Court Opinion

ID: 5360493
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:22:33.66674+00
Date Added: 2024-06-11T08:29:51.975473
License: Public Domain

Dore, J. (dissenting).
The contract on which plaintiff seeks to recover is a claimed oral agreement between plaintiff as broker for the seller and defendant as broker for the buyer, to “ pool ” between them, as plaintiff’s witness testified, “ on a fifty-fifty basis ” all commissions received from either or both principals. Defendant emphatically denied that any such oral agreement was ever made. As the claimed agreement gave each broker a special interest in commissions paid by the other party to whom his own client’s interests were naturally adverse, the arrangement was improper unless fully revealed to and approved by each of the principals. Plaintiff adduced no evidence to show that the alleged pooling arrangement was ever revealed to its own client.
The testimony purporting to establish the agreement is destroyed by plaintiff’s own documentary proof. Defendant, as broker for a buyer, on October 24, 1935, wrote plaintiff, as seller’s broker, a long *161letter making a formal offer for the purchase of the property, setting forth all the conditions “ which must be fulfilled ” before the proposed buyer would be bound to take title, and ending with the following: “ This offer is made upon the further condition that this Company [defendant] shall receive on a sale of the whole or any part of the premises above described one full commission at the rate of 5%.” Plaintiff offered this letter in evidence and is bound by its terms. It is usual and customary, and plaintiff’s officers so admitted, that the seller pays the commission to the buyer’s broker, here the defendant. Defendant’s letter of October twenty-fourth notified plaintiff that defendant as buyer’s broker insisted on receiving this usual and customary full commission on the sale, and indeed made that a condition “ which must be fulfilled ” before there could be a sale. That condition openly contradicted the oral agreement claimed to have previously been made, that all commissions were to be pooled. Plaintiff’s witnesses admitted that fact. But to that letter there never was any answer written by plaintiff. Just as the pooling agreement was purely oral, so the only claimed answer to the letter was an alleged telephone conversation. Hoffman, plaintiff’s president, testified that when he received the letter, “ immediately on my reading it I knew it was contrary to what our agreement was,” and thereupon telephoned defendant, spoke to Mr. May about it, and claimed May told him with reference to the five per cent commission mentioned that May thought he was going to be able to get that from his own purchaser, and so Hoffman said he concluded “ then we would each make five per cent out of the proposition.” This testimony not only contradicts the plain language of the letter, but suggests an incredible and even absurd agreement to divide commissions when five per cent was to be received by each broker from his own customer and there was no need of any division. On November 15, 1935, defendant, through its president, William B. May, again wrote plaintiff, “ Referring to our letter to you of October 24th, 1935,” and May advised plaintiff that he had succeeded in getting an increase of the offer to $60,000 cash for the property “ therein described upon the same terms and conditions.” To this second letter reiterating in writing as one of the essential terms and conditions of the sale that defendant receive “ one full commission at the rate of 5%,” there was again no answer. Hoffman could not even state whether he called up May after receiving that letter. Had the agreement been as plaintiff claims, Hoffman, an experienced real estate broker, undoubtedly would have so stated promptly in writing and would not have left the important question of commissions to a talk over the telephone twice contradicted by *162two unanswered letters of defendant explicitly insisting on an entirely contrary arrangement.
But that is not all. On November 25, 1935, plaintiff wrote its own employer, the New York Trust Company, submitting to that company through Mr. Tighe, its assistant secretary, defendant’s increased cash offer of $60,000, and purporting to give the “ conditions ” thereof; all of the terms set forth in defendant’s letters of October twenty-fourth and November fifteenth were incorporated except the very significant and important condition that defendant, as buyer’s broker, expressly demanded the usual full five per cent commission, which was entirely omitted. When asked why that particular condition was omitted, when all others were given, one of plaintiff’s witnesses, an officer of plaintiff corporation, gave the wholly incredible explanation: “ A. Because it was not necessary.” If there was in fact an agreement to pool commissions, then plaintiff in its letter to its own employer should have made full disclosure of all the terms including the important condition relating to full commissions to be paid by its own client to the buyer’s broker. Unless we presume unethical conduct on plaintiff’s part, its testimony is incredible on its face. A broker is employed to effect a sale on terms most advantageous to his own employer, and it is an axiom of good morals, as well as a rule of law, that there cannot be double employment without full knowledge on the part of both seller and buyer. I
On April 2, 1936, plaintiff wrote its employer, the New York Trust Company, waiving all commissions on the sale of the property “ in view of the conditions explained to us.” Plaintiff contended on the trial that when it wrote that letter it was deceived; that on the morning of April 2, 1936, Mr. Tighe of the New York Trust Company called Hoffman on the telephone and stated that an offer had been made “ by some entirely different people than the people that we had been negotiating with,” and asked whether “ in view of the fact that it was an entirely independent group and the fact that the widows and orphans had suffered so much by reason of the mortgaged condition of the property and the various foreclosures thereon, whether in this case we would be willing to forego our commission.” Hoffman testified he then “ stated very specifically to Mr. Tighe that if it were the fact that the people who are now making the offer for the purchase of this property on a net basis were entirely different from those with whom we had the communications in the past, we would be perfectly willing to forfeit our commission.” It should be obvious that this telephone conversation with Mr. Tighe, who was not produced, was pure hearsay and wholly incompetent. Defend*163ant’s counsel promptly objected before any of the conversation was given, but the court, over objection and exception, permitted the entire conversation which was obviously highly prejudicial to defendant. If there were any such conversation, it should have been easy for plaintiff to produce Mr. Tighe, secretary of plaintiff’s own employer, to testify to the facts and at the same time enable defendant to explore who had made the representation that the purchasers were entirely different. This is the only testimony in the record explaining the “ conditions ” mentioned in plaintiff’s letter of April 2, 1936, that led plaintiff to waive commissions. Except for this incompetent evidence and the inescapable inferences a jury would draw therefrom, there is nothing to show that the letter of April second was written because of any acts of deception on defendant’s part, an issue that was vital to plaintiff’s case.
As a result of this reversal of the Appellate Term’s judgment, plaintiff will now share equally with defendant in commissions paid not by plaintiff’s client, the seller, but by defendant’s client, the purchaser, under a claimed oral agreement which, if ever made, was unethical and was destroyed by plaintiff’s own documentary proof; and plaintiff will recover on a theory of fraud and deceit on defendant’s part in procuring plaintiff’s waiver of commissions, although there is no competent evidence whatever before the court to show any fraud on defendant’s part in procuring such waiver. The Appellate Term was entirely correct in its determination that plaintiff’s evidence was insufficient to support a recovery.
The determination of the Appellate Term should be in all respects affirmed, with costs.
Untermyer, J., concurs.
Determination appealed from reversed and the judgment of the City Court in favor of the plaintiff affirmed, with costs and disbursements to the plaintiff in this court and in the Appellate Term.