Hudson v. Fay

• Decision Date: 18 February 1939
• Parties: HUDSON v. FAY et al.
• Court: New Jersey Court of Chancery

4 A.2d 408

125 N.J.Eq. 62

HUDSON

v. FAY et al.

Court of Chancery of New Jersey.

Feb. 18, 1939.

Syllabus by the Court.

1. An agent has no authority to bind a principal to a contract outside the terms limited by the agency agreement.

2. In a suit for specific performance of a contract to sell real estate, evidence examined and held that the contract was outside the scope of the authority of the agent and that there was no ratification of the contract by the principal.

Suit for specific performance of a contract for the purchase of land and for damages by Paul H. Hudson against Frank B. Fay, Jr., and others.

Decree for defendants dismissing the bill.

Simon P. Northrup, of Newark, for complainant.

Nelson C. Doland, of Boonton, for.

Frank B. Fay, Jr., and Frank B. Fay, III.

Hillery & Young, of Morristown, for defendant Louis Malochowsky.

LEWIS, Vice Chancellor.

This is a suit for specific performance of a contract for the purchase of land, together with damages sustained by reason of the acts of defendants.

The Gould Ziegler Realty Co., Inc., owned a tract of land at Ideal Lake, Kennylawn Borough, which it was seeking to develop as a Summer colony. It was planned to put roads through the tract, but at the time of the making of the contract now sought to be enforced, the roads had not been built, nor had they been definitely located. Previous to the making of this contract, the Gould Ziegler Realty Co., Inc., had appointed F. D. Ford Land Development Co., Inc., agents for the sale of lots under a contract giving the agent the right to sell under certain specified conditions. The contract with complainant was dated on July 5, 1926 and was executed in the name of the Gould Ziegler Company by the Ford Company, as agents it read as follows:

"Gould Ziegler Realty Co., Inc., agrees to sell and Paul H. Hudson agrees to purchase Lot No. XXX located at 'Ideal Lake,' Borough of Kennylawn, New Jersey. The agreed purchase price being $200.00, a deposit of $25.00 is hereby paid and acknowledged. It is further agreed that $175.00 less 5% be paid by Paul H Hudson on or before three days after filing of map. "Signed: F. D. Ford Land Dev. Inc.

"Agents for Gould Zeigler Realty Co., Inc. "Paul H. Hudson, Purchaser.

"Witness: "Edw. Herwander "Date—July 5th, '26."

The map referred to in the contract was not yet in existence and there was no specific lot such as that designated in the contract as "XXX". It appears from the evidence that the purchaser and a representative of the selling agent did, however, pick out a parcel of land which adjoined a pathway or rudimentary roadway on the property and it seems that it was agreed that this would be the lot, to be acquired by complainant. It seems that within a few days the agent told complainant that the particular parcel selected had been sold or was under contract to someone else, and accordingly the complainant and the agent picked out another tract nearby. Complainant paid the sum of $25, the receipt of which is acknowledged in the contract, but never made any further payment. The contract was never ratified by the Gould Ziegler Co., Inc., nor was its validity ever acknowledged by it. Complainant built a bungalow on the tract.

Later, when the area was laid out with regular roads in accordance with a map that was made, it was discovered that complainant's bungalow was in one of the roadways. No deed was ever executed to complainant, nor apparently was the deposit on the purchase price ever paid to the owner by the agent. By 1933 the Ford Company had dropped out as selling agent, and the Gould Ziegler Company thereupon conveyed the entire development to defendants, Frank D. Fay, Jr., and Frank D. Fay, 3rd. After the sale to the Fays, complainant executed an acknowledgment of his contract and recorded it in the Office of the Register of Deeds.

It further appears from the testimony that while the Gould Ziegler Company never recognized complainant's rights in the tract of...