Grant v. Steenland Const. Co.

• Decision Date: 07 April 1926
• Citation: 132 A. 850
• Parties: GRANT v. STEENLAND CONST. CO. et al.
• Court: New Jersey Court of Chancery

132 A. 850

GRANT

v. STEENLAND CONST. CO. et al.

Chancery Court of New Jersey.

April 7, 1926.

(Syllabus by the Court.)

Suit by Roderick D. Grant against the Steenland Construction Company and another. Bill dismissed.

Andrew J. Whinery, of Newark, for complainant.

Morrison, Lloyd & Morrison, of Hackensack, for defendants.

BACKES, V. C. The complainant, Grant, obtained an option from the Nordhoff Land Company to purchase a tract of land, about 105 acres, in Bergen county, of which the parcel in controversy is a part. Before his option expired he interested Peter M. Steenland and his brother, Rollo, the stockholders of the defendant Steenland Construction Company, in his enterprise, and on December 10, 1923, secured a second option running jointly to himself and the Steenland Company, by the terms of which they acquired the right to purchase parcel A of said land, about 75 acres, at $2,000 per acre, and to pay for the same by their joint and several bond for the total of the purchase price, payable January 1, 1934, with 6 per cent. interest, payable January 1, 1927, and semiannually thereafter, secured by mortgage on the land. If the option as to parcel A be exercised, executed, and performed, then the option as to parcel B, constituting the remainder of the Nordhoff tract, should be available until January 1, 1929, upon substantially the same terms. The option as to parcel A was duly exercised by the complainant and the Steenland Company December 17, 1923. By a supplemental agreement a few acres of parcel B were added to parcel A and included in the deed and mortgage. The deed and bond and mortgage were delivered February 13, 1924. The deed was made to the Steenland Construction Company, and it executed the bond and mortgage for $153,178 in the terms of the option. Grant and the two Steenlands signed a guaranty annexed to the bond in this language:

"For value received the undersigned, Roderick D. Grant, Peter M. Steenland, and Rollo Steenland hereby jointly and severally guarantee the prompt payment of the principal of the within bond, together with the interest thereon, and Roderick D. Grant unconditionally guarantees the performance of all the terms, covenants, and conditions of the within bond and of the mortgage accompanying said bond."

The land was bought for subdivision and development, and by arrangement between the optionees and owner the title was taken in the name of the Steenland Construction Company for greater facility and convenience in selling and conveying lots, with the understanding that it was to be held for the joint benefit of the optionees. Grant had no money; that was well known to the Steenlands. He was to have a drawing account of $100 per week during the promotion. He brought the proposition to the Steenlands to finance and promote, with his help, and they were to share the profits equally. It was thought and hoped that the cost of development and payment of the mortgages could be anticipated from the proceeds of the sale of lots and that there would be a handsome profit. In this they were disappointed. During the first year, despite the activities of both Grant and the Steenlands, six houses were built, but only one was sold. The Steenlands became dissatisfied and abruptly repudiated Grant's interest in the enterprise on December 29, 1924. They had spent $5,500 in sutveys, blueprints, engineers, etc., in preparing the tract for market and for advances to Grant, and the due date was rapidly approaching for part payment on the mortgage—payment for releases on 10 per cent. of the area of the tract. It is open to suspicion that the reason for the Steenlands' conduct was that they saw large profits ahead and felt that Grant's share was disproportionate. Grant insisted that they carry out their bargain or return the property to him, so that he could seek capital elsewhere to promote the scheme, and after...