Court Opinion

ID: 5253087
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:19:28.826015+00
Date Added: 2024-06-11T08:27:58.468458
License: Public Domain

Smith, J. (dissenting):
My dissent from the conclusion reached by the majority of the court is simply in respect of the first and fourth causes of action. The averments of the first and second causes of action are, in all respects, similar, with the single exception that in the Second cause of action it is averred that the acts of the defendants in consummating the contract with the French government were committed “ in bad faith and with the intention * * * of preventing the consummation of said contract under negotiation by plaintiffs with the French government.” It may be assumed, therefore, that it was the intention of the pleader to omit these elements in his statement of his first cause of action, to the end that his right to recover without such proof might be tested. The law is well settled in the ordinary brokerage contracts that the contract is not exclusive unless it is therein specifically so provided. (McClave v. Paine, 49 N. Y. 561; Myers v. Batcheller, *287177 App. Div. 47; Wylie v. Marine Nat. Bank, 61 N. Y. 415.) I see no substantial reason for holding a different rule where the customer is named in the brokerage contract. It is clear that the defendants might assist in procuring that contract. They might praise the property to be sold and urge the sale by the proposed purchaser. But, suppose during the negotiations they should ascertain in good faith that the sale could not be made with conditions satisfactory and necessary to themselves at the price that they have named. Must they then abandon the sale entirely or pay the commission from the reduced price received? Suppose they cannot afford to pay the commissions from the reduced purchase price, must they then lose the sale entirely because perchance they have offered a broker a commission if a sale be made at a greater price? This court has by this decision answered yes. They must lose their sale, because if sold for less they are preventing a sale at the minimum price given to the broker. And this rule is held notwithstanding the defendants, in good faith, believed and knew that the proposed sale at the greater price could not be consummated. This proposition is to my mind repugnant to sound reason.
This contract which was finally negotiated, involving the production of 4,000,000 pounds of picric acid, involving between $6,000,000 and $8,000,000, was not the ordinary contract of purchase and sale. It was a contract in which the details were of vital importance. Whether payment should be made after the delivery of all of the acid, or of a certain part thereof; whether security should be given for the payment, and if so, what security; whether advancements should be made by the purchaser to enable the manufacturer to enlarge his plant to produce this large amount in quick time for war purposes, these were not the details of an ordinary contract of purchase and sale, but were as vital as was the quantity and the price. The plaintiffs’ contract was for compensation if the sale were made at a price of $1.60 a pound. There was annexed the implied condition that the terms of payment and the other details of the contract, important, as indicated, should be satisfactory to the manufacturer or to the defendants. The plaintiffs did not state their first cause of action upon a contract fulfilled. They admit that no contract *288was made satisfactory to the defendants at a price of $1.60 per pound. All they allege is that they had agreed upon the price and amount and were negotiating upon details, “ with reasonable prospect of immediately consummating the same,” which was known to the defendants, and that they were prevented from that consummation by the acts of the defendants negotiating a contract at a lesser sum.
In a transaction of this magnitude, it is inconceivable that a seller would intentionally tie his own hands in order that the broker may take further time to further negotiate and consummate a sale. Where a seller, after having employed a broker, himself steps in and makes a sale, if the brokerage contract were not definite, he might be deemed to have acted with and in co-operation with the broker so as to entitle the broker to his compensation. Not so, howeyer, where the brokerage contract is to sell for a specific price, for, in that case, the broker has not performed his contract unless he produces a customer satisfactory to the seller who will pay that price. (2 Mechem Agency [2d ed.], § 2437.) In the note to this section the author says: “ Where the price was fixed a purchaser must be produced ready, willing and able to buy at that price, and if the purchaser offered will not buy at that price, but only at a lower, the broker will not be entitled to commissions, unless there was collusion between the principal and purchaser.” (Faulkner v. Cornell, 80 App. Div. 161; McClave v. Paine, supra.)
It has many times been said that good faith is implied in every contract and so it is in this contract. If the defendants in bad faith and for the purpose of depriving the plaintiffs of their commissions had negotiated this sale they should properly be held hable to the plaintiffs for their commissions. But the cause of action as alleged in the first count presents no question of bad faith or sinister purpose in the making of the contract. It assumes, as I view it, and as the pleader intended, that the contract made was made by the defendants in the full belief that it was the best contract obtainable.
In Patterson v. Meyerhofer (204 N. Y. 96) the rule is stated: “ In the case of every contract there is an implied undertaking on the part of each party that he will not intentionally and purposely do anything to prevent the other party from carry*289ing out the agreement on his part, and a party who causes or sanctions the breach of an agreement is thereby precluded from recovering damages for its non-performance or from interposing it as a defense to an action upon the contract.” In Mechem on Agency ([2d ed.] p. 2022) the author says: “ Thus, it could not be contended that the principal might, by slightly reducing his terms for the purpose of avoiding liability to the broker, nevertheless avail himself of the broker’s efforts without being hable to him for his commission.” (Italics in text.) Moreover, this rule of liability is recognized by the pleader himself who alleges in his second cause of action all the facts alleged in his first cause of action and in addition that the acts of the defendants were “ done in bad faith and with the intention on the part of the defendants of preventing the consummation of said contract under negotiation by plaintiffs with the French government.”
To briefly summarize my views: First, a broker’s contract is not exclusive unless so stipulated. Second, the seller is only hable to the broker upon strict performance of the broker’s contract unless the consummation of that contract be intentionally prevented by the seller for the purpose of defeating the right of the broker to compensation. Third, the complaint must show a cause of action, and as the intervention of the defendants in the making of this contract at a lower rate may have been necessary to procure the contract, the plaintiffs have stated no cause of action for lack of an allegation that the making of the contract by the defendants was in bad faith and for the purpose of preventing the consummation of the contract that the plaintiffs were attempting to negotiate. In my judgment the first cause of action is, therefore, defective, and the demurrer thereto should have been sustained. The same reasoning applies to the fourth cause of action.
Order affirmed, with ten dollars costs and disbursements, with leave to defendants to withdraw demurrer and to answer on payment of costs in this court and at Special Term.