P.W. Chapman Co. v. Cornelius

Full title: P.W. CHAPMAN CO., Inc., v. CORNELIUS

Court: Circuit Court of Appeals, Second Circuit

Date published: Mar 3, 1930

39 F.2d 555 (2d Cir. 1930)

Opinion

No. 187.

March 3, 1930.

Appeal from the District Court of the United States for the Southern District of New York.

Action at law by Milton E. Cornelius against P.W. Chapman Co., Inc. From a judgment on a verdict of jury in favor of plaintiff, defendant appeals.

Affirmed.

The plaintiff learned that a building in New York City owned by the Phelps Stokes Estates, Inc., was for sale and that the general manager of the owner was of the opinion that a sale could best be financed through a bond issue offered to the public. Knowing this, the plaintiff, in May, 1925, asked one of the principal officers of the defendant whether "P.W. Chapman Co., Inc., would be interested in an especially attractive piece of real estate financing on a building down-town." Being assured of the defendant's interest, he disclosed the name and location of the building and stated that he was in a position to secure for the defendant all the information it might desire regarding it. Thereupon the defendant promised to pay the plaintiff "one per cent. of the bond issue if P.W. Chapman Co., do the financing on this building." Afterwards the plaintiff secured and gave to the defendant from time to time up to October, 1925, whatever information it desired. So far as the plaintiff knew, the defendant had come to no decision about the desirability of the business until, on March 9, 1926, he read in a newspaper the announcement that the defendant was offering a bond issue secured by a mortgage on the property. What the defendant had done was to organize the Platt Street Corporation, whose name was later changed to 100 William Street Corporation, to purchase the building, and had entered into a contract with this purchaser by the terms of which the defendant agreed to underwrite and sell an issue of $2,500,000 par value 5¾ per cent. sinking fund bonds secured by a first mortgage. The plaintiff had nothing to do with the purchase, the purchaser, or the negotiations between it and the defendant. After failing to collect his commission otherwise, he brought this suit.

For its defense, the defendant relied on article 12-A of the Real Property Law of New York (Consol. Laws, c. 50) which in section 440 provides as follows: "Whenever used in this article `Real estate broker' means any person, firm or corporation, who, for another and for a fee, commission or other valuable consideration, lists for sale, sells, exchanges, buys or rents, or offers or attempts to negotiate a sale, exchange, purchase or rental of an estate or interest in real estate, or collects or offers or attempts to collect rent for the use of real estate, or negotiates, or offers or attempts to negotiate, a loan secured or to be secured by a mortgage or other incumbrance upon or transfer of real estate."

Section 440-a applied the law to any city in the state and

Section 442-d provides: "No person, copartnership or corporation shall bring or maintain an action in any court of this state for the recovery of compensation for services rendered, in any place in which this article is applicable, in the buying, selling, exchanging, leasing, renting, or negotiating a loan upon any real estate without alleging and proving that such person was a duly licensed real estate broker or real estate salesman on the date when the alleged cause of action arose."

Section 442-f excludes, among others, attorneys at law from the necessity for compliance with the provisions of the statute. The plaintiff was an attorney at law, though not admitted to practice in the courts of the state of New York. He was not a licensed broker under article 12-A of the Real Property Law.

White Case, of New York City (Vermont Hatch and Thomas Kiernan, both of New York City, of counsel), for defendant-appellant.

Albert M. Lee, of New York City (Arthur Ofner, and J. George Levy, both of New York City, on the brief), for plaintiff-appellee.

Before SWAN, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

CHASE, Circuit Judge (after stating the facts as above).

In its nearest approach to the definition of a real estate broker contained in section 440 of the statute (Consol. Laws N Y c. 50), the plaintiff's conduct should be regarded with reference to an attempt to negotiate, for a fee or commission, a loan to be secured by mortgage on real estate. Unless what he did falls within that phase of the statute, his suit is not affected by its provisions. Furthermore, the law applies only if it is to be construed broadly enough to cover simply calling the defendant's attention to a prospective piece of financing and supplying it with all desired information regarding the property for the purchase of which the financing was contemplated. This is all the plaintiff did and all that he was promised his commission for doing.

To attempt to negotiate a loan, the plaintiff must at least have tried to bring about a loan by treating with or in behalf of somebody with a view to coming to an agreement upon some or all of the terms of the loan. Yet he did not try to agree with any one or to have any one agree upon the terms of any loan. He only put the defendant in possession of facts it wanted to enable it to decide whether it would be worth while for it to negotiate for any financing which might be involved in the sale of the building. He had no more to do with a loan than the plaintiff in Stout v. Kennelly, Inc., 218 App. Div. 385, 218 N.Y.S. 259, had to do with a sale. See, also, Shaffer v. Beinhorn, 190 Cal. 569, 213 P. 960, and Howard v. Heinig, 191 Wis. 166, 210 N.W. 414. And, for the difference between finding business for others to do and acting as a broker in doing the business, see Knauss v. Gottfried Krueger Brewing Co., 142 N.Y. 70, 36 N.E. 867. This license law was considered in Weingast v. Rialto Pastry Shop, Inc., et al., 243 N.Y. 113, 152 N.E. 693, where it was pointed out that the failure to procure a license is made criminal and the statute should not be extended by implication. Compare Reichardt v. Hill (C.C.A.) 236 F. 817.

We have taken no pains to distinguish the underwriting of a bond issue from a loan, as we are not of the opinion that the plaintiff attempted to negotiate either. Nor have we considered what merit, if any, there is in the plaintiff's claim of exemption as an attorney at law not admitted to practice in the state of New York.

Judgment affirmed.