## Facts

- An art collector sought to sell works from his New York City apartment and entered oral, nonexclusive brokerage arrangements with two art dealers.
- Under the oral agreements, each dealer would receive a 5% commission (to be paid by the buyer) if the dealer produced a ready, willing, and able buyer and a sale occurred.
- The collector refused to let the art leave his apartment; the dealers feared he would sell directly to buyers they introduced.
- To address this concern, the collector promised to “protect” the dealers’ commissions.
- The dealers introduced a potential buyer who expressed interest in a Renoir but did not purchase at the collector’s asking price; about a year later, a company controlled by that buyer purchased the Renoir from the collector at a lower price, and the collector refused to pay commissions.
- A similar sequence occurred with a Cassatt: a buyer originally introduced by the dealers later purchased directly from the collector.
- When asked about that sale, the collector stated the buyer was “no one” the dealers knew; the dealers alleged this statement was false and intended to defeat their claim to a commission.
- The dealers sued for fraud and breach of contract in federal court under Wisconsin substantive law (diversity jurisdiction).

## Issues

1. Whether the collector’s promise to “protect” the dealers’ commissions could support a fraud claim under Wisconsin law, rather than only a contract claim.
2. Whether the collector’s post-sale false statement about the Cassatt buyer’s identity was actionable fraud where the dealers alleged loss of their commission.
3. Whether the district court committed reversible error in jury instructions or evidentiary rulings on the breach-of-contract claim.

## Decision

- The court affirmed the directed verdict for the collector on the fraud claim.
- The court held that the “protect” promise was, at most, a contractual undertaking; treating its breach as fraud was improper under Wisconsin limits on promissory fraud.
- The court held that the post-sale misrepresentation about the Cassatt buyer did not satisfy causation of damages because the sale was already complete and the statement did not cause additional, reliance-based loss beyond the unpaid commission.
- The court affirmed the jury’s verdict for the collector on breach of contract, finding no reversible instructional or evidentiary error and sufficient basis for the jury to reject the dealers’ procuring-cause theory.

## Legal Principles

- Under Wisconsin law, a broken promise to perform a contractual obligation ordinarily supports a contract remedy, not a tort fraud remedy; promissory fraud is narrowly confined.
- A false statement of fact may be fraudulent, but liability requires proof that the misrepresentation caused compensable damages (including reliance-based harm), not merely that it accompanied or concealed a preexisting loss.
- In commission disputes involving brokers, entitlement commonly turns on whether the broker was the procuring cause of the sale; appellate courts generally defer to the jury’s resolution of disputed inferences and credibility absent instructional or evidentiary error.

## Conclusion

The Seventh Circuit held that the dealers’ fraud theories failed because the commission “protection” assurance was a contractual promise and the later lie about the Cassatt buyer did not cause additional damages; the court also upheld the jury’s defense verdict on contract where the dealers did not persuade the factfinder that they were the procuring cause of the sales.


Milwaukee Auction Galleries, Ltd. v. Chalk, 13 F.3d 1107 (7th Cir. 1994)