New York Law Review

Tag: Bradkin v. Leverton

  • Bradkin v. Leverton, 26 N.Y.2d 192 (1970): Recovery in Quasi-Contract Despite Lack of Direct Agreement

    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.

  • Bradkin v. Leverton, 26 N.Y.2d 192 (1965): Implied Renewal of Service Contracts Beyond One Year

    Bradkin v. Leverton, 26 N.Y.2d 192 (1965)

    When parties continue a business relationship beyond the expiration of an oral service contract that was initially for one year (but not performable within one year from its making), their conduct can be evidence of an implied agreement to renew the contract for another year, regardless of whether a conventional master-servant relationship exists.

    Summary

    Bradkin sued Leverton, alleging breach of an oral agreement where Bradkin was to act as Leverton’s exclusive export manager. The agreement, made in October/November 1957, was for one year beginning January 1, 1958, and allegedly continued on the same terms in 1959 and into 1960, until Leverton terminated it in April 1960. Leverton argued the agreement was unenforceable under the Statute of Frauds. The Court of Appeals held that the parties’ conduct in continuing the relationship beyond the initial year could imply a renewal of the contract, reversing the dismissal and remitting the case. The court emphasized that the implication of renewal is a matter of evidence, applicable beyond traditional master-servant relationships.

    Facts

    1. Bradkin, a corporation, acted as an export manager for manufacturers.
    2. Leverton, a corporation, manufactured products for photographic and sound recording equipment.
    3. In October/November 1957, Bradkin and Leverton made an oral agreement.
    4. Bradkin was to be Leverton’s exclusive export manager (excluding the U.S. and Canada) for one year, beginning January 1, 1958.
    5. Bradkin’s compensation was to be certain discounts on the prices of the exported items.
    6. The relationship continued on the same terms during 1959 and into 1960 without an express agreement.
    7. In April 1960, Leverton refused to allow Bradkin to continue as export manager.

    Procedural History

    1. Leverton moved for judgment on the pleadings, arguing the oral agreement violated the Statute of Frauds.
    2. Special Term denied the motion, citing Adams v. Fitzpatrick, stating the Statute of Frauds doesn’t apply to fully performed contracts.
    3. The Appellate Division reversed, stating the automatic renewal doctrine applies only to master-servant relationships.
    4. Two dissenting Appellate Division Justices favored allowing Bradkin to amend the complaint with additional facts implying renewal.
    5. The Court of Appeals reversed the Appellate Division’s decision, remitting the case to Special Term.

    Issue(s)

    1. Whether, for an oral agreement for one year of service unenforceable under the Statute of Frauds because the performance’s terminal date was more than a year after the agreement, the parties’ conduct in continuing the relationship beyond the agreed expiration date can be taken as proof of their intent to renew for another year?
    2. If the answer to the first issue is “yes”, does the complaint fail to state a cause of action because the agreement did not create a conventional master-servant relationship?

    Holding

    1. Yes, because entering into a contract to run for a year, and then continuing to act as if its time had not run, is sufficient evidentiary support for a finding that the parties in fact intended to keep it alive for another year.
    2. No, because the implication of an agreed renewal from the fact of continuance beyond a year should be available at least as to engagements like the one made between these parties for performance of services, regardless of the specific label.

    Court’s Reasoning

    The Court reasoned that while the Statute of Frauds typically bars enforcement of oral agreements not performable within one year, the doctrine does not apply when a contract is fully performed. The key issue was whether the continuation of the relationship beyond the initial year could imply a renewal of the agreement. The court acknowledged prior cases involved master-servant or landlord-tenant relationships, but stated that the rule allowing implication of renewal is based on evidence, not substantive law.

    The Court stated, “Entering into a contract to run for a year, and then continuing to act as if its time had not run, is sufficient evidentiary support for a finding that the parties in fact intended to keep it alive for another year.”

    The court emphasized that the plaintiff should be allowed to establish the intent to prolong the relationship through any relevant facts, including the parties’ continuation of the original arrangement without change. The defendant, of course, could present evidence to the contrary.

    The dissenting judges in the Appellate Division believed amendment should have been allowed to add facts establishing an implied renewal.