For modification and remandment -- Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. Opposed -- None. The opinion of the court was delivered by Francis, J.
The Superior Court, Law Division, after a non-jury trial, entered a judgment of $69,500 in favor of plaintiff, Richard Abeles, as a broker's commission for obtaining a lender, ready, willing and able to make a substantial institutional loan to defendant. The Appellate Division reversed. 64 N.J. Super. 167 (1960). We granted certification. 34 N.J. 327 (1961).
Abeles sued as assignee of a written brokerage agreement executed by the president of defendant corporation. Although Abeles was not named in the agreement, he was, to the knowledge of defendant, an active participant and an important factor in producing the lender. The plaintiff Levkoff was also an active participating broker and joined in the suit as such. But he was neither a party to defendant's written authorization nor to the assignment. Consequently the trial judge dismissed the action as to him. He did not appeal.
Defendant, Adams Engineering Co., Inc., is a Florida corporation with its principal office in Miami. Charles Silvers is the president and (as defendant says in its brief) as such manages its affairs. He and his family own approximately 89% of the outstanding stock, although the record does not reveal how many shares Silvers owns personally. Adams Engineering Co. was incorporated in 1952 and its initial public offering of stock was underwritten by Atwill & Company. Some time later William Atwill, Jr. became a member of defendant's board of directors and of the finance committee of that board. Atwill's corporation (which is wholly owned by him) is engaged in the investment banking business. His company acts as broker in financial transactions, including the buying and selling of
stocks and bonds; it engages in the underwriting of securities for corporations. Atwill acts as financial advisor to various municipalities in Florida, and he is also a general partner in the Wall Street firm of A. C. Allyn & Co.
While Atwill was serving on the board of directors and its finance committee, defendant became interested in long-term corporate financing. The matter was discussed a number of times at directors' meetings when Atwill was present. According to Silvers, "We had directors' meetings and he was asked many times to get money." In the spring of 1957 Atwill asked Silvers if Adams Engineering Co., Inc. (Adams) was interested in an institutional loan, and after an affirmative answer some discussion ensued regarding a loan of that type. There can be no reasonable doubt that Atwill was told by Silvers to explore the possibility of such a loan.
Atwill communicated with Levkoff, a Miami, Florida mortgage broker, who, he had learned, had been successful in negotiating substantial loans with insurance companies. After some conversation about the problem, Atwill provided financial statements of Adams. Levkoff studied them, apparently was favorably impressed and so informed Atwill. Levkoff got in touch with Abeles, a Newark, New Jersey broker with whom he had been associated in the placing of mortgages, and explained the situation to him. Abeles advised that the Prudential Insurance Company made that kind of loan, and thereafter they both busied themselves with the problem. Abeles drew a credit report on Adams and then took the matter up with Prudential representatives in Newark. He succeeded in interesting them -- a constructive accomplishment because in 1954 Prudential had refused a loan to Adams -- and the associate investment manager of the Newark office directed Donald R. Knab, Investment Manager of the Prudential Florida office, to look into the subject "because he felt it would pay interest at this time." As a result, a meeting was arranged for July 2, 1957 at defendant's office in Miami. Present were Silvers, Abeles,
Levkoff, Atwill and two representatives of the Prudential, Knab and Hall. The loan was discussed generally, as well as the financial condition and business operations of Adams. At this time Knab mentioned that his company might require life insurance written by any good insurer to safeguard the loan. In any event, the general atmosphere was favorable and it was understood the Prudential people would enter into a thorough study of the prospect.
Meanwhile, following discussion among Atwill, Levkoff and Abeles, Atwill informed Silvers that the brokerage fee would be 6% of the amount of any loan, each of the three participating brokers to receive 2%. Silvers at first expressed the view that the fee was too high but then agreed, apparently on condition that it cover the costs incidental to closing. Shortly thereafter the following letter was written on the letterhead of Adams Engineering Co., Inc.:
This will confirm our telephone conversation of Wednesday, August 7, 1957.
If you are successful in concluding a fifteen-year institutional loan in the amount of $1,600,000.00, upon terms to be mutually agreeable to both parties, this company agrees to pay you a brokerage of six percent (6%) of the amount of the loan.
This fee is to cover all costs, whether legal, filing, recording, accounting, etc.
Adams Engineering Co., Inc.
Prudential's analysis of Adams was an intensive one. Levkoff, who was experienced in accounting matters, testified that over a period of five months he spent a substantial
portion of his time at the Adams office working with and assisting its accounting staff in assembling data for Prudential. Finally, between September and November 1957, Knab on behalf of Prudential submitted preliminary proposals for loans of $1,500,000 and of $1,000,000. These were rejected by Silvers. In November a proposal for a loan of $1,250,000 was presented. Its terms were satisfactory to him. He approved in writing and returned it to Knab at Jacksonville, Florida. All of the proposals, including the one thus endorsed, were expressly made subject to the approval of the finance committee of Prudential's board of directors. When submitted to that committee, the loan was sanctioned but an additional condition was added, i.e., that the loan be secured by a five-year term $500,000 life insurance policy on Silver's life.
Sometime between November 26 and December 3 Knab received the finance committee approval which imposed the life insurance condition. His recollection was not clear as to the exact date. But either on the day of receipt or the next day he called Levkoff and informed him of the additional requirement. Levkoff testified that he immediately called Silvers and conveyed the message about the insurance to him. Silvers said, "O.K"; that if "he had to, he had to." Silvers also told Levkoff that he could pass a physical examination; he had bought some life insurance a short time previously and had passed the examination; moreover, he was then engaged in negotiating for $350,000 additional such insurance through his Miami agent. This conversation, which is denied by Silvers, is the most crucial factor in the case. Levkoff advised Knab of Silvers' acquiescence. Knab, in turn, called the Prudential Newark office and relayed the message to Robert Jones, Associate Investment Manager there. Jones again brought the loan to the attention of the finance committee, which approved it. On December 4, 1957, he sent a wire to Knab announcing "Adams Engineering approved with changes in terms as discussed with you." Silvers said he heard from Levkoff or Atwill on December
4 or 5 of the approval. According to Levkoff it was he who conveyed the information to Silvers.
The loan agreement containing the $500,000 policy clause was prepared in final form by Prudential attorneys in Florida and about December 15 or 16 sent to Silvers' attorney, Ehrlich, for review. Ehrlich testified that after perusal he telephoned Silvers to discuss the papers with him and in doing so informed him of the insurance requirement, whereupon Silvers instructed him to do nothing further in the matter. Thereafter, although he had a number of telephone calls from Levkoff, he did not return any of them. Silvers asserted that he called Atwill immediately and objected to "this sudden new requirement," and that Atwill told him not to get excited about it because it would be taken care of. Atwill denied that any such conversation took place.
At this point in the narrative it seems necessary to refer to certain events, some disputed and some conceded by the parties, which according to the testimony took place after Silvers' alleged acceptance of the insurance requirement, some time prior to December 3 or 4, 1957 (according to Levkoff), and after Silvers' alleged rejection of the demand on December 16 or 17. These events relate to a conference Silvers had with one Gustave Jay, an insurance broker, on January 2 or 3, 1958.
Sometime in December 1957 Levkoff told Abeles of the demand for the insurance policy and, quite obviously, of Silvers' acceptance of the condition. Abeles said he could save Silvers some money on the premium by placing the coverage with a Canadian company. Abeles knew a Newark insurance broker, Gustave Jay, who was a representative of that company. Jay was going to be in Florida on vacation or at a convention around the holidays. Thereafter, Levkoff arranged an appointment with Jay and Silvers. Levkoff knew the meeting between the two men took place because he talked with both of them about it on the telephone afterward. It is plain from this testimony, if credible, that Silvers was not then objecting to the insurance.
The insurance broker Jay (who was a stranger to Levkoff) testified that he saw Silvers in Florida pursuant to an appointment. Silvers was interested in exploring the five-year term policy and its cost. Jay presented the insurance plans which would best fit the requirement, and during the conference Silvers called in another representative of Adams (Jay thought he was the controller) to listen to part of the conversation. Silvers gave Jay a copy of Adams' 1956 Annual Report. The discussion extended into other forms of life coverage. Silvers asked Jay to see his Florida broker and, on Jay's consent, telephoned that person to make an appointment. Jay saw the broker that night or the following night. On defendant's objection, their conversation was excluded. Subsequent to these meetings Jay telephoned Silvers' broker but was not successful in writing any insurance.
Silvers admitted having this conference with Jay, even though he claimed he had told his attorney, more than two weeks earlier, he would not accede to the Prudential request for insurance. His explanation was that since Jay had come all the way from Newark to see him, it would not be "very nice not to see him"; also, he was negotiating at the time with his broker about some additional personal protection, and so was curious. In this connection Silvers denied that Levkoff had ever spoken to him about a proposed visit by Jay. He indicated that the first he knew about the matter was when Jay "apparently phoned [his] office and made an appointment" through his secretary. If his only contact with the Jay appointment before the actual meeting was through his secretary, it must be noted that he offered no statement as to how he knew Jay had come all the way from Newark to see him and when it was that he decided it would ...