PETER S. O'HARA and JOHN L. O'HARA, Respondents, Appellants,
DWIGHT H. MURRAY and THOMAS H. HALSTED, Appellants, Respondents.
CROSS-APPEALS by the plaintiffs, Peter S. O'Hara and another, and by the defendants, Dwight H. Murray and another, from parts of an interlocutory judgment of the Supreme Court, entered in the office of the clerk of the county of New York on the 7th day of July, 1910, upon the decision of the court, rendered after a trial at the New York Special Term, sustaining demurrers to a defense and overruling a demurrer as to another defense.
Michael J. Joyce, for the plaintiffs.
Abram J. Rose, for the defendants.
Action to recover broker's commissions. The amended complaint contains two causes of action. The answer, four separate defenses. The plaintiffs demurred, separately, to the third defense to the first and second causes of action, and also to the fourth defense to the second cause of action, upon the ground that each was insufficient upon its face. The demurrers to the third defense were sustained and the defendants appeal, and that as to the fourth was overruled and the plaintiffs appeal.
The first cause of action alleges that the plaintiffs were partners engaged in business as real estate brokers and that the defendants, on the 29th of August, 1906, entered into a written contract with them for the sale of certain land which was divided into 258 lots; by the terms of the contract the plaintiffs were to receive $50 for every lot sold by them or by the defendants; that the agreement further provided the plaintiffs were authorized to spend $150 a month in advertising the property and to reimburse themselves therefor out of moneys of the defendants which might come into their hands, and if none were so received, then the defendants should reimburse them; that the plaintiffs entered upon the performance of the contract, expended much time and effort in connection therewith, built and maintained an office on the land at their own expense and sold two of the lots, for which they were paid the amount agreed upon; and that thereafter, and on or about the 28th of February, 1907, the defendants sold the remaining 256 lots and have not paid to the plaintiffs the $50 per lot as agreed, by reason of which there is now due them $12,800, with interest from the day specified.
The second cause of action sets forth substantially the same facts, and in addition thereto, that on or about the 1st of April, 1907, the defendants unlawfully and without reasonable excuse, violated the contract on their part to be performed, and declined and refused to perform the same, and to permit the plaintiffs to complete further performance upon their part; and that by reason of such breach, damages have been sustained to the amount of $12,800, with interest.
The third defense demurred to, which was set up against each of the causes of action, alleges that the contract for the
sale of the lots was for an unspecified duration; that the plaintiffs had no interest in its performance other than to earn the commissions therein provided and, therefore, it was terminable by either party upon notice; that on January 15, 1907, the defendants gave notice to the plaintiffs that the contract was thereby terminated and canceled. In sustaining the demurrer, the court at Special Term, as appears from the opinion, held that the defense was insufficient because the contract was not terminable at the will of the defendants until the plaintiffs had had a reasonable time in which to complete their performance, which fact did not appear.
A contract for the sale of land, or other property, when not coupled with an interest, may, if the party act in good faith, be revoked at any time before the sale actually takes place. ( Terwilliger v. Ontario, C. & S. R. R. Co., 149 N.Y. 86; 1 Am. & Eng. Ency. of Law [2d ed.], 1216.) In the contract under consideration no time was fixed within which the land had to be sold. Therefore, either of the parties was at liberty to terminate it at will, subject only to the ordinary requirements of good faith. The right of the defendants to terminate their authority was unrestricted, provided they acted in good faith and not as a mere device to escape the payment of commissions. (Sibbald v. Bethlehem Iron Co., 83 N.Y. 378.) The contract was entered into on the 29th of August, 1906; it was not terminated until January 15, 1907--over four months--during which time plaintiffs had barely succeeded in selling two out of two hundred and fifty-eight lots. Had they continued at the same rate they would have sold six lots a year, or all of the lots in forty-three years. They had demonstrated their inability to perform, even though they were entitled to a reasonable time within which to do so, and for that reason the defendants were justified in terminating the contract when they did. But the authority to sell was not coupled with an interest, and, therefore, the defendants could revoke it at any time, if they acted in good faith, before the sale actually took place, without incurring any liability for a breach of the contract. (Stier v. Imperial Life Ins. Co., 58 F. 843.)
When the whole contract is considered I do not think it justifies reading into it a provision to ...