Opinion ID: 670488
Heading Depth: 3
Heading Rank: 1

Heading: The jury finding of agency

Text: 45 The landlords dispute the jury's finding of agency, arguing that AM Realty served not as their agent, but rather as the agent of the prospective tenants. Before we can determine whether AM Realty could be found to be the landlords' agent, we need to determine what standard of review we should apply to this question. 46 The Open Housing Center urges that the question whether an agency relationship exists is a factual question, a jury's answer to which we review only for clear error. The landlords, on the other hand, maintain that it is a legal question, a trial court's answer to which we are obliged to review de novo. We believe that the question of whether an agency relationship exists is a mixed question of law and fact. 12 We review the District Court's conclusion on the issue only to see whether plaintiffs introduced evidence which, if credited by the jury, would justify a finding of agency. 13 A determination that an agency relationship exists requires the application of a legal standard to a set of historical facts. Agency is a legal concept which depends upon the existence of required factual elements: the manifestation by the principal that the agent shall act for him, the agent's acceptance of the undertaking and the understanding of the parties that the principal is to be in control of the undertaking. Restatement (Second) of Agency Sec. 1 cmt. b (1958). Unless the facts are insufficient to support a finding of agency or there is no dispute as to the historical facts, the question of agency should be submitted to the jury so that it may apply the applicable legal standard, as set forth in the instructions, to the facts, as the jury finds them. 14 See Slotkin v. Citizens Casualty Co., 614 F.2d 301, 317 (2d Cir.1979), cert. denied, 449 U.S. 981, 101 S.Ct. 395, 66 L.Ed.2d 243 (1980) ([Plaintiffs'] burden of proof to avoid dismissal of the complaint was not to prove the agency but merely to adduce sufficient evidence to take the issue to the jury.). 47 We first review the evidence presented by the plaintiffs with regard to the relationship between AM Realty and Jakabovitz. Jakabovitz supplied AM Realty with listings of vacant apartments with the understanding that AM Realty would refer prospective tenants to him for those apartments. Jakabovitz instructed AM Realty to refer only those applicants who met his income requirements (namely, that a tenant's weekly income equalled or exceeded his or her monthly rent) and also his criteria for the number of persons occupying an apartment (roughly, no more than two persons in a studio, and no more than three in a one bedroom apartment). Jakabovitz provided copies of his rental application forms to AM Realty, and AM Realty employees often personally delivered completed application forms to Jakabovitz's office. On those occasions when Jakabovitz was unavailable, leases would be signed in AM Realty's offices, and AM Realty would accept the rent and security deposit on Jakabovitz's behalf. Realty brokers set up appointments for Jakabovitz to meet with prospective applicants, even at times driving applicants to Jakabovitz's office. When Jakabovitz accepted a rental application from a person referred by AM Realty, AM Realty brokers would contact the applicant to tell him or her that the application had been approved. 48 AM Realty had a larger role in renting Breitman's apartments than it had in renting Jakabovitz's apartments. Breitman too supplied AM Realty with listings of vacant apartments, and expected it to refer only prospective tenants who met his income requirements and his criteria for the number of persons who would occupy the apartment. But Breitman also required AM Realty to run credit checks on prospective tenants. Furthermore, Breitman asked AM Realty to contact applicants' prior landlords to determine whether the applicants had had any difficulties in paying their rent or in their interactions with other tenants. Like Jakabovitz, Breitman provided AM Realty with rental applications for his apartments. But unlike Jakabovitz, Breitman usually allowed the lease to be signed in AM Realty's offices without being present at the signing. In fact, Breitman often never met with the applicants at any time before they moved in, and instead relied on AM Realty brokers to answer any questions the future tenants might have about the lease. 49 All of AM Realty's brokers (who are also defendants in this case) admitted in their answers that they acted as the landlords' agents, except for one (Siegel) who neither admitted nor denied that he had acted as the landlords' agent. At trial, however, Fischler, the key figure in AM Realty, denied that he had served as the landlords' agent, explaining his earlier concession as the handiwork of his former attorney. Breitman himself admitted in a number of pretrial pleadings that AM Realty served as his agent, but also disavowed that admission at trial. While trial testimony that controverts an admission contained in a pleading may reduce the weight given to that admission, see United States v. McKeon, 738 F.2d 26, 31 (2d Cir.1984), the jury is free to disregard the later retraction if it finds the retraction not credible. A person's statement that he was an agent of another may not establish that relationship as an incontrovertible fact, but it can help establish that that individual himself believed that he was acting on another's behalf and under another's control. See Slotkin, 614 F.2d at 316 ( '[A] person can properly testify as to the facts which it is alleged constitute his authority, and his testimony can be introduced either by or against the alleged principal.'  (citation omitted)); Restatement (Second) of Agency Sec. 285 cmt. a (1958). Likewise Breitman's admission in the pleadings that AM Realty was his agent may help establish that he had agreed that AM Realty would act as his agent. 50 As mentioned earlier, whether an agency relationship exists depends on the existence of required factual elements: the manifestation by the principal that the agent shall act for him, the agent's acceptance of the undertaking and the understanding of the parties that the principal is to be in control of the undertaking. Id. Sec. 1 cmt. b. Here, there was ample evidence from which the jury could have inferred that the landlords had manifested a desire to have AM Realty act on their behalf in renting their apartments, and that AM Realty had accepted this agency. The landlords provided AM Realty with listings of their apartments and their criteria for acceptable tenants. AM Realty engaged in the business of renting these apartments and in screening the applicants to make sure that they met Breitman's and Jakabovitz's specifications. There was sufficient evidence also to indicate that the landlords controlled AM Realty's activities in referring candidates for these apartments. Both landlords had the power to deny further listings to AM Realty if the brokerage referred unacceptable applicants for the apartments. Breitman had in fact at one point cut off AM Realty from receiving further listings from his apartments, but had later reinstated the brokerage. 51 Appellants urge that the Supreme Court's decision in General Building Contractors Association v. Pennsylvania, 458 U.S. 375, 102 S.Ct. 3141, 73 L.Ed.2d 835 (1982), requires us to reverse the finding of agency. In General Building, the Court held that respondeat superior was not available where plaintiffs had presented no evidence that certain trade associations and construction employers controlled a union and a training committee. Here, however, as we have seen, plaintiffs presented evidence that the landlords dictated the qualifications for prospective tenants, and conditioned the realtor's receipt of future apartment listings on its abiding by the landlords' specifications. These facts also distinguish this case from Wheatley Heights Neighborhood Coalition v. Jenna Resales Co., 447 F.Supp. 838 (E.D.N.Y.1978), a case in which the District Court ruled that no agency relationship existed between brokers and a real estate multiple listing service. The Court held that a service that provided property listings to brokers was not responsible for the brokers' racial steering because the brokers did not act on behalf, at the behest, or for the benefit of the listing service, and because the service did not control the sales of the brokers, but only conditioned its provision of listings to the brokers. Id. at 842. Unlike Wheatley Heights, the brokers in the instant case acted pursuant to the landlords' directives to refer only acceptable tenants and the landlords benefitted from the brokers' service by renting their vacant apartments. Furthermore, the landlords not only conditioned the receipt of future apartment listings, but also required the brokers to perform various services, including screening applicants according to the landlords' rental criteria, showing them available apartments, and shepherding them through the application process. Plaintiffs presented sufficient evidence regarding the existence of an agency relationship to take the issue to the jury. 52 The landlords further argue that the brokers could not have been their agents because the brokers earned their commissions from prospective tenants, not from the landlords. The fact that the tenants paid the broker does not preclude a finding that the broker acted as the owner's agent in renting the apartment. 15 The District Court presented the question of agency to the jury, which found that the evidence demonstrated that AM Realty had served as the landlords' agent. We cannot say that the evidence was insufficient as a matter of law to allow this conclusion. 53 Finally, the landlords contend that imputing liability to a landlord for the discriminatory practices of a real estate broker contravenes what they believe to be a public policy favoring the use of real estate brokers. We believe that our decision will not harm the business of renting apartments, whether or not brokers are used. First, public policy certainly does not favor the use of brokers who engage in the repugnant practice of racial steering. Our decision will only increase the costs of using brokers who discriminate, and thereby potentially reduce such discrimination. Second, landlords need not be dissuaded from using brokers because of their fear that they will be held liable if the brokers discriminate. Landlords will be able to allay this concern by looking over the racial composition of the broker's referrals for any sign of discrimination. While this examination will not prove that a broker is discriminating, it will at least alert the landlord to that possibility and allow the landlord to take appropriate steps to avert such discrimination. Finally, instead of frustrating public policy goals, we believe that our decision will actually further the purposes of the Fair Housing Act: 54 The provisions of 42 U.S.C. Sec. 3604 are to be given broad and liberal construction, in keeping with Congress' intent in passing the Fair Housing Act of replacing racially segregated housing with truly integrated and balanced living patterns. 55 Woods-Drake v. Lundy, 667 F.2d 1198, 1201 (5th Cir.1982) (quoting Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 211, 93 S.Ct. 364, 367-68, 34 L.Ed.2d 415 (1972)) (quoting statement of Senator Walter Mondale, 114 Cong.Rec. 3422)). 16