Jennings v. Burlington Industries, Inc.

Steuer, J.

(dissenting in part). I agree with the disposition of the majority insofar as it dismisses the fifth, sixth, seventh and eighth causes of action and sustains the third and fourth causes of action. I disagree with the disposition made in regard to the first and second causes of action and believe these should be dismissed.

These causes of action are pleaded against defendant Rapid-American Corporation (herein Rapid) alone. In brief, the first cause of action alleges that one Riklis was the chairman of the board of directors and a substantial stockholder of Rapid. Riklis entered into an agreement with plaintiffs whereby plaintiffs were to introduce Riklis to two owners of a substantial number of shares of Lerner Stores Corporation, namely, Burlington Industries and Harold Lane, and to interest these latter in selling their shares to Riklis or a corporation nominated by him. The alleged agreement further provided that, in the event a sale was made by the owners of the Lerner stock to Riklis or his nominee company, Riklis would pay plaintiffs 4% of the purchase price agreed upon. It is further alleged that Riklis and the sellers reached an agreement for the sale and purchase of the shares. The complaint goes on to allege that Riklis designated Rapid as the company to buy the shares, that Rapid agreed to do so, and that, in consideration of being so selected, Rapid ratified and adopted as its own the agreement made by Riklis and plaintiffs. Then it is alleged that, following the agreement of purchase and sale of the shares, and by agreement between all parties involved in the sale, the shares were delivered not to Rapid but to MeCrory Corporation, who received and paid for them. Am allegation of demand and failure to pay the commission concludes the cause of action.

It is indisputable that Rapid’s liability is predicated on its alleged ratification and adoption of the agreement made between Riklis and the plaintiffs. That agreement is that Riklis was to name the company “ selected by Riklis as buyer ” and was to require the company selected by him to pay ”. Riklis was not obligated to pay plaintiffs unless and until an agreement was made between Riklis and the sellers for either Riklis or a company designated by him to acquire the stock. By the time such an agreement came into effect, MeCrory Corporation was substituted as buyer for Rapid. It is not alleged that Rapid ever received the shares. As pleaded, the company which Riklis agreed to make liable was the company which purchased the shares. That company was MeCrory, not Rapid. So even if Rapid ratified this agreement, it never became liable because a condition of its liability was its being the purchaser. The fact that at one stage in the negotiations between Riklis and the sellers it may have *880been contemplated that Rapid would become the purchaser does not affect the agreement the complaint sets out.

Moreover, assuming that the purport of the agreement made by Riklis and the plaintiffs and authorized by Rapid was that Rapid was to become liable upon its being designated by Riklis regardless of the fact that it never became the purchaser, the complaint must still fall. At best, the adoption of such an agreement is a guarantee for the corporation that becomes the ultimate purchaser. No claim is made that the two corporations are in any way connected except for the fact that Riklis has some interest in both. Nor is there any suggestion that Rapid profited in any way or was expected to profit from McCrory’s acquisition of the stock. Under the circumstances, an agreement to become liable for the commissions would exceed the corporate powers.

The second cause of action pleads the same facts and seeks recovery for the reasonable value of plaintiffs’ services. The same considerations indicate the invalidity of the claim.

1 would vote to dismiss these causes of action.