Bradkin v. Leverton, 26 N.Y.2d 192 (1970)
A party who knowingly benefits from the services of another under circumstances where it would be unjust to retain such benefit without compensation may be liable in quasi-contract, even in the absence of a direct agreement.
Summary
Bradkin sued Leverton, seeking compensation for Leverton’s profits from financing Mauchly, a company Bradkin had originally introduced to Leverton’s company, Federman. Bradkin had a written agreement with Federman to receive a percentage of profits from any Mauchly financing. Leverton, leveraging the relationship created by Bradkin, personally financed Mauchly. The court held that Leverton was liable to Bradkin in quasi-contract because Leverton knowingly benefited from Bradkin’s services, making it unjust for Leverton to retain the profits without compensating Bradkin, despite the lack of a direct agreement. The Statute of Frauds was not applicable because the action was not between a finder and his employer.
Facts
Bradkin, an employee of H.L. Federman & Co., introduced Mauchly Associates to Federman for financing.
Bradkin had a written agreement with Federman to receive $10,000 for arranging the initial financing and 10% of the net profit from any subsequent financing of Mauchly in 1967.
Leverton, an officer, director, and nonvoting stockholder of Federman, became acquainted with Mauchly through Bradkin’s introduction.
Leverton, without Bradkin’s knowledge, arranged private financing transactions with Mauchly, profiting personally.
Bradkin sought 10% of Leverton’s net profit from the Mauchly financing, claiming an implied promise to pay, but Leverton refused.
Procedural History
Bradkin filed suit against Leverton to recover a percentage of profits and an accounting.
The trial court (Special Term) granted Leverton’s motion to dismiss the complaint, citing the Statute of Frauds.
The Appellate Division affirmed the dismissal without opinion.
Two justices dissented at the Appellate Division, arguing that the complaint stated a cause of action in tort.
The New York Court of Appeals reversed the lower courts’ decisions.
Issue(s)
Whether Leverton, who profited from a financing opportunity initially procured by Bradkin for Leverton’s company, is liable to Bradkin in quasi-contract despite the absence of a direct agreement between Bradkin and Leverton.
Whether the Statute of Frauds bars Bradkin’s claim against Leverton where Bradkin had a written agreement with Leverton’s company, but no written agreement with Leverton personally.
Holding
Yes, because Leverton knowingly benefited from Bradkin’s services under circumstances where it would be unjust for Leverton to retain the benefit without compensation. The obligation is imposed by law to ensure a just and equitable result.
No, because the Statute of Frauds applies to contracts between a finder and his employer, not between a finder and a third party who benefits from the finder’s services.
Court’s Reasoning
The court reasoned that quasi-contracts are obligations imposed by law to prevent unjust enrichment, regardless of the parties’ intentions. The court quoted Miller v. Schloss, stating that “a person shall not be allowed to enrich himself unjustly at the expense of another.” Bradkin’s introduction of Mauchly to Federman created the opportunity from which Leverton profited. Leverton, by using his corporate position to benefit personally from the Mauchly financing, obtained the benefit of Bradkin’s labors. The court emphasized that “when the defendant took over the corporation’s financing arrangements, he assumed its obligation to the plaintiff for commissions.” The Statute of Frauds was deemed inapplicable because it is intended to protect against fraudulent claims between a finder and their employer, not between a finder and a third party. The court stated, “Quite manifestly, the purpose of the statute is to protect against fraudulent dealings between the finder and his employer, not between the finder and a third party.” The dissent in the Appellate Division agreed that the complaint should be upheld. The court concluded that it would be against good conscience for Leverton to retain the benefits of the contract made with his corporation without compensating Bradkin for his services. The court also noted that because there was no fiduciary relationship between Bradkin and Leverton, Bradkin was not entitled to an accounting.