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Louis Schlesinger Co. v. Kresge Foundation

decided: January 12, 1968.

LOUIS SCHLESINGER COMPANY, A CORPORATION OF NEW JERSEY, APPELLANT,
v.
THE KRESGE FOUNDATION, A MICHIGAN CORPORATION AND KRESGE DEPARTMENT STORE, INC., A DELAWARE CORPORATION



Hastie, Freedman and Seitz, Circuit Judges.

Author: Freedman

Opinion OF THE COURT

FREEDMAN, Circuit Judge.

Appellant, Louis Schlesinger Company, a New Jersey corporation licensed as a real estate broker in New Jersey, brought this action against The Kresge Foundation, a Michigan corporation, for additional commissions because the tenant it procured for the Foundation's department store building at 715 Broad Street, Newark, New Jersey, later extended its term of occupancy and acquired additional space in the building.

In 1956 plaintiff brought Western Electric Company to the attention of defendant as a prospective tenant in the building. Before the terms of a lease were fully agreed upon a controversy arose regarding plaintiff's commission. Plaintiff claimed the full commissions customarily paid in Newark, and defendant maintained that plaintiff was only entitled to a finder's fee because it had suggested the name of the prospective tenant. Discussions ensued between the parties in Newark and also by telephone and correspondence between Newark and Detroit. They resulted in the execution of a letter agreement dated December 12, 1956, but actually executed December 31, 1956, which provided for the terms of payment of plaintiff's commission.

Thereafter a lease between defendant and Western Electric Company was executed on February 15, 1957, which provided for the rental of two floors of the building for a term of ten years, and granted the lessee an option to renew for an additional five years and a right of first refusal of any additional space which became available during the term of the lease. A short time later, on April 12, 1957, defendant paid to plaintiff a commission in accordance with the letter agreement in the amount of $81,552.27.

The present controversy arose out of defendant's new lease to Western, dated June 9, 1964, before the expiration of the original ten year term. The new lease was for the original two floors and and three additional floors of the building, for a term of five years, and required major rehabilitation and alteration of the demised premises at a cost of more than one million dollars.

Plaintiff, learning of the negotiations between defendant and Western for the additional space, gave notice of its claim for commission and after the new lease was executed brought suit in the Superior Court of New Jersey. Defendant removed the suit to the United States District Court for the District of New Jersey on the ground of diversity of citizenship.

The district court on consideration of extensive depositions and affidavits of the parties entered summary judgment for defendant and dismissed the complaint.*fn1 The court held:

(1) The letter agreement was executed in Michigan and the statute of frauds of that state*fn2 applied and barred the suit because the letter agreement did not contain all the terms agreed upon but made reference instead to the rates and rules of the Detroit Real Estate Board.

(2) The letter agreement required the payment of only one commission and did not justify a subsequent commission.

(3) In any event the payment of the original commission constituted an accord and satisfaction between the parties which barred the present action.

As a result of these views the district court did not pass upon the defenses that even if plaintiff's interpretation of the brokerage agreement was correct, the new lease did not fall within its terms; and that plaintiff was barred from recovery of commissions in New ...


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