Stahl v. Township of Teaneck

• Decision Date: 28 May 1958
• Docket Number: No. C 821-56.,C 821-56.
• Citation: 162 F. Supp. 661
• Parties: Maurice STAHL, Plaintiff, v. TOWNSHIP OF TEANECK and Joseph E. McLean, Administrator of the Public Housing and Development Authority of the State of New Jersey, in the Department of Conservation and Economic Development of the State of New Jersey, Defendants.
• Court: U.S. District Court — District of New Jersey

162 F. Supp. 661

Maurice STAHL, Plaintiff, v. TOWNSHIP OF TEANECK and Joseph E. McLean, Administrator of the Public Housing and Development Authority of the State of New Jersey, in the Department of Conservation and Economic Development of the State of New Jersey, Defendants.

No. C 821-56.

United States District Court D. New Jersey.

May 28, 1958.

COPYRIGHT MATERIAL OMITTED

Morris Spritzer, New Brunswick, N. J., for plaintiff.

Grover C. Richman, Jr., Atty. Gen., by David Landau, Deputy Atty. Gen., for defendants.

FORMAN, Chief Judge.

This is an action brought by Maurice Stahl, a citizen of the State of New York, against the Township of Teaneck in Bergen County, New Jersey, and Joseph E. McLean, Administrator of the Public Housing and Development Authority of the State of New Jersey, wherein plaintiff seeks to recover a broker's fee allegedly due him of $25,007.50, plus interest and costs. This sum represents 5% of $500,150, the purchase price of a 72 apartment garden-type development originally constructed in 1947 as emergency housing for veterans, under authority of N.J.R.S. 55:14G-1 et seq., N.J. S.A., held in fee simple by the Township of Teaneck and leased to the Administrator until its sale pursuant to N.J.R.S. 55:14G-12(g), N.J.S.A., following an agreement between the Township of Teaneck and the Administrator authorizing the Administrator to sell the property at public sale.

In furtherance of the proposed sale, the defendant Administrator advertised in New Jersey and New York newspapers, and caused to be mailed to a list of addresses maintained for such purpose, a brochure describing the property, together with forms for submitting a sealed bid. Included in the invitation to submit bids was a statement of conditions, only one of which, namely paragraph No. 10, is pertinent here. This paragraph reads as follows:

"(10) A fee of 5% of the purchase price will be paid by the seller to any authorized broker or attorney representing the successful bidder or bidders; however, same shall not be due and payable until after closing of title."

It is conceded by plaintiff that he was not a licensed New Jersey broker during the time relevant to the instant case, although he was a licensed New York broker and subsequently became a licensed New Jersey broker. Plaintiff alleges that he received one of the mailed invitations, following which he induced Sydney Jacoby, with whom he shared offices, to submit a bid which later was accepted. The successful bid contained plaintiff's name as broker.

Jacoby's bid specified that in the event of acceptance the deed was to be drawn to the Hill Street Realty Co., in which name the bid was accepted by the State House Commission. The Hill Street Realty Co. was incorporated as a New Jersey corporation subsequent to the submission of the bid and prior to the closing of title, with Stahl being listed as a prospective shareholder.

At the closing of title, Stahl presented his bill for $25,000 on a prescribed State voucher form but was told that there might be some question as to his right to the commission because it was discovered that he was not a licensed New Jersey broker. Payment was refused. Plaintiff then sought recovery before the Claims Committee of the New Jersey Legislature, which committee recommended an award of $500. This was approved by the Legislature, but plaintiff rejected the award and brought the instant suit.

Defendants raise a number of defenses, some of which were not seriously pressed and will not be discussed here. However, the following defenses bring the basic issues into focus.

1. Factually, defendants dispute the bona fides of plaintiff's claim that he acted as broker in the instant case, contending that Jacoby, not Stahl, was on its mailing list at the time in question, and that Stahl, in effect, acted in a capacity other than as Jacoby's broker.

2. Defendants contend further, that even if the bona fide nature of plaintiff's role were not in dispute, plaintiff is estopped from bringing suit on several grounds, namely:

(a) The offer to pay a commission, as per the above quoted paragraph 10, was to "any authorized broker or attorney," and plaintiff, not being authorized to act as a broker in New Jersey, may not recover a commission.¹

(b) The practice of a real estate broker in New Jersey is defined in N.J.R.S. 45:15-3, N.J.S.A.², which statute prohibits the bringing of a suit in a state court for the recovery of compensation for services rendered by one not a duly licensed broker at the time the alleged cause of action arose. And since plaintiff's suit is in a federal court in New Jersey only by virtue of diversity of citizenship, this court, applying New Jersey law, should likewise bar its doors to plaintiff.

Plaintiff's position that his suit and recovery would not be repugnant to New Jersey's public policy and that this court cannot properly bar his suit, is based on the following four grounds:

1. The offer to "any authorized broker," coupled with mailing to New York addressees and advertising in New York newspapers, could only mean that it was intended that any licensed broker would be entitled to a commission were it earned.

2. Since interstate commerce is involved, the jurisdiction of this court cannot be ousted.

3. The statutory requirements that brokers be licensed must be read in conjunction with the following statement in the Emergency Veterans Housing Act, N.J.R.S. 55:14G-1, N.J.S.A.:

"* * * this emergency requires the temporary suspension of various normal restrictions, prohibitions, limitations, and procedures, in order that immediate relief from this condition may be provided; * * *"

4. Since New Jersey allows its licensed brokers to engage in promotional sales³ in New Jersey of lands outside New Jersey, there can be no strong objection to a New York licensed broker engaging in the sale of New Jersey land, where the brokerage contract was entered into in New York. Moreover, the fact that New Jersey permits the licensing of non-resident real estate brokers⁴ without examination indicates the very opposite of a public policy of restriction of non-resident brokers.

A reasonable interpretation of the words "any authorized broker" describing the qualifications for earning commission, as used, in the invitation to bid, must mean that it was the intent of the invitors to offer the commission to any New Jersey authorized broker. This is reinforced by the fact that the above phrase "any authorized broker" is followed by "or attorney." New Jersey attorneys are permitted to engage in real estate transactions without being licensed brokers by virtue of N.J.R.S. 45:15-4, N.J.S.A.⁵ It is too unrealistic to expect that New Jersey was willing to include non New Jersey attorneys in this category.

The incidence of burden on interstate commerce resulting from licensing of real estate brokers is patently negligible, and in the absence of contrary action by Congress, the reasonable exercise of state police power raises no federal question. See Robertson v. People of State of California, 1946, 328 U.S. 440, 66 S.Ct. 1160, 90 L.Ed. 1366.

Plaintiff's contention that the quoted provision of the Emergency Veterans Housing Act suspending "various normal restrictions, prohibitions, limitations and procedures" logically included the suspension of the real estate licensing statutes finds little merit in the circumstances of this case. Whatever application this general power might have had during the period of housing emergency to supersede or suspend normally operative requirements, such powers could hardly be said to apply to the liquidation of the emergency housing program.

Plaintiff submits the case of State v. Gallaher, Ch.Div.1957, 44 N.J.Super. 59, 129 A.2d 593, as standing for the proposition that "Federal Courts are not `the courts of this State'." However, that decision has no application here, and is taken out of its proper context in an opinion concerned with the effect of a state escheat statute on moneys deposited in the registry of a federal court.

The jurisdiction of the federal court was discussed in Woods v. Interstate Realty Co., 1949, 337 U.S. 535, 69 S.Ct. 1235, 93 L.Ed. 1524. It was a diversity of citizenship suit brought by a foreign corporation to recover a broker's commission for the sale of real estate. The United States District Court in the forum state barred the suit because plaintiff had failed to conform to a local statute requiring foreign corporations to file a written power of attorney designating an agent on whom process could be served. The statute further provided that failure to comply would bar such corporation from bringing or maintaining any suit in its courts. The Court of Appeals of the 5th Circuit reversed, holding that unenforceability in the state courts "did not close the doors of the federal court sitting in that State." (337 U.S. at page 536, 69 S.Ct. at page 1236). However, the United States Supreme Court stated that "the policy of Erie v. Tompkins 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, precluded maintenance in the federal court in diversity cases of suits to which the State had closed its courts." (337 U.S. at page 537, 69 S.Ct. at page 1237).

A case strongly parallel to the one at bar is that of Reed v. Kelly, 7 Cir., 1949, 177 F.2d 473. There, the plaintiff was a resident of and a duly licensed real estate broker in Illinois. He sued the defendant, a resident of Wisconsin, to recover a commission for procuring a purchaser for defendant's Wisconsin property. Plaintiff was not licensed in Wisconsin, the statutes of which, as in New Jersey, required that one acting as a real estate broker, temporarily or otherwise, should be licensed in Wisconsin before transacting any real estate business there. Further, a plaintiff could not bring or maintain an action in the Wisconsin courts for the recovery of a commission without alleging and proving himself to be a real estate broker licensed by Wisconsin.

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