Wyckoff v. O'Neil
| Decision Date | 29 September 1970 |
| Citation | 64 Misc.2d 333,314 N.Y.S.2d 410 |
| Parties | Claude E. WYCKOFF and Lois T. Wyckoff, Plaintiffs, v. James A. O'NEIL and Lois V. Harris, Defendants. |
| Court | New York County Court |
This is an action to recover a deposit paid to defendant James A. O'Neil, real estate broker, in connection with the sale of premises at 313 Wilder Street, Rochester, New York, owned by Randolph Marttucci and Laure Marttucci.
On April 21, 1970 the plaintiffs signed a purchase offer to buy the Marttucci residence for $15,900, payable all cash at time of transfer. Their signatures were witnessed by defendant Lois V. Harris, a saleswoman working for O'Neil.
The purchase offer form is a standard form printed and distributed through the Rochester Real Estate Board. On the upper left hand corner appears the seal of the National Association of Real Estate Boards of which the Rochester Real Estate Board is a member. In addition to certain standard boiler plate paragraphs, the name of the defendant James A. O'Neil, Realtor, is printed in that part of the contract consisting of the offer as well as in the printed acceptance.
There are blank spaces for the insertion of the property location, the purchase price, terms, the final acceptance date, the closing date and the amount of money deposited by the purchaser at the time of executing the offer. The court takes judicial notice (4 Bender's N.Y. Evidence, sec. 170) of the practice in Monroe County for the salesman or broker to complete the terms of the offer which, from a casual comparison of the signature of defendant Harris with the written terms, appears to have been done in this case by her.
These written terms and conditions represent extremely important areas of the contract. In addition to the amount of the purchase price of $15,900, the written terms also require that payment be made in cash at the time of transfer; that the contract is subject to the purchasers obtaining an FHA mortgage loan in the sum of $14,300 for a 25-year term; that the application for such mortgage must be accepted for processing by a lending institution within fifteen days or the seller may cancel on written notice to the purchasers. It is further subject to the approval of plaintiff, Lois T. Wyckoff, the wife of plaintiff Claude E. Wyckoff, following her inspection of the premises on April 22, 1970, and the affixing of her signature to the offer, which was done.
Probably the most important condition, at least with respect to this lawsuit, is the one making the contract subject to the sellers 'obtaining the property at 151 Lake Front, Irondequoit, N.Y.' The contract does not specify whether 'obtaining' means obtaining title, possession, or simply a binding contract of transfer.
The offer was made good until April 23, 1970 and called for closing on or before June 1, 1970. According to the contract, and the complaint, the sum of $954.00 was deposited with the defendant O'Neil by the purchasers, 'to be held until this offer is accepted, at which time it shall become part of the purchase price or returned, if not accepted.' Judicial notice is taken that in Monroe County the prevailing minimum brokerage commission for dwellings is 6% Of the purchase price, (Cash v. Diamond, 208 Misc. 712, 144 N.Y.S.2d 627), and $954.00 is 6% Of the purchase price here. The printed portion of the offer also includes language, immediately following the above printed terms, 'I agree to pay the prevailing minimum brokerage commission if I fail to complete my part of this agreement.'
The sellers executed their acceptance on the same date. Their signatures were also witnessed by defendant Harris. There being no additions or changes to the offer, their acceptance consisted of the following printed language on the contract: 'I hereby accept the above offer and agree to sell on the terms and conditions set forth and to pay JAMES A. O'NEIL, REALTOR, prevailing minimum brokerage commission, and the deposit here made may be applied thereon.'
The plaintiffs' suit to recover the deposit is based upon the non-fulfillment of the written terms in the contract because the FHA loan was never procured and the sellers never obtained possession of the 151 Lake Front premises. Plaintiffs further allege that the time for the completion of these contingencies and the transfer of title has expired and that the defendants refused to return the deposit upon demand.
The motion by defendant O'Neil is brought pursuant to CPLR 3211(a)(7) for judgment dismissing the complaint upon the ground that it fails to state a cause of action. The defendants both allege that they were acting solely as agents for disclosed principals and that, consequently, they have no obligation to the plaintiffs whose remedy, if any, would be solely against the sellers. Defendant Harris, moving for summary judgment pursuant to CPLR 3212, relies upon several undisputed facts, i.e., the deposit was delivered into the control of co-defendant O'Neil; that the check for the deposit was made payable to O'Neil; that Harris was solely an agent of O'Neil who, as to her, was her principal; that she does not have the deposit in her possession or control. It appears that she has also brought a cross-claim against O'Neil.
There is a general rule in the law of agency which supports the defendants' position. It is that where a party with whom an agent is dealing knows that he is acting for a principal, either by disclosure by the agent or otherwise, he cannot be held personally liable upon a contract he negotiated on the principal's behalf. Such insulation from liability includes the situation where a party to the contract becomes entitled to a return of money paid to the agent because of the failure of a contingency in the contract notwithstanding the agent still has possession of the money. (2 N.Y.Jur., Agency, sec. 301; Beeman v. May, 193 Misc. 684, 85 N.Y.S.2d 122; Scaramuzzino v. Larkin, 54 Misc.2d 839, 283 N.Y.S.2d 375).
However, this is not the standard situation to which the general rule applies, at least not yet. It is necessary to probe further to determine what the effect of the real estate agent's interest is in the contract; whose contract we are construing; and the role of the agent in drawing as well as negotiating the contract.
Although not raised in either the pleadings or moving papers, the court is empowered to take judicial notice of well-known facts, (Stahl Soap Corp. v. city of N.Y., 7 Misc.2d 901, 164 N.Y.S.2d 79, rev'd on other grounds, 4 A.D.2d 957, 167 N.Y.S.2d 717, aff'd 5 N.Y.2d 200, 182 N.Y.S.2d 808, 156 N.E.2d 443; City of Buffalo v. New York Central Railroad Co., 125 Misc. 801, 212 N.Y.S. 1, aff'd 218 A.D. 810, 218 N.Y.S. 713, aff'd 271 N.Y. 658, 3 N.E.2d 471; Walsh v Trustees of New York & Brooklyn Bridge, 96 N.Y. 427), particularly as they involve a practice which, for many years, has involved the community at large and the bar. I am referring, of course, to the notorious and tolerated practice of real estate brokers drawing contracts for the purchase and sale of real estate. Although not directly in point, there is strong authority for the court to review and investigate, on its own motion, matters affecting the practice of law. (In re Association of the Bar of the City of New York, 222 A.D. 580, 227 N.Y.S. 1; M. Anonymous v. Arkwright, 5 A.D.2d 790, 170 N.Y.S.2d 535).
The printed form contract is a product of the Rochester Real Estate Board. The terminology in the contract is the standard language used in the great majority of the contracts printed and distributed by it, with no changes except for those specifically requested by individual members of the Board. The seal of the National Association appears on all of the Rochester Real Estate Board's contracts. As an added service, it prints the business name of the realtor who purchases the contract. The fixed commissions are printed on the contract.
Regardless of whetehr or not some lawyer at some time in the past may have advised the Rochester Real Estate Board regarding the terminology or legal affect of the language appearing in the printed portion of its contract, there is no question but that it is exclusively the end product of a lay organization not authorized to practice law.
The requirements to become a real estate broker are governed by the licensing requirements of Article 12--A of the Real Property Law, (49 McKinney's Real Property, secs. 440--a, 441). The bar and the practice of law have been historically under the exclusive supervision and jurisdiction of the courts. 1 (For comprehensive treatment of the subject, see, Payne, 'Title Insurance, the Legislatures and the Constitution', 21 Ala.L.Rev. 25 (1968); Payne, 'Title Insurance and the Unauthorized Practice of Law Controversy', 53 Minn.L.Rev. 423 (1969). Admission to practice is regulated by statute, and anyone not licensed to practice law may be enjoined from doing so. In addition, a violation constitutes a misdemeanor. (29 McKinney's Judiciary Law, Art. 15, secs. 476A, 476B, 478, 485).
Whether as exceptions to the rule or as erosions from the generally accepted definition of legal practice, or otherwise, the courts in various jurisdictions have carved out certain areas of sanctioned conduct by a lay person. They have been delineated as follows:
(1) The Substantial Interest Theory.
Performance of services that would ordinarily be regarded as practicing law justified when done by someone with sufficient interest in the subject matter to be viewed as a party acting for himself.
(2) The Incidental Theory.
A service usually performed by a lawyer not unauthorized as done ancillary to a business or profession.
(3) The...
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Duncan & Hill Realty, Inc. v. Department of State
...the termination of the contract and the fact that Bellaire, although not an attorney, drafted the contract (see Wyckoff v. O'Neil, 64 Misc.2d 333, 340, 314 N.Y.S.2d 410, 417). The modifications made by Bellaire in the purchase offer upon the acceptance of the seller's counter offer did not ......
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