Hoffman v. First Nat. Bank of Boston

• Decision Date: 27 April 1964
• Docket Number: No. 5741,5741
• Citation: 135 S.E.2d 818,205 Va. 232
• Parties: ALAN L. HOFFMAN v. THE FIRST NATIONAL BANK OF BOSTON, ET AL. Record
• Court: Virginia Supreme Court

Page 818

135 S.E.2d 818

205 Va. 232

ALAN L. HOFFMAN v. THE FIRST NATIONAL BANK OF BOSTON, ET AL.

Record No. 5741.

Supreme Court of Appeals of Virginia

April 27, 1964.

Robert R. MacMillan (E. Griffith Dodson, Jr.; Breeden, Howard & MacMillan; Dodson, Pence & Coulter, on brief), for the appellant.

Frank W. Rogers and John L. Walker, Jr. (Lyne, Woodworth & Evarts; Woods, Rogers, Muse & Walker, on brief), for the appellees.

JUDGE: BUCHANAN

BUCHANAN, J., delivered the opinion of the court.

This is an appeal by Alan L. Hoffman, a real estate broker, from a decree adjudicating that he was not entitled to a lien for brokerage commissions on the leasehold estate of Towers Shopping Center, Incorporated, in the city of Roanoke. He had asserted such right in a petition filed by him in a chancery cause pending in the Court of Law and Chancery of the City of Roanoke brought by The First National Bank of Boston against Towers Shopping Center, Inc., and others.

The bill of complaint in that suit alleged that the bank was the holder of first deeds of trust on the leasehold estate of Towers in lands leased to it by Times-World Corporation by lease which obligated Towers to construct a shopping center on the premises, with provision for financing the cost by mortgage thereon; and that the bank had made loans to Towers for that purpose, pursuant to a loan agreement, in the aggregate sum of $3,500,000, secured by deeds of trust on the leasehold, and under the provisions thereof the bank was entitled to have the trustees take over the leased premises and perform the obligations of Towers, as to which Towers was in default. The bill alleged that the bank was also entitled to have the trustees in the first deed of trust appointed receivers of the court so their action would be subject to the supervision of the court.

The bill accordingly prayed that said trustees be appointed receivers, that all present and potential lien creditors of Towers be convened and that the receivers continue operation of the affairs of Towers for a reasonable time to determine whether its financial problems might be solved. A decree was entered on February 1, 1962, appointing the receivers and assigning their duties.

On March 20, 1962, the receivers filed a petition stating that they had learned that there was pending in the Circuit Court of the City of Norfolk a chancery suit by Hoffman against Towers and Leo T. Zoby, as shown by court papers filed as an exhibit. The receivers prayed that Hoffman be enjoined from prosecuting that suit, and a decree granting the injunction was accordingly entered.

Thereupon Hoffman filed his petition in the present suit in the Roanoke court praying that the court declare Towers and Zoby obligated to him for brokerage commissions and enter judgment therefor in the sum of $50,000, and that the court recognized his vendor's lien or impress upon the leasehold an equitable lien superior to all other liens.

The bank filed a demurrer to this petition and the receivers moved to strike out the paragraphs thereof which alleged that Hoffman was entitled to a vendor's lien or an equitable lien on the leasehold estate of Towers. By the decree appealed from the court held that the allegations of the petition were not sufficient to establish the lien claimed, and accordingly sustained the motion of the receivers and the demurrer of the bank, but ordered that the petition be treated as an unsecured claim against Towers and Zoby and be referred to the special commissioner previously appointed to hear the evidence and make report as to the disposition of Hoffman's claim. The assignments of error are to those rulings.

As the basis for his claim Hoffman's petition made the following allegations:

That by writing dated June 14, 1960, Towers contracted to sell to Joseph Durst the said leasehold, and Zoby joined therein and guaranteed performance; that Paragraph 24 of said contract of sale provides:

'Brokerage Commissions. The parties acknowledge that Alan L. Hoffman and Pearce, Mayer & Greer are the brokers who brought about this transaction and Seller agrees to pay the commissions of said brokers pursuant to separate agreement heretofore entered into between Seller and said brokers.'

That simultaneously with the execution of said sales contract a real estate commissions contract was entered into by letter of June 14, 1960, addressed to Towers, signed by Pearce, Mayer & Greer and by Durst, and signed by Towers as 'Agreed and accepted.' This letter stated that pursuant to Paragraph 24 of the contract between Durst as purchaser and Towers as seller, the brokerage commission shall be $100,000, payable as follows: '$50,000 upon the closing of the transaction. $50,000 by an assignment of the purchase money mortgage called for under the contract.' The letter then continues:

'It is understood and agreed that this commission shall be payable only when, as, and if title actually closes.

'It is understood between the parties that Pearce, Mayer & Greer of New York City and Alan L. Hoffman, trading as Hoffman Real Estate, are sharing the commission on a fifty-fifty basis.

'It is also understood that Joseph Durst is a member of the firm of Pearce, Mayer & Greer and is participating in the share to be received by Pearce, Mayer & Greer.'

The bill further alleged that after the execution of the agreement of sale of June 14, 1960, and a further agreement amending it, dated November 15, 1960, 'not material to the issues raised herein,' Towers obtained a long-term mortgage financing for said project from Massachusetts Mutual Insurance Company in the sum of $2,100,000 and that Towers and Durst commenced construction of the shopping center which is over 80 percent complete;

That although Durst was ready, willing and able to perform his contract of purchase, Towers and Zoby did not perform but breached their contract, and Zoby wrote a letter to Durst dated February 13, 1961, stating that 'we' were not able to obtain construction money and could not handle the shopping center project, and suggesting that he, Zoby, pay Durst only his 'out of pocket expenses,' which Durst rejected and wired Zoby that he intended to hold his company to complete performance; and on May 19, 1961, Durst instituted a chancery suit against Towers and Zoby in the Circuit Court of the City of Norfolk to require Towers and Zoby to perform the sales contracts of June 14, 1960, and November 15, 1960, or for an award of damages; but before a hearing of the suit Towers and Zoby, for the sum of $225,000, purchased back and canceled Durst's interest in said sales contract; that $100,000 of the $225,000 was paid by Towers to Durst on August 3, 1961, and $125,000 was evidenced by ten negotiable notes; and said suit was dismissed agreed on August 7, 1961;

That after Towers and Zoby breached their contract of sale with Durst, they entered into agreements with one Kanavas and said The First National Bank of Boston, by which the bank made loans in substantial sums to Towers, Zoby and Kanavas without securing same by mortgage on said shopping center, and to protect its 'unsecured position' the bank 'wrongfully colluded and conspired with Towers, Zoby and Kanavas and furnished the sum of $100,000 in cash paid to Joseph Durst as aforesaid to repurchase Durst's purchase contract for Towers Shopping Center;' and that the acts of the bank were done 'with full knowledge of the right' of Hoffman 'and in wrongful disregard thereof';

That as a result of the action of Towers, Zoby and the bank 'in refusing to perform its sales...