Hecht v. Meller

• Decision Date: 27 November 1968
• Citation: 296 N.Y.S.2d 561,23 N.Y.2d 301,244 N.E.2d 77
• Parties: , 244 N.E.2d 77 Helen HECHT, Appellant, v. S. Herbert MELLER et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 561

296 N.Y.S.2d 561

23 N.Y.2d 301, 244 N.E.2d 77

Helen HECHT, Appellant, v. S. Herbert MELLER et al., Respondents.

Court of Appeals of New York.

Nov. 27, 1968.

Hunter Meighan, G. Kenneth Brown and Jefferson D. Meighan, New York City, for appellant.

Charles Burton and Martin J. Rosen, New York City, for respondents.

KEATING, Judge.

This appeal presents a question of first impression: Is a real estate broker entitled to commissions on the sale of real property if the purchaser asserts a statutory privilege to rescind the contract of sale because the property has been substantially destroyed by fire after the contract was executed, but before the buyer took title or possession?

The present action was submitted to the Supreme Court, Westchester County, upon an agreed statement of facts (CPLR 3222). Special Term found the seller liable for the agreed brokerage commissions. The Appellate Division, Second Department, reversed, two Justices dissenting (23 A.D.2d 863, 259 N.Y.S.2d 458).

Briefly, the facts submitted were the following: Helen Hecht, plaintiff-appellant, entered into a written contract with Herbert and Joyce Meller, defendants-respondents, by which she became the exclusive selling agent for the sale of their personal residence and an adjacent lot which they wished to sell for $75,000. Through the plaintiff's efforts suitable buyers were introduced to the Mellers, and on May 30, 1963 a contract for the sale of the property was signed which acknowledged that Mrs. Hecht had brought the parties together, established a sale price of $60,000, and set August 1 as the closing date.

On July 20, without fault of either the vendors or vendees, the dwelling house on the property was substantially destroyed by fire. The buyers elected to rescind the contract, as provided for by statute (Real Property Law, Consol.Laws, c. 50, former § 240--a, repealed by General Obligations Law, Consol.Laws, c. 24--A, § 19--101, subd. 7, re-enacted as General Obligations Law § 5--1311), and the Mellers, therefore, returned the buyers' down payment. The present action was commenced by the real estate broker when the sellers refused to pay the $3,600 brokerage commission allegedly earned by the broker in bringing the contracting parties together.

The statutory provision applicable to the realty contract under consideration provides that any contract for the purchase and sale of realty shall be interpreted, unless the contract expressly provides otherwise, as including an agreement that the vendor cannot enforce the contract of sale if the property is substantially destroyed and the vendee has taken neither the legal title nor possession of the property. This section was enacted to alter the common-law rule which, absent any agreement to the contrary, cast the risk of destruction of the property between the time the contract of sale was entered into and passing of title upon the vendee. (See, e.g., Sewell v. Underhill, 197 N.Y. 168, 90 N.E. 430, 27 L.R.A.,N.S., 233; Reife v. Osmers, 252 N.Y. 320, 323--324, 169 N.E. 399, 400, 67 A.L.R. 1101.) The force of the enactment, however, did not render realty contracts unenforcible but, rather, simply bestowed a privilege on vendees to rescind the contract.

Examination of the legislative history of the Uniform Vendor and Purchaser Risk Act (General Obligations Law § 5--1311, subd. 3) discloses on evidence that the Legislature intended to shift the risk of payment of earned brokerage commissions, because of the assertion of a vendee's privilege, from the seller to a business loss of the broker. Professor Williston, the author of the provision, proposed its promulgation to the Commissioners on Uniform Laws in order to abrogate the injustice caused by the common-law rule which required a vendee to fulfill his contractual obligations even though the property was substantially destroyed and he neither took title nor possession. The announced justification for proposing the provision was the fact that normally a vendee failed to perceive the necessity of insuring the property and thus bore the loss of its destruction (1934 Handbook of the National Conference of Commissioners on Uniform State Laws and Proceedings, pp. 202--203, 204--205; 1935 Handbook, pp. 138--139; 9C Uniform Laws Annotated, Uniform Vendor and Purchase Risk Act, p. 313 (1957)). Our Legislature adopted the model act in 1936, with minor revisions, after the New York Law Revision Commission recommended its enactment. The Law Revision Report stated that the act embodied a 'wise policy of having the party in possession of the property care for it at his own peril' (1936 Report of N.Y.Law Rev.Comm., pp. 757--780, 760--762, 759). Thus support cannot be gleaned from the section's legislative history to provide a basis for determining that the enactment was intended by the Legislature to alter a seller's pre-existing obligation to compensate his broker, who fully performed an independent brokerage agreement.

This court has consistently stated that a real estate broker's right to commissions attaches when he procures a buyer who meets the requirements established by the seller. (Levy v. Lacey, 22 N.Y.2d 271, 274, 292 N.Y.S.2d 455, 458; Wagner v. Derecktor, 306 N.Y. 386, 390, 118 N.E.2d 570, 572; O'Hara v. Bronx Consumer Ice Co., 254 N.Y. 210, 172 N.E. 472; Colvin v. Post Mtge. & Land Co., 225 N.Y. 510, 516, 122 N.E. 454, 456; Reis Co. v. Zimmerli, 224 N.Y. 351, 353, 120 N.E. 692, 693; Davidson v. Stocky, 202 N.Y. 423, 95 N.E. 753; Smith v. Peyrot, 201 N.Y. 210, 214, 94 N.E. 662, 663; Gilder v. Davis, 137 N.Y. 504, 33 N.E. 599, 20 L.R.A. 398.) At the juncture that the broker produces an acceptable buyer he has fully performed his part of the agreement with the vendor and his right to commission becomes enforcible. The broker's ultimate right to compensation has never been held to be dependent upon the performance of the realty contract or the receipt by the seller of...