Opinion
June 27, 1961
James D.C. Murray for defendants.
Steinbugler, Joyce Scully for plaintiffs.
Motion to dismiss the complaint for failure to state facts sufficient to constitute a cause of action is denied.
The complaint alleges: that the plaintiffs in November, 1958 listed real property with defendant Joseph C. Kleinman for sale at a price of $14,700; that thereafter the property was sold for $14,300 to one "Ellen Kaufman," who was in fact Ellen Kleinman, the wife of the defendant Joseph C. Kleinman; that said relationship of the defendants was unknown to the plaintiffs; that a real estate brokerage commission ($615) was paid to said Joseph C. Kleinman; that within six months after the sale to "Ellen Kaufman" the property was resold by "Ellen Kaufman" for a sum $2,303.73 in excess of the sum received by the plaintiffs. Allegations contending that the defendants conspired to deceive the plaintiffs and that defendant Joseph C. Kleinman violated a rule number 4 of rules adopted by the Secretary of State for the better administration of article 12-A of the Real Property Law are also pleaded. The plaintiff seeks damages for a violation of article 12-A, as provided by section 442-e Real Prop. of the Real Property Law.
I find that the complaint states a cause of action, not under the aforesaid statute (Real Property Law, art. 12-A), but for the damages resulting from the fraudulent acts of the defendants in not disclosing their relationship to the plaintiffs and in receiving a commission ($615) to which the defendant Joseph Kleinman was not entitled. A broker is required, in the performance of his duties, to exercise the utmost good faith and loyalty and not to act in any manner inconsistent with its agency or trust ( Lamdin v. Broadway Surface Adv. Corp., 272 N.Y. 133; Wendt v. Fischer, 243 N.Y. 439). "A failure to disclose any interest tending to influence the plaintiff [the broker] in its conduct in obtaining and negotiating [a sale] constitutes a breach of its fiduciary obligation and precludes it from recovering for services rendered ( Murray v. Beard, 102 N.Y. 505) " ( John J. Reynolds, Inc. v. Snow, 11 A.D.2d 653-654, affd. 9 N.Y.2d 785). Therefore, the plaintiffs are at least entitled to a recovery of $615, if the facts alleged in the complaint be true. The fact that relief is sought in the same cause of action under article 12-A of the Real Property Law, which is not available to them for a violation of the rules of the Secretary of State, does not warrant a dismissal of the complaint. Alternative theories or causes of action are not pleaded.