Summary
In Arnold v. Rothschild's Sons Co. (37 App. Div. 564; affd., 164 N.Y. 562) the parties had negotiated through a broker for the lease of certain premises.
Summary of this case from Sherry v. ProalOpinion
February Term, 1899.
Herbert R. Limburger, for the appellants.
Mark M. Schlessinger, for the respondent.
The action was brought to recover two installments of rent claimed to be due to the firm of Morris Arnold Co., upon a lease by which Arnold Co. let to the defendant a store in the city of New York. The defendant, who had never taken possession of the store under the alleged lease, denied that any lease had ever been made between the parties, and the question presented was only whether a completed lease had ever been made.
No evidence was given by the defendant, and the case stands solely upon what was proved by the plaintiff's witnesses. At the close of the plaintiff's case the learned justice who presided at the trial held that, upon the facts shown, no lease was ever concluded between the parties, but that the agreement sworn to was simply a contract to make a lease which had not yet been completed, and for that reason he dismissed the complaint. Whether that ruling was proper is the only question presented upon this appeal.
The evidence showed that the principals in the transaction never had any consultation with regard to the making of the lease, but all negotiations, so far as there were any, were conducted by one Tanenbaum, a broker, who undertook to bring the parties together and complete the agreement; and the case stands solely upon his evidence.
It appears that the firm of M. Arnold Co. were in possession of the building, or a portion of the building, at 472 Broadway, for which they had a lease which expired on the 1st day of February, 1893. The defendant corporation was engaged in business in the city of New York, and, as Mr. Tanenbaum says, desired to rent a store for the purposes of its business. It had had some negotiation upon that subject with Tanenbaum, and in the early part of January he called at the premises of the defendant at 1155 Broadway to talk with its officers about renting a store. Before that they had had in view a store at 543 Broadway, with regard to which they had been conducting some negotiations which apparently had fallen through. The officers of the defendant, who were conducting its business in New York, then spoke to Tanenbaum about the store occupied by Arnold Co., and, as he puts it, he said: "They said that they would take the store of Mr. Arnold if I could get it for $5,000, and I told him if they put it in the shape of a proposition, in the form of an offer, I would endeavor to get it. They said they would take it at $5,000, but hurry up, it is late in January and we want to occupy it the first of February." He immediately took a car and went down to Mr. Arnold's office. The following testimony was then given: "Q. Did they say anything to you about closing it at $5,000? A. Yes, sir. Q. Tell us what they said about that, whether they authorized you to close it at $5,000? A. If I could get the other store for $5,000 for one year they would take it and they authorized me to close it. The language was, they authorized me to take it at $5,000." The witness then stated that he went down and saw Mr. Morris Arnold, since dead. "I said to Mr. Arnold that I had just received an offer of $5,000 for the store. I am saying what I told Mr. Arnold. I said, `I have just received an offer for $5,000 for your store and basement form the R. Rothschild's Sons Company,' handing him the card. He said, `I ought to get $5,500 which I am paying.' I said, `Mr. Arnold, it is late in the season, you had better do it. I can get you a store for $1,800 which will suit you.' He said, `Are you sure?' I said, `Yes, sir.' He said, `On that statement I will rent the store for $5,000 to the first of February.' He said he would rent it for one year for $5,000. He authorized me to close it then." After some further conversation, the witness said "He said, if that is the case you can close the lease." This took place on the 9th of January, 1892. On returning to his office, Tanenbaum wrote, and sent by a messenger, the following letter to the defendant, dated on that day: "Gents. — I have closed the lease for you as directed, with Mr. Arnold, of store and bas. 472 Broadway, for one year from February 1st, 1892, at $5,000.00 rental, payable monthly. Yours truly, Leon Tanenbaum."
The messenger who delivered that letter brought back a scrap of paper upon which was written the following: "Mr. T. Yours received. Mr. R. is satisfied. Yours, etc., A.M. Rothschild."
Tanenbaum further testified that on the same day, at a later hour, he caused to be sent to the defendant a letter in which he asked it to inform him by return mail under what State law the company was organized and the individual names of its officers. He testified that he wrote this letter after his return from having his conversation with Arnold for the purpose of getting the information to enable him to draw a lease; and that he intended to draw a lease in the ordinary and usual form, and the information which he asked from the defendant was for the purpose of ascertaining the manner in which the lease was to be drawn.
It will be noticed that Tanenbaum at the time of his first direct examination, in which he stated the conversations between the two parties relating to the lease, does not say that the Rothschilds said anything to him about the manner of paying the rent. His attention having been called to that upon a further direct examination, he said that in his conversations with the Rothschilds it was stated that the rent was to be paid monthly, and having been asked whether that manner of payment was also mentioned in his conversation with Mr. Arnold, he answered, "It was his instructions. Q. Both the monthly payment of the rent, the duration of the term and the amount? A. Yes. I had made his lease originally. Q. And you were going to embody those things in a written agreement, were you? A. Yes, sir."
So it will be seen that, at the time Tanenbaum finished his conversation with Arnold respecting the agreement, he supposed that a formal lease was to be made, and he expected to put into that lease an agreement as to the time of payment of the rent of $5,000, which he said was the same sum agreed upon.
The Rothschilds never took possession of the premises under the alleged agreement. The 9th day of January, 1892, was Saturday, and on the eleventh, the Rothschilds wrote to Tanenbaum saying that it would be impossible for them to "use Arnold's store." After the receipt of that letter, no effort was made by Tanenbaum to procure a written lease, and nothing further was done in that direction. Subsequently, after the first installment of rent had become due, an action was brought for it by these plaintiffs against the defendant, in which, upon a trial, the defendant succeeded, and the judgment entered in its favor was affirmed upon appeal, after having been modified by striking out a statement that the action was dismissed upon the merits, and inserting in place of it a statement that it was dismissed with the same effect in all respects as though the defendant's motion to dismiss had been granted at the close of the plaintiffs' evidence; thus making the judgment operate merely as a nonsuit, instead of a final determination of the rights of the parties. ( Arnold v. The Rothschild's Sons Co., 23 App. Div. 221.) As the case is presented here, the evidence is somewhat different from that presented on the other trial. Therefore, the decision of the Appellate Division upon the facts there appearing cannot be of much assistance to us.
The rule ordinarily is that whether an agreement shall be construed to operate as a lease in præsenti, or only an agreement for a lease, depends upon the intention of the parties, to be collected from the whole contract. ( Jackson v. Delacroix, 2 Wend. 433.) If the agreement contains words of demise in præsenti, or if all the terms of the contract are included in the agreement, and there has followed an actual possession of the premises by the lessee, it would not be difficult to say that the understanding was that an actual lease had been made, and that the contract was not a mere agreement to make a lease in the future. But if all the terms of the contract were not finally agreed upon, or if there is, upon the statement of the alleged contract between the parties, any unsettled term, or if any of the terms of the agreement are not clear, and if it is understood between the parties that a formal lease was to be executed, then the contract will be interpreted as an agreement to make a lease, and not as a finally concluded lease which passes to the lessee the right to the possession of the premises, and which vests in the lessor the right to recover the rent.
The contract as testified to contains no express words of demise by which a present interest passed. That is not claimed. But it is said that authority given to Tanenbaum to "close the lease," which was all the authority either party gave him, necessarily implied that the contract was complete so far as the speaker was concerned when Tanenbaum had procured one party to accept the terms offered by the other. We do not think so. When Arnold authorized Tanenbaum to "close the lease," that implied that he should do something yet to make it a complete lease. He had still to "close it." He has told us what that meant when he says that he took at once the slips to prepare a formal instrument to be executed by both parties, and it is clear that he did not suppose that his duty was done until such a paper had been made.
It is claimed by the appellants that if all the terms of the agreement were finally concluded between the parties so that nothing remained except to reduce those terms to writing and execute the writing, the contract was completed, although it was understood between the parties that a formal lease should be executed. It is quite true that where a valid contract has been made by which the parties understand that their rights are fixed, such a contract may be enforced, although there may be a stipulation of the understanding between them that a more formal contract shall be executed. ( Sanders v. Pottlitzer Bros. Fruit Co., 144 N.Y. 209.) But it is essential to the enforcement of such an informal contract that the minds of the parties should have met upon all the terms as well as the subject-matter of the contract; and if anything is left open for future consideration, or if the subject-matter does not appear to be understood alike between the parties, the informal paper cannot form the basis of an agreement. ( Nicholls v. Granger, 7 App. Div. 113.)
It is to be noticed that, according to Mr. Tanenbaum's testimony, the subject-matter of the lease, that is the premises which were to be leased, did not seem to be understood precisely alike by the defendant and the plaintiff, or by the defendant and himself. He says expressly that the defendant told him that it would take the store if it could get it for $5,000. He is equally explicit in saying that the proposition he made to Mr. Arnold was that the defendant would take the store and basement at $5,000. There is considerable difference between these two propositions, and the defendant, having offered to take the store, would not have been called upon to accept a lease of the store and basement; so that upon the testimony of Tanenbaum himself it is quite clear that the subject-matter of the contract between the parties had not been finally agreed upon. As the rule requires that, where the complaint has been dismissed upon the testimony of the plaintiff only, the most favorable inferences must be drawn in favor of the plaintiff, it must be assumed undoubtedly that, at the time of Tanenbaum's conversation with the Rothschilds, he spoke of the fact that the rent was to be payable monthly. But yet it is worthy of consideration that when he was relating, in order as it occurred, the conversation by which the Rothschilds authorized him to negotiate with Arnold, he says nothing about the fact that the rent was to be payable monthly. This illustrates the danger of construing as a completed contract a series of detached conversations had by a broker with principals, in which he is endeavoring to bring them together before they have had any final agreement between themselves. As every one knows, a formal lease contains many stipulations which are not found in the contract growing out of the conversations which Tanenbaum had with these parties. All those stipulations have an important effect upon the rights of the respective parties; and when it was understood that such a formal lease should be executed, it would be necessary that the preliminary conversations should be quite full and explicit as to the terms of the contract before the parties should be held to a completed contract, in the absence of what they had agreed should be the final evidence of such a bargain.
In the case of Sanders v. Pottlitzer Bros. Fruit Company ( 144 N.Y. 209) the contract between the parties was made in writing. All the stipulations which they had agreed upon were fully set out, and the court held that because of that fact they were bound, although they expected to put these formal stipulations into another form. The decision of the court in that case was put expressly upon the ground that it was understood between the parties that the contract was completed by the correspondence between them, and that it was subsequently to be put into a single writing, simply for their convenience and for the purpose of furnishing more satisfactory evidence of the arrangement which had been already finally completed. But in this case, not only is it apparent that the subject-matter of the contract was not the same in the minds of both parties, but it is also apparent that it was to be finally put into writing for the purpose of embodying in it other stipulations which are usually embodied in writings of that kind, and which have a considerable effect upon the rights of the parties. Undoubtedly, if; as a result of the conversation which had been had, without any further writing between the parties, the defendant had taken possession of the store and basement, thus indicating the intention of both parties that the final arrangement was completed without any formal lease, a different question would have been presented. But where it appears, as here, that the parties themselves never met; that the whole transaction was conducted by an agent, who leaves the subject-matter of the contract in some doubt; who is not clear in his testimony as to all the terms of the lease, and whose only authority was to close the lease which he himself has interpreted as authority to make a formal lease, after the terms of the arrangement had been substantially understood, the talk had by the agent is not to be construed as the final agreement between the parties, but simply as the negotiations, the result of which was to bring about a meeting of the minds for the purpose of enabling him to reduce the contract to writing when it should have been made. It is quite true that the learned Appellate Division of the second department, in referring to the first letter of Tanenbaum to the defendant, on the ninth of January, and the receipt of it to which Rothschild's name was signed, said that if in addition to that, there had been any proof that Tanenbaum had actually seen the plaintiffs and made the agreement set out with them in his letter, there would be great force in the argument that the transaction amounted to a complete lease. That saying, however, was not necessary to the determination of the case, and it entirely overlooked the fact that the authority to Tanenbaum given by the defendant was to negotiate a lease for the store, while the actual lease which he did negotiate was for the store and basement, which is an entirely different thing. It may be said, too, with reference to that paper, that it is merely a declaration by the defendant of what he had done, and it does not purport to be any part of a contract or writing for the purpose of making a contract between the plaintiffs and the defendant.
This letter was delivered and the answer received by one McDonald. There was no testimony on his part given to show that the letter was received by either of the Rothschilds who had authority to represent the defendant in this regard, or that it was signed by either of them. He presumed that he gave it to Mr. Rothschild, and the person to whom he handed the letter gave him the answer. But it is not signed by defendant and he does not pretend to know who signed it. It clearly was not intended by Tanenbaum to represent a contract between the parties, because it contains no stipulations on the part of Arnold, and did not in any way bind him, nor is it executed by Tanenbaum as his agent or on his behalf. The only legitimate interpretation that can be given to it is, that it was written for the purpose of giving to the defendant information as to the result of the negotiation which had been had at that time, so that it might know what to expect with relation to the store for which Tanenbaum had been bargaining in its behalf.
Upon the whole case we are satisfied that the agreement as testified to by Tanenbaum did not constitute a lease, but was simply an agreement to make a lease which was subsequently to be reduced to writing, and for that reason neither party incurred any liability to the other as the result of this conversation, and, therefore, this action cannot be maintained.
The judgment and order appealed from must, therefore, be affirmed, with costs.
VAN BRUNT, P.J., PATTERSON and O'BRIEN, JJ., concurred; BARRETT, J., dissented.
I am constrained to differ with my brethren in this case. In my judgment a prima facie case of a completed agreement in præsenti was made out. There was at least sufficient proof to go to the jury upon the question of a present completed agreement. It will not do to pick out a single phrase in Tanenbaum's narration and conclusively predicate thereon a mere inchoate agreement for a lease to be executed in futuro. It is true that Tanenbaum testified that the plaintiff Arnold, at the close of the crucial interview, said to him: "If that is the case (referring to some previous observations of Tanenbaum's recommending the defendant as tenant) you can close the lease." That expression, however, may have implied, and may well have been understood to mean, "You can now complete the bargain." It did not necessarily mean, "You can draw a lease for our final consideration." At all events, the jury might have looked at it, in connection with Arnold's preceding language, as importing a present agreement, and might have found that the word "lease" was loosely used as a layman's synonym for "renting." As there was a nonsuit, we are bound to place upon the testimony such inferences as are most favorable to the plaintiffs. Arnold's preceding language was this: "On that statement (a statement that Tanenbaum could get Arnold another store for $1,800) I will rent the store for $5,000 to the first of February." Tanenbaum added that Arnold said that "he would rent it for one year for $5,000. He authorized me to close it then." Putting it all together, the jury might fairly have inferred — had the evidence been submitted to them — that the formality of an unnecessary written lease was not intended to be a condition precedent to a binding agreement. There was undoubtedly evidence from which the jury might have found that the defendant authorized Tanenbaum to take the plaintiffs' store for it at $5,000 per annum, payable monthly, and to close the transaction on those terms. Armed with this authority, Tanenbaum induced the plaintiff to agree to let the defendant have the store on such terms, and that, it seems to me, closed the transaction. It was competent for the jury to say that the minds of the parties met, and that the bargain for a year's renting was then complete. Nor can incompleteness well be predicated of a variation between the defendant's offer, as an offer for the store, and the plaintiffs' acceptance, as for the store and basement; for the reason that Tanenbaum immediately notified the defendant by letter that he had closed for the store and basement, and the defendant replied, through A.M. Rothschild, expressing satisfaction. This satisfaction was quite natural, as the defendant thus got more than it had bargained for, not less. It is said that the evidence of the delivery of this letter from Tanenbaum to the defendant, and of A.M. Rothschild's reply expressing satisfaction, is insufficient. But these letters were introduced in evidence without objection, and the defendant did not, either during the trial, or upon its motion for a nonsuit, question the proof on that head. Its point was that the letters, though proved, did not complete the renting. But, further, the jury might fairly have concluded that the defendant's letter to Tanenbaum, in which it states that it "cannot use Arnold's store," resulted from the receipt by it of Tanenbaum's letter and its knowledge of A.M. Rothschild's reply thereto. It was for the jury to say whether this last letter of its was written to stop an unfinished negotiation, or was an attempt to withdraw from the situation in which its previous note expressive of satisfaction with the bargain had placed it.
Upon all the evidence adduced, I think there was a question for the jury upon the issue of a completed agreement, and that the complaint should not have been dismissed.
Judgment and order affirmed, with costs.