Hammond v. CIT Financial Corp., 189

• Decision Date: 15 April 1953
• Docket Number: No. 189,Docket 22521.,189
• Citation: 203 F.2d 705
• Parties: HAMMOND v. C. I. T. FINANCIAL CORP.
• Court: U.S. Court of Appeals — Second Circuit

203 F.2d 705 (1953)

HAMMOND v. C. I. T. FINANCIAL CORP.

No. 189, Docket 22521.

United States Court of Appeals Second Circuit.

Argued March 13, 1953.

Decided April 15, 1953.

Lundgren, Lincoln, Peterson & McDaniel, New York City, for plaintiffs-appellees-cross-appellants; Walter C. Lundgren and J. Kevin Murphy, New York City, of counsel.

Isseks, Laporte & Meyers, New York City, for defendant-appellant-cross-appellee; Alphonse A. Laporte, Lawrence R. Eno, Melbourne Bergerman and Seymour Kleinman, New York City, of counsel.

Before AUGUSTUS N. HAND, CHASE and CLARK, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

This action was brought by Paul Hammond, a citizen of the State of New York, H. Donald Harvey, a citizen of the State of Connecticut, and Carter M. Braxton, a citizen of the State of New York, copartners doing business under the firm name of The Hammond, Harvey, Braxton Company, against the C. I. T. Financial Corporation, organized under the laws of the State of Delaware, for breach of a contract giving Braxton (hereafter sometimes referred to as the plaintiff) the exclusive right to sell defendant's wholly owned subsidiary corporation, known as the Holtzer-Cabot Division. Federal jurisdiction was invoked because of diversity of citizenship, the amount in controversy exceeding $3,000.

The facts as found by the district court sitting without a jury may be summarized as follows:

In January 1948 the defendant decided to sell its wholly owned subsidiary, Holtzer-Cabot. On January 27, the defendant's vice-president Urquhart approached Braxton with a view to enlisting his services in finding a buyer. The plaintiff was given the exclusive right to negotiate the sale of the Holtzer-Cabot assets. All inquiries were to be referred to him by the defendant, and all negotiations were to be conducted by him. His fee was to be five per cent of the first two million dollars of the sales price with lesser percentages upon amounts received in excess of that sum, but the plaintiff agreed to discuss an adjustment of his fixed commission in the event of "unusual circumstances" attending the sale. The defendant was given the right to terminate the contract at any time it was dissatisfied with the plaintiff's efforts. The parties decided that no written contract was necessary. The plaintiff, who was engaged in the business of acting as broker in the sales of going concerns, prepared a prospectus which he sent to prospective buyers and in some instances where interest was manifested, he exhibited the plant to the prospect.

On April 13, 1948, Braxton brought a prospective buyer to Urquhart's office. Some interest was indicated on the part of this prospect but no offer was made. Following this interview Braxton was informed by Urquhart that an inquiry had been made on behalf of Redmond Company and that if the company showed any interest, it would be turned over to Braxton. On April 21 the latter was told by Urquhart that an offer of $1,000,000 had been made for the plant and inventory by this prospect and that this offer was the subject of pending negotiations. Braxton said that his late participation in the negotiations which had been initiated by the defendant's president would be futile. The plaintiff was also informed that his position was not affected in any way, but a decrease in his compensation was discussed. Urquhart agreed to consider any offer from the prospect previously introduced by Braxton.

On May 12 the defendant closed the sale of the Holtzer-Cabot plant and inventory to Redmond Company without Braxton's knowledge or intervention; the contract was executed on May 28. The price was $1,165,743.39, of which $65,743.39 was represented by promissory notes. On May 17 Braxton had sent an offer from still another prospect. Later on that day he was told by Urquhart that the contract of sale was being prepared; Braxton's commission was discussed on the theory that "unusual circumstances" had developed when the defendant had consummated the sale itself and a low price had been received. At the trial the price was admitted to be the best then obtainable and to represent the true market value. A compromise commission was rejected by the plaintiff. The plaintiff's brief indicates that a counter proposal for arbitration of the controversy was rejected by the defendant.

The district court further found that except for the eventual buyer all leads were referred to the plaintiff by the defendant; that the defendant never terminated its contract with the plaintiff; and that the plaintiff would have been at least equally successful in negotiating the sale. A judgment of five per cent of the sales price was awarded, with interest from May 28, 1948, for breach of the contract giving plaintiff the exclusive right to sell the property in question.

The defendant's first contention is that the district court erred in finding that the defendant had given the plaintiff an "exclusive right to sell," while agreeing not to sell the property itself. The essentially factual question as to the parties' intention was resolved by the district court in favor of the plaintiff and we think it cannot be said to have been "clearly erroneous." In view of the defendant's agreement to refer all leads to the plaintiff this construction was a reasonable one. See Gaillard Realty Co. v. Rogers Wire Works, Inc., 1st Dep't., 215 App.Div. 326, 213 N.Y.S. 616. The defendant's explanation of the reason for this part of the contract is unconvincing. Moreover, if there was any ambiguity in the agreement, consideration of the parties' own conduct in construing it as entitling plaintiff to his commission (although defendant asserted that the rate must be reduced because of "unusual circumstances") would lead to the same result. See New York Central R. Co. v. New York & Harlem R. Co., 185 Misc. 420, 425-426, 56 N.Y. S.2d 712, affirmed 297 N.Y. 820, 78 N.E.2d 612; cf. Brainard v. New York Central R. Co., 242 N.Y. 125, 133, 151 N.E. 152, 45 A.L.R. 751. The defendant argues that its conduct was not an admission of the existence of a legal obligation to pay a commission, but the trial court's findings do not appear to us to be ...