Industrial America, Inc. v. Minnesota Mining & Manufacturing Co.

306 A.2d 751, 1973 Del. Super. LEXIS 168
CourtSuperior Court of Delaware
DecidedMay 8, 1973
StatusPublished

This text of 306 A.2d 751 (Industrial America, Inc. v. Minnesota Mining & Manufacturing Co.) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Industrial America, Inc. v. Minnesota Mining & Manufacturing Co., 306 A.2d 751, 1973 Del. Super. LEXIS 168 (Del. Ct. App. 1973).

Opinion

TAYLOR, Judge.

Plaintiff sued defendants claiming a fee in the amount of $67,500 as a broker’s fee in connection with the acquisition of Wagner Sign Service, Inc. [Wagner] by defendant National Advertising Company [National], a wholly owned subsidiary of Minnesota Mining & Manufacturing Company [3M]. Defendants have moved for summary judgment on two grounds: (1) that an indispensable party to plaintiff’s claim has not been joined, and (2) that there was no contractual relationship between plaintiff and defendants and, therefore, there was no right to a broker’s fee.

[752]*752For purposes of defendants’ motion for summary judgment, the pleadings, eviden-tiary facts and inferences must be considered in the light most favorable to plaintiff. Hazewski v. Jackson, Del.Super., 266 A.2d 885 (1970).

Plaintiff is a corporation which functions as an industrial broker, serving the role of bringing buyers and sellers of businesses together for the purpose of sale, acquisition or merger of the business. The principal officer of plaintiff is Millard B. Deutsch [Deutsch],

Plaintiff’s version of the facts is as follows: In May, 1970, Deutsch was informed by G. R. Stewart [Stewart], a broker, that he had information that Wagner might be available for sale. Deutsch ascertained the names of the principal owners of Wagner. He also learned from Frank Mason [Mason], an officer of Continental Illinois National Bank [Continental], that National might be a potential acquirer of the business. Deutsch wrote to the president of Wagner and indicated that he had a major corporation which might be interested in acquiring Wagner. In that letter, Deutsch indicated that he would look to the buyer for payment of broker’s commission. Wagner’s response was that it had entered into an exclusive six month listing with another broker. In August, 1970 Stewart and Deutsch attended a meeting with officers and certain stockholders of Wagner, and Deutsch was authorized to propose to 3M the sale of Wagner for $1,700,000 plus broker’s fee. Deutsch met with officers of National on September 4, 1970 and presented the proposal. A further meeting was held on September IS, 1970. On October 26, 1970 an officer of National informed Deutsch that 3M was unwilling to pay the asking price. Deutsch requested a counter-offer. On November 16, 1970 Deutsch, upon authorization from the Wagner principals, reduced the asking price from $1,700,000 to $1,350,000 plus 5% broker’s fee. On December 1, 1970 an officer of Wagner informed Deutsch that the matter was moving forward again and looked favorable to close before the end of the year. On December 14, 1970 an officer of National informed Deutsch that the parties were in the process of wrapping up the deal but that the broker’s fee was a “hang-up”. He requested that Deutsch look to the Wagner principals rather than 3M for payment. Deutsch agreed to this on the conditions that (a) the provision for payment of the broker’s fee be made an express term of the 3M-Wagner agreement, (b) a copy of the agreement be supplied to Deutsch, (c) Deutsch be invited to attend the closing, and (d) the fee be actually paid. The National official acquiesced. On the following day Wagner’s president called Deutsch, indicating that the final price was $1,250,000 and asked Deutsch to reduce his fee to $50,000. Deutsch agreed. The closing took place on December 31, 1970; Deutsch was not invited to the closing; the agreement did not include a provision for Deutsch’s commission ; Deutsch was not furnished a copy of the agreement; and Deutsch was not paid the fee. At an early stage in the negotiations, Stewart agreed with Deutsch that Deutsch would pursue the negotiations as the sole broker and that if a broker’s fee was earned, Deutsch would pay Stewart a percentage of the fee. Initially, Continental had expected to participate in the broker’s fee. However, in 1972 Continental renounced its claim to participate in the fee.

Two issues are raised by defendants’ motion for summary judgment: (1) that plaintiff cannot recover because it had no contract with defendants, and (2) that an indispensable party who participated in the brokerage arrangement with plaintiff has not been joined in this action.

With respect to the contract issue, defendants’ version of the negotiations which led to the sale differs from those of plaintiff, particularly as to the issue of the broker’s commission. Since there is an issue of fact, in passing upon defendants’ motion for summary judgment, it is only necessary to determine whether a cause of action ex[753]*753ists, accepting the evidence and inferences most favorable to plaintiff. Jones v. Julian, Del.Supr., 195 A.2d 388 (1963); Smith v. Berwin Builders, Inc., Del.Super., 287 A.2d 693 (1972); Plant v. Catalytic Construction Co., Del.Super., 287 A.2d 682 (1972).

Defendants point out that the relationship between plaintiff and defendants was created in Illinois and is governed by the law existing in Illinois, citing Williams v. Warner, 260 U.S. 201, 43 S.Ct. 18, 67 L. Ed. 21 (1942). Plaintiff does not argue to the contrary.

Defendants further contend that there must be a contract relationship between a principal and a broker in order to entitle the broker to a commission. A contract may be expressed or implied according to the nature of the dealings of the parties. Graff v. Whitehouse, 71 Ill.App. 2d 412, 219 N.E.2d 128 (1966); Young v. Zimmer, 56 Ill.App.2d 298, 206 N.E.2d 281 (1965).1

If plaintiff’s version of the facts is accepted, the earlier proposals to 3M that sale would be based on a stated price plus broker’s commission to be paid by 3M and the subsequent negotiations followed by the proposal that Deutsch look to Wagner for payment could give rise to the conclusion that a contractual obligation existed between 3M and Deutsch. Similarly, if plaintiff’s evidence concerning the conditional relinquishment of its rights to look to 3M for the commission be accepted, the conclusion could be reached that 3M’s contractual obligation to pay commission upon the consummation of the contract remained.

Accordingly, it cannot be said that plaintiff’s factual contentions, if believed, with inferences drawn most favorably to plaintiff, do not make a sufficient case for plaintiff. Cf. Ebersole v. Lowengrub, Del.Super., 4 Storey 463, 180 A.2d 467 (1962). The motion for summary judgment on this ground is denied.

The second issue is whether an indispensable party is missing. Defendants point out that there was an agreement between Deutsch, Stewart and Continental to divide the brokerage fee earned in the acquisition of Wagner by National.

The purpose of the “indispensable party” rule is to assure that a litigant can have his rights and liabilities determined at one time without the likelihood of renewed litigation at another time or place involving another claimant whose rights are intertwined with those of the present claimant.

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Related

Shields v. Barrow
58 U.S. 130 (Supreme Court, 1855)
Ebersole v. Lowengrub
180 A.2d 467 (Supreme Court of Delaware, 1962)
Smith v. Berwin Builders, Inc.
287 A.2d 693 (Superior Court of Delaware, 1972)
Plant v. Catalytic Construction Company
287 A.2d 682 (Superior Court of Delaware, 1972)
Jones v. Julian
195 A.2d 388 (Supreme Court of Delaware, 1963)
Young v. Zimmer
206 N.E.2d 281 (Appellate Court of Illinois, 1965)
Graff v. Whitehouse
219 N.E.2d 128 (Appellate Court of Illinois, 1966)
Hazewski v. Jackson
266 A.2d 885 (Superior Court of Delaware, 1970)
Maryland ex rel. Carson v. Acme Poultry Corp.
9 F.R.D. 687 (D. Delaware, 1949)
Forney v. La Susa
132 N.E.2d 55 (Appellate Court of Illinois, 1956)
McDermott v. Morton
96 N.E.2d 633 (Appellate Court of Illinois, 1950)

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Bluebook (online)
306 A.2d 751, 1973 Del. Super. LEXIS 168, Counsel Stack Legal Research, https://law.counselstack.com/opinion/industrial-america-inc-v-minnesota-mining-manufacturing-co-delsuperct-1973.