On Appeal from the United States District Court for the District of New Jersey; Civil Action No. 85-5920.
Mansmann and Scirica Circuit Judges, and Louis H. Pollak, District Judge.*fn* Scirica, Circuit Judge, dissenting.
In this diversity suit brought in federal court in New Jersey, plaintiffs John J. Cooney and F. Dring Wetherill claimed that defendant Donald W. Ritter owed each of them a commission for having arranged to introduce Ritter to the person who purchased Ritter's business. After a two-day bench trial, the district court found in plaintiffs' favor with respect to the claimed commissions but concluded that plaintiffs were not entitled to an award of pre-judgment interest. From the judgment awarding plaintiffs the claimed commissions, defendant appealed. From the denial of interest, plaintiffs cross-appealed. For the reasons which follow, we conclude that (1) plaintiffs are entitled to commissions, but not as large as the district court awarded; and (2) the denial of prejudgment interest was not warranted.
The District Court's Findings of Fact
The salient facts found by the district court may be quickly summarized:
F. Dring Wetherill and Donald Ritter were acquaintances. In 1982 Ritter told Wetherill that he was interested in selling his New Jersey trucking business, Ritter Transportation Inc., and inquired whether Wetherill had any thoughts about a possible purchaser. Wetherill got in touch with John Cooney, who had considerable experience bringing purchasers and sellers of businesses together. Cooney then met with Ritter to learn more about Ritter Transportation Inc.; in the course of the conversation Ritter said that he would pay Cooney a five per cent commission on a consummated sale of the business. Cooney then approached Richard Kirk, a business man with whom Cooney had prior dealings, with a view to interesting Kirk in buying Ritter's business. Kirk agreed to meet with Ritter. Cooney set up a breakfast meeting in New York for Ritter, Kirk (who had promised Cooney a commission of $150,000 if the purchase went through) and himself. At the breakfast meeting Cooney told Kirk and Ritter that he was to receive commissions from both sides in the event that Kirk and Ritter made a deal. Meanwhile Cooney and Wetherill agreed to divide equally whatever commissions arose out of the prospective Ritter-Kirk transaction. Ensuing negotiations between Ritter and Kirk -- negotiations in which Cooney played no real role (and, evidently, Wetherill played no role at all) -- proceeded to the point where a closing was scheduled; but Kirk failed to show. That put the quietus on the 1982 Ritter-Kirk round.
In 1983 Cooney produced another potential purchaser, one Alex Kogan; Kogan made Ritter an offer, but Ritter -- to Cooney's dismay -- turned it down. Then in 1984 Cooney approached Kirk again and succeeded in re-igniting Kirk's interest in Ritter Transportation Inc. In July of 1985 the deal was done. Kirk's company, WISL Transportation Inc., bought all the shares of Ritter Transportation Inc. for $5,500,000.
The District Court's Conclusions of Law
After rejecting Ritter's factual claim that he had not promised Cooney a commission, the district court addressed Ritter's legal claim that, because a significant fraction of the assets of Ritter Transportation Inc. was real estate,*fn1 Cooney and Wetherill, not being licensed real estate brokers, were barred by the New Jersey real estate brokers' act, N.J.S.A. 45:15-3, from recovering commissions on the sale of the shares in Ritter Transportation Inc. Section 45:15-3 provides, in relevant part, as follows:
A real estate broker, for the purposes of this article, is defined to be a person, firm or corporation who, for a fee, commission or other valuable consideration, or by reason of a promise or reasonable expectation thereof, lists for sale, sells, exchanges, buys or rents, or offers or attempts to negotiate a sale, exchange, purchase or rental of real estate or an interest therein . . . or solicits for prospective purchasers or assists or directs in [sic] the procuring of prospects or the negotiation or closing of any transaction which does or is contemplated to result in the sale, exchange, leasing, renting or auctioning of any real estate. . . .
No person, firm, partnership, association or corporation shall bring or maintain any action in the courts of this State for the collection of compensation for the performance of any of the acts mentioned in this article without alleging and proving that he was a duly licensed real estate broker at the time the alleged cause of action arose.*fn2
Plaintiffs argued in the district court (as they argue here) that § 45:15-3 is, for two independent reasons, without application to the Cooney-Wetherill claim against Ritter: first, because a sale of stock in a corporation that happens to own some real estate is -- as distinct from a sale of some or all of the underlying assets, including the real estate -- not a transaction covered by the statute; and, second, the Cooney-Wetherill role was confined to finding a purchaser, rather than brokering the deal, and hence falls outside the contemplation of the statute.
The district court rejected the first argument but agreed with the second. Pursuant to its conclusion that § 45:15-3 was no bar to the suit, the district court found that Cooney and Wetherill were each entitled to judgment against Ritter in the sum of $137,500 (fifty per cent of five per cent of the $5,500,000 purchase price). In addition, the district court dismissed, as unsupported by the evidence, counterclaims by Ritter alleging misrepresentations on Cooney's part. Thereafter the district court denied Ritter's motions for amendment of the findings of fact and conclusions of law, or, in the alternative, for a new trial; at the same time, the district court denied plaintiffs' motion for prejudgment interest.
Ritter has appealed from (1) the judgments entered in favor of Cooney and Wetherill (and from the concomitant denial of his motions to amend the district court's findings of fact and conclusions of law), and (2) the denial of his motion for a new trial.*fn3 Cooney and Wetherill have cross-appealed from the district court's denial of prejudgment interest.
The first question posed by Ritter's appeal is the correctness of the district court's holding that § 45:15-3 is no bar to the Cooney-Wetherill suit for the reason that Cooney's role was limited to bringing purchaser and seller together. This is ...