinion is expressed or entertained as to the merits of the controversy. It is a question for the jury to determine after hearing both sides.
For that purpose the judgment should be reversed and a new trial granted, with costs to abide the event.
All the judges concurred.
Judgment reversed.
Note on Pleading in Action by Broker Employed by Both Parties.
The allegations of the complaint were as follows:
" i. That plaintiff is and for many years has been a broker engaged in the business of buying and selling real and personal property.
" 2. That the defendant is, and during the times therein set forth, was a corporation organized and existing under the laws of the State of -New Jersey, owning a large brewery in the city of Newark, New, Jersey, and engaged in the business of brewing in the said city, and transacting business in the city of Nev^ York.
" 3. That plaintiff, on or about the 2nd of February, 1889, in the city of New York, at defendant's request, introduced one Gottfried Krueger, then and now the President of defendant, to one Robert Bliss, for the purpose of effecting a sale of the brewery and business of defendant.
" 4. That thereafter and on the same day in the city of New York, the defendant agreed with plaintiff that if said Robert Bliss, or his assigns, purchased defendant's said brewery and business, defendant would pay plaintiff for his services as broker his usual commissions therefor.
" 5. That during the months of February, April, May, June and July, 1889, plaintiff rendered defendant, at its request, sei vices in the city of New York and elsewhere as its broker in effectuating said contemplated sale; which was on or about the 15th day of July, 1889,. consummated by the purchase of said brewery and business by the United States Brewing Company, the assignee of said Bliss, in the city of New York, for the sum of one million eight hundred and twenty-two thousand dollars.
" 6. The plaintiff's services were reasonably worth the sum of forty-five thousand five hundred dollars, to wit: a commission of two and one-half per cent. (2 1-2), upon the consideration of said sale, and defendant promised and agreed in the city of New York, to pay said sum therefor.
" That defendant has not paid said sum or any part thereof, and the whole amount thereof remains due and owing from defendant to plaintiff with interest from said 15th day of July, 1889."
" Wherefore," etc.
The court at General Term, in its opinion, after reciting the substance of the complaint, said : " The plaintiff by his complaint thus establishes for the purposes of this action his relation to the defend ant. He alleges that he was a broker; that he rendered services to defendant as its broker in effectuating the sale, and that such services were reasonably worth the sum for which he demands judgment, and to entitle him to recover in this action, he must prove that he was employed by defendant as its broker, to render services as a broker; that he rendered such services, and that the value of such services was the sum for which he seeks to recover judgment, and he cannot ask to recover upon the pleadings for any other or different service rendered to defendant or for services rendered in another or different relation than that which he alleges did exist in his complaint." . . . The testimony " sustains the allegation of the complaint that the relation of the plaintiff to the defendant was that of a broker engaged in an endeavor to effectuate a sale of the defendant's property." . . . The claim by plaintiff that he acted as a mere middleman and not a broker, is negatived by his own complaint and by his own testimony-upon the trial.