Allwin Realty Co. v. Barth

Full title: ALLWIN REALTY COMPANY, Respondent, v . MARY G. BARTH, Appellant

Court: Appellate Division of the Supreme Court of New York, First Department

Date published: Apr 3, 1914

161 App. Div. 568 (N.Y. App. Div. 1914)

146 N.Y.S. 960

Opinion

April 3, 1914.

Joseph Day Lee, for the appellant.

Leo Schafran, for the respondent.

INGRAHAM, P.J.:

This action was brought in the Municipal Court and the pleadings were oral. The complaint was for commissions due and the answer was general denial and Statute of Frauds, and a bill of particulars was demanded. No bill of particulars was ever furnished and the case came on for trial before the court without a jury.

The plaintiff's assignor was called as a witness for the plaintiff and he testified that he was a real estate broker; that he he was employed by the defendant to procure a tenant for the defendant's property on Third avenue; that the defendant's interest in the property was that of tenant having a lease for twenty-one years; that the defendant agreed that she would give the broker the regular commission of one per cent on the amount of rent she should get for the premises; that he subsequently procured a tenant and a lease was executed, which was introduced in evidence. That lease was dated July 26, 1904, between the defendant, as the party of the first part, and the Twentieth Century Laundry Company, as the party of the second part, whereby the defendant leased the premises to the tenant "for a term of six (6) years and nine (9) months from the 1st day of August, 1904, expiring May 1st, 1911, at the yearly rent of Sixty-five hundred ($6,500) dollars per annum, to be paid in equal monthly payments in advance * * *." The lease also contained a provision by which the defendant agreed to grant to the said tenant a renewal of this lease for a further term of seven years to expire May 1, 1918, upon the same terms as those therein contained, and provided further that said tenant give to said landlord notice in writing claiming such renewal at least four months before the 1st day of May, 1911, and also to grant to the said tenant a second renewal of lease for the further term of seven years to expire May 1, 1925, upon the same terms as those therein contained, upon giving a like notice. The witness was paid his commission based upon the amount of the rent to be received during the term of six years and nine months, for which time the property was leased. I think that under his employment that was all the commission to which the broker was then entitled. This term demised of six years and nine months was from August 1, 1904, and that was the term of the lease. It covered all the rent which was received under the lease made by the tenant procured by the broker. The covenant of renewal was entirely at the option of the tenant, and whether or not there should be a renewal of the lease could not be determined until the time when the tenant was called upon to give the notice by which he was to exercise his option. Certainly the broker would not when the lease was executed be entitled to sue for and recover commission based upon the amount of rent that should be paid if the tenant did exercise his option to take a new lease for a second term of seven years. All that the tenant whom the broker procured agreed to pay was the rent for the term of six years and nine months, which was the term demised, and it seems to me clear that the rent during such term was all the rent that was secured to be paid by the lease, and on which the broker was entitled to his commission.

The broker further testified that, at the time of the execution of the lease, he told the defendant's husband: "We will have to get our commission now for the term of the lease, as we agreed upon between us," to which the latter replied: "No, * * * you know my wife is very short on money, we had that building vacant for such a long time now, and we will have to pay the taxes, the ground's rent, wouldn't you take the percentage this way? As to the seven years now, and I will try to pay you that as soon as I can. * * * When the seven years is over and the tenant should take his option as he will on that lease, then you will get your commission on the seven; and if that is off, you will get your other percentage for the other seven years to come," to which the broker assented. He further testified that eventually he received payment of commission for the term of the lease. If that was all of the commission to which he was entitled at that time it is difficult to see where there was any consideration for the agreement to pay commission for the extended time if the tenant exercised its option to take it. But if this was a new agreement to pay an additional commission over and above the sum agreed upon it would seem to be a contract for the payment of a sum of money not to be performed within a year. To sustain the plaintiff's cause of action at all it must appear that the broker was entitled to be paid at the time the contract was made a sum of money by the defendant, based upon his having obtained a tenant who had agreed to pay rent under the lease as then executed. As before stated, under the lease the only obligation of the tenant to pay rent was for the period of six years and nine months from the 1st of August, 1904. An agreement then that the defendant would pay to the broker a further sum in addition to the commission for the original term of the lease, if the tenant exercised the option four months before the 1st of May, 1911, was a contract for the payment of money not to be performed within a year, and was, therefore, within the Statute of Frauds and void unless in writing. (See Pers. Prop. Law [Consol. Laws, chap. 41; Laws of 1909, chap. 45], § 31, subd. 1.)

But, assuming the contract was enforcible, I do not think the defendant was liable for this additional commission. The agreement as stated by the broker was: "When the seven years is over and the tenant should take his option as he will on that lease, then you will get your commission on the seven; and if that is off, you will get your other percentage for the other seven years to come." The condition upon which the broker was to receive this additional commission was the exercise of the option by the tenant at the expiration of the term of six years and nine months. To exercise that option the tenant had to give the defendant a notice in writing claiming such renewal at least four months prior to the 1st of May, 1911, in which case, without further negotiations or trouble, the lease would be extended for seven years. It is conceded that the tenant did not exercise the option and refused to take the extended term under the lease as it was executed, and when the tenant refused to exercise the option and take the new term of seven years the obligation of the defendant to pay the broker's commission, assuming the contract could be enforced, was at an end. The advantage to the landlord in having the tenant exercise that option is obvious. If four months before the end of the term demised the tenant exercised the option, the landlord was relieved of the trouble and expense of obtaining a new tenant. It might well be that the landlord would be willing to pay a commission for the term of seven years if the tenant would exercise the option, and it was for the broker then to procure the tenant to take such option. The tenant, however, refused to exercise the option, and the right to an extended term of the lease expired and was at an end. The parties were then at liberty to make a new lease or to make whatever disposition of the property their interests required. The defendant then entered into negotiations with various parties to lease the property. On the trial the defendant attempted to prove that the tenant refused to exercise the option, what negotiations he had with the tenant as to the exercise of the option four months before the expiration of the lease, and the negotiations with the old tenant that subsequently resulted in the execution of a new lease prior to May 1, 1911. This testimony was all excluded by the court and the defendant excepted. All that was proved was that on April 5, 1911, the defendant made an entirely new lease with the old tenant, on somewhat different terms, and without an option to renew the lease for a term of seven years at the end of the term then demised. I think it was error to refuse to allow the defendant to prove the circumstances under which the new lease was obtained. If the new lease was not the result of any services performed by the plaintiff and for which the plaintiff should be entitled to recover a commission, plaintiff cannot recover. The new lease itself showed that it was executed, not as the result of the exercise of the option by the tenant, but of an entirely new letting, upon different terms; and it was not, therefore, the result of any of the plaintiff's efforts to procure a tenant that the new lease was executed. Therefore, I think this judgment cannot be sustained, and the determination of the Appellate Term and of the Municipal Court should be reversed and a new trial ordered, with costs in this court and in the Appellate Term to the appellant to abide the event.

CLARKE and SCOTT, JJ., concurred; DOWLING and HOTCHKISS, JJ., dissented.

Determination of Appellate Term and of the Municipal Court reversed and new trial ordered, with costs in this court and in the Appellate Term to appellant to abide event. Order to be settled on notice.