Circelli v. Braunstein, Civ. A. No. 1937.

• Decision Date: 29 July 1958
• Docket Number: Civ. A. No. 1937.
• Citation: 165 F. Supp. 168
• Parties: Michael M. CIRCELLI, Plaintiff, v. I. David BRAUNSTEIN, Defendant.
• Court: U.S. District Court — District of Delaware

165 F. Supp. 168

Michael M. CIRCELLI, Plaintiff, v. I. David BRAUNSTEIN, Defendant.

Civ. A. No. 1937.

United States District Court D. Delaware.

July 29, 1958.

William H. Bennethum, Wilmington, Del., Saul, Ewing, Remick & Saul, Walter Biddle Saul, Gerald K. Burns, Philadelphia, Pa., of counsel, for plaintiff.

George T. Coulson (of Morris, Steel, Nichols & Arsht), Wilmington, Del., for defendant.

LAYTON, District Judge.

The plaintiff is a business and industrial broker maintaining an office in Philadelphia. He conducts his business everywhere. In May 1956, he alleges that he was authorized by the defendant to sell defendant's business. This was a ladies' dress business consisting of five stores operating in the Wilmington area. There was no real estate included in the sale, merely the inventory, good will, accounts receivable, etc. The defendant, it is stated, told the plaintiff that the sale would be consummated by way of a sale of all of the capital stock of the defendant's corporation; that he owned most of it and could "deliver all the stock." The price was $600,000.

The plaintiff contends that among other means of attempting to make sale of the defendant's business, he got in touch with one Burnside, a business broker in New York, and asked him to attempt to find a buyer. Thereafter, Burnside reported to the plaintiff that he had found a buyer (one Blauner) who was ready, able and willing to purchase the business on defendant's terms. However, the plaintiff charges that when he attempted to set a conference with the defendant to arrange the details of the sale, the defendant reported that the property was not for sale.

The defendant's motion for summary judgment rests upon two grounds, (1) that the terms of the arrangement between the plaintiff and defendant governing the sale being incomplete, the defendant was free at any point to revoke plaintiff's agency, and (2) that the arrangement called for a sale of the capital stock of the Braunstein business and, since the plaintiff had not procured a Delaware broker's license as required by 30 Del.C. § 2301, he cannot recover.

The law of Delaware governs here. In Delaware Apartments v. John J. Monaghan Co., 6 Terry, Del., 75, 69 A.2d 242, 245, the Supreme Court of Delaware stated:

"The law governing the right of real estate brokers to recover commissions for the sale of property is correctly stated by Gross, The Law of Real Estate Brokers, in part II, `Commissions and Their Recovery,' Chap. III, Sec. 131 et seq.: `The broker must produce a purchaser ready, willing and able to purchase on the principal's terms.'

"In Section 132, the author further speaks as follows:

"`Whatever may be the terms and conditions upon which the broker's right to compensation depends, they must be performed as a condition precedent to a right of action for a commission. Where the terms of the sale are all given to the broker in advance, he must produce a purchaser ready, willing and able to purchase on those terms, and the owner may refuse any proposed purchaser who is not willing to purchase on all of those terms.

* * * * * *

"`If no terms are laid down before hand by the principal, the broker takes the hazard. In such case the broker cannot recover commissions unless he produces a purchaser ready, willing and able to purchase on the terms, whatever they may be, then stated by the owner.'"

Inherent in this statement is the further proposition¹ that if only part of the terms are laid down in advance and other important terms remain to be negotiated then the broker still "takes the hazard."

In fact, this is general law. As said in Rest. Agency, § 445, Comment d, pp. 1039-40:

"d. Effect of completeness of terms given broker. The principal may either specify to the broker all his terms or furnish the broker with only part of the terms, the price for example, with the understanding that further details are subject to negotiation between the principal and the customer when found.

* * * * * *

"When the principal has furnished the broker with only part of the terms, with the understanding that further details are subject to negotiations between the principal and the customer when found, the principal is free to terminate such negotiations without liability to the broker. The principal's promise to pay the broker a commission does not become binding unless the principal and the customer reach a present definitive oral or written agreement. * * *"

Turning to the facts of this case, it is to be gathered from the affidavits and depositions that plaintiff claims to have been given a contract for a 5% commission to sell the defendant's ladies' dress business consisting of five stores (four in Delaware and one in Philadelphia) for $600,000 and that the sale was to be consummated by way of a transfer of the entire capital stock which carried with it the complete inventory, accounts receivable and debts. This the defendant must concede for the purposes of this motion. But he insists that important terms of the contract were not laid down in advance, among them the details of negotiating a lease for the Wilmington store. Thus, he argues that the Monaghan decision is controlling and that he was free to terminate the agency at any time without liability to the plaintiff. The testimony concerning the lease follows:

"Q. And he had told you that he owned the building? A. Oh, yes, they owned the real estate down here in Wilmington.

"Q. And you understood that the real estate was not to be considered at all? A. That is right.

"Q. Did he discuss with you what the leasing arrangements were between the store or the women's specialty business and the real estate? A. Well, I asked him that question myself. He said, `Circelli, whatever they want, long lease, we will discuss that.' Naturally those things are generally discussed with the buyer. We honor that. We don't enter into any discussion of future business with the purchaser and seller.

"Q. Did he tell you what the amount of the lease would be? A. No, we didn't discuss that. That is a question to be taken up by the buyers.

"Q. Didn't it occur to you that it might be very important to a sale whether he wanted a high rent or a low rent? A. Well, you see, it is always taken up with the buyers and sellers themselves.

"Q. Well, you knew that would be a matter to be discussed and it would have to be negotiated later? A. It has to be negotiated as far as the lease, of course. The terms of the lease, the length of the lease, the type of lease, sometimes on commission basis, on a sale, or sometimes straight leases; it all depends."

"Q. And you knew that unless that was satisfactorily negotiated that there couldn't be any sale? A. Well, that I don't know. Those things you never know. Those things are always negotiated.

"Q. They have to be negotiated? A. Always.

"Q. Before there can be a sale. A. We didn't enter into any discussion about the lease at all.

"Q. But you knew that he owned the building? A. Of course I did.

"Q. The family owned the building? A. Yes, I did.

"Q. And the leasing arrangements would have to be negotiated before a sale could be concluded? A. Yes." (My emphasis.)

Now, summary judgment will not be granted unless the plaintiff cannot recover under any conceivable set of facts which might be proven. Traylor v. Black, Sivalls & Bryson, Inc., 8 Cir., 189 F.2d 213. True, the plaintiff, here, seems to concede that a vital term of the sale agreement, to wit, the negotiation of a lease or leases, had not been agreed on in advance between himself and his principal. But I cannot assume that the important business of the Wilmington store (if not some or all of the other stores) was being conducted without a lease. To the contrary, I would suppose that there was a lease either oral or written. If so, that lease was one of the assets of Braunstein which would pass to the purchaser with the sale of all the capital stock of the business. Then, what the plaintiff meant was, not the existing lease, but some lease which would be negotiated later. I cannot assume that the plaintiff might not produce a buyer willing to purchase the business and at the same time be satisfied with the existing lease or leases which, for all we know at this stage, might have a year or several years to run. Accordingly, summary judgment will not lie under such a set of facts.

But the defendant maintains, in any event, that the plaintiff failed to produce a buyer ready, able and willing to purchase this concern upon the defendant's terms. For instance, he argues with much force that Blauner, the buyer named by plaintiff, was not the real buyer at all. If there was any buyer it was Cohan, the owner of 20% of the defendant's business, and there is an affidavit by Cohan that his offer was in jest—that he was not serious.

The best I can make out of the moving papers is that, after the plaintiff got in touch with Burnside in New York, the latter phoned plaintiff that he had a purchaser. When asked who it was he said it was Eugene Blauner, a ready, able and willing purchaser on defendant's terms. The plaintiff then called Wilmington to set up a conference with Braunstein in Wilmington because he had a buyer and was informed that the business was no longer for sale. It seems to be conceded that Blauner was not the potential purchaser. He thought Cohan was and was coming to Wilmington to try to arrange a sale to Cohan and, very importantly to him, Blauner, to try and participate in the already divided commission. Whether or not Cohan was a ready, able and willing buyer is disputed. This is a curious set of facts and superficially does not present a strong case but the question here is under any conceivable set of facts, does it present any case at all. Sprague v. Vogt, 8 Cir., 150 F.2d 795, 801. We know that 2% of the commission was to go to one Isaacson and the remaining 3% to the plaintiff. But the plaintiff was free to divide his commission with anyone who would produce a...