Opinion
Civ. No. 1020.
January 11, 1949.
William H. Foulk and Herbert L. Cobin, both of Wilmington, Del., for plaintiffs.
Thomas Herlihy, Jr., and Morris Cohen, both of Wilmington, Del., for defendants.
Action to recover real estate commissions by Abraham H. Woldow and another, trading as Woldow Company, against Edgemoor Realty Company and another. On motion for leave to file an amendment to answer.
Motion granted.
On motion for leave to file an amendment to an answer. The complaint, claiming real estate commissions, was filed on April 2, 1947. The answer sets up three defenses. The first is a general denial. The second defense provides, inter alia, that "The defendants, during the latter part of the year 1945 and during the year 1946, authorized the plaintiffs to secure a purchaser * * * and agreed with the plaintiffs that if a purchaser was procured, the terms of whose offer to purchase were acceptable to the defendants, the defendants would pay the plaintiffs a commission * * *". The amended answer leaves the first defense undisturbed and the third defense is substantially the same, i.e., plaintiffs were not licensed real estate brokers in Delaware and, holding no certificates of authority, could not under Delaware law recover commissions for an attempted sale of real estate located in Delaware. The second defense is, however, stricken, and the gravamen of the proposed amendment is that a certain officer of the defendant corporations had no authority to enter into a sale of Edgemoor Gardens on behalf of defendants and did not have authority to bind defendants to a contract of sale.
The second defense reads:
"1. The defendants, during the latter part of the year 1945 and during the year 1946, authorized the plaintiffs to secure a purchaser for the lands and premises known as Edgemoor Gardens in New Castle County, State of Delaware and agreed with the plaintiffs that if a purchaser was procured, the terms of whose offer to purchase were acceptable to the defendants, the defendants would pay the plaintiffs a commission for their services.
"2. Thereupon, the plaintiffs presented to the defendants a purchaser who offered to purchase the aforesaid lands and premises upon terms which were not acceptable to the defendants.
"3. Said terms being unacceptable to the defendants, the defendants refused to accept said offer of purchase, the refusal to accept being a proper and justifiable exercise of the right reserved by the defendants in their agreement with the plaintiffs to reject offers which were unacceptable to them.
"4. Since the plaintiffs did not procure a purchaser for the aforesaid lands and premises whose terms were acceptable to the defendants, the defendants are not responsible for any commissions to the plaintiffs."
The following is substituted for the second defense:
"1. All negotiations by the plaintiffs in connection with the matters concerned in this action were with Joseph R. Culhane, an officer of the defendant corporations.
"2. The said Joseph R. Culhane had no authority to enter into any contract of sale of Edge Moor Gardens on behalf of the defendants, and had no authority to bind the defendants to a contract of sale of Edge Moor Gardens.
"3. The said Joseph R. Culhane had no authority to bind the defendant corporations to the payment of any commissions to the plaintiffs in connection with any sale or attempted sale of Edge Moor Gardens.
"4. The defendants are, therefore, not liable to the plaintiffs for any commissions."
Between the time of the original answer and the motion for leave to amend, a year and a half have elapsed. But on June 26, 1947 the deposition of Culhane, Vice-President and Director of defendants, was taken by plaintiffs and there have been numerous depositions and applications for continuances by plaintiffs since that time. The last deposition was taken on October 15, 1948.
In opposition to the amendment, plaintiffs urge that, one, the motion to amend is not timely; two, it interjects new issues; three, plaintiffs will be prejudiced if leave to amend is granted; four, the amendment is contrary to the evidence in the depositions; and five, the facts now attempted to be inserted in the defense were known to defendants at the time the original answer was filed.
The motion to amend should be granted. Only plaintiffs' arguments three, four and five will be discussed. The difficulty with the third reason is plaintiffs do not, in fact, indicate how they would be prejudiced if the leave to amend is granted. They argue that by the amendment they are deprived of the judicial admission which they had in the previous answer which, according to their interpretation, concedes the authority in Culhane to bind defendants. Plaintiffs' assumption that there was such a judicial admission is far from clear, for the authority of a corporate officer to bind the corporation by his acts is a necessary part of plaintiffs' case (Owens Bottle-Mach. Co. v. Kanawha Banking and Trust Co., 4 Cir., 259 F. 838) and is already in issue by defendants' general denial. Alternative defenses are permitted and the mere fact one defense is inconsistent with general denial, or with the facts actually proved at trial is, I think, insufficient to support a claim of judicial admission. It is doubtful, in law, under this theory, whether the second defense is at all needed; but I see no harm in specifically setting up such an affirmative defense.
Whether the proposed amendment is contrary, as asserted in four above, to the alleged facts contained in the depositions is irrelevant. The depositions may never be used, i.e., never become evidence or part of the record of the case. If it is possible to amend pleadings at trial to conform to the proof, certainly there can be no objection in the nature of things to an amendment before trial, regardless of the effect to be given to matters contained in depositions.
The fifth reason, viz., that the facts were known to defendants at the time the original answer was filed, would appear to be the most important one. But there is an error of fact in the plaintiffs' argument, for defendants claim that all the facts were not know to them at the time the original answer was filed but, in fact, became known only after Culhane's deposition was taken. In support of their argument, plaintiffs rely on Darcy v. North Atlantic Gulf S.S. Co., Inc., D.C., E.D. Pa., 1948, 78 F. Supp. 662; Schick v. Finch, D.C., S.D.N.Y., 1944, 8 F.R.D. 639; Canister Co., Inc., v. National Can Corp., D.C. Del., 1946, 6 F.R.D. 213; and Friedman v. Transamerica Corp., D.C. Del., 1946, 5 F.R.D. 115. These cases are beside the mark. Darcy v. North Atlantic Gulf S.S. Co., for example, was based almost exclusively on the ground that the amendment would prejudice the rights of the plaintiff. Here there can be no showing of prejudice because plaintiffs, in the first place, in view of the general denial, had to show authority of Culhane; lack of such authority is the sum and substance of the proposed amendment. The real plaint of plaintiffs is that the amended answer increases in some inexplicable manner their burden of proving authority to bind by requiring proof of Culhane's authority; but, as indicated, they had that burden anyway. In Schick v. Finch the amendment was proposed just before trial and amounted, in fact, to a substantial change in the issues. There is no such change here. The other cases relied on are decisions of this court and I am unable to see their relevancy to the precise question involved here. The timeliness of motions to amend obviously depends upon the facts of each case and the legal pantomime in getting the case to issue. Here, defendants cannot be indicted with the charge of either thoughtful or thoughtless delay.
I think the proposed amendment is well within the spirit of the liberalities afforded by the rules and the motion should be granted.