to know before hand what ultimately came to pass: only a triparte deal between the seller and the joint buyers would insure development of the property. Just as the residential buyer needs the mortgage, and often all the help he can get in finding it, plaintiff had to know that the deal for the Kero-Bosin tract was as dependent on Troast finding a Sheraton as it was on Sheraton finding a Troast.
Not only were the two transactions interrelated in significant, even determinative ways, they also spawned the conflict of interest and self-dealing anticipated by the Appellate Division. That Court opined that whenever a broker placed itself between the seller and the buyer its efforts could serve neither party, or worse, harm one of the two. Both of those hypotheticals occurred in this case. First of all, although somewhat buried in Friedman's affidavit, plaintiff simply makes no effort to rebut his assertion that the sellers paid plaintiff over $ 18,000.00 for a study on the feasibility of hotel development, information plaintiff then used in its efforts to work a deal between Troast and Sheraton. Would any reasonable businessman, acting as principal, pay his agent such a sum for a study that the agent would then use to generate a fee of almost one half of a million dollars from the principal's contractual adversary? The answer to the question is self-evident. Clearly, the role of master and servant has been reversed.
Second, just as the Appellate Division predicted, an agent serving two principals might, in order to serve his own interests, "delay or complicate the title closing." Here, the correspondence between Friedman and Singer makes clear that Singer saw nothing wrong in interjecting his dispute with Troast over the hotel fee into the closing process. Although Singer is quick to criticize Friedman for not raising the conflict issue, Friedman at least, if not Singer, had his client's interests in mind when he warned Singer to refrain from conduct that could have jeopardized the closing.
Here, the uncontroverted facts demonstrate that plaintiff impermissibly sought to extract compensation from parties on opposite sides of a single, unitary transaction in clear violation of N.J.S.A. 45:15-17(i). The only remaining question is the appropriate penalty.
Defendants argue that plaintiff should be precluded from collecting any portion of the hotel fee. I agree. The law of New Jersey is clear that a broker who violates N.J.S.A. 45:15-17(i) may not collect his commission earned in violation of the statute. Winding Brook Realty v. Platzer, 166 N.J. Super. 575, 400 A.2d 145 (Law Div. 1979), aff'd 173 N.J. Super. 472, 414 A.2d 596 (App.Div. 1980). This result is consistent with fundamental principals of contract law. Plaintiff's breach of an implied warranty of authority is clearly a contractual claim. A person who purports to bind another in contract, whom he has no power to bind, is personally liable to the other contracting party. Bregman Screen & Lumber Co. v. Bechefsky, 16 N.J. Super. 35, 39, 83 A.2d 804 (App.Div. 1951). Here, plaintiff has offered to prove that Wilson was never Troast's agent and hence that Wilson and the other defendants are liable in contract for Wilson's misrepresentation to the contrary. Id. However, a contract that violates public policy is void. HIMC Inv. Co. v. Siciliano, 103 N.J. Super. 27, 246 A.2d 502 (Law Div. 1968). More specifically, a contract formed in violation of a statute is void as against public policy. Naseef v. Cord, Inc. 90 N.J. Super. 135, 216 A.2d 413 (App.Div.), aff'd on other grounds, 48 N.J. 317, 225 A.2d 343 (1966).
I reject plaintiff's assertion that defendants' own participation in the proposed transaction estops them from raising the statute as a defense. Plaintiff cites no case for this proposition and New Jersey law is clearly to the contrary. The doctrine of estoppel cannot be invoked to enforce an agreement in violation of public policy. McCarthy v. National Ass'n for Stock Car Auto Racing, Inc., 90 N.J. Super. 574, 218 A.2d 871 (App.Div. 1966), aff'd, 48 N.J. 539, 226 A.2d 713 (1967). If the rule were otherwise, illegal contracts would be void only if challenged by third parties whose standing would surely be questioned. Accordingly, because defendants have demonstrated that there can be but one reasonable conclusion as to the verdict on those claims, Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), I will grant defendants' motion for summary judgment on the two counts in the four count complaint that sound in contract, and on the one count of the complaint sounding in fraud which seeks recovery of the hotel fee.
Defendants argue that plaintiff's transgressions with regard to N.J.S.A. 45:15-17(i) should also bar its claim to recover defendants' half of the land sales commission. At first blush, this argument has appeal. Ordinarily, the court will not assist either party to an illegal contract and will leave the parties as it found them. Design-4 v. Masen Mountainside Inn, Inc., 148 N.J. Super. 290, 372 A.2d 640 (App.Div. 1977). Here, however, that somewhat trite rule would work an inequitable result. Despite defendants' unsupported assertions to the contrary, plaintiff has set forth sufficient evidence from which a reasonable jury could conclude that defendants are liable to plaintiff for half the sales commission based upon a theory of fraud.
Plaintiff has set forth sufficient evidence in the record that if believed by a jury would support a finding that Wilson told Singer that he had the authority to promise that Troast would pay the hotel fee, that this statement was knowingly false when made, and that in reliance on that misrepresentation plaintiff shared the sales commission with defendants who were not otherwise entitled to it. This court will not allow what appears to be in all significant respects a classic case of fraud fall by the wayside merely because plaintiff overstepped its bounds in relation to the sellers. While the court obviously does not condone plaintiff's disregard for its ethical obligations as embodied in N.J.S.A. 45:15-17(i), to hold otherwise would confer upon defendants a windfall, a result this court will not countenance. Accordingly, plaintiff may proceed to trial on the one count of its complaint sounding in fraud and misrepresentation that seeks to recover one-half of the sales commission. One of plaintiff's intentional tort claims having survived summary judgment, it may also seek punitive damages.
The court will enter an appropriate order.
Dated: May 20th, 1988
ORDER -- May 20, 1988, Filed; May 24, 1988, Entered
This matter having been opened to the court by defendants' motion for summary judgment, and plaintiff having filed opposition thereto, and the court having considered the submissions of the parties, without oral argument, pursuant to Fed. R. Civ. Pr. 78; and
The court having rendered an opinion on the date hereof, and for the reasons expressed therein,
It is on this 20th day of May, 1988
ORDERED that defendants' motion for summary judgment on Counts 1, 3, and 4 of the Complaint be and the same hereby is granted; and it is further
ORDERED that defendants' motion for summary judgment on Count 2 the Complaint be and the same hereby is denied.