Morris Cohon & Co. v. Russell, 23 N.Y.2d 569 (1969)

A memorandum satisfies the Statute of Frauds for a finder’s fee claim in quantum meruit if it acknowledges the plaintiff’s employment, identifies the parties and subject matter, and establishes the plaintiff’s performance, even if it doesn’t specify the compensation rate.

Summary

Morris Cohon & Co. sued Sidney Russell to recover a finder’s fee for services rendered in Russell’s sale of stock. The lower courts dismissed the claim based on the Statute of Frauds. The Court of Appeals reversed, holding that a clause in the sale contract, representing that Cohon was the only broker involved, sufficiently evidenced Cohon’s employment and performance, thus satisfying the Statute of Frauds for a quantum meruit claim. The court emphasized that the Statute of Frauds should not be used to evade just obligations when the writing identifies the key elements of the agreement.

Facts

Morris Cohon & Co. (plaintiff) claimed to have acted as a broker in connection with the sale by Sidney A. Russell (defendant) of his 50% stock interest in Russell and Russell, Inc.
The contract of sale between the buyer, Atheneum House, Inc., and the sellers, including Russell, contained a clause stating the sellers had dealt with no one other than Morris Cohon & Co. as broker or finder and would indemnify the buyer against any brokerage claims.
After the lawsuit commenced, Harry Magdoff, another seller, provided a letter and affidavit stating he procured Cohon’s services for himself and Russell, with Russell’s authorization.

Procedural History

The Supreme Court, New York County, denied Russell’s motion for summary judgment.
The Appellate Division, First Department, reversed and granted summary judgment, finding the action barred by the Statute of Frauds.
The Court of Appeals reversed the Appellate Division’s order.

Issue(s)

Whether a clause in a contract of sale, representing that a specific broker was the only one involved in the transaction, is sufficient to satisfy the Statute of Frauds requirement of a written memorandum for a claim of compensation for services rendered by the broker.

Holding

Yes, because the clause, by reasonable construction, acknowledges that the plaintiff performed services and that an obligation to the plaintiff actually existed, satisfying the Statute of Frauds for a claim in quantum meruit.

Court’s Reasoning

The Court of Appeals found the Appellate Division’s view of the memorandum too narrow in light of the Statute of Frauds’ purpose: to prevent perjury and fraudulent claims, not to allow evasion of just obligations.
The court noted that the peril of perjury was largely absent because the writing identified the parties, the subject matter, and established that the plaintiff performed. The court reasoned that the clause, stating the sellers dealt with “no person…other than Morris Cohon & Co. as broker or finder,” was an affirmation that the defendant dealt only with Cohon.
“Standing alone, the contract clause constitutes an admission by the defendant that plaintiff performed services and that an obligation to plaintiff actually existed.”
The court distinguished this situation from cases where no memorandum existed at all. The court emphasized that, for a quantum meruit claim, the memorandum only needs to evidence the fact of the plaintiff’s employment and performance.
“In an action in quantum meruit…a sufficient memorandum need only evidence the fact of plaintiff’s employment by defendant to render the alleged services. The obligation of the defendant to pay reasonable compensation for the services is then implied.”
The court found the memorandum sufficient because it identified the buyer and seller, established the plaintiff’s employment as a broker, identified the transaction’s subject matter, and acknowledged the plaintiff’s performance in bringing about the sale.