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Blau v. Friedman

Decided: April 3, 1958.

LESLIE BLAU, PLAINTIFF-RESPONDENT,
v.
MORRIS FRIEDMAN AND BETTY FRIEDMAN, DEFENDANTS-APPELLANTS



For reversal -- Chief Justice Weintraub, and Justices Heher, Wachenfeld, Burling, Jacobs, Francis and Proctor. For affirmance -- None. The opinion of the court was delivered by Jacobs, J.

Jacobs

The Appellate Division, in an opinion reported at 46 N.J. Super. 573 (App. Div. 1957), affirmed the Law Division's judgment for the plaintiff for brokerage commission in a real estate transaction which was never consummated. We granted certification under R.R. 1:10-2.

In April 1947 the defendant Morris Friedman and his aged mother Sarah purchased premises at Elmwood Avenue, Irvington. The deed was in the name of Morris alone, but in May 1947 Morris and Sarah executed an instrument of trust in which Morris declared that he held a half part of the premises in trust for Sarah, who in turn declared that Morris, as trustee, shall have power to sell the premises at such time and for such price and upon such terms as he shall see fit. In 1952 Sarah executed and recorded an instrument which set forth that she thereby revoked the trustee's power of sale embodied in the May 1947 declaration

of trust, but Morris states that he knew nothing whatever of his mother's action when he, along with his wife, Betty, authorized the plaintiff Leslie Blau, realtor, to represent them in the sale of the premises.

The testimony by the defendants with respect to their transaction with the plaintiff was to the following effect: A man named Teltser, employed by Blau, called and asked Morris whether he wanted to sell his apartment building at Elmwood Avenue and stated that he could get a fair price for him. Morris said that he would sell and two days later Teltser came to him with a form authorization which he and his wife Betty signed. It was dated May 28, 1956 and authorized Blau to represent them as their exclusive agent for the sale of the "land and building which we own" at Elmwood Avenue, Irvington; it contained an agreement that they would pay a commission "equal to 5% of the total purchase price if, as and when title to the property actually passes to the purchaser." Thereafter Morris received a letter from Blau (signed by J. Frank Brooks, manager, and dated June 14, 1956) advising that he had obtained a purchaser; the letter requested that Morris instruct his attorney to draw the contract of sale and forward it to Mr. Mandelbaum, 17 Academy Street, Newark. Morris did call his attorney, Mr. Herships (who was also attorney for Sarah) and then learned about the 1952 instrument of revocation. He asked his mother to join in the sale but she refused; he offered to convey his own interest in the premises but this was refused by the purchaser; he offered to give Blau a perpetual exclusive agency with respect to the premises but this was refused. The purchaser refused to proceed with the transaction unless he could receive a marketable title and the transaction was never consummated.

On July 27, 1956 the plaintiff filed his complaint seeking recovery of brokerage commission which the defendants had refused to pay. The first count alleged that the plaintiff had produced a purchaser who was ready, willing and able to purchase the property upon the terms and conditions

set forth in the authorization of May 28, 1956 but the defendants had refused to consummate the sale and had refused to pay the plaintiff's commission. The second count alleged that the defendants had in their authorization represented that they were the owners of the property whereas they knew that it was owned partly by Sarah and that Morris "could not convey title"; that the plaintiff in reliance on the defendants' representation had expended time and money and had produced a ready, willing and able purchaser, and that the plaintiff had been "deprived of the commission he would have received had the representation been true." The pretrial order set forth that the plaintiff's proceeding was "a contract action for real estate commissions with a second count based upon fraud."

After all the testimony on behalf of the parties was introduced, the trial court rendered its opinion which determined that there should be judgment for the plaintiff in the sum of $5,685. It found that the defendants' ownership "extended only to one-half of the property" and that "another party was the equitable owner of the remaining half"; that the power of sale, "revoked or unrevoked" was not equivalent to ownership; that regardless of whether the defendants knew of the instrument of revocation they "did represent themselves as owners of the property, when in fact they knew they only owned a portion of it"; that the plaintiff, in reliance upon the defendants' representation had "produced a buyer, ready, willing and able to purchase the property"; and that the clause in the authorization conditioning the right to commission upon the actual passage of title to the purchaser could not destroy the broker's right to commission when it was "called into operation solely as a result of the seller's original misrepresentation of ownership." The Appellate Division, in affirming the trial court, concluded that in view of their misrepresentation the defendants could not take advantage of the clause which conditioned the broker's right to commission upon the actual passage of title even if they established that when they signed the authorization of May 28, 1956 they acted in

good faith and with the conscientious belief that they had unrestricted legal power to sell the entire property to the purchaser to be procured by the plaintiff. See 46 N.J. Super. at pages 581, 582.

Our cases hold that ordinarily an authorized broker who obtains a ready, willing and able buyer is entitled to his commission even though the sale is never consummated. See Beckmann, Inc., v. (Zinke's) Rainbow's End, Inc., 40 N.J. Super. 193, 196 (App. Div. 1956), certification denied 22 N.J. 219 (1956); Marschalk v. Weber, 11 N.J. Super. 16, 21 (App. Div. 1950), certification denied 6 N.J. 569 (1951). To avoid this result the seller may include a contingency clause in the authorization to the effect that the broker's commission shall be payable only if the sale is consummated and title passes to the buyer. See Beckmann, Inc., v. (Zinke's) Rainbow's End, Inc., supra, 40 N.J. Super. at page 198; Todiss v. Garruto, 34 N.J. Super. 333, 338 (App. Div. 1955), certification denied 18 N.J. 549 (1955); Alexander Summer Co. v. Weil, 16 N.J. Super. 94, 98 (App. Div. 1951); 3 Corbin, Contracts 956 (1951); Note, " Special Conditions in Real Estate Brokerage Contracts," 32 Colum. L. Rev. 1194 (1932). But even the presence of the contingency clause will not prevent recovery by the broker if the sale is defeated by the seller's own willful conduct. Keifhaber v. Yannelli, 9 N.J. Super. 139, 142 (App. Div. 1950); Beckmann, Inc., v. (Zinke's) Rainbow's End, Inc., supra, 40 N.J. Super. at page 199. In the Keifhaber case the seller agreed that the premises located in New York would be vacated, but then deliberately withheld any steps towards removing the occupant. The court, applying New York law without, however, suggesting that ...


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