Galbreath-Ruffin Corp. v. 40th & 3rd Corp.

227 N.E.2d 30, 19 N.Y.2d 354, 280 N.Y.S.2d 126, 1967 N.Y. LEXIS 1598
CourtNew York Court of Appeals
DecidedApril 11, 1967
StatusPublished
Cited by47 cases

This text of 227 N.E.2d 30 (Galbreath-Ruffin Corp. v. 40th & 3rd Corp.) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Galbreath-Ruffin Corp. v. 40th & 3rd Corp., 227 N.E.2d 30, 19 N.Y.2d 354, 280 N.Y.S.2d 126, 1967 N.Y. LEXIS 1598 (N.Y. 1967).

Opinion

Vah Voorhis, J.

This is an action for brokerage commissions. Plaintiff became exclusive renting agent for defendants to rent the offices in a building owned by them at 605 Third Avenue, Manhattan, while it was still under construction. It was completed in 1963. This contractual arrangement arose from two letter agreements whereby plaintiff was to be paid regular commissions in accordance with rates recommended by the Real Estate Board of New York, Inc., where plaintiff procured the tenant, and, in instances where the tenant was procured by an outside broker, plaintiff was to be paid commissions equal to 50% of the rate mentioned, not exceeding $125,000, Such 50% commissions are described as “ override ”.

By March, 1962, while the first letter agreement was in force, leases were executed and delivered to defendants with Kudner Agency, Inc., American Gas Association, Inc., John Wiley & Sons, Inc. and Bendix Corporation. Of these, only the Bendix Corporation lease was executed through plaintiff’s efforts, the three other leases having been procured through outside brokers. The first cause of action in the complaint deals with commissions allegedly due from all of these leases. The second through fifth causes of action concern the same leases but are based on [360]*360accounts stated. Defendants terminated the brokerage contract, under a clause permitting it, as of April 8, 1962. On September 13, 1963, plaintiff and defendants entered into the second letter agreement whereby defendants undertook to pay commissions at Beal Estate Board rates upon the execution and delivery of a noneaneelable agreement of lease between defendants and Trans-World Airlines, Inc. TWA rented the 34th through the 36th floors of the building, and later leased space on the 43d floor also. The sixth and seventh causes of action deal with commissions allegedly due as a result of those leases. There is no dispute with reference to the subject matter of the eighth and ninth causes of action.

These cross appeals concern summary judgment. Special Term dismissed the first seven causes of action and refused to dismiss the affirmative defenses and counterclaims. The Appellate Division modified by granting to plaintiff summary judgment on some of the causes of action and dismissing the affirmative defenses and counterclaims insofar as related thereto. Both sides appeal.

Defendants have paid to plaintiff the aggregate sum of $82,173.40 in commissions on these leases. This includes substantial payments on account of each of the leases regarding which commissions are in dispute, with the exception -of the rental of part of the 43d floor to TWA, concerning which the Appellate Division correctly held that there is. a triable issue. These payments clearly establish accounts stated for commissions with respect to all of the leases to which they apply.

The Appellate Division’s decision (apart from the 43d floor questions) is based entirely upon the licensing sections of the Beal Property Law as it existed at the times of plaintiff’s performance, more particularly sections 440-a and 441-b. There is no triable issue over whether plaintiff was the procuring cause of the Bendix and TWA leases. It is an established fact that plaintiff procured them.

Initially defendants considered that these commissions were payable to plaintiff, as evidenced by their partial payments to plaintiff of the said $82,173.40 on account of commissions with respect to each lease except for the 43d floor. At some stage, however, defendants discovered the facts relative to plaintiff’s licensing situation, hereafter to be stated, and declined to pay [361]*361more and counterclaimed for the amounts already paid quadrupled by way of penalty under the supposed authorization of subdivision 3 of section 442-e of the Beal Property Law.

Plaintiff had a corporation brokerage license, as required by section 441-a, at all times when brokerage services were rendered for defendant; the alleged violations spring from the circumstance that plaintiff was affiliated with another brokerage corporation known as John W. Galbreath & Co., Inc., also a licensed broker, with which it acted in conjunction respecting the rental of these offices. The contention of defendants is that since subdivision 2 of section 441-b, providing for license fees, states that the license issued to a corporation shall entitle its president or such other officer as shall be designated by such corporation to act as a real estate broker, but that, if other officers are to act as real estate broker in behalf of the corporation, an additional license fee ($50 for each) shall be obtained, none except those so authorized could act. Plaintiff’s president, Peter B. Baffin, a licensed broker of more than 30 years’ standing, was authorized to act as broker for plaintiff; plaintiff’s vice-president, Philip M. Shannon, licensed as a broker since 1948, was authorized to act as broker for John W. Galbreath & Co., Inc.. These two men (chiefly Shannon) did all of the brokerage work connected with procuring Bendix and TWA as tenants, and performed such other work as was done (but failed of fruition) in endeavoring to procure the other leases—which were actually procured by outside brokers — on which plaintiff claims the overriding commissions. There is no dispute about any duplication of recovery as between plaintiff and John W. Galbreath & Co., Inc. They worked in conjunction, but any commissions that are recovered concededly belong to plaintiff.

Defendants’ contention—decided in their favor by Special Term and left as a triable issue by the Appellate Division — is that, although no brokerage services were rendered except by licensed brokers, Buffin was the only licensed broker who could act for plaintiff (Galbreath-Buffin Corp.) and that whatever Shannon accomplished toward the earning of plaintiff’s commissions was done in an unlicensed capacity, since he was licensed solely to act as broker in the service of John W. Galbreath & Co., Inc. but did most of this work as vice-president of plaintiff.

[362]*362The Appellate Division granted summary judgment to plaintiff for the overriding commissions, on the theory that, although it was Shannon who tried to rent the offices taken by Kudner, American Gras and Wiley, he did not succed in renting those spaces with the consequence that their leases were placed through other brokers, leaving the transactions untainted by his participation. Therefore, since plaintiff held a brokerage license as a corporation, and the rental spaces under discussion were not rented through the efforts of any unlicensed representative of plaintiff, recovery of the overriding commissions was lawful. Upon the other hand, in the case of Bendix and TWA, who were tenants (or subtenants) procured by plaintiff acting alone or in conjunction with John W. Gralbreath & Co., Inc., recovery was suspect of commissions based on the rental of their offices since they were procured mainly through the efforts of Shannon.

It is, of course, the law that commissions cannot be recovered by a real estate broker who is unlicensed while his services were rendered (Bendell v. De Dominicis, 251 N. Y. 305; Roman v. Lobe, 243 N. Y. 51; Brener & Lewis v. Fawcett Pubs., 197 Misc. 207, affd. 276 App. Div. 994, mot. for lv. to app. den. 276 App. Div. 1081). 'The reason for this court-imposed disability to recover commissions on unlicensed brokers was stated in the cases cited to be that “ The intrinsic nature of the business combines with practice and tradition to attest the need of regulation.

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Bluebook (online)
227 N.E.2d 30, 19 N.Y.2d 354, 280 N.Y.S.2d 126, 1967 N.Y. LEXIS 1598, Counsel Stack Legal Research, https://law.counselstack.com/opinion/galbreath-ruffin-corp-v-40th-3rd-corp-ny-1967.