Hornstein v. Podwitz

• Decision Date: 18 November 1930
• Citation: 254 N.Y. 443,173 N.E. 674
• Parties: HORNSTEIN v. PODWITZ et al.
• Court: New York Court of Appeals Court of Appeals

254 N.Y. 443

173 N.E. 674

HORNSTEIN

v.PODWITZ et al.

Court of Appeals of New York.

Nov. 18, 1930.

Action by Henry Hornstein against Kopel Podwitz, the Hadassah Realty Company, Inc., and others. From a judgment of the Appellate Division, First Department (229 App. Div. 167, 241 N. Y. S. 123), reversing a judgment in favor of defendants Meyer Mersel and Isidor Hirschhorn, entered upon an order of the Trial Term setting aside a verdict in favor of the plaintiff and dismissing the complaint as against said defendants; from an order of the Appellate Division, First Department (224 App. Div. 11, 229 N. Y. S. 159), reversing a judgment for defendants Meyer Mersel and Isidor Hirschhorn, entered upon an order dismissing the complaint on the ground that it failed to state a cause of action; and from an order of the Appellate Division, First Department (226 App. Div. 53, 234 N. Y. S. 429), reversing a judgment in favor of defendants Meyer Mersel and Isidor Hirschhorn, and granting a new trial, defendants Meyer Mersel and Isidor Hirschhorn appeal.

Judgment on the first appeal and order on the second appeal affirmed, and appeal from the order last mentioned dismissed.

KELLOGG, J., dissenting.

Appeal from Supreme Court, Appellate Division, First department.

Joseph L. Lefkowitz, Thomas A. McKennell, and Aaron Goody, all of New York City, for appellants.

Abraham Hornstein and George D. Hornstein, both of New York City, for respondent.

HUBBS, J.

The complaint herein stated in proper form, with all necessary allegations, a cause of action against the defendant Hadassah Realty Company, Inc., a domestic corporation, for the recovery of $2,600 commissions due plaintiff, a real estate broker, on the sale of said defendant's real property for $200,000.

It alleges that the plaintiff, acting as a broker, procured the defendants Mersel and Hirschhorn as purchasers and they agreed with the defendant Podwitz, the president of the corporation owner, to purchase the property at the price and on the terms specified by the owner, and a written contract of sale was executed by the parties.

It also alleges:

‘Tenth. Upon information and belief that the defendants herein conspired together and entered into an agreement wherein and whereby they sought to deprive this plaintiff of the commissions to which he was entitled by reason of such sale and agreed among themselves to withhold from plaintiff the fact that such sale had been made and to deprive plaintiff of the commissions to which he was entitled by reason of such sale, and to distribute among themselves a sum of money in lieu of the commissions, which the plaintiff was entitled to receive on such sale.

‘Eleventh. Upon information and belief that in pursuance of such agreement defendant, Hadassah Realty Corporation, allowed to said defendants, Mersel and Hirshhorn, a part of the commissions on the sale of said premises.’

It then alleges that the plaintiff has duly demanded from the defendants said sum, but no part thereof has been paid.

Upon the trial the complaint was amended to allege: ‘That the plaintiff has suffered damages by reason of the insolvency of the defendant, Hadassah Realty Co., Inc.’

The question for review is whether the complaint as amended states a cause of action against the individual defendants-appellants, Mersel and Hirschhorn.

The argument of the respondent is that the complaint states a cause of action against the individual defendants for unlawfully, intentionally, and knowingly and without reasonable justification or excuse, inducing a breach of contract, with profit to themselves and damages to the respondent.

The action for inducing a breach of contract as it now exists is of comparatively modern origin. The action for inducing a servant to breach a contract existed under the early common law in England. Not until the decision in Lumley v. Gye, 2 El. & Bl. 216, in 1853, was it declared to be actionable to ‘maliciously’ procure another to breach a contract for personal service, although the relation of master and servant did not exist. In Temperton v. Russell, 1 Q. B. 715, 62 L. J. Q. B. 200, 412, decided in 1893, the doctrine was extended and made applicable to contracts generally. The courts of this state have accepted the doctrine and extended the law of torts to actions to recover damages for unlawfully inducing the breach of contracts.

The elements necessary to constitute a valid cause of action have been variously stated. In Lumley v. Gye, supra, ‘malicious' procurement of the breach of contract was treated as the basis of the action, and a vindictive spirit or ill will toward the plaintiff was indicated as necessary to establish the cause of action.

In South Wales Miners' Federation v. Glanmorgan Coal Co., [1905] A. C. 239, 246, it was said: ‘It is settled now that malice in the sense of spite or ill will is not the gist of such an action.’ And in Quinn v. Leathem, [1901] A. C. 495, 510, it was stated: ‘That a violation of legal right committed knowingly is a cause of action, and that it is a violation of legal right to interfere with contractual relations recognised by law if there be no sufficient justification for the interference.’

This court has limited the meaning of the word ‘malicious' as so used. ‘This [malicious] does not necessarily mean actual malice or ill will, but the intentional doing of a wrongful act without legal or social justification.’ Campbell v. Gates, 236 N. Y. 457, 460, 141 N. E. 914, 915. That case also decides that one who, having knowledge of an existing valid contract between others, intentionally, knowingly, and without reasonable justification or excuse, induces one of the parties to the contract to breach it to the damage of the other party, is liable in an action to recover the damages suffered. The action is predicated on the intentional interference without justification with contractual rights, with knowledge thereof. Such interference constitutes a legal wrong, and, if damages result therefrom, a valid cause of action exists therefor.

The complaint herein contains, as amended, all of the essential allegations necessary in a complaint to recover damages for wrongfully inducing a breach of contract. It sets forth the contract and the fact that the plaintiff had fully performed, and was entitled to the agreed commissions; that the defendants, with full knowledge thereof, entered into an agreement to deprive the plaintiff of the commissions which he had earned, and to distribute among themselves a sum of money in lieu of the commissions and that, in pursuance...