Creek Ranch, Inc. v. New Jersey Turnpike Authority

• Court: New Jersey Supreme Court
• Writing for the Court: SCHREIBER; Crane; HUGHES
• Citation: Creek Ranch, Inc. v. New Jersey Turnpike Authority, 383 A.2d 110, 75 N.J. 421 (N.J. 1978)
• Decision Date: 16 February 1978
• Parties: CREEK RANCH, INC., Plaintiff-Appellant, v. NEW JERSEY TURNPIKE AUTHORITY, Defendant-Respondent.

Page 421

75 N.J. 421

383 A.2d 110

CREEK RANCH, INC., Plaintiff-Appellant, v. NEW JERSEY TURNPIKE AUTHORITY, Defendant-Respondent.

Supreme Court of New Jersey.

Argued Oct. 3, 1977.

Decided Feb. 16, 1978.

Daniel J. Carluccio, Toms River, for plaintiff-appellant (Citta, Carluccio & Holzapfel, Toms River, attorneys).

Bernard M. Reilly, New Brunswick, for defendant-respondent (Herbert I. Olarsch, New Brunswick, attorney).

The opinion of the court was delivered by

SCHREIBER, J.

The plaintiff, a property owner, instituted this action against the New Jersey Turnpike Authority (Authority) for breach of a contract allegedly made in anticipation of a project to construct an expressway between the New Jersey Turnpike Interchange 9 in the New Brunswick area and Toms River. The proposed route would have necessitated a taking of part of the plaintiff's land located in Toms River. The Authority sought and received a Right of Entry Permit from plaintiff. When the expressway project was abandoned, the Authority attempted to void the permit. Plaintiff refused to release its rights and instituted this action to recover the sum allegedly promised in the permit. The Authority's motion for summary judgment, predicated on the concept that no contract had come into being, was granted by the trial court. On appeal, the Appellate Division affirmed, one judge dissenting. The plaintiff appealed as of right to this Court pursuant to R. 2:2-1(a).

The following factual picture emerges from the pleadings and affidavits submitted on the summary judgment motion. After surveying the plaintiff's property which was to be used for the proposed expressway, the Authority made nine test borings on the land on six different days in July and August 1973. On November 12, 1973 the Authority's Manager of Right of Way wrote the following letter to the plaintiff:

Your property will be affected by the construction of the Governor Alfred E. Driscoll Expressway and will be needed no later than April 1, 1974.

Enclosed please find Right of Entry permit form which entitles you to 8% from the date of signing until an agreement has been reached by negotiations. In addition, the Authority will pay the property taxes on the affected property to be acquired from April 1, 1974 until final settlement date. May I reiterate that the 8% is over and above the final settlement price.

If this agreement meets with your approval, please sign, date and return to:

New Jersey Turnpike Authority

8 Robbins Street

Toms River, N.J. 08753

The enclosed printed Right of Entry Permit form in which the property description was inserted read as follows:

NEW JERSEY TURNPIKE AUTHORITY

(201) 247-0900

New Brunswick, N.J. 08903

RIGHT OF ENTRY PERMIT

IN CONSIDERATION of the sum of one dollar ($1.00) and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned, hereinafter called the "Owner" grants to the New Jersey Turnpike Authority, hereinafter called the "Authority" a permit upon the following terms and conditions:

1. The owner hereby grants to the Authority an irrevocable right to enter upon the lands hereinafter described in order to carry out the construction program of the Authority; to include but not be limited to surveys, clearing, grading, drainage and the erection of structures or other improvements.

2. All tools, equipment, buildings, improvements and other properties placed upon the land by the Authority or its contractors and/or agents shall remain the property of the Authority, its contractors or agents, as the case may be, and may be removed by the Authority, its contractors or agents at any time within a reasonable period after the termination or expiration of this permit.

3. The Authority recognizes the co-operation of the owner in granting this voluntary entry, and will proceed promptly to obtain reports and appraisals so that negotiations may be instituted quickly, looking to a settlement, based upon a fair and just price to be paid to the owner.

4. The lands affected by this permit are located in the State of New Jersey, County of Ocean, and are described as follows: DE1B-31

As shown on preliminary map of Governor Alfred E. Driscoll Expressway by Sanders and Thomas, Inc., consisting of 32.02 acres further defined as Block 298, Lots 15, 16, 17, & 38, Dover Township.

The Authority agrees to pay interest, at the rate of 8%, on the value of the lands herein described, as ultimately agreed upon, either by negotiations, resulting in an Agreement To Convey; or the results of the ultimate award in condemnation; between the time of execution of this Right of Entry Permit and the time possession ceases; or the Authority and the Owner enter into a contract of purchase; or in the alternate, the Authority institutes condemnation proceedings.

WITNESS My Hand and Seal this - - - - day of - - - - - - 19 - - -

Plaintiff acted promptly. On November 20, 1973, its Board of Directors accepted the proposal and formally "(r)esolved that the corporation enter into a Right of Entry Permit Agreement with the New Jersey Turnpike Authority in accordance with a copy attached hereto and made a part hereof, which is self-explanatory." The president and secretary were authorized to execute the permit and affix the corporate seal. The permit was then fully executed, acknowledged and returned to the Authority.

The expressway project was stalled by litigation commenced by the Townships of South Brunswick and Monroe. The townships prevailed because of the Authority's failure to obtain a necessary environmental impact statement. Township of So. Brunswick v. N. J. Turnpike Auth., 129 N.J.Super. 126, 322 A.2d 478 (App.Div.), certif. den. 66 N.J. 334, 331 A.2d 34 (1974). Thereafter, the Authority elected not to seek that statement and abandoned the project.

Approximately one year after obtaining the Right of Entry Permit, the Authority sent the following letter dated November 25, 1974, to plaintiff's counsel:

Our records indicate a Right-of-Entry providing for payment of interest contingent upon Authority occupancy, acquisition, and final settlement was executed concerning the above-captioned property. Due to legal and executive developments concerning the expressway project, the Authority is not in a position to occupy or acquire this property at this time or in the near future. Due to the present and future uncertainty as to the expressway project and the legality of any acquisition and, further, the potential effect of the Right-of-Entry on the date of valuation under N.J.S.A. 20:3-20 in any future acquisition, it is appropriate for both parties that the Right-of-Entry be hereby voided and of no force and effect and any rights or obligations of either the owner or the Authority potentially arising be nullified.

Would you kindly acknowledge this understanding on the attached copy of this letter and return to the undersigned; an acknowledged copy will be returned to you within seven (7) days. In the event the Authority does not hear from you within fifteen (15) days, said Right-of-Entry shall be considered nullified and voided and of no force and effect.

Thank you for your cooperation in this matter.

Very truly yours,

/s/ Herbert I. Olarsch

Herbert I. Olarsch

Senior Attorney

I hereby acknowledge and agree to the above understanding voiding this Right-of-Entry.

Plaintiff refused to execute the understanding and instituted this action seeking damages for breach of contract. During the oral arguments before the trial court and this Court, plaintiff claimed that its damages consisted solely of the loss of 8% of the value of the land between the execution of the Right of Entry Permit in November 1973 and its cancellation in November 1974. The trial court granted the defendant's motion for summary judgment because the 8% "was due on the closing of the transfer of the title" which did not occur because the Authority chose not to proceed. The Appellate Division's affirmance was bottomed on the finding that no binding agreement ever came into being because a condition precedent thereto, namely the fixing of a price for the land, either by agreement or in a condemnation proceeding, never occurred. It reasoned that the Right of Entry Permit represented at best only an offer by the plaintiff which had never been accepted by the Authority. Furthermore, it reasoned that no consideration passed to the Authority because the entry permit merely authorized the Authority to do what it was already empowered to do under N.J.S.A. 20:3-16.

Judge Crane dissented. He stated that a contract was formed when the plaintiff executed and returned the Right of Entry Permit, that the Statute of Frauds appeared to be satisfied by the letter of November 12, 1973, and that it was inappropriate to grant summary judgment on the meager record. We agree with the dissenting opinion and reverse and remand for a plenary trial on all issues.

The Authority urges that its November 12, 1973 letter and the enclosed Right of Entry Permit constituted only a solicitation of an offer and that the plaintiff's execution of the permit constituted an offer which the Authority never accepted. The proposition that an offer was solicited must be examined from the viewpoint of the recipient of the letter and permit. Would the plaintiff know or have reason to know that the Authority did not intend the letter and enclosure to be an expression of a fixed purpose in the absence of a further expression of the Authority's assent? See Restatement, Contracts, § 25 (1932). Or putting the proposition affirmatively, would the recipient reasonably be led to believe that the power to create a contract had been conferred on it? Professor Corbin has drawn the distinction between an offer and a solicitation in the following language:

What kind of act creates a power of acceptance and is therefore an offer? It must be an expression of will or intention. It must be an act that leads the offeree reasonably to...