Midcourt Builders Corp. v. Eagan
| Decision Date | 18 February 1971 |
| Citation | 319 N.Y.S.2d 286,36 A.D.2d 90 |
| Parties | ., Industrial Park Warehousing Corp., Tarbell Road Realty, Inc., Expressway Development Corp., Midcourt Industrial Corp., Syracuse Industrial Park Corp., Appellants, v. L. T. EAGAN, Edward Eagan, William Eagan, Eagan Real Estate, Inc., FrelProperties, Inc., New York State Investors, Inc., Midler Court Realty, Inc.,Respondents. Supreme Court, Appellate Division, Fourth Department |
| Court | New York Supreme Court — Appellate Division |
Griffith & Pileckas, Rome, for appellants; Paul L. Pileckas, Rome, of counsel.
Hancock, Estabrook, Ryan, Shove & Hust, Syracuse, for respondents; Stewart Hancock, Syracuse, of counsel.
Before GOLDMAN, P.J., and DEL VECCHIO, WITMER, GABRIELLI, and HENRY, JJ.
This action arises out of the sale in 1961 of property known as the Syracuse Industrial Park. The property consists of approximately 100 acres of land improved with 18 industrial and commercial buildings which are leased to various tenants. Appellants acquired the property in the early 1950's, and for years respondents served them as brokers in leasing various parcels thereof. During the period from early 1959 through 1961 appellants gave various authorizations to respondents to sell the property for a stated price for which, if accomplished, respondents would be paid $650,000 in commissions. The last such authorization was entered into on February 16, 1961. It provided that 'any prior understanding or agreement is hereby nullified, cancelled and of no effect whatsoever' and that this 'exclusive' authorization shall be subject to 30 days' notice of cancellation by appellants.
On May 1, 1961 appellants gave respondents written notice of cancellation of the above sales authorization, effective June 1, 1961. Respondents having expended considerable money and effort in endeavoring to sell the property, pleaded with appellants for an extension of the sales authorization but appellants were adamant and insisted on terminating the agreement. It was later revealed upon the trial that by the above cancellation notice appellants, some of whom were well trained in the art of selling real estate, were putting pressure on respondents to consummate a sale.
Although appellants refused to extend the old sales authorization or to sign a new one, they executed a proposed contract to sell the property for the net sum of $11,700,000 with the name of the purchaser left blank, and they delivered it to respondents with a letter giving respondents four days in which to complete the contract by filling in the name of a buyer. The letter further provided that no commission on the transaction would be paid by the sellers and that any commission respondents received must be paid by the purchasers. This was indeed intensive pressure upon respondents, considering the amount of the commission involved. On the fourth day of said 'contract' and letter, respondents had Frel Properties, Inc., a corporation wholly owned by them, sign the contract for the purchase of said property. Respondents did not disclose to appellants that they were in essence the purchasers.
It is obvious that respondents did this to protect their investment of time and money previously made in an effort to sell this property, and that even then they did not intend to be the actual buyers of the property through said corporation, but used it as a temporizing maneuver to enable them to continue their efforts to find an outside purchaser. There is evidence from which the court could conclude that appellants understood this to be the case. During the period after Frel Properties, Inc. thus contracted with appellants to buy the property and before the closing of the transaction, respondents continued their efforts to find a genuine purchaser. They parried for time and sought extensions of time to close. As a condition for granting such extensions of time for closing, appellants twice demanded and received a deposit of $50,000 as evidence of good faith and to secure eventual performance, which sums, totaling $100,000, were advanced to appellants by respondents. In this period respondents told appellants that in order to complete the transaction they might have to take some interest in the property. One of the appellants' principals testified that appellants did not care who put up the money, so long as they had some money on deposit against the delay in closing.
As events turned out, respondents' prospective purchasers 'bowed out', and in November 1961 respondents arranged, without express disclosure to appellants of their equitable interest in the transaction, to complete the transfer to Frel Properties, Inc. It is noteworthy that appellants required no individual guarantee of the promissory notes given by Frel Properties, Inc. for part of the purchase price, nor did appellants make any investigation into the financial condition of that corporation or its officers or stockholders. We observe, as part of the total picture, that after the transaction was closed, down to the day of trial in September 1969 nearly eight years later, appellants accepted from time to time substantial payments on the purchase money mortgage, being well aware of many subsequent transactions respecting the parcels in the tract and much construction thereon.
Appellants allegedly first became aware of respondents' interest in Frel Properties, Inc. late in 1964 or early in 1965 and soon thereafter commenced the instant action to set aside the sale to the corporation on the ground that respondents, as their agents and brokers, had breached their fiduciary duty of full and complete disclosure by concealing the fact that they were purchasing the park for themselves. At the close of all the evidence upon the trial, the judge ruled on the motion...
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- Midcourt Builders Corp. v. Eagan
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