Rosenberg v. Cyrowski

• Citation: 198 N.W. 905,227 Mich. 508
• Decision Date: 02 June 1924
• Docket Number: No. 47.,47.
• Parties: ROSENBERG et al. v. CYROWSKI.
• Court: Michigan Supreme Court

227 Mich. 508

198 N.W. 905

ROSENBERG et al.

v.CYROWSKI.

No. 47.

Supreme Court of Michigan.

June 2, 1924.

Error to Circuit Court, Wayne County; Ira W. Jayne, Judge.

Action by Barnett Rosenberg and another against August Cyrowski. Judgment for plaintiffs, and defendant brings error. Reversed, and new trial granted.

Argued before CLARK, C. J., and McDONALD, BIRD, SHARPE, MOORE, STEERE, FELLOWS, and WIEST, JJ.William Van Dyke, of Detroit, for appellant.

Wm. Henry Gallagher, of Detroit, for appellees.

SHARPE, J.

The plaintiffs are real estate agents in the city of Detroit. In June, 1919, they arranged with Paul Cyrowski to sell certain property owned by him to one Steinberg. It is their claim that a 3 per cent. commission was agreed upon. They went to the office of Cyrowski's brother, the defendant, who was a practicing attorney, to have the papers prepared. Rosenberg testified that while there he said to defendant:

“Mr. Cyrowski, make out an agreement for our commission.' He said, ‘What commission?’ ‘Three per cent.’ August said to Paul, ‘Is that right?’ ‘Yes.’ ‘Do you know how much it is?’ He takes a pencil and figures $1,050, and he says, ‘That is right.’ Paul said, ‘That is right.’ I said, ‘Make out an agreement.’ He said, ‘You don't need any agreement.’ I said, ‘August, I want an agreement; I want a writing.’ He said, ‘It ain't necessary; I am a lawyer, and that is my brother, and you will get every cent; take my word of honor.’ And that was all there was about it.'

Karbel testified as to what was then said:

‘I said, ‘Mr. Cyrowski, please can you make out an agreement for our commission?’ He says, ‘Mr. Karbel and Rosenberg, take my word of honro; I am a lawyer, and you don't need an agreement; when you close the deal you will get your commission;’ and he says, ‘It is drawn; how much is the commission;’ and he said, ‘Three per cent.;’ and I take the pencil and figure out $1,050; and he said to his brother, ‘Are you satisfied to pay that?’ And he said, ‘Yes, we agree;’ and that is all.'

Both testify that they ‘took his word for it’ that a writing was not necessary. The defendant denied that there was any talk about drawing an agreement for commission, and in this he is corroborated by others present at the time. The sale was consummated, but the commission has not been paid.

Plaintiffs' declaration is grounded on a claimed false and fraudulent representation made by defendant that a written agreement was not necessary to enable them to recover a commission on the sale, on which they relied to their damage, the loss of the commission agreed upon. It does not count on any breach of duty arising from the relationship of attorney and client. Recovery is not sought based on any negligence of the defendant in giving advice in conflict with the statute, and we therefore do not consider it.

The trial court charged that, if defendant stated that a written agreement was not necessary, and that he so stated either ‘knowing it to be false or with reckless disregard of its truth or falsity,’ and plaintiffs relied and acted on it to their damage, they might recover.

[1] There was no privity of contract between the plaintiffs and the defendant. Neither does it appear that defendant in any way personally profited by the plaintiffs' having been misled to their damage by his utterance. When action is brought to recover for false and fraudulent representations made by one party to another in a transaction between them, any representations which are false in fact and actually deceive the other and are relied on by him to his damage are actionable, irrespective of whether the person making them knew them to be false or acted in good faith in making them, when the loss of the party deceived inured to the benefit of the other. Holcomb v. Noble, 69 Mich. 396, 37 N. W. 497;Busch v. Wilcox, 82 Mich. 315, 46 N. W. 940;Aldrich v. Scribner, 154 Mich. 23, 117 N. W. 581,18 L. R. A. (N. S.) 379;Hubbard v. Oliver, 173 Mich. 337, 139 N. W. 77;Bartholomew v. Walsh, 191 Mich. 252, 157 N. W. 575;Mulheron v. Koppin Co., 221 Mich. 187, 190 N. W. 674; Bucannan v. Raymond, 224 Mich. 462, 194 N. W. 980; 26 C. J. 1108, 1109; 12 R. C. L. 335, 336.

But when the person making the representations is not a party to the transaction, and in no way profits by the act of the party defrauded in reliance on the representations made by him, he is liable for damage only in case he knows the representations made by him to be false, and makes them for the purpose of deception, and with the intent that they shall be relied on and acted on by the person to whom they are made and loss or damage results therefrom. Aldrich v. Scribner, supra,; Steele v. Banninga, 225 Mich. 547, 196 N. W. 404.

[2] Applying these rules to the facts here presented, it is clear that this instruction given was erroneous. To hold the defendant liable the jury must find that he made the representation as testified to by plaintiffs; that he knew he was not stating the truth; that he intended to deceive the plaintiffs and induce them to act on his advice; that they acted in reliance upon it, and sustained damages as a result thereof.

The more serious question is whether, under the proof submitted by plaintiffs, any liability attaches to the defendant. He was under no obligation to give legal advice to the plaintiffs. He might have declined to do so. He was acting for his brother, the vendor, in preparing the contract of sale with the vendee whom plaintiffs had produced, a person ready, willing, and able to purchase the property. The plaintiffs had at that time earned the commission agreed upon between themselves and the vendor. In order that they might be in a position to enforce payment, they believed (and were right about it) that they must have the commission agreement reduced to writing. By the advice given, defendant relieved his client from a liability which would have been incurred by him, had such advice not been given. If he knowingly, and with the intent to deceive them and relieve his client from such payment, falsely represented to them that it was not necessary to have a written agreement in order to enforce collection of their commission, and t...