Court Opinion

ID: 5393444
Source: CourtListenerOpinion
Date Created: 2022-01-08 10:02:45.953031+00
Date Added: 2024-06-11T08:30:19.895091
License: Public Domain

Oallahan, J.
(dissenting). In my opinion Special Term erred in granting summary judgment for defendants. It did so on what appears to be untenable grounds. It held, in effect, that neither the sellers nor the buyer were irrevocably committed to each other on the sale of certain stock and that the broker had not earned his commissions even though the buyer was ready, able and willing to buy and the sellers were the ones who refused to complete the sale.
The agreement gave the broker an exclusive right to sell all defendants’ stock in L. & C. Mayers Co., Inc., on or before August 31, 1950, for the price of $2,500,000 “ for all the shares, payable in cash, or upon such other terms as may be acceptable to you (the sellers) ”. The contract continued: “ should I obtain a purchaser by that date, but the transaction should perchance close thereafter, my commission nonetheless will have been earned.” It then said: “ Because the deal is capable of being worked out in different ways, our understanding is that I am to receive my commission no matter what kind of assets you actually sell or in what form the transaction is cast.”
The first question is whether the clause “ upon completion of the transaction ” was intended to create a condition precedent or to merely fix the time of payment. The context would seem to ascribe to it the latter meaning. In any event it is well settled that in the absence of a covenant clearly indicating an intent to exculpate the seller upon his own refusal to complete, the employer cannot deprive the broker of his commissions by the employer’s failure to consummate the trade, after the broker has produced a buyer ready, able and willing to buy on the seller’s terms. (Clinchy v. Grandview Dairy, 262 App. Div. 51, affd. 288 N. Y. 502; Colvin v. Post Mtge. & Land Co., 225 N. Y. 510; Mengel v. Lawrence, 276 App. Div. 180; Sheridan v. McLaughlin, 172 App. Div. 314.) We have no such exculpatory clause here.
*180The rule is clearly stated in the leading authority of Sibbald v. Bethlehem Iron Co. (83 N. Y. 378, 383-384) as follows: “ If the efforts of the broker are rendered a failure by the fault of the employer; if capriciously he changes his mind after the purchaser, ready and willing, and consenting to the prescribed terms, is produced; or if the latter declines to complete the contract because of some defect of title in the ownership of the seller, some unremoved incumbrance, some defect which is the fault of the latter, then the broker does not lose his commissions. And that upon the familiar principle that no one can avail himself of the non-performance of a condition precedent, who has himself occasioned its non-performance. But this limitation is not even an exception to the general rule affecting the broker’s right, for it goes on the ground that the broker has done his duty, that he has brought buyer and seller to an agreement, but that the contract is not consummated and fails through the after-fault of the seller.”
It is quite apparent that the sellers never attempted to terminate the employment of the broker in the present case, and thus the question is not presented as to whether they did so in good faith before the commissions were earned. In fact, the sellers could not terminate, for the contract of employment gave the broker the exclusive right to sell until August 31,1950. The termination of the deal by the sellers occurred before that date.
The only issue of any moment here is whether the broker performed the terms of his employment by procuring a buyer, who was ready and willing to buy on the terms prescribed by the seller. This depends mainly upon whether the sellers in the course of negotiations agreed to modify the prescribed terms of sale so as to accept a price of $2,170,000 in cash, plus 12,500 shares of stock of the buyer corporation.
The written contract of employment required the broker to get $2,500,000 payable in cash or upon such other terms as might be acceptable to the sellers. As the price of $2,170,000 plus the stock, was apparently less than $2,500,000, plaintiff was required to establish that the sellers had agreed to accept the lesser price that the broker got, that the buyer agreed to contract at the reduced price, and that the sellers then refused to close the deal. The plaintiff says that the buyer insisted that the sellers take some stock of the buyer corporation, and that they claimed that certain assets had been overvalued, and on August 2, 1950, the sellers agreed to the modified terms. Such a modification of the selling price would amount to a modification of the broker’s obligation. The seller would be bound by the modified terms *181of employment, if he availed himself of the continued service of the broker. There would be no doubt that the commission would have been earned, if an executory contract of sale had been entered into at the altered price. (Bliven v. Lighthouse, 231 N. Y. 64; Colvin v. Post Mtge. & Land Co., supra; Tanenbaum v. Boehm, 202 N. Y. 293.) I see no reason why the same rule should not be applied, if the broker obtained a willing buyer at the new terms and the seller then changed his mind or capriciously refused to close the deal at the new price (Ostroff v. Doctor, 238 N. Y. 264; Mooney v. Elder, 56 N. Y. 238).
Upon this appeal the sellers take the position, at least in their briefs, that they did not agree to accept the reduced price. It cannot be denied, however, that after several drafts of a complete contract were drawn, a final contract was signed by all the sellers and the buyer providing for a sale of $2,170,000 plus 12,500 shares of stock. This lends strong support to the plaintiff’s claim that such price had been accepted by the sellers. It could be possible, of course, that this whole process of drawing-contracts Was tentative, and that the sellers had reserved their acceptance of the reduced price pending the completion of loan negotiations by the buyer. If this was so, the sellers were required to come forward with unequivocal statements to such effect in answer to the broker’s motion for summary judgment. I find no such statement in this record. In fact, I find no direct denial that the sellers had agreed to the reduced price.
The written agreement of sale though signed was not delivered but held in escrow by one of the attorneys under an arrangement whereby the buyer had a certain period to complete pending negotiations for financing. The buyer was to advise the escrowee of the successful completion of these negotiations and the escrowee was to convey that information to the sellers whereupon the sellers were to deposit the stock to be sold with the escrowee and the purchaser was to deliver certain purchase money checks. The sellers, however, had the right under the escrow agreement to refrain from delivering the stock and the escrow agreement was thereupon to be terminated and the signatures to the agreement destroyed.
What happened thereafter is not in substantial dispute. The buyer did notify the escrowee of the successful completion of the loan negotiations and his readiness to close and the escrowee conveyed this information to the sellers. The sellers’ attorney thereupon advised the escrowee that the sellers were not going to complete the sale. This was clearly a rejection of the deal by the sellers and the buyer was not required to deposit the *182checks. They aver, without contradiction, that they were at all times ready, able and willing to complete the purchase.
The only fact set forth in the sellers’ affidavit is that the broker was hired to complete a sale at $2,500,000 and he failed to obtain this price. They make no reference to the alleged modification of the price and terms and fail to deny the facts set forth in the plaintiff’s affidavits with respect thereto. Nor do defendant sellers deny plaintiff’s allegations with respect to the claim that the sellers were the ones who backed out of the deal. The sellers do not attempt to explain why the escrow agreement contained a clause giving them the right to withdraw from the sale, nor do they attempt to explain their action in failing to complete.
It does not appear to me that the fact that the buyer’s acceptance was temporarily conditional alters the case in view of what subsequently happened when the buyer made its willingness to take unconditional. The sellers’ option to escape sellingvis-a-vis the buyer and their exercise of that option, did not permit them to escape liability to the broker. The brokerage contract had no escape clause. Commissions were due if the broker produced a buyer before August 31st, and the present buyer made his willingness to take unconditional before that date.
The case is somewhat analogous to one where the buyer takes an option to buy. No liability for commissions would arise until after the exercise of the option by the buyer, but the seller would be liable for commissions, when the buyer exercised the option, if the seller then refused to complete the sale (Seidman v. Rauner, 51 Misc. 10).
A point has been raised that under subdivision 10 of section 31 of the Personal Property Law any modification of the broker’s contract is required to be in writing. Here the broker had a written contract, and the alleged modification refers to the sales price and not to any other term of the broker’s employment. It would not seem to me to be the intent of the Legislature that the sales price was to be deemed such an essential part of a brokerage contract so as to require it to be in writing. In other words, it would not seem that the Legislature intended that a new broker - age contract or a new writing; was to be drawn with each modification of the terms of sale during the course of negotiations. Be that as it may, the provisions of the present contract were broad enough to show an obligation to pay commissions upon a sale on any agreed terms, or in whatever form the transaction was cast, so that the present writing would appear to satisfy the statute.
*183For the reasons indicated, direction of summary judgment for defendants was improper. There being no sufficient statement of facts in the defendants’ affidavits to show any triable issue with respect to the earning of commissions by the plaintiff, the plaintiff should have summary judgment. I vote to reverse the order appealed from and award plaintiff summary judgment.
Peck, P. J., and Breitel, J., concur with Yak Yoorhis, J.; Callahan, J., dissents and votes to reverse, in opinion.
Judgment and order affirmed, with costs.