And while "the general rule applicable to the employment of brokers to procure a loan is that their commissions are not earned unless the loan is made,"7 this rule would not be applicable where the negotiations fall through on account of the principal's misrepresentation as to the security to be given.8 This condition emphasizes the importance of having most satisfactory proof of the ability, readiness and willingness of the party to make the loan and to show that the failure to consummate the same was solely owing to the failure of the broker's principal.9 "In other words," says the court,10 "there may be a liability for a breach of a contract where a person after employing a broker to make a loan on certain securities discovers that his securities are not as valuable as he supposed and that he would be unable to perform a contract to furnish securities for a loan according to his representations to his broker, but that would not afford a basis for a recovery by the broker of commissions as for full performance on his part."
4 Gatllng v. Central Spar Verein, 67 App. Div. 50 (S. Y. 1902). See also JSec. 168, 169 supra.
5 Stone v. Goodsteln, 49 Misc. 482 (N. Y. 1906).
6 See Sec. 185 supra.
7 Hollidav v. Roxbury Distilling Co.. 130 App. Div. 654 (N. Y. 1909). (citing Crasto v. White, 52 Hun 473 (N. Y. 1889); Ashfleld v. Case. 93 App. D1y. 452 (N. Y. 1904); Duckworth v. Rogers, 109 App. Div. 168 (N. Y. 1905) ).
8 See Sec. 174 supra.
9 Holli'day v. Roxbury Distilling Co., supra.
An allegation that the broker was to procure the loan is not established by proving that he produced a person ready, prepared and willing to make the loan. Where the contract is to procure the loan, it should appear that it was actually secured, and in such case the right of action depending upon a condition precedent, performance should be averred.11
In other states the second rule mentioned in Sec. 185 prevails. "A broker who is employed to procure a loan is entitled to his commission when he procures a lender ready, willing and able to lend the money upon the terms proposed. His right to commission does not depend upon the contingency of the applicant's acceptance of the loan but upon his performance of his part of the contract. The principal cannot deprive the broker of his commission by refusing to accept the loan which the negotiations of the latter have resulted in securing. In Green v. Lucas, 33 L.T. (N. S.) 584, Lord Cairns said in a case very similar to the present: 'It appears to me that the plaintiff had done everything which agents in this kind of work were bound to do, and it would be forcing their liability if they were to be held answerable for what happened after. If the contracts afterwards were to go off from the caprice of the lender or from the infirmity in the title, it would be immaterial to the plaintiffs.' Green v. Reed, 3 F. & F. 226; Green v. Lucas, 31 L. T. (N. S.) 731. In principle the case of a broker negotiating a loan is the same as that of a broker negotiating a sale of property, and in the latter case it is uniformly held that the commissions are earned when a purchaser is found able and willing to buy on the terms proposed. In such cases, the broker's right to compensation is held to accrue when he has furnished a purchaser, and does not depend upon the ultimate consummation of the sale."12
11 McLaughlin v. Whiton. 37 Misc. 838 (N. Y. 1902). See also Sec. 1CG-168, 172 supra, 191 infra, for failure to complete on account of defects.