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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. RBCORD AND GUIDE IS IN ITS FIFTIETH YEAR OF CONTINUOUS PUBLICATION.