Court Opinion

ID: 9859233
Source: CourtListenerOpinion
Date Created: 2023-09-24 19:23:18.987259+00
Date Added: 2024-06-11T10:30:50.435274
License: Public Domain

Dissenting Opinion by
Mr. Justice Cohen :
We note at the outset that our determination in this matter must comply with the rule that a judgment on the pleadings can be granted only in cases that are free and clear from doubt. Levin v. Blue Mountain Dairy, Inc., 407 Pa. 566, 180 A. 2d 908 (1962).
Herman, the plaintiff, alleged that, “as agent for defendant,” Stern, he entered into a certain lease agreement with Roslyn Sailor, as tenant, a copy of which he attached to the complaint; that “defendant ratified and approved the same in writing;” that “Section 37B thereof contain [ed] certain stipulations and agreements between plaintiff and defendant,” including an “agreement” that if the tenant purchased the property defendant would pay the plaintiff 5% of the sales price; that the tenant purchased the property; that plaintiff demanded that defendant pay him 5% of the sales price but that plaintiff refused.
*291That part of section 37(B) which plaintiff relies upon as forming the so-called “agreement” between plaintiff and defendant is, in its entirety, a small type printed clause appearing in the middle of the last page of a five page document prepared by plaintiff. At the top of the first page of the document, in large, bold type, appear the words “Lease Agreement.” Section one of the document is captioned in the margin by the word “Parties.” It states that it is an agreement “between Richard B. Herman & Company, Inc. Agent for James L. Stern of the City of Philadelphia, Pennsylvania, hereinafter called ‘Lessor/ of the one part and Roslyn Sailor . . . of . . . Philadelphia, hereinafter called ‘Lessee’, of the other part.” The document is signed and sealed on page five as follows: “Richard B. Herman & Company, Inc., Agent By Richard Herman” and “Roslyn Sailor.” Then follows the clause: “The principal of Richard B. Herman & Company, Inc., having examined the above lease and agreements, hereby agrees to them and ratifies and approves of the same in all particulars.” Beneath this clause appears the sealed signature of James L. Stern.
In his answer the defendant, inter alia, admitted signing and approving the lease but in new matter averred, inter alia, that the 5% clause “was not part of any understanding or agreement between plaintiff and defendant,” and that “defendant agreed with the plaintiff to pay him only the regular real estate commission for leasing and no agreement was made to pay any additional amount in the event of a sale.” Plaintiff refused to reply to the former averment, deeming it irrelevant, and denied the latter averment stating that “the agreement between the plaintiff and the defendant is as set forth in Section 37B.” Plaintiff further replied that the “lease . . . contains the contract between the plaintiff and the defendant, upon which this suit was brought.” Both parties moved for judgment on the pleadings; plaintiff’s motion was granted.
*292Confining onr analysis to tlie pleadings, as we must in such, a case, it was error to enter judgment for plaintiff; he has not alleged “the material facts on which a cause of action ... is based.” Pa. R. C. P. 1019(a); 3 Goodrich-Amram, §§1019(a) (2), 1019(a)(6). The only basis for a cause of action which is even suggested by the allegations of the complaint is that defendant has committed a breach of a written contract between Mm and defendant which contract is attached to the complaint. There are absolutely no allegations which would support alternative causes based on quantum meruit, or promissory estoppel (no allegation of reliance), or third party beneficiary contract,1 or oral bilateral contract, or oral offer by defendant for a unilateral contract which plaintiff accepted by perform*293anee, or oral offer by plaintiff which defendant accepted in writing (no allegation of any oral communication), or contract implied from conduct (no allegation regarding conduct), or sealed promise (no allegation of delivery).2 Confirming the limited factual ground of the complaint, plaintiff says in his brief: “Plaintiff in fact sued upon a written agreement for the payment of a commission in the event of a sale. There was no need to aver that there had been prior oral discussion resulting in the written agreement. Nor was there any need to deny the averment of defendant that in fact there had been no prior oral discussion.”
Thus, it is plain beyond dispute that plaintiff is relying solely on the fact that the writing which he has incorporated into his pleadings and which defendant has admitted signing demonstrates in and of itself— without any other allegation — a contract between him and defendant. If the writing were a contract the case would be free and clear from doubt and would, therefore, warrant judgment on the pleadings for plaintiff; nevertheless, it is equally true that if the writing upon which plaintiff relies is not, in and of itself, a contract between plaintiff and defendant, then the defendant rather than the plaintiff is entitled to judgment on the pleadings.
“There must be at least two parties in a contract. . . .” Restatement, Contracts, §15 (1932).3 “The re*294quirements of the law for the formation of an informal contract are: (a) A promisor and a promisee each of whom has legal capacity to act as such in the proposed contract; (b) A manifestation of assent by the parties who form the contract to the terms thereof, and by every promisor to the consideration for his promise. . . . (c) A sufficient consideration. . . .” Id. §19. Now it is plain that in one aspect the writing incorporated by plaintiff in his complaint meets the above requirements imposed by law for the existence of contract. But in that aspect it is a contract between plaintiff as agent for defendant-landlord, on the one part, and Roslyn Sailor, tenant, on the other part. The plaintiff signing as agent for defendant, has manifested assent to the terms of the lease on behalf of defendant, and the tenant, by her signature, has done the same on her own behalf. In addition, the defendant, has manifested his assent to the terms of the lease negotiated in his behalf by plaintiff with the tenant.
Plaintiff asserts that within this written contract, negotiated and executed by him with the tenant on behalf of the defendant, there is another written contract — the one upon which he is suing. Allegedly, this contract is section 37(B). But section 37(B), while it states a promisor, a promisee, and consideration, it does not have two parties. There is no indication that plaintiff is a party to it, and thus there is not the required “manifestation of assent by the parties who form the contract to the terms thereof, and by every promisor to the consideration for his promise.” Id. Even if the defendant’s signature beneath the lease ratification clause (which in ordinary experience is only for the purpose of satisfying the statute of frauds, and to relieve the agent of any personal liability), can be taken as defendant’s manifestation of assent to the brokerage commissions clause in section 37(B), there is no similar manifestation on the writing by plaintiff. Plain*295tiff lias signed the writing only as agent for defendant; surely that cannot satisfy the requirement of a manifestation of assent to the terms of a compensation agreement wherein plaintiff and defendant are parties on their own parts. In short, section 37(B) and defendant’s signature constitutes, at most, a signed promise reciting consideration. But, under the law that alone cannot constitute a contract between defendant and plaintiff. Plaintiff has failed to allege how he is a party to the promise — either by showing that it was an offer which he accepted or an acceptance of an offer made by him.
The majority’s analogy to a suit on a deed or note signed only by one party is erroneous. In order to make the signed writing a contractual obligation, there must be a delivery with the requisite intent. See Restatement, Contracts, §§95, 101, 102 (1932). In the complaint there is no allegation of delivery or facts from which a delivery may be inferred. By supplying missing allegations in order to sustain the judgment on the pleadings the majority has deprived the defendant the right to deny such supplied allegations — which denial would defeat the entry of judgment on the pleadings.4
This analysis of the requirements of the formation of a contract is not a mere academic exercise, for it is defendant’s contention that section 37(B) did not form any part of any contract between plaintiff and defendant. Perhaps it is free and clear from doubt that it is a signed, written promise but it is also free and clear from doubt that it is not a contract between plaintiff and defendant. Defendant’s signature may be strong evidence that it is part of such a contract but plaintiff *296must allege and prove the contract — either by alleging and proving that the promise was a written acceptance of some form of offer by plaintiff or that it was a written offer for a unilateral contract which plaintiff accepted by performance, or that it was a written and sealed promise which was delivered to plaintiff. But here we are reviewing a judgment on the pleadings and one searches in vain to find the required allegations.
That plaintiff has not alleged any contract between him and defendant is supported by Smith v. Watters, 38 Ohio App. 437, 176 N.E. 466 (1931). There the cpiestion was whether the Ohio Statute of Frauds, requiring brokerage contracts to be in writing, was satisfied. The writing adduced by the plaintiff-broker in that case was in one aspect a contract between defendant-principal in that case and one Dales for an exchange of properties owned by them. Also, “in that contract . . . there was a provision . . . that [defendant-principal] was to pay a commission to the plaintiff - [broker].” The court said: “The contract which was signed by the defendant-[principal] was not a contract with the plaintiff-[broker] but with Dales.” However, the writing was considered a sufficient memorandum under the Ohio Statute of Frauds.
It is instructive to note how the broker in Smith v. Watters proved a contract with the defendant. In the opinion of the court: “The oral evidence discloses . . . that . . . plaintiff negotiated . . . with Dales, and finally had a lawyer prepare a contract for the exchange by Dales of his property for the five parcels of property of the defendant and then took said contract to the defendant and called her attention to the fact that it was provided in said contract that the defendant should pay to the plaintiff a stipulated real estate commission; that defendant, knowing that said contract contained that provision, signed the contract, with the understanding that the plaintiff would present said contract so signed by the defendant to said Dales and *297procure his agreement and signature thereto, which plaintiff did. . . .” It is clear that in the Smith case, unlike the instant action, the broker proved a contractual arrangement outside the writing with his principal by proving conduct and verbal exchanges from which the elements of a contract could be inferred, and the integration found to be a memorandum.
In his supplemental brief on reargument plaintiff attempts to supply allegations missing in his pleadings by arguing about how an offer and acceptance can be inferred from a tender of the document and other circumstances and conduct surrounding defendant’s signing of the writing. But a brief on reargument is not a substitute for a pleading. Again, it cannot be emphasized too strongly that we are confronted with a judgment on the pleadings; in his pleadings plaintiff rests solely on the allegation of the existence of a signed writing constituting a contract between plaintiff and defendant. There are no allegations regarding the circumstances or conduct surrounding the signing of the writing. Accordingly, the majority’s reliance on such unalleged circumstances is misplaced; at the same time it indicates that the actual allegations are insufficient.
In addition to the inadequacy of his pleadings, plaintiff’s suggestion in his brief that the tendering of the writing to his principal was an offer to contract regarding fees, which the defendant accepted by signing the writing, is of dubious legal validity. It needs no citation of authority to support the rule that an agent owes his principal a duty of loyalty and must deal with him in good faith. It also needs no citation of authority to support the agent’s right to engage in' arm’s length bargaining with his principal on the matter of his compensation. But an agent cannot wear both hats at once. An agent cannot rightly argue that in handing to his principal for his signature a document which on its face purports to be a lease, executed by him as agent for the principal, he is at the same *298time offering to enter into an arm’s length contract regarding his fee. Plaintiff argues that handing such a document to his principal is “analogous to the plaintiff’s saying to the defendant: ‘If you will promise to pay me the commissions set forth in section 37 (B), this lease is yours.’ ” It is obvious that the mere act of handing such a document to the principal is very different from expressly and unequivocally calling the principal’s attention to the fact that the broker is bargaining about fees as was done in the Smith, case. An agent’s duty of loyalty and good faith ivould require him to do more than merely insert his offer in the main body of a lease agreement which he has obtained and signed as agent for his principal.5 It might be quite reasonable to bind the principal with respect to promises made to the tenant in a lease which he has failed to read. But it is not at all reasonable to hold that he should have reasonably understood without explicit disclosure, which is not here alleged, that a document such as that involved in the instant case was also an offer by his agent regarding fees. Requiring agents to bargain at arm’s length for their compensation in a manner distinguishable from the performance of their fiduciary duties is not burdensome and is in accord with sound agency principles.
But irrespective of the soundness of the propositions advanced in plaintiff’s brief the plain fact remains that his complaint does not allege facts which if proven would show a contract between him and defendant. There is no allegation in the complaint of a promise made to the plaintiff by the defendant. There is no allegation of the delivery of the instrument so as to make it operative. Since the adequacy of his complaint depends entirely upon the existence of such a contract he should not have been granted judgment on *299the pleadings. The case should be remanded with leave to plaintiff to amend; and in default of amendment, judgment be rendered for defendant.
I dissent.
Mr. Justice Jones joins in this dissenting opinion.
Dissenting Opinion by
Me. Justice Eagen:
As I read the record in this case, plaintiffs cause of action is based upon the existence of a reverse unilateral contract. While no Pennsylvania authority has thus far recognized the validity of such a contract, and the theory has been ignored in at least two other jurisdictions (see, Warner and Co. v. Brua, 33 Ohio App. 84, 168 N.E. 571 (1929), and Tomars v. Sanford Holding Corporation, 232 App. Div. 169, 249 N.Y. Supp. 982 (1931)),1 there is responsible authority supporting the validity of such obligations. See, 1 Williston, Contracts §71 (3d ed. 1957).
Assuming arguendo that such a contract should be recognized in Pennsylvania, the question still remains: Does the lease agreement involved satisfy its requirements. I conclude that it does not.
Section 57 of the Restatement of Contracts states that a contract of this type is not complete until the offeree (the defendant) makes the promise requested. Section 58 further requires that the acceptance or promise be unequivocal. The mere fact that something is inserted into a lease agreement does not in itself constitute an acceptance. See, Cutler Corp. v. Latshaw, 374 Pa. 1, 97 A. 2d 234 (1953). For the acceptance to be binding in the present case, there must be present a definite acceptance of the demand for additional commissions phrased in unequivocal terms. On this point, the lease agreement is fatally defective. Nowhere *300therein does the defendant unequivocally accept plaintiffs unilateral demand. In view of the type of promise asserted, the signature of the defendant can hardly be considered an unequivocal acceptance. This is particularly so where, as in the present case, the alleged acceptance is incorporated or “slipped” into the agreement between the lessor and the third party.
I would, therefore, reverse the judgment entered in the court below and enter judgment in favor of the defendant.
I further agree with Mr. Justice Cohen's observations concerning the absence of an adequate allegation ox delivery. This, in itself, defeats the right of the plaintiff to judgment on the pleadings.
Mr. Justice Jones joins in this dissenting opinion.

 Even, if he did. so allege it is doubtful that he would fit within the generally prevailing view of a third party beneficiary. This much is apparently conceded by the majority.
“A third party who is not a promisee and who gave no consideration has an enforceable right by reason of a contract made by two others (1) if he is a creditor of the promisee or of some other person and the contract calls for a performance by the promisor in satisfaction of the obligation; or (2) if the promised performance will be of pecuniary benefit to him and the contract is so expressed as to give the promisor reason to know that such benefit is contemplated by the promisee as one of the motivating causes of his making the contract. A third party may be included within both of these provisions at once, but need not be. One who is included within neither of them has no right, even though performance will incidentally benefit him.” 4 Corbin Contracts, §776 (1951).
It requires no extensive analysis to ascertain that Herman is not a third party beneficiary of the Stern-Sailor lease. The obligation purported to be created by section 37(B) would run directly from appellant to appellee. Mrs. Sailor is involved in this obligation only to the extent that her purchase of the leased property is made the prerequisite to the generation of Stern’s obligation to pay additional compensation. There is no intention, either expressed or implied to give plaintiff the benefit of any consideration flowing from appellant to Mrs. Sailor. See Restatement, Contracts, §133 (1932).

 Restatement, Contracts, §§95, 101, 102 (1932).

 “At common law no one could maintain an action upon a contract to which be was not a party. This rule is well established in this country, and is recognized by both the state and federal courts.” Howes v. Scott, 224 Pa. 7, 10, 73 Atl. 186, 187 (1909). This statement by Judge Mestiíf.zat more than half a century ago still expresses the foremost qualification which one must have in order to assert contractual rights. As a general rule only parties to a contract may enforce it and strangers to a contract acquire no rights thereunder. Williston on Contracts §347 (Jaeger ed. 1959); see 1 Corbin Contracts, §124 (1963). As noted in n. 1. supra, and the text thereat the exception to this rule for third party beneficiaries is not applicable here.

 “A contract under seal or other sealed, instrument does not become operative as such until the party executing it does some overt act indicating that he intends it to be immediately operative. This act is called ‘delivery.’” 1A Corbin, Contracts §244 (1963).

 Paragraph three of the complaint reads: . . plaintiff as agent for defendant entered into a certain Lease. . ."

 Both courts apparently considered agreements similar to the present one as without effect because they lacked consideration on the part of the broker at the time they were executed.