EDWARD DUMBAULD, SENIOR UNITED STATES DISTRICT JUDGE.
This has been a troublesome case. The Court after review of the record and briefs called for oral argument, but emerged no wiser than before; somewhat resembling the poet Omar Khayam, who "heard great argument . . . but evermore went out by the same door where in I went."
Mindful of the admonition attributed
to the late Calvert Magruder, a charming Maryland gentleman who for many years adorned the faculty of the Harvard Law School and the bench of the First Circuit Court of Appeals, to the effect that a District Judge should be courteous, prompt, and wrong, we shall spend no further time in ratiocination but shall take the bull by the horns, for better or worse, so that the case may be expedited for consideration by an appellate tribunal whose members are equipped with three law clerks rather than none. We shall not follow the aleatory methods of the legendary Judge Bridlegoose.
But rather the Brandeis practice of first himself preparing a statement of the facts of the case, while relying upon his law clerks to assemble the applicable authorities.
Cross-motions for summary judgment by plaintiffs and defendant are before the Court. Plaintiffs (Shannon & Luchs Co., a District of Columbia corporation authorized to do business in Pennsylvania as a real estate broker, hereinafter called Shannon & Luchs, and Warren K. Montouri, Inc., a District of Columbia broker not so authorized, hereinafter called Montouri) seek a commission allegedly arising out of an agreement with defendant (Mellon Bank, N.A., hereinafter called Mellon) concerning an aborted sale by defendant of the Union Trust Company building in Pittsburgh to plaintiffs customer Dr. Laszlo N. Tauber, a surgeon practicing in Alexandria, Virginia.
The Course of Negotiations
Jon W. Barker, an employee of plaintiff Shannon & Luchs, who is individually licensed in Texas and the District of Columbia, but not in Pennsylvania, as a real estate broker, was looking for sale-lease back properties for Dr. Tauber, and happened to read in The Wall Street Journal about a pending sale of a building now known as One Mellon Bank Center by Mellon to Integrated Resources.
In August of 1983, by telephone Barker informed David M. Knight, a Mellon Senior Vice President, that he had a customer who would be interested if the Integrated Resources deal did not go through. Barker was referred to David J. Neustadt, a lawyer in Mellon's law department. After telephone calls and letters, Barker was invited to visit Knight and Neustadt in Pittsburgh, and did so on November 15, 1983. These discussions related to sale and leaseback of the Union Trust Building (not the building mentioned in the Wall Street Journal article).
On December 9, 1983, Barker wrote Neustadt outlining terms for a sale-leaseback, item 1 of which provided for a sale price of $ 30 million cash, and item 7 of which provided that "A commission of $ 650,000 from the proceeds of the purchase monies are (sic) to be paid and distributed equally between Shannon & Luchs company and Warren Montouri, a real estate broker and consultant to the purchaser."
A letter from Barker to Montouri, dated November 17, 1983,
indicates that Mellon expected the buyer to spend $ 35 million more to rehabilitate the building over a three year period. Buyer would receive tax benefits as Union Trust was a registered historic landmark.
On February 3, 1984, Dr. Tauber wrote to Knight (apparently following "our meeting yesterday") confirming his intent to purchase at a price of $ 40 million plus commission.
Apparently after a further meeting on February 6, Mellon transmitted through Baskin & Sears, a Pittsburgh law firm, a letter of February 7, 1984, offering to sell at a price of $ 8,200,000. Buyer was to "retrofit" the building at a cost of at least $ 32 million. This amount was to be available at the time of closing, in addition to the $ 8.2 million price payable at the same time in cash or certified check.
This document, with revisions in ink, bears the signature of "David M. Knight S.V.P." for Mellon, and also the signature, dated "2/8/84" of "Laszlo N. Tauber, M.D." Paragraph 6 provides regarding commissions: "Seller agrees to pay a real estate commission of $ 200,000.00 to Shannon & Luchs AND WARREN MONTOURI. The parties will otherwise agree to save each other harmless on account of such fees."
The letter also contained a paragraph reciting that "This offer is not intended to be contractual in nature. It is only an expression of the basis on which Seller would consider entering into an Agreement of Sale for the Building." It concludes with a paragraph stating that: "This offer will be null and void unless a copy of this letter signed by Buyer together with satisfactory evidence that Buyer has available funding in an amount of not less than $ 40,200,000.00 is received by Seller no later than February 15, 1984."
On March 23, 1984, Neustadt wrote Barker confirming that the offer of February 7, 1984 had "by its own terms become null and void on February 15, 1984 because of the failure of Dr. Tauber to furnish Mellon Bank with satisfactory evidence of available financing." But he indicated that negotiations could be resumed if the building is still on the market if Dr. Tauber sent Mellon $ 1 million as a "good faith deposit."
Dr. Tauber on April 2, 1984, sent a check for that amount to be cashed at settlement, but Mellon insisted upon an immediate deposit in Mellon Bank.
On April 6, 1984, Neustadt sent by telex the wording of an offer to be submitted by Dr. Tauber, directing that if Dr. Tauber is satisfied he should sign the copies being sent by express mail and return them with the "deposit" [of $ 1 million] to David Knight as soon as possible.
The April 12, 1984, agreement
provides, with respect to commissions, that "Seller agrees to pay a real estate commission of USD 200,000 to be divided between Shannon & Luchs and Warren Montouri. The parties will otherwise agree to save each other harmless on account of such fees.
The following paragraph provided that buyer pay all closing costs. These include title insurance, transfer taxes and recording fees.
Paragraph 2 deals in detail with disposition of the $ 1 million "deposit," and interest thereon at 10 percent. The pertinent provisions read:
A. If this offer is accepted by seller, the deposit and the interest earned thereon shall be credited to the purchase price at the time and place of final closing.