Graff v. Billet
| Decision Date | 07 May 1984 |
| Parties | Guy GRAFF, d/b/a South Fork Realty, Respondent, v. Marvin BILLET, Appellant. |
| Court | New York Supreme Court — Appellate Division |
Tucker, Gellman & Mulderig, P.C., New York City (Michael J. Kopcsak, New York City, of counsel), for appellant.
Esseks, Hefter, Cuddy & Angel, Riverhead (Stephen R. Angel, Riverhead, of counsel), for respondent.
Before LAZER, J.P., and THOMPSON, O'CONNOR and BROWN, JJ.
In March, 1981 the plaintiff broker showed a prospective purchaser a vacant parcel of land listed with him by the defendant seller. The broker subsequently drew up an agreement under which, inter alia, he would earn a commission for selling the parcel of land "as, if and when title passes, * * * [sic ] except for willful default on the part of the seller". The seller does not dispute the terms of this agreement. Before closing of title and before any written agreement was entered into between the prospective purchaser and the seller, the latter decided to accept a better offer from someone else. The broker then sued to recover his commission and Trial Term, after a bench trial, entered judgment in his favor. For the reasons stated, we reverse and dismiss the complaint.
It is of course fundamental that in the absence of an agreement to the contrary a broker is entitled to his commission when he produces a buyer ready, willing and able to purchase on terms acceptable to the seller (see Lane-Real Estate Dept. Store v. Lawlet Corp., 28 N.Y.2d 36, 42, 319 N.Y.S.2d 836, 268 N.E.2d 635; Hecht v. Meller, 23 N.Y.2d 301, 305, 296 N.Y.S.2d 561, 244 N.E.2d 77; Levy v. Lacey, 22 N.Y.2d 271, 274, 292 N.Y.S.2d 455, 239 N.E.2d 378). The broker's right to receive a commission otherwise owed to him may, however, be varied by agreement as at bar where the parties agreed that the commission would be owing "if and when title passes" (see Lane-Real Estate Dept. Store v. Lawlet Corp., supra, 28 N.Y.2d pp. 42-43, 319 N.Y.S.2d 836, 268 N.E.2d 635). Whatever preparatory work the broker did to produce a ready, willing and able buyer was irrelevant once he agreed to forgo his commission until passage of title. He bore the risk of the deal until the condition precedent was fulfilled, and that condition precedent simply never materialized (see White & Sons v. La Touraine-Bickford's Foods, 50 A.D.2d 547, 375 N.Y.S.2d 351, affd. 40 N.Y.2d 1039, 391 N.Y.S.2d 856, 360 N.E.2d 356).
Nor can the seller's acceptance of a better offer be deemed a "willful default" as contemplated by the commission agreement, requiring payment of the brokerage fee. Unless the terms "as, if and when title passes" evince an intent on the part of the parties that the deal progress to some legally recognizable form before the commission was to be earned, the commission agreement would be nothing more than a reiteration of the general rule of earning a brokerage fee upon presentation of a ready, willing and able buyer and would therefore be of no real practical value. Clearly the parties did not mean to enter into an unnecessary agreement, and the terms chosen were meant to impose upon the broker something more than presenting a ready, willing and able buyer. In any event, any ambiguity in the agreement on that score must be resolved against the broker who drafted it (see Rentways v. O'Neill Milk & Cream Co., 308 N.Y. 342, 126 N.E.2d 271; Universal No. 2 Corp. v. Ainbinder, 25 Misc.2d 613, 201 N.Y.S.2d 949). Consequently, since no deal between the prospective purchaser and the seller ever materialized in legal, written form, the seller could not be in default of the broker's agreement and was free until then to negotiate with other prospective purchasers without becoming liable for a commission (cf. White & Sons v. LaTouraine-Bickford's Foods, supra ).
The dissent would hold the seller in default "whether [his alleged] repudiation of the transaction with the buyer occurred before or after the execution of the contract of sale". Besides being contrary to the plain meaning of the agreement as already discussed, such an interpretation cannot be truly supported by the Court of Appeals cases the dissent itself cites. In those cases, unlike here, there was a sales contract in existence between seller and the prospective purchaser produced by the broker, and under those circumstances, the seller, who frustrated closing, was held liable for the commission (see Levy v. Lacey, supra, 22 N.Y.2d p. 273, 292 N.Y.S.2d 455, 239 N.E.2d 378; Wagner v. Derecktor, 306 N.Y. 386, 389, 118 N.E.2d 570; Stern v. Gepo Realty Corp., 289 N.Y. 274, 276, 45 N.E.2d 440; Amies v. Wesnofske, 255 N.Y. 156, 158, 174 N.E. 436; Colvin v. Post Mortgage and Land Co., 225 N.Y. 510, 515, 122 N.E. 454). Furthermore, according to these cases, an agreement that the broker is not entitled to his commission when the failure to complete the sale is due to the seller's action will be found only where such a result appears to have been clearly intended (see Levy v. Lacey, supra, 22 N.Y.2d p. 274, 292 N.Y.S.2d 455, 239 N.E.2d 378; Colvin v. Post Mortgage and Land Co. supra, 225 N.Y. p. 516, 122 N.E. 454). In this case, the parties clearly intended that the broker would not be entitled to a commission prior to the execution of a contract of sale, and their agreement must be so construed, drafted as it was by the broker who could have drafted it otherwise.
Accordingly, we conclude that the seller was not in default of the brokerage agreement, no cause of action for a commission lay against him and Trial Term should have dismissed the complaint.
Judgment of the Supreme Court, Suffolk County (CORSO, J.), entered January 10, 1983, reversed, on the law, with costs, and complaint dismissed.
LAZER, J.P., dissents and votes to affirm the judgment, with an opinion.
LAZER, Justice Presiding (dissenting):
After the plaintiff produced a buyer ready, willing and able to purchase at the seller's terms, he mailed the seller an agreement which provided that the brokerage commission of $9,500 was "due and payable * * * as, if and when title passes, * * except for willful default on the part of the seller, in which case the commission shall be payable upon demand after said default". Also sent to the seller--this time by the buyer--was the down payment and a signed contract incorporating the terms agreed upon between buyer and seller. The seller never signed the contract, however, because he subsequently received a higher offer for the property from another purchaser. In the broker's action that followed, the court found that the condition precedent to payment of the commission--the passage of title--had been frustrated by the seller's willful default, and plaintiff was awarded judgment.
Believing that a seller who frustrates a sale cannot be deemed in "default" before a written contract with the buyer is in existence, my colleagues have voted to reverse the judgment. In their view, because the seller never signed the contract, he was never in default, and because title never closed, the commission never became due. I view it as immaterial whether the seller's repudiation of the transaction with the buyer occurred before or after execution of the contract of sale, for a seller is in default if his willful refusal to consummate a sale prevents the fulfillment of the condition precedent to payment of the brokerage commission.
It is a fundamental proposition of real estate law that absent an agreement to the contrary a real estate broker has earned his commission when he has produced a buyer ready, willing and able to purchase at terms acceptable to the seller (Lane-Real Estate Dept. Store v. Lawlet Corp., 28 N.Y.2d 36, 319 N.Y.S.2d 836, 268 N.E.2d 635; Wagner v. Derecktor, 306 N.Y. 386, 118 N.E.2d 570). The proposition can be altered, of course, if the broker and seller make an agreement conditioning payment of the commission on the happening of other events such as the closing of title (Levy v. Lacey, 22 N.Y.2d 271, 292 N.Y.S.2d 455, 239 N.E.2d 378; Stern v. Gepo Realty Corp., 289 N.Y. 274, 45 N.E.2d 440; Amies v. Wesnofske, 255 N.Y. 156, 174 N.E. 436). Nevertheless, unless the...
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