236 A.2d 843 (N.J. 1967), A--12, Ellsworth Dobbs, Inc. v. Johnson

Docket Nº:A--12.
Citation:236 A.2d 843, 50 N.J. 528
Opinion Judge:[11] Francis
Party Name:ELLSWORTH DOBBS, INC., a New Jersey corporation, Plaintiff-Appellant, v. John R. JOHNSON and Adelaide P. Johnson, his wife, Defendants and Third-Party Plaintiffs-Respondents, v. Joseph IARUSSI, Third-Party Defendant and Defendant-Respondent.
Attorney:[6] Mr. Thomas L. Morrissey for plaintiff-appellant (Messrs. Carpenter, Bennett & Morrissey, attorneys; Miss Virginia D. Fenton, on the brief).
Case Date:December 18, 1967
Court:Supreme Court of New Jersey
 
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236 A.2d 843 (N.J. 1967)

50 N.J. 528

ELLSWORTH DOBBS, INC., a New Jersey corporation, Plaintiff-Appellant,

v.

John R. JOHNSON and Adelaide P. Johnson, his wife, Defendants and Third-Party Plaintiffs-Respondents,

v.

Joseph IARUSSI, Third-Party Defendant and Defendant-Respondent.

No. A--12.

Supreme Court of New Jersey.

December 18, 1967

Argued Oct. 9, 1967.

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[50 N.J. 534] Thomas L. Morrissey, Newark, for plaintiff-appellant (Carpenter, Bennett & Morrissey, Newark, attorneys, Virginia D. Fenton, Morristown, on the brief).

William P. Westling, Bound Brook, for plaintiffs-respondents John R. Johnson and Adelaide P. Johnson (Imbriani, Hughes, Westling & Lucas, Bound Brook, attorneys).

Lee A. Holley, Orange, for defendant-respondent Joseph Iarussi (Holley & Kroner, Orange, attorneys).

Arthur M. Greenbaum, Newark, for New Jersey Assn. of Real Estate Bds. appearing amicus curiae (Greenbaum, Greenbaum & Rowe, Newark, attorneys, Stanley Stern, Newark, on the brief).

OPINION

FRANCIS, J.

Plaintiff Ellsworth Dobbs, Inc., a real estate broker, sued John R. Johnson and Adelaide P. Johnson, his wife, and Joseph Iarussi for commissions allegedly earned in a real estate transaction. The Johnsons, as owners of certain acreage in Bernards Township, New Jersey, and Iarussi as purchaser, entered into a written agreement, the former to sell and the latter to buy the property. There is no doubt that Dobbs brought the parties together, and into the signed [50 N.J. 535] contract of sale. Title did not close, however, because of Iarussi's inability to obtain financial backing for his intended development of the property. After Iarussi's failure to perform, the Johnsons released him from the contract under circumstances to be detailed hereafter. Dobbs then brought this action charging the Johnsons with breach of an express agreement to pay a commission due for bringing about the contract of sale, and charging Iarussi with breach of an implied agreement to pay the commission if he failed to complete the purchase and thus deprived the broker of commission from the seller. The trial judge held, as a matter of law, that Dobbs' commission claim against the Johnsons vested upon execution of the contract of sale with Iarussi, and that the right to commission was not dependent upon the closing of title. Consequently, he declined to submit that issue to the jury for determination. Instead he instructed them that plaintiff was entitled to a commission against the Johnsons, and limited their function to a determination of the amount due. The jury found for Dobbs in the amount of $15,000.

As to the defendant Iarussi, the trial judge submitted this issue to the jury: Did the facts as they found them show by a preponderance of the evidence that Iarussi impliedly agreed with Dobbs' representative that if the representative located property satisfactory to Iarussi for residential development purposes, and the owner entered into a contract with Iarussi to sell the property on terms mutually agreeable, Iarussi would perform the contract and thus enable the broker to earn a commission from the owner? The jury found that there was such an implied agreement; further, that the implied agreement was breached by Iarussi's failure to perform his contract to buy the Johnsons' property. Therefore he became liable to the broker for payment of the commission. Since the jury had been charged that the amount of the verdict against Iarussi would have to be the same as that returned against the Johnsons, he was assessed $15,000.

[50 N.J. 536] On appeal the Appellate Division, 92 N.J.Super. 271, 223 A.2d 199, reversed the judgment against the Johnsons, holding that there was a jury question as to their liability to pay the commission to the plaintiff, and a new trial was ordered on this phase of the case. The judgment against Iarussi was reversed also, on the ground that the evidence was insufficient to show a contract, express or implied, under which Iarussi made himself liable to pay the commission

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Dobbs would have received from the Johnsons if Iarussi had performed his agreement to buy their property. On plaintiff's application, this Court granted certification. 48 N.J. 354, 225 A.2d 365 (1966).

I.

The Johnsons are the owners of a 144-acre tract of farm land in Bernards Township, New Jersey. They had placed it on the market for sale in 1960. It was listed with Dobbs and other agencies as available.

Prior to 1960, Iarussi had been connected with the building business. He decided to enter the residential development business on his own. Just when this decision was reached is not clear from the record, but it does appear that in early 1960 he consulted Theodore R. Fleming, Vice President of the Dobbs agency, about acquiring land in the area. As Iarussi put it, 'I went out looking for land when I went into business for myself.' According to Fleming, the gist of their conversation was that Iarussi wished Dobbs to assist him in finding properties on which he could build homes. Fleming was agreeable, and an understanding was reached that if Dobbs found property satisfactory to Iarussi and it could be bought on terms agreeable to him, Iarussi would make and perform an agreement of purchase with the owner, in which event Dobbs would earn its commission from the seller. Iarussi's testimony is somewhat unclear as to precisely what his arrangement was with Dobbs. In his answer to the complaint herein he admitted that he 'solicited, obtained and utilized the services of plaintiff in [50 N.J. 537] order to obtain lands which would be suitable for residential development by him.' He said also he knew that if Fleming showed him land which he bought, Dobbs would receive its commission from the seller. And he conceded that after his first meeting with Fleming, he utilized Dobbs' services in contracting to buy at least four pieces of property. In each instance he completed the transaction and Dobbs earned the commission, which was paid by the sellers.

Sometime in 1960, Fleming showed the 144-acre Johnson tract to Iarussi. He was interested in it for residential development, but could not finance such a large undertaking personally and had to obtain backing from some source. Satisfactory terms were agreed upon with the Johnsons, and an oral agreement of purchase was made. Iarussi's hopes for financial support were not realized and the deal collapsed.

It seems plain that Iarussi's interest in the project remained high. In early 1961, he and the Johnsons again met in the Dobbs office, at which time Fleming told the Johnsons of Iarussi's renewed interest in acquiring their property. There is a dispute in the testimony as to what was said at the time about Iarussi's financial ability to consummate a deal. The Johnsons said that in view of their previous experience they expressed skepticism on that score at that interview, whereupon Fleming assured them that Iarussi had or would have by the closing date sufficient financial backing to undertake a development of the proportions contemplated. They said further that Fleming told them he was not at liberty to reveal the source of the backing, but he assured them it existed. Moreover, according to the Johnsons, Fleming said if they went along with Iarussi, Dobbs would pay all the legal expenses. Fleming testified he agreed only to pay the legal fee for drawing the contract of sale. As a result of these assurances, on May 1, 1961 the Johnsons entered into a contract to sell their property to Iarussi for $250,000, title to close on September 1, 1961.

According to Iarussi, at this meeting in the Dobbs office he indicated his interest in the Johnson property and [50 N.J. 538] in trying to obtain financial backing to undertake the residential development thereon. He asserted also that thereafter on a number of occasions he discussed with Fleming his hopes of obtaining the necessary support, and that Fleming offered to assist him in

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any way he could. He denied he ever informed Fleming that he had secured such backing. Nevertheless, he entered into the purchase contract on May 1, 1961, with the closing date fixed at September 1, with the expectation of obtaining the necessary backing in the interim.

On the other hand, Fleming asserted that on the renewal of the negotiations in 1961 Iarussi neither asked for assistance in securing financing nor discussed the matter at all. He said further that Iarussi simply indicated he would go through with the purchase at the original price of 250,000, if the Johnsons would reduce the downpayment to $10,000. When this was agreed upon the contract was signed. In this connection it may be noted that at the time of execution, the contract provided for a down-payment of $10,000. Three days later, however, by an addendum, this was changed to $1500 on execution of the contract, an additional $1000 on June 15, and $10,000 on passing of title.

After this addendum was executed, the contract provided for the payment of the purchase price of $250,000 as follows:

"On execution of the contract etc. .................. $ 1,500 Further, on June 15, 1961 additional ................ 1,000 On passing of title ................................. 10,000 On purchase money mortgage, etc. .................... 237,500"

The original agreement provided also that the purchase money note and mortgage would contain a clause releasing one building lot sold from the lien of the mortgage upon payment of each $2500.

With respect to the broker's commission, the contract provided:

[50 N.J. 539] 'The commission hereinafter mentioned shall be payable as follows: $5,000.00 when sellers shall have received a total of $25,000.00 on...

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