The Beth Din of America recently launched “Jewishprudence,” a blog dedicated to contemporary beit din jurisprudence with a special focus on the intersection of Jewish law and modern commercial practice. In the space below, we present our first two “Jewishprudence” posts. The first post provides a general introduction to the work of the Beth Din of America and explains how “Jewishprudence” will bring the Beth Din’s work into public view. The second post accompanies a recently published decision (available on the Beth Din’s website, www.bethdin.org/Jewishprudence) involving a dispute over a brokerage commission. The post summarizes the published decision and draws attention to the central features of the pesak.
Introducing “Jewishprudence”
Since its inception over 50 years ago, the Beth Din of America has been recognized as one of the nation’s preeminent rabbinic courts. The Beth Din serves the Jewish community of North America as a forum for arbitrating commercial and monetary disputes through the din Torah process, obtaining Jewish divorces and confirming personal Jewish status. Firmly anchored in Jewish law, the Beth Din has earned a reputation for conducting its affairs with confidentiality, competence, fairness and integrity.
The Beth Din of America regularly handles a large caseload of dinei Torah. Our cases range from small claims to litigation involving several million dollars and include commercial disputes, such as disputes between employers and employees, landlord-tenant disputes, partnership disputes, disputes over real property, breach of contract, breach of fiduciary duty, investor mismanagement, defective merchandise, tortious interference and unfair competition; family disputes, such as inheritance disputes, division of marital property, spousal support and disputes over a family business; and communal disputes, such as disputes over rabbinic contracts, yeshiva tuition payments and catering agreements. All of our decisions are issued as binding arbitration awards and are enforceable in court.
While most of the Beth Din’s work takes place behind the closed doors of the courtroom and in dayanim’s private chambers, “Jewishprudence” brings the work of the Beth Din to the public. “Jewishprudence” features discussions of beit din procedure and analysis of substantive Jewish law as it applies in the modern commercial marketplace. “Jewishprudence” also publishes actual decisions rendered by the Beth Din of America (following anonymization and with the consent of the parties).
“Jewishprudence” seeks to accomplish two objectives. First, we hope to make the din Torah process more transparent and accessible. Halacha requires parties to settle their disputes in beit din in a manner consistent with Jewish law. Yet many members of our community are unfamiliar with the din Torah process, and others are hesitant to bring a case to beit din because they do not know what kind of decision to expect and whether it would frustrate their reasonable commercial expectations. Through its published decisions and posts on Jewish law, “Jewishprudence” provides critical access to the din Torah process and offers its readers insight into the kinds of decisions they can expect from the Beth Din of America.
Our second objective is to create a sophisticated forum for discussions of Jewish law as it applies to the contemporary commercial marketplace. Modern commerce raises complex questions of Jewish law. Parties utilize ever more intricate financial and legal instruments that have no clear antecedent in Jewish law, and they do business within a framework of commercial norms and practices that form the basis for their reasonable expectations. “Jewishprudence” discusses how Jewish law conceptualizes these instruments and the extent to which Jewish law incorporates commercial customs and the law of the jurisdiction. Likewise, “Jewishprudence” considers how internal Jewish law principles—such as the cancellation of debts on shemitah, the prohibition against taking interest, inheritance, the ketubah etc.—apply in the contemporary marketplace and home as well as how they are treated in beit din.
“Jewishprudence” continues the project started several years ago by the Journal of the Beth Din of America, which published some of the Beth Din’s decisions along with substantive articles on Jewish law. We hope that you will find “Jewishprudence” accessible, informative and engaging as we embark on this project le-hagdil Torah u-le-ha’adirah.
Sharing Brokerage Commissions in the Absence of a Compensation Agreement
What kind of compensation is a worker entitled to if he or she never worked out a compensation agreement with his or her employer? Schiff v. Chester, an anonymized decision posted on “Jewishprudence,” is a case of two real estate agents who worked together to procure properties but never discussed with each other how they would share commissions. Jewish law provides that in the absence of a compensation agreement, a worker is entitled to receive ke-minhag ha-medinah, ke-pachut she-ba-po’alim, the lowest level of a wage that a comparable person would accept for comparable work.1 This rule is consistent with a general principle in Jewish law that a worker is entitled to be compensated for a benefit he confers even in the absence of a contract.2 In effect, Jewish law holds a beneficiary of work presumptively liable to pay for a conferred benefit unless he can show that the worker did not confer a bona fide benefit or that the worker waived his right to compensation.3
Chester, who had considerably more experience working in the industry than Schiff, had approached Schiff about working with him to procure properties in Miami for an overseas buyer. They closed three deals, earning about $676,000 in commissions. Schiff argued that he was very much involved with these deals and that he was a full partner with Chester and therefore entitled to 50% of the commissions. Chester argued that Schiff was only minimally involved with these deals and was certainly not the “procuring cause.”
Schiff v. Chester asked the dayanim to determine appropriate compensation for Schiff consistent with the minhag ha-medinah of the industry. The dayanim determined (in consultation with experienced brokers in the New York market, utilizing a process for ex parte investigation that was discussed with the parties) that splitting brokerage commissions is the predominant form of compensation for brokerage professionals working together as well as for referrals from one professional to another. Common percentages range from 10% to 25%, and reach up to 50% for relationships representing equal partnerships.
The dayanim considered several factors in deciding what percentage to award Schiff. They considered the amount of work that Schiff put into the deals. They raised the equitable consideration that Schiff attempted to clarify how the commissions would be split but was repeatedly frustrated by Chester who told him to focus on getting deals done rather than worrying about commission splits. They also considered the fact that Schiff bears the burden of proof as claimant (ha-motsi me-chaveiro ‘alav ha-rayah).
Notably, the dayanim also cite New York case law to establish the relevant commercial custom. Under New York law, a brokerage commission is not due unless the broker seeking the commission was the “procuring cause” of the sale. Chester argued that Schiff was not the procuring cause of these deals and therefore was not entitled to any commission. The dayanim appeal to case law to establish that the procuring cause standard applies to contracts “between the broker and the principal” but not necessarily to the “contract between the salesperson and the broker.”4
You can access the full text of Schiff v. Chester at www.bethdin.org/Jewishprudence.
Rabbi Itamar Rosensweig is the editor of “Jewishprudence.” In addition to serving as a dayan at the Beth Din of America, Rabbi Rosensweig is a maggid shiur at Yeshiva University and the resident scholar at Congregation Ahavath Torah in Englewood, New Jersey. He also teaches Jewish business law and ethics at YU’s Sy Syms School of Business.
1 Shulchan Arukh Choshen Mishpat 332:1, Pitchei Choshen Sekhirut 8:4.
2 Bava Metsi’a 101a, Shulchan Arukh Choshen Mishpat 375, Pitchei Choshen Geneivah ve-’Ona’ah 8:15-25
3 See Pitchei Choshen Sekhirut 8:31-35.
4 Greendlinger v. Donahue Real Estate, Inc., 798 N.Y.S.2d 344 (Kings.Co. S.Ct. 2004).
