American Mercantile Corporation v. Spielberg

• Decision Date: 02 December 1919
• Docket Number: 11.
• Citation: 262 F. 492
• Parties: AMERICAN MERCANTILE CORPORATION v. SPIELBERG.
• Court: U.S. Court of Appeals — Second Circuit

262 F. 492

AMERICAN MERCANTILE CORPORATION v. SPIELBERG.

No. 11.

United States Court of Appeals, Second Circuit.

December 2, 1919

The American Mercantile Corporation is a corporation organized under the laws of the state of Delaware. The defendant Spielberg, is a citizen of the state of New York, residing in the Southern district of that state.

The defendant was the owner of an undivided half interest in the American steamship Fordonian, subject to said vessel being security to the Equitable Trust Company for a loan amounting to approximately $310,000; the owner of the other half interest being A. W. Duckett & Co., Incorporated, which company was in the hands of a receiver appointed by the United States District Court in the Southern District of New York. The defendant's half interest in the Fordonian had been secured by obtaining the loan above mentioned from the Equitable Trust Company, which was made upon the note of A W. Duckett & Co., Incorporated, indorsed personally by A. W Duckett and by defendant, and secured by a bill of sale of the vessel to Arthur A. Miller, nominee of the Equitable Trust Company. The loan became due December 27, 1917, at which time notice of its nonpayment was given to defendant by the Equitable Trust Company; and on January 7th notice was sent to defendant that if the note was not paid on or before January 10, 1918, legal proceedings would be brought against him immediately for its collection. These facts become important in explaining why it was that the contract of sale subsequently referred to, could not be consummated.

The complaint alleges that on January 8, 1918, the defendant, who represented himself to have in charge for sale as owner or otherwise the steamship Fordonian, requested plaintiff, as broker, to produce a purchaser for said property for the sum of $540,000 and the defendant agreed to pay to the plaintiff for services as a broker in said transaction 5 per cent. of the said purchase price or the sum of $27,000.

It appears that on January 8, 1918, the defendant wrote to the plaintiff as follows:

'I am informed that you have some people who are interested, or may become interested, in the purchase of the steamship Fordonian, in which I have an undivided half interest, and the sale of the entire boat I am in a position to control. I am willing to sell that boat for the sum of five hundred and forty thousand dollars ($540,000), in cash, free and clear from all liens, mortgages, or incumbrances of any kind or description whatsoever.

'Said boat is to be delivered subject to a bare boat form charter between the present owners of the boat and the United States government. The boat is 3,800 tons dead weight, paying at the rate of $15,770 a month. I will deliver that boat, rated A-1, British corporation, will deliver a certificate of seaworthiness, and in the shape and condition, as required by the United States government, bare boat form charter.

'If you accept my offer, I will ask you to deposit 10 per cent. at the Metropolitan Trust Company of the City of New York, and will undertake to deliver title within one week from to-day. This option is good until 5 p.m. January 8, 1918.'

On the same day the plaintiff communicated defendant's offer to the Metropolitan Trust Company. The latter company on the same day addressed a letter to the defendant, in which it said:

'We hereby beg to accept your offer, subject to the verification by an inspection of the representations regarding the boat made in your offer, and your additional representations made over the telephone to our representative this afternoon, viz. the vessel's guaranteed fuel capacity to be not less than 203 tons of fuel oil, consumption of fuel not to exceed 4 tons of fuel oil per 24 hours based on a speed of 9 to 10 knots in fair weather; also, subject to the compliance on the part of the present owners of all terms and conditions of the bare boat form charter, which we understand you are now about to enter into for this vessel with the United States government or their agents; and it is understood that said vessel is to be delivered to us, subject to this charter, fully complied with, by the present owners, and subject to the approval of the United States to this sale.

'We are informed by you that the vessel is now lying at Bordeaux, France, where she is available for our inspection. If this is correct, we will cable at once and arrange for immediate inspection at that port, to be completed and confirmed by cable advices to us within six days from this date. If said inspection confirms the representations you have made to us as outlined in your offer and hereinabove, you are to deliver title of the boat to us within 24 hours thereafter, upon payment to you or your order of the purchase price, $540,000.

'The 10 per cent. deposit referred to in your offer, to wit, $54,000, has been made and is now held by us in escrow, subject to the terms of this agreement, to be paid to you upon the completion of the purchase under the terms herein above stated.'

On the same day defendant wrote to the plaintiff a letter which read as follows:

'Gentlemen: If my offer given this day to your corporation, is accepted by 5 o'clock this afternoon, and the deal consummated, I agree to pay you 5 per cent. commission, the amount to be paid over to you when the full amount of the purchase price is paid over to me, from the final payment.'

It is alleged that the plaintiff procured a responsible purchaser, the Metropolitan Trust Company of the City of New York, which was acting for the Cosmopolitan Shipping Company, and that said purchaser was ready and willing and anxious to purchase the boat in accordance with terms agreed upon, yet the defendant failed to carry out the conditions he had agreed to perform, and voluntarily released by an instrument in writing the Metropolitan Trust Company from its obligation to purchase. It is also alleged that the release of the Metropolitan Trust Company from its agreement was due solely to the inability or failure of defendant to perform the agreements upon his part to be performed, and not to any fault or defect upon the part of the purchaser so obtained by the plaintiff. The complaint stated that the plaintiff was entitled by reason of the facts aforesaid to recover from defendant his commission in the sum of $25,000, and he demanded judgment in that amount, with interest thereon from January 18, 1918.

The defendant represented and agreed that the vessel was at Bordeaux, France, and was there available for inspection, and that he would deliver the vessel, free and clear of all liens, subject to a bare boat form charter to the United States government, and in the shape and conditions as required by the United States government bare boat form charter, and would deliver a certificate of seaworthiness. After this agreement was made it was ascertained that the boat was not at Bordeaux, and during the six-day period above mentioned the vessel was not available for inspection. Thereafter the Metropolitan Trust Company was ready to accept the boat and carry out the conditions of the contract, waiving the inspection, upon satisfactory assurance that the boat was in the shape and condition as required by the United States government bare boat form charter, and upon delivery of certificate of seaworthiness; but it is alleged that defendant refused to carry out the terms and conditions he had agreed to perform.

The purchaser wanted the vessel, and negotiations were continued between defendant and the proposed purchaser, until late in the afternoon of January 17th, when, upon the refusal of defendant to extend the time to permit inspection or to accept any substitute therefor, defendant and the purchaser canceled the agreement of sale and purchase without the plaintiff's consent. The circumstance which prevented the extension of time asked for was that the note given to the Equitable Trust Company, already referred to, and for which that company held a bill of sale of the vessel, was...