Fuller v. Bradley Contracting Co.

Kelly, J.:

The record in this case is voluminous, and the amounts involved are very large, but the legal principles involved are comparatively simple. The plaintiff seeks to recover commissions as a broker under employment by the defendant; he alleges that he has performed his part of the contract and demands payment. Naturally the questions involved are, What was the plaintiff’s contract? Was it performed and is he entitled to payment? The case comes to this court without findings of fact or conclusions of law by the learned trial judge. Originally, a jury was impaneled and the trial was commenced, but, on the second day, the counsel for both parties called the attention of the trial justice in chambers to an attempt made to tamper with the jury and to bring about a verdict in favor of one of the litigants by bribery. The facts of this transaction are before this court in the case of People v. Bennett (182 App. Div. 871), in which it appears that the defendant Bennett was convicted and sent to State prison for his activities in the matter. The attention of the learned trial justice having been called to the circumstances, it was agreed that the jury be discharged, that a jury be waived, and that the case proceed to trial before the court without a jury, and that “ the court be empowered to direct a verdict with the same force and effect as though a jury were present.” This is not very definite. It is true, the language used by the trial justice who dictated the stipulation was that “ the court be empowered to direct a verdict with the same force and effect as though a jury were present.” This is open to the "construction that it meant" that the court might “ render ” a verdict, instead of the technical interpretation of the provision for “ directing ” a verdict. The appellant makes the point that the judgment is void because of the absence of findings of fact or conclusions of law, citing Code of Civil Procedure, sections 1010 and 1022 (which last section he.says is mandatory); Electric Boat Co. v. Howey (96 App. Div. 410); Gilbert v. Finch (72 id. 38), and Heinitz v. Darmstadt (140 id. 252). The respondent urges that at the end of the case both parties moved for the “ direction of a verdict,” and that the effect of such joint motions is to invest the trial justice with all the powers of a jury, and that the parties thus consented that the court should decide all questions whether of law or of fact. (Ormes v. Dauchy, 82 N. Y. 443; Dillon v. Cockcroft, 90 id. 649; Thompson v. Simpson, 128 id. 270; Sigua Iron Co. v. Brown, 171 id. 488.) The respondent says that under the amendment to section 1317 of the Code this court has power to make the necessary findings and on such findings to render final judgment. (Bonnette v. Molloy, 209 N. Y. 167; Lamport v. Smedley, 213 id. 82; Acme Realty Co. v. Schinasi, 215 id. 495; Catskill National Bank v. Lasher, No. 1, 165 App. Div. 548; affd., 221 N. Y. 551.) At the conclusion of the testimony the plaintiff moved for ■ the direction of a verdict for the full amount, with interest. The. defendant’s counsel, opposing the motion, asked whether the court would hear argument, or take briefs, to which the learned trial justice replied that he assumed both sides asked for the direction of a verdict. “ That was the ■understanding when I took up the case.” Again this indicates that the court and counsel were acting on the theory that they were to ask the court to “ render ” a verdict, instead of the more technical “ direction ” of a verdict, because it is apparent that at the outset of the trial neither litigant assumed that there was to be a direction of a verdict in the strict sense. Thereupon, the defendant’s counsel moved that the court “ direct a verdict on the behalf of the defendant in this action on the ground no cause of action has been proven, and not the cause of action alleged in the complaint,” and renewed the motion to dismiss the complaint “ upon all the evidence, which I made at the close of the plaintiff’s case, and upon the grounds, éach and every one there stated. The Court: You can incorporate that too in the grounds for a direction of a verdict. Do you want me to pass on the motions now or submit briefs? Mr. TJterhart [of counsel for plaintiff]: Now. Mr. Nicoll: I understood your Honor was going to try this case and so the stipulation reads, as though the case was tried before a jury. The Court: There are a couple of questions of law involved. Do you want to put in briefs on those? If you don’t, I am ready to direct a verdict now. Mr. Conway: I would like to put in a brief on the law, and put in a brief on the facts, or argue the facts briefly. The Court: Two weeks to submit briefs.” Ordinarily a litigant who asks for the direction of a verdict has the opportunity, if his motion be denied, to request that he may go to the jury on the facts, and apparently the learned counsel for the defendant thought there were facts to discuss. The trial having been concluded and these proceedings had on- November 27, 1916, the court on January 5, 1917, filed its opinion without findings of fact or conclusions of law, directing a verdict “ under the stipulation ” for the plaintiff for $400,000, “ but without interest, the time of payment thereof having by agreement been postponed.” (98 Misc. Rep. 382.) It would have been the better practice to have procured findings of fact and conclusions of law by the learned trial justice. An examination of his opinion filed leads to the conclusion that he decided the case on the theory that it involved questions of fact as well as questions of law, because while he holds that the plaintiff’s commissions were earned by what he describes as the “ acceptance by defendant ” of the Russian contract and its “ formal execution and delivery,” it is evident that in so holding he must have-passed upon the intention of the parties as disclosed by the evidence, and in his reference to the various defenses interposed it is apparent that he assumed to decide them as questions of fact. At the close of his opinion he says: “ Under the authorities the plaintiff is entitled to his commissions even though there is a failure of performance, the failure being due entirely to the act and fault of the defendant.” This would also appear to involve questions of fact.

We are constrained to differ with the learned trial justice in his interpretation of the contract between the parties. We think the plain intent of the written letters evidencing the agreement, prepared by the plaintiff, an attorney at law, is that he was not entitled to commissions unless the contract with the Russian government was executed, that is, performed, and not then unless the defendant actually received the money payable to it upon performance. This in our opinion is the plain wording of the written contract, and this interpretation is confirmed by all of the evidence in the case. In an ordinary real estate transaction, a broker performs his work when he brings the vendor and the purchaser together, and he does not assume the risk of performance. His work is done when he introduces a willing purchaser to the vendor, and the contract is made.. The broker does not assume responsibility for the vendor’s title or the purchaser’s responsibility. And it is also true that in the ordinary case where a broker stipulates that his commission shall not. be payable until the closing day, such agreement does not discharge the principal from the obligation to close the contract in a reasonable time, or if the broker stipulates that his commission shall be paid out of the proceeds of the transaction, the principal cannot defeat recovery by failure on his part to perform his own obligations. These are elementary rules and founded on elementary principles of fair dealing. But no one will dispute the proposition that a broker may make any legitimate agreement as to his services and payment therefor which may suit the transaction and accord with the desires of all concerned. A broker may bind himself not to demand payment unless the .contract is actually carried out. He may, if he sees fit, agree that he shall have no claim for commissions unless his principal actually receives the fund from which the broker’s compensation is made payable. Such agreements are lawful and proper and not unusual. Even in such case, the broker has the right to insist on good faith on the part of his principal. His right to commissions cannot be defeated by capricious refusal on the part of the principal to proceed with the contract, or by fraud or deceit practiced with a view to relieve the principal from his lawful obligations. The plaintiff in the present case makes no claim, and certainly the evidence disproves any suggestion that the defendant and its officers were not willing and anxious to carry out the contract. They did their utmost to secure it; they paid $100,000 in cash to the officials of the Savage Arms Company for the option to purchase the stock and control of the plant of that company. The anomalous situation arising from the action of the Russian commissioners in insisting that the cartridges be manufactured at the particular plant of the Savage Arms Company in Utica, N. Y., and yet dealing with the defendant company without experience or facilities in ammunition making, and insisting in the contract as a condition precedent that defendant must acquire control of the Savage Arms Company plant, which put the performance of the contract entirely in the hands of the executive committee of that company. They were not parties to the agreement between the defendant and the Russian government, but they had complete control of the situation. They could demand whatever price or conditions suited their fancy. As it was, they named a price for the stock which netted a profit to the stockholders so enormous as to be almost unconscionable, and in addition - demanded a “ bonus ” for their personal service, first of $1,200,000 and later of $1,700,000. But the defendant agreed to then demands, paid $100,000 in cash for the option, and exhausted every effort to raise the enormous sum in cash necessary to satisfy their demands. There is no doubt, on the evidence, that the plaintiff understood the situation fully from the outset. He fully understood the defendant’s position and financial condition, and appreciated the fact' that defendant could not carry the Russian contract through unless he procured the plant of .the Savage Arms Company. It was the plaintiff who called defendant’s attention to the Savage Arms Company’s plant and who suggested that if the plant could be purchased the Russian contract could be obtained. It was the plaintiff.who undertook to introduce the defendant’s officers to the officers of the Savage Arms Company and to procure the sale of the munition plant to these subway contractors with the knowledge on the part of the vendors that their property thus sold was essential to the performance of defendant’s contract involving an expenditure by the Russian government of $37,500,000, and a profit to defendant estimated by the learned counsel for plaintiff on the argument of $10,000,000. Indeed, the plaintiff understood the situation far better than the defendants, who may have been familiar with the ramifications of city subway contracts, but who were decidedly out of their sphere in then-new enterprise. In their efforts to enter the field of the munition contractors, they were on unfamiliar and dangerous ground. The plaintiff says he never saw the Russian commissioners; he left it all to a man named De Florez, a brother-in-law of plaintiff’s brother, Paul Fuller, Jr. Mr. De Florez, who was not called as a witness on the trial, is said to have been' socially intimate with some of the officers composing the commission. It appears that De Florez also obtained a promise from the Bradleys to pay him $500,000. Mr. De Florez appears to have handled the Russian commission as the agent of the- plaintiff. The defendants testified that he agreed to procure modifications of the contract to suit defendants if they would put up $100,000 for obvious purposes. The defendants refused to pay the money, and the plaintiff is said to have criticised their business acumen, and even the learned and experienced counsel for the plaintiff answered Bradley’s denunciation of De Florez at the trial by saying: “ Q. As a matter of fact, Mr. Bradley, of course you rejected at once any proposition' to corrupt anybody? A. I didn’t give the money. Q. You wouldn’t do a thing like that? A. Well, I didn’t do it then, did I? What would you have done under the circumstances? Q. I don’t know. I think I would have given a little advance to De Florez. He seems to be a worthy young man. I think I would have treated him very liberally. A. All right.” Whether De Florez, plaintiff’s agent and family connection, was a worthy young man or not, he was not called to contradict the very serious charges made against him and inferentially against the agents of a foreign government in the throes of revolution.

Plaintiff’s personal service appears to have been two-fold; he introduced the Bradleys to the Savage Arms Company and endeavored to bring about the sale of the plant, although later he is compelled by the exigencies of the situation to say that was a separate service covered by an agreement to pay “ compensation for legal services,” a “ fee ” $100,000. If it was a separate service, then his personal part in securing the Russian contract consisted in his relationship and friendship with the legal advisers of the Russian government in this country and his professed ability to put the contract through at all events for that reason. From its inception the whole transaction has an unpleasant and unwholesome appearance. Mr. Fuller -says he had never acted as a broker before this extraordinary departure from his legal profession. But in our opinion all this confirms the defendant’s claim that the commission of fifty cents per 1,000 cartridges, not forty cents, this commission of $500,000, not $400,000, was to be payable only in the event that the contract was performed and that Bradley actually received the money from the Russian government. It is only this interpretation which will explain such an enormous payment for services of the vaguest possible description. We may well imagine why De Florez demanded $500,000. But plaintiff as a reputable member of the bar cannot justify his claim on any other basis than the plain unequivocal conditions written by himself in his letter of agreement. The defendant’s agreement was that “ In consideration of the services rendered by you in securing a contract for us with the Imperial Russian Government for the manufacture and sale of One billion (1,000,000,000) cartridges, we agree to pay you, in event of such contract being accepted and executed by us, as full and complete compensation,” etc. We think that the meaning of the words “ executed by us ” is that the contract was to be performed. We think the meaning of the word “ executed ” does not refer to the mere signing of the contract, and this interpretation is confirmed by the succeeding portions of the contract letters, and the words used are the plaintiff’s in preparing the letters. “It is understood that the commission mentioned above shall become due and payable only as arid when and in the same proportion as we receive payment from the purchaser; that is to say the commission is only to be paid out of the payments under the contract.” In our opinion, the actual receipt of the cash by Bradley was a condition precedent to plaintiff’s right to recover. We may take notice from the course of events across the sea that even if Bradley had undertaken the manufacture of the 1,000,000,000 cartridges, they might never have been delivered, and might never have been paid for by the .Imperial Russian government — now a thing of the past. We have referred to some of the unpleasant and unwholesome aspects of this case. We do not dwell here on the peculiar reasons given by plaintiff for splitting up his $500,000 contracts into four payments and obtaining a letter stating that each amount is “ full and complete compensation and commission ” for his service, except to say that they do not commend themselves' to reasonable men. But there is a matter of greater significance connected with these four letters, in their relation to plaintiff’s present action to recover $400,000 commissions. It is something which seems to throw light upon the intention of the parties when these contract letters were signed, and which indicates that the plaintiff is entirely aware of its significance.. The plaintiff testified, as well as the defendants and all of the witnesses in the case on both sides, that the plaintiff’s commission was to be fifty cents per 1,000 cartridges, or $500,000 for the 1,000,000,000 cartridges to be manufactured. No other sum was asked or suggested. At the plaintiff’s urgent insistence, on his statement that the legal advisers of the Russian government wished all these matters of commission settled before the contract was signed, and that the letters were necessary to secure the signing by the Russian commissioners, the defendant signed four letters on October 4, 1915, to evidence its agreement to pay this $500,000 commission contract. In each of the first three letters, the full and complete compensation and commission of the plaintiff for procuring the Russian contract was stated to be a different sum, the first letter. “ ten cents (.10c) per thousand cartridges, amounting on the above order of 1,000,000,000 cartridges to the sum of One hundred thousand dollars ($100,000); ” the second letter “ thirteen and one-third cents (.1334jc) per thousand cartridges, amounting on the above order of 1,000,000,000 cartridges to One hundred and thirty-three thousand three hundred and thirty-three dollars and thirty-three cents ($133,333.33); ” the third letter “ sixteen and two-thirds cents (.16%c) per thousand cartridges, amounting on the above order of 1,000,000,000 cartridges to One hundred and sixty-six thousand six hundred and sixty-six dollars and sixty-six cents ($166,666.66);” this, it will be noted, aggregated $400,000, less one cent. In each of these letters it is stated clearly and unequivocally that the sum named is the “full and complete compensation and commission” of the plaintiff. But the plaintiff was to receive more than $400,000 —his contract called for fifty cents per 1,000 cartridges. No one ever suggested forty cents per 1,000. His commission was to be $500,000, not $400,000, a substantial difference, even in this case of bewildering figures. So the fourth letter was prepared by plaintiff at the same time as the other three, and signed by the defendant at the same time, and delivered to plaintiff with the others. In. the fourth letter, instead of stating a new percentage as full compensation and commission for procuring the contract so as to make up the aggregate of $500,000, the defendant in consideration of services rendered by plaintiff in connection with the purchase of the Savage Arms Company, or control of the same, at plaintiff’s request, signs a promise to pay “ One hundred thousand dollars ($100,000.00) as full and complete compensation for legal services performed by you for us. It is understood that the above mentioned legal fee shall become payable only in event of the deal for the purchase of the Savage Arms Co., or control thereof shall have been com-, pletely consummated.” Now the case may be searched from beginning to end to find any word of evidence that plaintiff ever asked, or that defendant ever promised to pay $100,000 for services, legal or otherwise, in connection with the purchase of the Savage Arms Company. True, the plaintiff says he was employed to obtain control of that company for defendant, but it was part and parcel of the entire transaction. There is no claim made by plaintiff that he asked or was promised $100,000, or any sum whatever, for this service, separate and apart from his commission of fifty cents per 1,000 cartridges — $500,000. And yet we have this most astonishing abandonment of $100,000 of the commission which he and every one else agrees was to be paid if the contract was performed and payment made. The explanation is apparent. Because the plaintiff is here asserting his right to $400,000 upon the theory that he was not concerned in the performance of the contract by the Bradleys. He takes the position here that, having brought the parties together, the Imperial Russian government and Bradley on the one hand, and Bradley and the astute gentlemen from Utica representing the Savage Arms Company on the other, his work was done. If the Russian commissioners inserted impossible conditions precedent, still, says the plaintiff, Bradley accepted them; if the officers of the Savage Arms Company representing its stockholders demanded profits which astonished their cestuis que trust, and bonuses of $1,200,000 or $1,700,000 for themselves, still Bradley was willing, and plaintiff takes the position that his right to commission was in no way dependent upon performance of the contract or payment made. Of course, the plaintiff, in urging that the Bradleys signed the Russian agreement containing the condition precedent for the purchase of the Savage Arms Company, and that they signed the option with the Savage Arms Company and afterwards declared their intention to execute it, overlooks the obvious fact that he, the plaintiff, brought about these things by his representations that everything would be satisfactory and that the matter would surely go through. When defendant objected to the condition precedent in the Russian contract, it was the plaintiff who represented that with De Florez handling the Russian commissioners, and plaintiff handling the legal advisers of the Russian government, there would be no difficulty in obtaining modifications and concessions which would enable the Bradleys to obtain the necessary advances to pay the amounts demanded by the Savage Arms Company’s executive committee. But plaintiff’s last letter shows unmistakably that he is wrong in his claim that payment was due him in advance of full performance and receipt of the moneys by defendant. His last letter makes the $100,000 payable only upon the complete consummation of the purchase of the Savage Arms Company. While we think there is no ambiguity in the meaning of the first three letters, and that the language is to be interpreted in its plain, obvious meaning, that the commissions were not to be paid until the money due for the cartridges was actually received and then out of that money, there is no escape from the last letter. Surely that $100,000 was not payable until the purchase of the control of the Savage Arms Company was completely consummated. We think there can be no question that the money was not due or payable unless the purchase of the control of the Savage Arms Company was an accomplished fact. And it was never an accomplished fact, it was never consummated. And this $100,000 is "part and parcel of plaintiff’s commissions as fully and completely as the $400,000 shed for here. We are forced to the conclusion that it is deliberately abandoned in this action in the effort to press the claim for the remainder on a theory entirely inconsistent with the plain language of the last letter, a theory at variance with the plain meaning of the language used in the first three letters, at variance with the intention of the parties as disclosed by their relations and transactions in evidence, and, lastly, an erroneous theory flatly contradicted by the last letter. To allow plaintiff to sustain this judgment for $400,000 when the scheme devised by him and in which he took the risk of performance with the defendant failed, where the defendant has not realized one dollar from the transaction despite its best efforts to perform, but, on the contrary, is out of pocket $100,000, would in our opinion be unconscionable and unjust. The whole scheme of letting this $37,500,000 contract to impractical, inexperienced men without machinery or plant, with a condition precedent that they must buy out the company which really had to do the work, is open to the suspicion that it was a plan to loot the treasury of the former Imperial Russian government, made up in large part of cash contributed by the people of the United States of America. We know that the profits were not to go to the defendant without substantial depletion. We can see from the record where nearly $3,000,000 were to go in bonuses and commissions. The court cannot shut its eyes to the situation. As was recently said by the Appellate Division in the First Department of a much milder attack on the Serbian treasury: “ The making of such an agreement to rob a people already impoverished by famine and war discredited all who participated therein.” (May v. Hettrick Brothers Co., 181 App. Div. 3.) In our opinion, the judgment should be reversed, but we think the case should go back for a new trial, so that the questions of fact, if there be any, may be clearly stated and submitted to the jury for determination.

The judgment and order should be reversed, and a new trial granted, costs to abide the event. This court reverses the verdict and findings of the Trial Term as contrary to the evidence and contrary to law, and particularly the finding of the trial justice so far as the same is involved in the verdict, that it was the intention of the parties that the plaintiff was entitled to payment of commissions upon the signing of the contract between the Imperial Russian government and the defendant, or upon the signing or acceptance of the option on the stock of the Savage Arms Company, and the finding that failure of performance was due to any act or default on the part of defendant.

Jenks, P. J., and Putnam, J., concurred; Blackmar, J., concurred in result; Thomas, J., read for affirmance.