Chiapparelli v. Baker, Kellogg & Co.

• Decision Date: 19 November 1929
• Citation: 169 N.E. 274,252 N.Y. 192
• Court: New York Court of Appeals Court of Appeals
• Parties: CHIAPPARELLI v. BAKER, KELLOGG & CO., Inc.

252 N.Y. 192

169 N.E. 274

CHIAPPARELLI

v.BAKER, KELLOGG & CO., Inc.

Court of Appeals of New York.

Nov. 19, 1929.

Action by Fernando G. Chiapparelli against Baker, Kellogg & Co., Inc. From a judgment (226 App. Div. 866, 234 N. Y. S. 762), affirming judgment for plaintiff, defendant appeals.

Reversed, and complaint dismissed.

Appeal from Supreme Court, Appellate Division, First Department.

Harold H. Corbin and Edward J. Bennett, both of New York City, for appellant.

Samuel C. Steinhardt, and Walter S. Newhouse, both of New York City, for respondent.

KELLOGG, J.

The plaintiff, Fernando Chiapparelli, was a member of an Italian mission sent to the United States in the year 1915. He represented the Italian government in this country from the year 1915 to the year 1919 and was in charge of the financial department of the mission. His official duties brought him into contact with many important New York banking houses. In the year 1924 he was employed by the banking house of F. J. Lisman & Co. to procure for them the financing of foreign loans. In the service of that company he was sent to Austria in 1924, where he spent the months of September and October. In Vienna he met a Dr. Rintelen, who was the Governor of Styria, one of the nine provinces of the Republic of Austria. Rintelen was interested in obtaining a loan of $5,000,000 for his province. On his suggestion, Chiapparelli visited Styria. At Graz, the capital of Styria, he procured written data concerning the resources of the province, and obtained from the provincial government options for Lisman & Co. to make to Styria a loan of $4,000,000 or $5,000,000, and take over the bonds of the province at a stated figure. On Chiapparelli's return to New York, Lisman & Co. determined not to take on the loan. Chiapparelli left their service and attempted to interest other banking houses in the loan to Styria. Mr. Owen, of Hornblower, Miller & Garrison, general counsel for the defendant herein, introduced Chiapparelli to two responsible New York houses, but they proved not to be interested in the matter. At this time the Styrian options had long since expired. Nevertheless, Chiapparelli retained confidence in his ability to reinstate himself with the government officers of Styria so that he might have the financing of the loan on favorable terms. He says: ‘I could provide the business any time I could find a banking house heady to do it.’ He told Mr. Owen that, although the Styrian option had expired, ‘he felt that his relations with Governor Rintelen were such that he could get it restored if he had a banking house actually prepared to take the contract.’ In July, 1925, Chiapparelli was introduced to Mr. Bromley, the vice president of the banking house of Baker, Kellogg & Co., Inc., the defendant herein.

Baker, Kellogg & Co., Inc., had already become interested in Styrian loans. At this time they had under negotiation a loan of $5,000,000 to a Styrian hydroelectric company, known as ‘Stewag,’ to be guaranteed by the Styrian government. That the various provinces of the Republic of Austria were sadly in need of financing was commonly known to New York bankers. On June 15th a meeting of bankers, including a representative of the defendant, occurred, at which loans to the various Austrian provinces, including Styria, were discussed. It was recommended at the meeting that all loans to the separate provinces be held in abeyance, pending an arrangement whereby a joint loan to all the provinces might be negotiated. A representative of Baker, Kellogg & Co. had already visited Styria where he had discussed with Governor Rintelen, not only the loan to Stewag, but to the province of Styria itself.

On June 21, 1925, Bromley called upon Chiapparelli to see if he could be of assistance to the defendant in procuring, through his influence with Governor Rintelen, a governmental guaranty of the proposed Stewag loan. Chiapparelli told him that this would be impossible until a loan to the province of Styria itself had been arranged. Of this fact the defendant was already cognizant. Chiapparelli then attempted to interest Bromley in the provincial loan itself. Bromley said that the matter might prove interesting and asked Chiapparelli to bring his data to the office and talk with Mr. Luitweiler, the president of the defendant.

On the 25th day of June Chiapparelli and Luitweiler met in the latter's office. The opening words of their conversation are significant. Chiapparelli spoke to Luitweiler as follows: ‘I would not be interested in telling to the Government of Styria about this provincial loan unless I was sure that his [Luitweiler's] house was seriously interested.’ Luitweiler then spoke as follows: ‘He asked me if I could assist him in securing this loan and support his desire for this loan with the Governor Rintelen.’ Chiapparelli told Luitweiler that he had with him all the data, which he had collected for Lisman & Co., to start the foundation of the business and to find out whether the business would be possible or not. Luitweiler said that ‘it would be interesting to send a telegram to the Governor Rintelen; that he would see if I could go there and negotiate for them the deal, if they would decide to do it.’ Chiapparelli said: ‘What would be my compensation if the business will be arranged?’ Luitweiler said: ‘How much would you want?’ Chiapparelli replied that he would be satisfied if he had ‘one per cent. commission on the face value of the loan when it was completed.’ To this Luitweiler answered, ‘Satisfactory.’ Chiapparelli said he would turn over all the papers, in reference to the loan, which he had gathered for Lisman & Co., and, taking them from his brief case, handed them to Luitweiler.

After the conversation had with Luitweiler, the defendant delayed for nearly a month to notify Chiapparelli whether it was or was not interested in the Styrian loan. Chiapparelli, growing impatient at the delay, on July 22, 1925, wrote the defendant as follows: ‘Gentlemen: I assume that you are not interested in the loans for the Province of Styria, which was the object of several conferences between your good selves and me the early part of June. As I am leaving for Europe next Saturday, kindly return to me the offical papers and data pertaining to the abovementioned loan, which were left in your office at the request of Mr. J. C. Luitweiler. To avoid delay, I will appreciate it if you will address the papers to me, and deliver same to Mr. Owen's office.’ Complying with the request thus made, the defendant at once returned the papers to Chiapparelli which he had left with Luitweiler.

In January or February, 1926, the defendant negotiated a loan of $5,000,000 to the Province of Styria. The plaintiff claimed that he was entitled, under the terms of an agreement alleged to have been made with the defendant on June 25, 1925, to a commission of 1 per cent. upon the amount loaned, or $50,000. A verdict in his favor for that amount, with $9,000 added for interest, was returned by a jury, and a judgment therefor, entered upon the verdict, has been affirmed by the Appellate Division.

A familiar rule of law has been expressed by Professor Williston in the following terms: ‘Since an offer must be a promise a mere expression of intention or general willingness to do something on the happening of a particular event or in return for something to be received does not amount to an offer.’ Williston on Contracts, § 26. It is also said by Professor Williston: ‘Frequently negotiations for a contract are begun between parties by general expressions of willingness to enter into a bargain upon stated terms and yet the natural construction of the words and conduct of the parties is rather that they are inviting offers, or suggesting the terms of a possible future bargain than making positive offers.’ Section 27.

We think that neither Chiapparelli nor Luitweiler, in the conversation of June 25, 1925, indicated by their words any intention presently to make a bargain either absolute or conditional. Chiapparelli opened...