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Arnold v. Schmeidler

Supreme Court of New York, Appellate Division

May 12, 1911

AARON ARNOLD, Respondent,
v.
LEOPOLD SCHMEIDLER and Others, Composing the Firm of SCHMEIDLER & BACHRACH, Appellants.

APPEAL by the defendants, Leopold Schmeidler and others, composing the firm, etc., from an order of the Appellate Term of the Supreme Court, entered in the office of the clerk of the county of New York on the 8th day of December, 1910, affirming a judgment of the City Court of the city of New York in favor of the plaintiff, entered in the office of the clerk of said court on the 6th day of May, 1910, upon the verdict of a jury.

COUNSEL

Page 421

Nathaniel Cohen, for the appellants.

M. Spencer Bevins, for the respondent.

DOWLING, J.:

The cause of action upon which plaintiff has recovered herein is based upon allegations that in February, 1909, defendants, who were owners of premises known as Nos. 10, 12, 14, 16 and 18 West One Hundred and Tenth street, in the borough of Manhattan, city of New York, authorized and employed the plaintiff and one Harrison, real estate brokers, 'to find for them a person or persons ready, able and willing to buy the said five (5) lots and houses thereon or any one or more thereof, upon certain terms and conditions,' and agreed to pay the brokers a commission of one per cent for their services; that thereafter the plaintiff and Harrison 'procured a person ready, able and willing to buy four (4) of the said houses at the price of Twenty-eight thousand three hundred and seventy-five ($28,375) dollars for each thereof, which price was satisfactory and acceptable to the defendants, and upon the terms and conditions acceptable to them, which person thereupon offered to purchase the said (4) houses at the price and upon the terms and conditions aforesaid, but the defendants thereupon refused to consummate the transaction; ' that demand has been duly made for the payment of the commissions claimed to be due, but no part thereof has been paid, and that Harrison has assigned all his interest therein to the plaintiff. The answer was a general denial. The testimony on behalf of the plaintiff disclosed that in the course of a business call upon the defendants, Harrison, plaintiff's assignor, there saw a list of properties which they had for sale and upon which appeared the five houses in question, listed at an aggregate asking price of $165,000, subject to mortgages aggregating $137,500; the four parcels ultimately claimed to have been sold, Nos. 12, 14, 16 and 18 West One Hundred and Tenth street, being listed at an aggregate price of $133,000, subject to mortgages amounting to $110,000.

The defendants are claimed to have then told Harrison that they thought he could sell the houses very easily, and asked him to take the list, to which Harrison replied that it was

Page 422

impossible to sell at the prices asked, whereupon one of the defendants answered, 'never mind the price; if you get a man let me know.' Harrison claims that he had interested a prospective purchaser, but they could not agree on conditions and so the deal was off. He then met Arnold, the plaintiff, and asked him if he could interest some one in the matter, in response to which Arnold finally produced one Purtman as a purchaser, upon whom Harrison called with Arnold. They had a conference, as the result of which Purtman offered a second mortgage of $5,500 on property in Madison street, in New York city, in exchange for the equity in the five houses. This, when proposed by the brokers to the defendants, was rejected by the latter after they had conferred with both the brokers and with Purtman about the matter, the reason assigned being that to realize cash upon the mortgage would involve a discount of twenty per cent, which sum the defendants were unwilling to lose. Negotiations then followed between both the brokers and the defendants, resulting in an offer of $3,000 in cash by Purtman for the equity in the four houses, which was finally increased by him to $3,500. This offer, when communicated by Harrison to defendants, is claimed to have been accepted by Bachrach, one of the latter, who, in the presence of Harrison and Arnold, telephoned Purtman to come over to defendants' office to 'settle the business, the price is $3,500,' $1,000 of which was to be deposited on that day upon the signing of the contract, and the balance in thirty days. Something had been said before that time about the adjustment of the interest and insurance, but the details thereof were not testified to. Purtman came over to defendants' office and there attended with his brokers, while one of the defendants, as claimed, after talking over the price and amount of deposit, the time for closing title and other details, informed an attorney, William M. Golden, then present, of the terms of the proposed agreement, whereupon the latter dictated the same to a stenographer in the presence of all the parties. It was testified that the defendants left the room at different times, and upon their return, Bachrach said there was something else that he wanted, which was that he should have security, that when the interest upon the mortgages became due (in four or six

Page 423

months) it would be paid, which request was emphatically refused by Purtman, who said that he had never heard of such a demand in all his real estate experience; and, when the demand was insisted upon by Bachrach, Purtman replied, 'I will not buy your houses; it never happens that anybody shall pay interest in advance,' whereupon Bachrach replied, 'the deal is off.' Upon cross-examination Harrison claimed that the occasion referred to was the first that he ever heard of any demand by defendants that security should be given for the payment of the interest on the mortgages. Upon redirect examination it was disclosed that what the defendants really demanded was that the amount of the accrued interest, which they were to allow to Purtman upon the closing of the title, should be deposited with them to be held until the next interest day, in order to protect them against the possibility of the purchaser defaulting in the payment of the six months' interest then to become due. The testimony of plaintiff was corroborative of Harrison's testimony in regard to the transactions with Purtman and as to what occurred at the time when the negotiations finally ended in a failure to agree upon the conditions for the sale. He claimed never to have heard of any condition that the accrued interest should be deposited with the vendors until it was made in his presence by defendants at the last meeting of the parties.

Isaac Purtman, the proposed purchaser, testified in effect that he was ready, able and willing to make an agreement to purchase the four houses in question for $3,500 in cash over and above the mortgages thereon, which it appears were first and second mortgages on each house. He was positive that the amount of deposit, $1,000, the time when title was to pass (within thirty days), as well as the purchase price, were fixed by defendants in their conversations with him over the telephone, but he was unable to state anything that was said as to the adjustment of rents, insurance and interest, as 'it didn't come that far.' His understanding of the demand made by the defendants as an additional condition of the agreement was that they desired to have the accrued interest, which was to be allowed the purchaser, deposited with them until the due day. He claimed that the question

Page 424

was raised while the contract was being dictated and before it was concluded. The defendants' contention, sought to be established by their witness Bachrach, was that when Harrison called upon them and offered the second mortgage on the Madison street houses in payment for the equity in the West One Hundred and Tenth street houses they rejected it, but finally told him that if he would bring a customer who would pay $3,500 cash over the mortgages, and allow defendants to retain the accrued interest due on the mortgages, the property would be sold. Harrison produced such a customer in one Starr, and, acting upon his prior request, when Harrison called with Starr at defendants' office a contract had been prepared which was handed to Starr, who rejected it, objecting to the interest being retained. Bachrach then said that he had such an understanding with the broker and explained exactly what the provision meant. All this was in the presence of Harrison, who did not dispute Bachrach's statement. Starr's attorney was present at the interview and it was then further given as the reason for this proviso that the brother-in-law of one of the defendants held a second mortgage of $2,500 on each of the houses and that they desired to see that the interest was paid for his protection. After Starr and his attorney had left, Harrison asked whether the property would be sold to another purchaser under the same agreement and at the same price, to which Bachrach replied: 'If he came within reason about the entire terms' he might have it at the same price. Five or six days thereafter Harrison called and said he had a customer who would take the property instead of Starr, to which Bachrach replied that if he was willing to make a contract similar to the one proposed for Starr, he could bring his purchaser over; whereupon, at Harrison's request, Bachrach telephoned Purtman to ...


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