138





RECORD   AND   GUIDE





August 4, 1917





LEGAL    NOTES    AFFECTING    REALTY

Prepared   by Committee on Real Estate Laws of
Real Estate Board, Samuel P. Goldman, Chairmsm





Agent's Transaction in Own Behalf.

T"'HE general rule is that an agent is
■*• not permitted to enter into any
transaction with his principal on his own
behalf respecting the subject matter of
the agency unless he acts with entire
good faith, without any undue influence
or imposition and makes a full disclo¬
sure of all the facts and circumstances at¬
tending the transaction. If an agent
purchases the property of his principal
without making such disclosure and act¬
ing in good faith, the principal may have
the sale set aside, and compel the agent
to recover the property to him upon re¬
payment of the purchase money, or as
mucli as has been paid, and account for
the rents and profits received by him;
and where the principal is infirm or of
doubtful business capacity, very slight
circumstances will suffice to cause the
court to set aside the dealings between
principal and agent. Sperry v. Sperry,
West Virginia Supreme Court of Ap¬
peals, 92 S. E. 574.

Failure to Complete Deal.

A broker producing a party ready to
loan money on first mortgage security
is entitled to compensation, although he
knew of outstanding liens against his
principal's land, since he might assume
arrangements would be made to dis¬
charge them.—Bledsoe v. Lombard
(Mo.), 194 S. W. 518.

Construction  of  Security  Deed.

W. in his individual capacity executed
and delivered a deed to land to secure
a named indebtedness due by him to L.
The deed stipulated that it was given to
secure "any and all indebtedness" which
W, "might hereafter owe" to L. After
the delivery of the deed W. became a
member of a partnership which also be¬
came indebted to L. Upon the dissolu¬
tion of  the partnership  with  the  know¬





ledge of L., its entire indebtedness due
L. was assumed by W. In an action by
L. for a construction of the security
deed, the Georgia Supreme Court holds,
A. Leffler Co. v. Lane, 92 S. E. 214, that
under the terms of the deed, when W.
assumed the debt of the copartnership,
it became his debt, and was covered by
the deed.

Custom as Part of Brokerage Contract.

A contract giving a real estate agent
and broker an exclusive agency to rent,
collect rentals, and manage certain prop¬
erty, was silent as to any right of the
broker to reserve from amounts col¬
lected a brokerage fee against which
commissions on rents subsequently col¬
lected should be charged, and there was
no agreement relative to the reserva¬
tion of any such sum. The Massachu¬
setts Supreme Judicial Court holds, Rus¬
sell v. Klein, 116 N. E. 257, that the cus¬
tom of the broker's office to reserve a
sum equal to 5 per cent, of the yearly
rental against which the commission as
it accrued would be applied, could not
be  read  into  the  contract.

Marketable Title.

A title to be marketable must be so
far free from defects as to enable the
holder, not only to retain the land, but
to possess it in peace, and, if he wishes
to sell it, to be reasonably sure that no
flaw or doubt will arise to disturb its
market value. But a mere suspicion
against the title or a speculative possibil¬
ity that a defect in it might appear in the
future cannot be said to render a title
unmarketable. It is not required to be
free from mere shadows or possibilities,
but from probabilities. Moral, not
mathematical, certainty that the title is
good is all that is required.—Kenefick v.
Shumcker, Indiana Appellate Court, 116
N. E. 319.





FIRE INSURANCE.





Real Estate Board Favors Investigation
Into Kates Charged.

•T" HE Real Estate Board of New York,
* which has frequently called atten¬
tion to the fact that while the cost of
fire insurance shows no reduction, the
cost of fire prevention has increased
tremendously in recent years, is pro¬
foundly interested in a proposed official
investigation of the cost of fire insur¬
ance. The following statement was is¬
sued^ on behalf of the Board by Richard
^   Chattick, its executive secretary:





O





"It is impossible to over-estimate the
importance of a resolution adopted by
the Board of Estimate on July 19, asking
the State Commissioner of Insurance to
'make a thorough examination of the
seeming injustice between the fire in¬
surance losses and the fire insurance
tolls of the city, with a view to estab¬
lishing a fire insurance rate for the city
in   keeping  with   the   fire   hazard.'

"The resolution says that the city's
fire risk has been so reduced in the past
seven years that the fire losses have
been under ?8.000,000 a year, although
the fire insurance companies continue to
levy an annual tax now aggregating ap¬
proximately   $25,000,000.

**ln the recently issued report of the
Fire Commissioner for the year 1916, at¬
tention is called to the wide discrepancy
between the huge sums collected in the
area covered by the Fire Insurance Ex¬
change and the relatively low annual fire
loss  in  the  same  territory.

"The Fire Commissioner is proud of
the fact that the annual fire loss in New
York City is as low as it is. So are
the  taxpayers.

"But it is to be borne in mind that
■while the fire loss may be low, it does
not by any means represent the actual
tribute paid by the taxpayers for fire
protection. Particularly in recent years
immense sums, estimated to be in the
millions, have been paid for all sorts of
Labor Law and departmental orders look-





mg to fire prevention. So that the only
v.-ay to compute the annual toll paid
l)y the taxpayer is to take it as the cost
of an expensive Fire Department, plus
the cost in millions paid for fire preven¬
tion orders, plus the cost of $25,000,000 in
hre premiums.

"The prime object of fire prevention
laws is not to reduce fire insurance pre¬
miums. But the reduction of these pre¬
miums should bear some relation to the
increase in fire prevention efticiency.

"It is clearly an outrage upon the tax¬
payer to continue to pay more than $9,-
000,000 a year to maintain the Fire De¬
partment and $25,000,000 a year in fire
insurance premiums and perhaps twice
this sum a year to carry out structural
and other requirements for fire pre¬
vention; or, to put it another way, to
make the risk safer for the fire insurance
companies.

"The thing is so plain that the pro¬
posed investisfation by the State Com¬
missioner of Insurance should be both
IJrompt and thorough.

"The Real Estate Board of New York
will give the fullest support to such an
investigation."





Title Companies Organize.
Five of the principal title companies
of the city have joined in the formation
of the New York Board of Title Under¬
writers. The purposes of the association
are to establish and maintain uniformity
among its members in the contracts of
title insurance and the rates therefor,
and to acquire, preserve and exchange
information relative to the business of
title insurance. The companies repre¬
sented in the association are the Title
Guarantee and Trust Company, the
Lawyers Title and Trust Company, the
New York Title and Mortgage Com¬
pany, the United States Title Guaranty
Company and the Home Title Insurance
Company. The association is a volun¬
tary one and hopes to inculcate just and
equitable principles in the business of
title insurance and to improve the meth¬
ods relating to such business.





To Take Charge of Section.
J^hn J. Hagerty, a member of the
contracting firm of Rodgers & Hagerty,
has been engaged by the Public Service
Commission to take charge for the Com¬
mission of the work of constructing
Section No. 2 of 'Routes Nos. 19 and 22,
the elevated portion of the Peiham Bay
Park branch of the Lexington avenue
subway, extending northerly from Whit¬
lock avenue along Westchester avenue
to Peiham Bay Park. The contract for
the construction of this section was
awarded last year by the Commission
to Lawrence C. Manuell, and by him
assigned to the Flick-Manuell Construc¬
tion Company. This company exper¬
ienced difhculty in carrying on the work,
and after repeated efforts by the engi¬
neers of the Commission to insure bet¬
ter progress the Commission on May 29
last declared the contract forfeited, and
itself took over the completion of the
work. It employed J. H. Flick as man¬
ager temporarily and a small force of
laborers to keep the work going. Mr.
Flick has now resigned, and the Com¬
mission, as stated, has engaged Mr. Hag¬
erty as Director of Construction. Mr.
Hagerty's work is to complete the con¬
tract, at least up to the point of erec¬
ting the steel structure for the elevated
railroad, which may be let as a separate
contract, and his compensation is to be
$10,000.

-------------«-------------

Writ Withdrawn.

The Public Service Commission has
been advised by its counsel that the writ
of certiorari, obtained by the New York
Railways Company for the purpose of
reviewing the determination and order
of the Commission, upon the applica¬
tion of that company for approval of an
issue of bonds to finance the acquisi¬
tion of 175 new "stepless" cars, has been
withdrawn by the company and the pro¬
ceeding instituted by the service of the
w'rit has been discontinued. The mat¬
ter has been held open pending the
making up of a detailed balance sheet
of the company, inasmuch as there was
unadjusted a large number of unsettled
claims growing out of the receivership,
the value of which was indeterminate.
It was said at the otitices of the Com¬
mission during the week that it was
deemed not unlikely that the New York
Railways Company will later apply for
leave to present additional evidence, cov¬
ering matters which have come to its
knowledge in connection with the mak¬
ing up of that balance sheet, as basis
for approval of the issuance of more
than $640,000 of bonds thus far approved.
The company has lately expressed its in¬
terest in the establishment of a fair and
adequate rule whereby the 4 per cent,
bonds of the company may be used in
meeting the needed development of the
property.

--------------♦--------------

New  Tariff   Schedules.

During the week the Public Service
Commission continued its hearing on
the new tariff schedules filed by the Long
Island Railroad Company, containing
certain changes in commutation rates,
mileage tickets and one-way and round-
trip fares within the First District. At
the hearing James A. McCrea, Vice-
President and General Manager of the
company, testified that his company had
just made a new contract with the Jami¬
son Coal Company for the supply of coal
for railroad use for the next year. The
company is to pay $3 per ton for coal
at the mines, but it is stipulated that the
contract may be cancelled if the Gov¬
ernment should fix the price of coal at
less than $3 per ton. This is more than
double the price of coal a year ago. The
company. Mr. McCrea said, has plenty
of cars for the moving of the coaL





—In 1859 the plot now occupied by the
new buildine: of Brokaw Brothers on
Broadway, just south of 42nd street, was
usrd by the owner, fleoree Ross, as sl
coal yard. It was not until 1874 that he
hm'lt the Rossmore Hotel, which later
brrnme known as the Saranac Hotel, thc
Cafe de I'Qpera, the Cafe de Paris and
later occupied by Louis Martin's restau¬





rant.
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