New York Law Review

Tag: Procuring Cause

  • Greene v. Heilman, 51 N.Y.2d 195 (1980): Establishing Apparent Authority for Real Estate Brokers

    Greene v. Heilman, 51 N.Y.2d 195 (1980)

    A real estate broker is not entitled to a commission unless they are the procuring cause of the sale, and apparent authority to hire a broker requires actions by the principal that reasonably give the appearance of authority and upon which the third party relies.

    Summary

    Alfred Greene, a real estate broker, sued Maynard Heilman for commissions allegedly owed on the sale of a shopping center. Greene claimed that Richard Driscoll, acting with apparent authority on Heilman’s behalf, hired him to find a buyer. The sale occurred a year after Greene initially informed I. Gordon Realty Corporation about the property, with direct negotiations between Heilman and Gordon. The court held that Greene was not the procuring cause of the sale and that Driscoll lacked apparent authority to bind Heilman, as Heilman made no manifestations that would reasonably give the appearance of authority to Driscoll.

    Facts

    In October 1974, Driscoll told Greene he wanted to find a buyer for a shopping center. Greene, assuming Todd Mart, Inc. owned the property, informed Robert Gordon of I. Gordon Realty Corporation about the center and provided operating statements. Heilman actually owned the property, having purchased it at a Sheriff’s sale, but this was unknown to Greene and Gordon. Gordon was initially uninterested due to W.T. Grant’s bankruptcy and other business matters. In the spring of 1975, Heilman, facing financial pressure, was advised by his accountant that Gordon was seeking investment opportunities. Heilman then directly contacted Gordon, leading to negotiations and a sale in the fall of 1975, a year after Greene’s initial contact. Greene was not involved in these later negotiations.

    Procedural History

    Greene sued Heilman, Driscoll, and others for breach of contract, fraud, and civil conspiracy. The trial court ruled in favor of Greene solely against Heilman on the contract claim, finding Driscoll had apparent authority. The Appellate Division affirmed, stating Heilman had a duty to address Greene’s potential claim after the purchase offer mentioned Greene. Justice Cardamone dissented, arguing that neither actual nor apparent authority was established. The New York Court of Appeals reversed the Appellate Division’s order.

    Issue(s)

    1. Whether Driscoll had apparent authority to bind Heilman to a brokerage agreement with Greene.

    2. Whether Greene was the procuring cause of the sale of the shopping center to I. Gordon Realty Corporation.

    Holding

    1. No, because Heilman did not engage in any conduct that would reasonably lead a third party to believe that Driscoll had the authority to hire a broker on his behalf.

    2. No, because there was not a direct and proximate link between Greene’s initial introduction and the ultimate consummation of the sale; Greene did not bring together the minds of the buyer and seller.

    Court’s Reasoning

    The Court of Appeals found no evidence that Heilman delegated authority to Driscoll or Diamond to hire Greene. The court emphasized that holding stock or serving as officers in common corporations does not automatically confer authority to act on behalf of each other’s personal property. “Mere authority to manage Heilman’s personal realty would not include authority to take steps to sell it.”

    The court clarified that apparent authority requires verbal or other acts by the principal that reasonably give the appearance of authority to conduct the transaction, and the third party must be aware of them and rely upon them. Here, Heilman made no such manifestations. The court noted that Gordon’s purchase offer mentioning Greene’s statement did not create a duty for Heilman to settle with Greene, as it did not acknowledge a commission was due or that Greene was the procuring cause.

    Regarding procuring cause, the court stated that a broker must do more than initially call the property to the buyer’s attention. There must be a direct and proximate link between the broker’s actions and the sale. Citing Sibbald v Bethlehem Iron Co., the court emphasized that Greene did not bring together the minds of the buyer and seller. Greene’s role was limited to alerting Gordon to the property’s availability, with no further involvement in negotiations or the ultimate sale, indicating abandonment of the effort.

  • Williams Real Estate Co. v. Solow Development Corp., 38 N.Y.2d 978 (1976): Recovery in Quantum Meruit and Use of Real Estate Board Rates

    38 N.Y.2d 978 (1976)

    A real estate broker can recover the reasonable value of their services (quantum meruit) even if there’s no explicit agreement on commission, and real estate board’s recommended rates can be considered as evidence of reasonable value.

    Summary

    Williams Real Estate Co. sued Solow Development Corp. for commissions allegedly earned as the procuring cause of three leases with Avon Products in the Solow Building. Cushman & Wakefield also sued Solow for breach of contract as the exclusive renting and management agent. The jury found for Williams on all three leases based on quantum meruit, and for Cushman & Wakefield for wrongful termination and half commissions on the first two Avon leases. The key issue revolved around the valuation of Williams’ services in the absence of a commission agreement and the use of real estate board rates as evidence of reasonable value. The Court of Appeals affirmed the lower court’s decision, holding that the jury could consider the board rates as evidence of reasonable value, especially since Solow’s attorney stipulated to receiving the real estate board recommended rates into evidence.

    Facts

    Avon Products leased space in the Solow Building. Williams claimed to be the procuring cause for all three leases and sought commissions from Solow. Solow acknowledged Williams’ involvement in the first two leases but denied it for the third. Cushman & Wakefield, the exclusive renting and management agent, also sought commissions, including half commissions for the leases procured by other brokers (Williams). Solow terminated the agreement with Cushman & Wakefield, leading to a breach of contract claim.

    Procedural History

    Williams sued Solow for commissions. Cushman & Wakefield sued Solow for breach of contract. The cases were consolidated. The jury found in favor of Williams for all three leases based on the reasonable value of services and for Cushman & Wakefield on both claims. The Appellate Division affirmed except for the award to Williams on the third lease, which was reduced. Solow appealed to the Court of Appeals.

    Issue(s)

    1. Whether the jury’s finding that Williams was the procuring cause of the third lease was a question of fact properly submitted to the jury.

    2. Whether it was proper for the trial court to allow the jury to consider the real estate board’s schedule of recommended rates as evidence of the reasonable value of Williams’ services in a quantum meruit claim.

    Holding

    1. Yes, because whether Williams was a procuring cause of the third lease was a question of fact properly submitted to the jury.

    2. Yes, because the real estate board schedule of recommended rates could be considered as some evidence of reasonable value but was not binding.

    Court’s Reasoning

    The Court of Appeals held that the question of whether Williams was the procuring cause of the third lease was a factual one, properly submitted to the jury. Regarding the real estate board rates, the court noted that Solow’s attorney stipulated to the receipt of the real estate board recommended rates into evidence. Moreover, Solow’s own expert testified that said rates were used as an upper guideline in these negotiations, as well as in others in the industry. Therefore, Solow could not complain about the court’s charge that the jury could consider the real estate board schedule of recommended rates as some evidence of reasonable value but was not binding. The court emphasized that the jury’s award to Williams was based on quantum meruit (the reasonable value of services) since the jury found no agreement on commissions. The court stated, “On the case in quantum meruit, the court charged, inter alia, that the real estate board schedule of recommended rates could be considered as some evidence of reasonable value but, was not binding.” The court affirmed the order, effectively allowing the jury to consider industry standards when determining the value of the broker’s services.