Siegel v. Rosenzweig

The plaintiff alleged and proved: That his assignor, a real estate agent, was authorized by the owners of certain premises to offer them for sale for $85,000 on certain specified terms, and that the owners agreed to pay him for his services a commission for procuring a purchaser for such premises; that thereafter the agent proposed the premises for purchase to the defendant, and at the latter’s request told him the names of the owners of the premises, the terms and conditions on which, and the price at which, the premises could be purchased; that the defendant requested the agent to do nothing further in the negotiations for the sale of such premises, to permit the defendant to deal directly with the owners, and not to offer the premises for sale to any other person, and the defendant promised to pay plaintiff’s assignor, if he complied with these conditions, a commission of 1 per cent, on the purchase price, in case the defendant actually purchased the premises; that plaintiff’s assignor agreed to and did perform such conditions; that the defendant negotiated direct with the owners for the purchase of the property, later actually bought it for $84,500, but has not paid the commission of 1 per cent, which he agreed to pay to plaintiff’s assignor. At the end of the plaintiff’s case, the court, of its own motion, directed a verdict in favor of the defendant, on the ground that the contract rests on an immoral consideration and cannot be enforced.

The argument by which the judgment is sought to be sustained is based upon the proposition that the plaintiff’s assignor was guilty of a betrayal of the owners’ interests. If so, then, of course, the contract, to betray may not be enforced for the reason assigned by the learned trial court. To determine whether or not there was such betrayal, it is important to look at the terms which the law implies in a contract between owner and a real estate broker. Among the terms of such contracts are the obligations of the owner to the broker, and it is well to have them in mind when it is sought to define the obligations of the broker to the owner. In the leading case of Sibbald v. Bethlehem Iron Co., 83 N. Y. 378 , 383, 38 Am. Rep. 441 , the court says;

“It follows, as a necessary deduction from the established rule, that a broker is never entitled to commissions for unsuccessful efforts. The risk of failure is wholly his. The reward comes only with his success. That is the plain contract and contemplation of the parties. The broker may devote his time and labor, and expend his money with ever so much of devotion to the interests of his employer, and yet, if he fails, if, without effecting an agreement or accomplishing a bargain, he abandons the effort, orhis authority' is fairly and in good faith terminateduhe gains no right to hrinmissions. He loses the labor and effort which wasstaked upon success, and in such event it matters not that after his failure, and the termination of his agency, what he has done proves of use and benefit to the principal. In a multitude of cases that must necessarily result. He may have introduced to each other parties who otherwise would have never met; he may have created impressions which, under later and more favorable circumstances, naturally lead to and materially assist in the consummation of a sale; he may have planted the very seeds from which others reap the harvest—but all that gives him no "claim. It was part of his risk that failing himself, not successful in fulfilling his obligation, others might be left to some extent to avail themselves of the fruit of his labors. As was said in Wylie v. Marine National Bank, 61 N. T. 416, in such a case the principal violates no right of the broker by selling to the first party who offers the price asked, and it matters not the