Leon Mutchnick and Annie Goldstein, Respondents, v. Asher Davis, Appellant

Leon Mutchnick and Annie Goldstein, Respondents, v. Asher Davis, Appellant. First Department, February 5, 1909. Principal and agent — broker’s action for commissions-^— proof necessary to recovery where proposed exchange of lands not executed — evidence —defenses — defect in title—waiver. To entitle a real estate broker to commissions he must procure a customer not only willing but able to purchase his client’s property upon the terms fixed by the client, which rule applies also to a proposed exchange of real estate. Where no exchange has been consummated, a broker suing for commissions must show that the customer produced by him was the owner of the property offered in exchange and that after the terms of the exchange had been agreed upon, his principal refused to carry them out. This, because where no exchange has been made the principal is presumed to have bargained for a marketable title. It seems, however, that the rule is different where the exchange has been actually consummated, for if the principal sees fit to accept the property offered in exchange, whether the title be good or not, the broker has earned his commissions. Hence, where the contract of exchange has not been executed, a principal sued for commissions who denies that the customer produced by the broker was able to exchange, is entitled to show that the customer had- already conveyed a portion of the premises, was not the owner of all the lands embraced in the proposed exchange and that they were incumbered by a party wall. Where the defendant denies that he made any contract to exchange he may take thei defense that the broker did not produce a person having good title to the property offered in exchange, although he did not raise that objection during the negotiations for exchange. Moreover, if it be assumed that the principal was bound by the rule that objections not specified are deemed to have been waived, a failure to object on the ground that the lands were incumbered with a party wall is not a waiver because the defect could not have been cured. Appeal by the defendant, Asher Davis, from, a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the cleric of the county of Hew York on the 8th day of June, 1908,-upon the verdict of a jury, and also from an order entered in said clerk’s office on the 25th day of-May, 1908, denying the defendant’s motion for a new trial made upon the minutes. Samuel Leavitt, for the appellant. Jacob Friedman, for the respondents. [MAJORITY — Houghton, J.:] Houghton, J.: The action is by real estate brokers to recover commissions. The complaint alleges that plaintiffs were employed by the defendant to effect an exchange of real property owned by him for real property owned by one Goldberg, who was “ ready, willing and able” to make such exchange upon certain agreed valuations. Ho written contract of exchange was entered into, but plaintiffs insist they earned their commissions because Goldberg was able and willing to make the exchange upon defendant’s terms, and that defendant capriciously refused to consummate the trade. One of the plaintiffs testified that one of the terms of exchange was that each party should have good title to his land. Plaintiffs did hot prove by production of title deeds, but.- only by oral testimony that Goldberg had title to the lands which he proposed to exchange. The defendant offered to show; that Goldberg liadl conveyed a portion of the premises and was not the owner" of all the lands embraced in the proposed exchange, and that they were further incumbered by - a party wall,' This evidence was excluded by the learned trial court and we think erroneously. To entitle a real estate broker to compensation he must produce a customer not only willing but able to purchase his client’s property upon the terms fixed by such client. The same rule applies to a proposed exchange of real estate. In an. action by a broker to recover commissions upon a proposed exchange of real property it is necessary for him to show that the customer produced by him was the owner of the property offered to be exchanged as well as that after the terms of the exchange had been agreed upon the client refused to carry them out. (Woolley v. Lowenstein, 83 Hun, 155; Alt v. Doscher, 102 App. Div. 344.) . Where the agreement to sell or exchange real property no longer remains executory but has been consummated by an actual execution of a written contract therefor the rule is different, and in the absence of any stipulation to the contrary the broker’s commissions are earned when the contract is signed- by the client, and a defect in title under such circumstances becomes unimportant and constitutes no defense to the payment of the commissions. (Kalley v. Baker, 132 N. Y. 1; Gilder v. Davis, 137 id. 504.) The distinction between these two situations is very wide and very apparent. In the absence of any stipulation to the contrary a marketable title to real property is always presumed to be bargained for (Scudder v. Watt, 98 App. Div. 228; Burwell v. Jackson, 9 N. Y. 535); and when a broker produces a person who proposes to exchange property with his client that person must have good title to the property which is proposed to be given in exchange.' On the other hand, if the client sees fit to execute a contract and exchange property, whether the other person has a good title or not, the broker has performed his service to the satisfaction of his client and has earned his commission. Assuming that the plaintiffs in the present case made prima facie proof of title in Goldberg, still, under the defendant’s denial that Goldberg was able to exchange, he had the right to prove that Goldberg was not able because he had no title as well as to prove that the real property was incumbered by a party wall which made it unmarketable. Nor was the defendant deprived of this objection and defense because he did not specify it during the negotiations for the exchange. The plaintiffs asserted and testified that the defendant in fact agreed to exchange and only refused to do so because plaintiffs would not reduce their commissions. On the other hand, the defendant testified that he never agreed to exchange and.that he made no objection to the commissions or offered to carry out the exchange if the commissions would be reduced. In Hotchkiss v. Kuchler (86 App. Div. 265), relied upon by the plaintiffs, a broker employed to procure a loan produced a person ready and willing to loan the money and the client arbitrarily refused to accept it; and a like situation existed in Duclos v. Cunningham (102 N. Y. 678). Under the proofs in the action at bar, the rule respecting objections to title and specific objections to completing a contract, in which cases objections not specified are deemed to have been waived, does not apply. The defendant denied making any contract at :all, and he had a right to stand not only upon plaintiffs’ failure' to prove performance of a valid contract on their part, but also to show that they did not fully perform by producing a person having good title to the property proposed to be exchanged. If, however, the rule respecting objection to title be deemed to apply, failure to object on the ground of the party wall cannot be deemed a waiver of that defect because it could not have been cured. (Whalen v. Stuart, 123 App. Div. 446.) The judgment and order must, therefore, be reversed and a new trial granted, with costs to the appellant to abide the event. ÍPatterson, P. J., Ingraham, McLaughlin and Clarke, JJ., concurred. Judgment and order reversed, new trial ordered, costs to appellant to abide event.