Opinion
December 19, 1913.
Benjamin Reass, for the appellant.
Aaron William Levy, for the respondent.
This is an action to recover damages for the breach of an alleged contract by defendant to sell to plaintiff a subordinate interest in a bond and mortgage. In December, 1909, one Isaac Polansky, owner of premises in Hester street, in the city of New York, desired to obtain a loan of $75,000 upon his bond, to be secured by a mortgage upon his real property. He employed for that purpose a broker named Kronsky, who arranged with the defendant and the New York Life Insurance Company that the latter company should take a senior interest in such a mortgage, to the extent of $62,500, defendant guaranteeing the loan to that extent. This left a subordinate interest of $12,500 to be disposed of. Kronsky tried to dispose of this himself, but was unable to do so. He then called to his aid one Schinsky, who was in the employ of a firm of mortgage brokers known as H.D. Baker Bro. Schinsky found a man named Marx who was willing to buy, but was unwilling to agree to the terms and conditions of sale prescribed by defendant. Schinsky testified that Kronsky took him to see one O'Brien, who at the time was acting assistant secretary of the defendant; that O'Brien asked him if he could find a purchaser; "Mr. O'Brien did not tell me to go to find a purchaser, but he asked me if I could sell the interest. I was a broker. Mr. O'Brien asked me if I could sell that junior interest, and I told him I would try to sell it, and I took the details and went out on the market and tried to sell it. I looked for a purchaser." After the attempt to sell to Marx had failed Schinsky testifies that Mr. O'Brien said to him: "We will have to go elsewhere to see if we cannot sell it to somebody else, and go out in the market again and try to sell it." It is upon this conversation (denied by O'Brien) that the plaintiff builds his whole case, his claim being that the defendant thereby made Schinsky its agent, not to find a purchaser, but to actually make a valid binding contract of sale. On December 14, 1909, Schinsky delivered to O'Brien the following letter addressed, not to defendant but to H.D. Baker Bro., who were Schinsky's employers:
"NEW YORK, Dec. 14 th, 1909.
"Messrs. H.D. BAKER BRO.:
"GENTLEMEN. — I, the undersigned, am willing to purchase and take an assignment of the junior interest in a first mortgage affecting premises No. 103 Hester Street, Borough of Manhattan, New York City, and duly recorded in the office of the Register of the County of New York, in the amount of $75,000, said junior interest amounting to $12,500, bearing interest at the rate of 5% per annum, and maturing in three years. I will purchase the said junior interest, amounting to the sum of $12,500 as aforesaid, for the sum of $10,300. Title insurance policy insuring the title to said mortgage and assignment shall be issued to me without charge or expense on my part.
"Very truly yours, "MARTIN M. STONE, "NEWMAN BUTLER, Metropolitan Bank, "Attorneys, 271 Broadway. "116 Nassau St."
The plaintiff's position is that, on the theory that Schinsky had full power in defendant's behalf to make a contract of sale as its agent, this acceptance by plaintiff made it a valid, binding contract, and as it was not carried out, he claims as damages the difference between $10,300, which he offered to pay for the junior interest, and $12,500, the face value of this interest.
Schinsky refused to give O'Brien any particulars respecting Stone, or even his address, insisting that O'Brien should deal only with himself or his firm. O'Brien thereupon gave Schinsky the following letter:
" December 14, 1909. "Mr. E.P. SCHINSKY, "c/o Messrs. H.T. BAKER BRO., "New York City:
"DEAR SIR. — In regard to the junior interest of $12,500, in $75,000 mortgage on 103 Hester Street, would state that I have read the acceptance of Mr. Stone, to your Company, or firm, and will hold the same at your disposal, but will deal with you direct in the matter. It is understood I presume by your client, that this junior interest is to be assigned to him on the same conditions as was the original deal of Mr. Marx, as per my letter of December 4th. It is also understood that should the deal fall through by reason of any act of the New York Life Insurance Company, or of the owner, or any other party interested beside this Company, then and in that case this Company is in no way liable to H.T. Baker Bro., or their clients for any damage or remuneration whatever. This, of course, only carries out the agreement as signed by you and Mr. Krone on December 6th.
"I am very glad to see that you got another client for this loan, and must congratulate you on your promptness. We will keep you posted on the progress of the matter, and will send your client or yourself the report when complete.
"Very respectfully yours, "O'B."
It appears now that Schinsky never showed this letter to plaintiff, but defendant, assuming that the sale had been made subject to its terms, sent to plaintiff's lawyer what papers were necessary. This sale fell through because plaintiff refused to accept an assignment of the interest in the form and upon the conditions upon which the New York Life Insurance Company insisted.
If the real contract was that evidenced by the two letters above quoted, it is evident that the plaintiff has no cause of action. He must, therefore, succeed, if at all, upon his theory, already referred to, that Schinsky was authorized by defendant to actually make a sale as its agent, and to agree upon the terms of sale, and that the letter from plaintiff to H.D. Baker Bro. was not an offer to buy, but an acceptance of an offer already made through Schinsky. This latter claim is clearly untenable for several reasons.
First. There is no evidence, and no presumption arising from his office, that the acting assistant secretary of defendant had any authority to employ an agent to actually sell a mortgage, or to authorize such an agent to make a contract of sale for the company. The fact, if it be a fact, that Schinsky represented to plaintiff that he had authority to contract in behalf of the defendant adds no strength to plaintiff's case, for no one can make himself an agent of another by merely asserting his agency.
Second. It is apparent that Schinsky's authority was only that of a broker, and he was well known in that capacity to all the parties in the transaction. It is perfectly well settled and generally understood that the entire duty of a broker employed to sell or to assist in selling property is to search out a purchaser and to act as the intermediary to bring the seller and the purchaser together. In the absence of a special and well-defined authority it is no part of a broker's duty to actually make the sale in behalf of the owner. ( Glentworth v. Luther, 21 Barb. 145; Alt v. Doscher, 102 App. Div. 344, 348; Sibbald v. Bethlehem Iron Company, 83 N.Y. 378.) Accepting Schinsky's version of his interviews with O'Brien at its fullest value it is perfectly obvious that his employment was merely that of a broker to seek out a purchaser and involved no authority to make a binding contract in behalf of defendant.
Third. Even if it could be held that Schinsky was given any authority to sell the junior interest, he was given, upon his own statement, no authority to agree on any terms except to sell the interest at a given price. The letter from plaintiff, which he calls an acceptance, but which was in fact only a proposal, contains a condition not claimed to have been put within Schinsky's authority to consent to, viz., "Title insurance policy insuring the title to said mortgage and assignment shall be issued to me without charge or expense on my part."
It would serve no useful purpose to discuss so bald a case at greater length. It is perfectly clear upon the undisputed facts that plaintiff has not and never had a cause of action against defendant, and the court erred in not dismissing the complaint. That error it is our duty to correct.
The judgment and order appealed from must, therefore, be reversed and the complaint dismissed, with costs to the appellant in all courts.
INGRAHAM, P.J., McLAUGHLIN, LAUGHLIN and CLARKE, JJ., concurred.
Judgment and order reversed and complaint dismissed, with costs to appellant in all courts. Order to be settled on notice.