On appeal from the Essex Circuit Court.
For the plaintiff-respondent, Harrison & Roche (J. Henry Harrison and George L. Lombardi).
For the defendants-appellants, Edward R. McGlynn.
The opinion of the court was delivered by
CASE, J. The appeal is from a judgment in the Essex County Circuit Court for the plaintiff, assignee of David Houston Corporation, and against the defendants on conclusions filed by one of the judges of that court sitting without a jury upon a stipulation as to the facts. The stipulation contained a provision that "the testimony, exhibits, final decree and record, as set forth in the state of case in the New Jersey Court of Errors and Appeals entitled 'May M. Brittingham, et al., Complainants-Respondents, and Huyler's a New York Corporation, et al., Defendants-Appellants, and David Houston, Defendant-Respondent, on Appeal from the Court of Chancery,' together with the pleadings, records and affidavits on the motion to strike the answer in the above entitled cause, to wit, Houston v. Brittingham, et al., be used by the Court in lieu of the taking of testimony." The decision of this court in the named litigation is reported in 120 N.J. Eq. 198, and consists of an affirmance upon the Chancery opinion reported in 118 Id. 352. The instant suit is to recover the unpaid brokerage commissions for effecting the sale agreement mentioned in that opinion.
Defendants were the owners of 861 Broad street in the city of Newark wherein Huyler's, a corporation, was the
tenant, bound by a lease guaranteed by Huyler's of Delaware, Incorporated. Both of the Huyler corporations were owned, to the extent of control, by D. A. Schulte, Incorporated. The management personnel in the several corporations interlocked. For illustration, Mr. Arthur D. Schulte was vice-president of D. A. Schulte, Incorporated, and of most of the Schulte companies and specifically had general charge of the retention or cancellation of Huyler leases, and Mr. Kenneth Barnaby was a vice-president of D. A. Schulte, Incorporated, and of Huyler's. Mr. Houston refers in his testimony and depositions interchangeably to himself and the corporation bearing his name. No distinction, substantial in the cause, is made between the individual and the corporation. Houston had recently entered into a contract with D. A. Schulte, Incorporated, whereby he took over the management for that corporation of the Firemen's Building in Newark as renting agent -- a business arrangement which has no relevancy beyond the fact of business affiliation. He was summoned by Barnaby and authorized to negotiate for the purchase of the defendants' property. Out of that authority grew the contract of sale which this court, in adopting the language of Chancery, found was "conceived in fraud and executed in fraud * * * not intended as a bona fide transaction" and which, the fraudulent purpose having meanwhile been accomplished, "Huyler's * * * dummy refused to carry out." The "dummy" was the New Dorp Realty Corporation which, as vendee, executed the sales contract and which was incorporated for that sole purpose. Plaintiff's clients were the corporations which perpetrated the fraud upon which he now endeavors to collect. Plaintiff was a party to the equity proceeding, a witness at the hearing in Chancery and, by his counsel, a participant throughout the case. After the hearing the bill was dismissed as to him upon the ground that his part in the fraudulent contract was apparently innocent.
The action is upon the following written memorandum addressed on defendants' behalf to plaintiff's assignor before the corporate vendee had renounced its contract and before the fraud had been discovered:
"David Houston Corporation, 810 Broad Street, Newark, New Jersey.
This is to confirm arrangement entered into for payment of broker's commission to you for sale of premises 861 Broad Street, Newark, N.J., which title is set for closing at $180,000.00 -- commission to be $3,750.00 on which it was agreed that $1,000.00 would be paid on ...