| N.Y. App. Div. | Apr 17, 1919
Lead Opinion
The first cause of action is plainly one to recover damages for breach of contract. Ib is alleged that the defendant brokers, who were employed by a corporation engaged in the manufacture of munitions of war to negotiate in its behalf contracts and orders with foreign governments, employed the plaintiffs to negotiate and procure an order or orders from the French government for large quantities of picric acid at specified prices, the minimum being $1.60 per pound, and agreed to pay the plaintiffs for their services an amount equal to the difference between said minimum price and the price paid by the French government under the orders procured by the plaintiffs, as the same was paid to the defendants or to the manufacturing plant represented by them; that the plaintiffs negotiated, in accordance with their contract of employment, an order or orders from the French government for picric acid at $1.895 per pound in quantity of 4,000,000 pounds, satisfactory to the defendants and to the manufacturing plant represented by them, and while the plaintiffs were continuing under said contract of employment their negotiations with the French government on the details of the contract covering said order or orders with reasonable prospect of immediately consummating the same, the defendants, well knowing the same and without terminating the contract of employment and without giving the plaintiffs a reasonable opportunity of consummating their negotiations, in violation of the obligations which they owed to the plaintiffs under the contract of employment, negotiated and closed a contract with the French government, to be performed by the manufacturing plant represented by the defendants, for 4,000,000 pounds of picric acid at a price less than the minimum price of $1.60 per pound, which the plaintiffs had. been authorized to quote on behalf of the defendants; that thereby the French government was induced to and did withdraw the orders for picric acid which it had previously placed, or agreed to place, through the plaintiffs, and the plaintiffs were prevented from closing said contract with the French government, to their damage in the sum of $1,180,000.
The contention of the plaintiffs, which I think is sound, is that where a party stipulates with another to do a certain
The defendants contend that the casé does not fall within the principles above stated because, there being no agreement that the plaintiffs had either an exclusive agency to make the sales or a definite period within which defendants agreed to accept the order or orders, the defendants had a right to negotiate the contracts themselves. The basis of this contention is the well-settled rule that a party having employed a broker or brokers to sell property may nevertheless negotiate the sale himself, and if he does so, unless the broker
In the second cause of action the same facts are pleaded and there is added the allegation that the acts of interference by the defendants were done in bad faith and with the inten
The third cause of action repeats the allegations of plaintiffs’ employment and alleges that in accordance therewith plaintiffs negotiated and procured from the French government, for the defendants or for the manufacturing plant represented by the defendants, an order or orders for picric acid at $1,895 per pound and in quantities of 4,000,000 pounds upon terms and conditions satisfactory to the defendants and to said manufacturing plant, but that the defendants refused to accept or execute or cause the manufacturing plant represented by them to accept or execute said orders, to plaintiffs’ damage in $1,180,000. The basis of the attack upon this cause of action is its failure to allege that the French government was ready, able and willing to consummate the agreement. Here again the distinction is to be drawn between a contract to procure an order from a designated party and an ordinary brokerage contract to find a purchaser. In the
As what has been said applies to the fourth, fifth and sixth causes of action, which as to another transaction practically duplicate respectively the first, second, and third causes of action, it follows that the demurrers were properly overruled as to each cause of action and the order appealed from should be affirmed, with ten dollars costs and disbursements, with leave to withdraw the demurrers and answer within ten days on payment of costs.
Clarke, P. J., Laughlin and Merrell, JJ., concurred; Smith, J., dissented in part.
Dissenting Opinion
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" court="NY" date_filed="1872-06-04" href="https://app.midpage.ai/document/mcclave-v--paine-3582654?utm_source=webapp" opinion_id="3582654">49 N. Y. 561; Myers v. Batcheller,
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
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 A.D. 161" court="N.Y. App. Div." date_filed="1903-07-01" href="https://app.midpage.ai/document/faulkner-v-cornell-5192866?utm_source=webapp" opinion_id="5192866">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
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.