Solomon Marcus, Respondent, v. Joseph B. Bloomingdale, Appellant.
Seal estate agent's commissions — where, by reason of an erroneous statement of rentals furnished by the agent, the principal repudiates the contract — willful false representations need not be shown.
In an actipn by a real estate broker to recover commissions, which he claimed to have .earned in effecting a contract for the exchange of property between the defendant and one Loy, it appeared that the plaintiff, who it was conceded had been employed by the defendant, at the time of submitting the proposition for the exchange to the defendant, delivered to him a writing containing a statement that the rents of the property owned by Loy aggregated 811,000 per annum; that the defendant thereupon directed the plaintiff to examine the property and requested him to get a statement in writing of the rentals, running expenses and , taxes. The plaintiff thereupon procured from Loy’s agent a statement that the actual rentals of the property aggregated 815,000. The defendant also inspected the premises from the outside, rode up in the elevator, and inquired of the janitor how many apartments were filled, but made no inquiries as to the rentals. He subsequently executed the contract of exchange, but upon learning that the rentals were one-sixth less than the sum represented to him, he refused to consummate the contract.
Held, that it was error for the court.to charge that the plaintiff was entitled to recover, unless he made false representations regarding the rental income of the property, knowing them to be false, for the purpose of inducing the defendant to sign the contract, and unless the defendant in signing relied on such representations.
Appeal by the defendant, Joseph B. Bloomingdale, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 20th day of November, 1900, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 5th day of December, 1900, denying the defendant’s motion for a new trial made upon the minutes.
Plaintiff is a real estate broker and brought this action to recover commissions which he claims to have earned in effecting a contract between defendant and one Loy for the exchange of premises owned by defendant in Yonkers for premises Nos. 62 and 64 East Ninetieth street, New York city, the legal title to which was in Loy but which were in fact owned by one Bradley. A contract in writ*228ing, dated the 27tli day of January, 1898, for the exchange of such land's was executed by the owners, and the 24tli day of .February, 1898, was therein fixed as the time for consummating the contract. This time was subsequently extended four1 days. The New York parties were represented in the transaction by a broker named Potter. The employment of plaintiff by defendant was conceded. At the time of submitting to defendant the proposition for taking the New York property in exchange, plaintiff delivered to him a writing containing a diagram of the premises, the valuation, the incumbrances, the number of stories, and stating that the premises were all occupied on yearly leases, the rents aggregating $17,000 per annum. It does not appear from what source plaintiff obtained this information. According to plaintiff’s testimony the defendant thereupon dh-ected him to examine the property and see what he thought of it. Subsequently defendant requested plaintiff to get a statement in detail and in writing of the rentals, running expenses and taxes, and thereupon plaintiff applied to Potter who obtained such a statement from Bradley, showing, among other things, that the “ actual ” rentals of premises No. 62 were $8,200, and of premises No. 64 were $6,800, aggregating $15,000. Bradley testified that those figures repre. sentea the rentals specified in the leases, but that the rents actually received pursuant to his understanding with his tenants were about one-sixth less, and that he so informed Potter. Potter was not sworn as a witness, nor was plaintiff interrogated as to whether this information was communicated to him. It is undisputed that this statement was delivered to defendant prior to the execution of the con tract.-
According to the testimony of defendant when plaintiff first applied to assist him in disposing of the Yonkers property, he told plaintiff not to come to him with any proposition for an exchange unless he (plaintiff) had thoroughly investigated and found a real bona fide equity in the premises offered' in trade. Defendant also testified that when plaintiff delivered to him the statement first referred to, he instructed plaintiff to get him a statement showing the actual net income of the property, the rents and disbursements, plaintiff not being positive as to whether the rentals, were as stated. While it would appear that the defendant was aware that the state*229ment secondly referred to was furnished by the owners of the New York property, yet lie says that when it was delivered to him by plaintiff the latter represented that it contained the actual rentals, and the actual expenditure and that the figures were correct. Prior to signing the contract, defendant viewed the premises from the outside, rode up in the elevator and inquired of the janitor how many apartments were filled, but made no inquiries as to the rentals. Upon learning that the rentals were one-sixth less than was represented to him he refused to consummate the contract. Defendant testified that in signing the contract he relied upon the written statements referred to and the representations of plaintiff as to the actual rentals and that he had no other information on the subject. He also testified that when he employed plaintiff as a broker it was upon the express understanding that plaintiff was to represent him and no one else. This plaintiff denies and he also denies having made any personal representations as to the actual rentals. It appeared without controversy that at the outset plaintiff and Potter agreed to divide their commissions, and it was shown, under defendant’s objection and exception, that it was the custom in New York for brokers to divide their commissions. Defendant had been a real estate broker and dealer in the city of New York to a limited extent for a number of years..
The court charged the jury in substance .that the negotiations having resulted in a contract, plaintiff was entitled to recover unless hé made false representations regarding the rental income of the property, knowing them to be false, for the purpose of inducing the defendant to sign the contract and that defendant in signing relied thereon'.
Defendant’s counsel duly excepted to this charge and to a further statement in the charge that if the plaintiff knew of the false statements concerning the rent he cannot recover commissions, and asked the court to charge “ that the question of his knowledge is immaterial. If he stated that those were the actual rents, and Mr. Bloomingdale relied upon them, his knowledge would he immaterial,” which was refused, and defendant’s counsel duly excepted.
At the request of plaintiff’s counsel the court also charged the jury “ that if they believe that Mr. Bloomingdale visited the property and made inquiries as to the rents, that in such event, Mr. *230Bloomingdale must fail on the issue of fraud,” and to this defend' ant’s counsel also excepted.
/Sol. Kohn, for the appellant.
Wales F. Severance, for the respondent.
Laughlin, J.:
The exceptions to the charge and to the refusals to charge set forth in the statements of facts require a reversal of the judgment. We find no evidence in the record that the defendant made inquiries at the premises concerning the rent, but the jury were left to infer from the fact that defendant visited the premises, rode up in the elevator and asked about the number of apartments rented, that he also asked and learned the truth about the rents received: If the jury believed the testimony of the defendant with reference to his instructing plaintiff to ascertain the actual facts concerning the rentals and as to the representations made by plaintiff in that regard, and that such representations were relied upon by defendant, plaintiff was not entitled to recover.. Having employed plaintiff to acquire. this information defendant was not • obliged personally to reinvestigate the question. The information obtained on account of its inaccuracy and untruthfulness was of no value to defendant, and he was misled thereby into executing the contract which, because the misrepresentations were also chargeable to the owners of the N ew York property, was not enf orcible against him. To alio w a broker to recover commissions on these facts which the jury might have found from the evidence would be inequitable, and we know of no principle of law requiring it. The jury evidently believed that the broker was not guilty of fraud, and under the charge of the learned trial judge they then had no alternative but to render a verdict in his favor. .
If these other facts, which by the charge the jury were precluded from acting upon, had been found in favor of defendant it could not be said that the broker’s commissions were earned when through his failure to comply with his principal’s instructions he had induced the latter to enter into a fruitless contract.
Other questions not wholly without merit have been argued, but as they will not necessarily arise upon the new trial, which must be1 *231granted for the reasons already stated, we deem it unnecessary to consider them.
The judgment and order should be reversed and a new trial granted, with costs to the appellant to abide the event.
Yan Brunt, P. J., Patterson, O’Brien and Ingraham, JJ., concurred.
Judgment and order reversed, new trial granted, costs to appellant to abide event.