Galbreath-Ruffin Corp. v. 44th & 6th Ave. Corp., 27 N.Y.2d 350 (1971)

A licensed real estate broker can recover commissions where brokerage services were performed by licensed individuals, even if one of those individuals was not specifically licensed to act on behalf of the plaintiff brokerage corporation, so long as there is no evidence of public harm or unlicensed activity.

Summary

Galbreath-Ruffin Corp., a licensed real estate broker, sued 44th & 6th Ave. Corp. to recover commissions for leases procured for a building. The defendant argued that the plaintiff could not recover commissions because Philip Shannon, an officer of the plaintiff, was not licensed to act on behalf of the plaintiff, even though he was a licensed broker acting on behalf of another corporation. The court held that the plaintiff could recover commissions because the brokerage services were performed by licensed individuals and that the statute requiring additional licenses for officers was primarily a revenue measure, not intended to protect the public from harm. The court granted partial summary judgment to the plaintiff.

Facts

Galbreath-Ruffin Corp. was the exclusive renting agent for 44th & 6th Ave. Corp. for a building under construction. The agreement was based on two letters outlining commission rates. Leases were executed with several entities, some procured by the plaintiff and others by outside brokers. The plaintiff had a corporate brokerage license and was affiliated with John W. Galbreath & Co., Inc., another licensed broker. Peter Baffin, plaintiff’s president, was a licensed broker for the plaintiff. Philip Shannon, plaintiff’s vice-president, was licensed for John W. Galbreath & Co., Inc. Shannon primarily handled the Bendix and TWA leases. The defendant paid $82,173.40 in commissions but then disputed further payments, arguing Shannon was not licensed to act for the plaintiff.

Procedural History

The plaintiff sued to recover commissions. Special Term dismissed the first seven causes of action and refused to dismiss the affirmative defenses and counterclaims. The Appellate Division modified the order, granting the plaintiff summary judgment on some causes of action and dismissing the affirmative defenses and counterclaims related thereto. Both sides appealed to the New York Court of Appeals.

Issue(s)

Whether a licensed real estate broker can recover commissions where brokerage services were performed by two separately licensed brokers, one licensed to act for the plaintiff corporation and one licensed to act for another corporation, even though the latter was not specifically licensed to act on behalf of the plaintiff corporation.

Holding

Yes, because the statute requiring additional licenses for officers of a brokerage corporation is primarily a revenue measure, and the essential requirement is that individuals performing brokerage services be licensed to protect the public.

Court’s Reasoning

The court reasoned that the licensing requirements for real estate brokers are primarily intended to protect the public from incompetent or untrustworthy brokers. The court stated, “The intrinsic nature of the business combines with practice and tradition to attest the need of regulation. The real estate broker is brought by his calling into a relation of trust and confidence. Constant are the opportunities by concealment and collusion to extract illicit gains.” The court emphasized that the animating purpose is the protection of the public, not simply to collect additional fees. Here, both Ruffin and Shannon were licensed brokers. The court rejected the argument that because Shannon was not specifically licensed to act on behalf of Galbreath-Ruffin Corp., the plaintiff could not recover commissions. The court noted that 441-b should be strictly construed because it is a penal statute. The court distinguished Brener & Lewis v. Fawcett Pubs. because in that case, the individual performing the real estate services was not licensed to act as a broker or salesman for the plaintiff or any other corporation. The court determined that requiring an extra license for Shannon would be a matter of form and would not accomplish anything useful in carrying out the purpose of the act.

The court held that the Appellate Division erred in directing a trial to ascertain the views of the Department of State regarding the practical construction of the statute. The court stated, “This case is not one in which the administering agency, namely, the Department of State, was first charged with the function of construing the statute in an administrative proceeding.”