Javna v. D. J. Fredricks, Inc.

• Decision Date: 04 September 1956
• Docket Number: No. A--287,A--287
• Citation: 41 N.J.Super. 353,125 A.2d 227
• Parties: Stephen L. JAVNA, Plaintiff-Appellant v. D. J. FREDRICKS, Inc., Defendant-Respondent. . Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 353

41 N.J.Super. 353

125 A.2d 227

Stephen L. JAVNA, Plaintiff-Appellant v. D. J. FREDRICKS, Inc., Defendant-Respondent.

No. A--287.

Superior Court of New Jersey.

Appellate Division.

Argued July 2, 1956.

Decided Sept. 4, 1956.

Max Rosenbloom, Palisades Park, argued the cause for plaintiff-appellant (Sidney Cohn, Palisades Park, attorney).

James A. Major, Hackensack, argued the cause for defendant-respondent (G. Tapley Taylor, Hackensack, on the brief).

Before Judges CLAPP, HALL and HEGARTY.

The opinion of the court was delivered by

CLAPP, S.J.A.D.

Plaintiff entered into a contract with the defendant for the purchase of three vacant lots in the Borough of Maywood, N.J., paying $500 down on account of the purchase price. Under the terms of the contract, defendant was to refund to him the $500, together with search and legal fees not exceeding $125, in the event it could not give a 'marketable title.' In this action--so far as we need concern ourselves with it--plaintiff sues for the recovery of the $625. Judgment went against him below, and he appeals.

The three lots were part of a tract, 1100 600 , comprising 44 lots, 28 of them in the borough's residential zone and 16, including the three sold, in one of its light industry zones. The borough conveyed the tract to Milton E. Zerman by deed dated December 16, 1947 and included in the deed the following covenant, which is the source of this litigation:

'The grantee herein agrees to commence the erection of dwellings on said premises, the construction cost of which shall be not less than $6000.00, within a reasonable time, after delivery of this Deed.'

Zerman then conveyed the tract to a corporation of which he was president, and it erected on 38 of the 44 lots (we are informed) 'approximately fifty' one-family dwellings, including nine in the light industry zone. Three of the remaining lots were thereafter conveyed to the defendant, and they constitute the lots sold to the plaintiff.

The case comes before us on an agreed statement under R.R. 1:6--2, approved by the trial Judge, indicating that the central question below, as settled at the pretrial conference, was whether defendant's title was marketable. More particularly, the question was whether Zerman's agreement, above quoted, created a restrictive covenant which would be binding upon his successors in title so as to constitute a breach of the contract to give a marketable title.

Defendant argues that the plaintiff cannot complain of this alleged restriction because, as stated in a printed clause of the contract between them, the conveyance to the plaintiff was to be made 'subject to existing restrictions of record, if any.' However in another clause, which was typewritten into the contract, the parties declared it to be their understanding and agreement that--

'the above mentioned land is zoned for light industry. In the event that it is not, then the contract shall be declared null and void * * *.'

This latter clause, read with surrounding circumstances, plainly indicates that plaintiff wanted to acquire the land only if it could be used for light industry. In fact, as defendant knew at the time of the making of the contract, plaintiff was buying the land in order to erect a factory on it for his own business. The printed words must yield insofar as they conflict with the underlying purpose of the parties, disclosed in the typewritten words, to convey property for industrial use; they are to be read as requiring the plaintiff to take title subject to restrictions of record other than those designed to exclude light industry.

This brings us to the principal issue in the case, namely, whether the title to the three lots was marketable for the purposes of light industry. A title is marketable only if there is a reasonable certainty that it will not be called into question, so as to subject the purchaser to the hazard of litigation. La Salle v. La Pointe, 14 N.J. 476, 479--481, 102 A.2d 761 (1954); Simpson v. Klipstein, 89 N.J.Eq. 543, 545, 105 A. 218 (E. & A.1918). However, a title is not rendered unmarketable merely because a purchaser may be subjected to litigation which has no rational justification. Smith v. Reidy, 92 N.J.Eq. 586, 592, 113 A. 774 (Ch.1921).

Can we say, then, that it is reasonably certain that if the three lots were to be used for industrial purposes, the title would not be subject to any rational attack? An examination of Zerman's covenant

'to commence the erection of dwellings on said premises * * * within a reasonable time after delivery of this Deed'

raises questions. Was the covenant satisfied by a mere commencement of the dwellings, or was Zerman called upon not only to start them within the time stated, but to complete them in due course? If so, how many dwellings? Was he to devote the whole tract to residential purposes? Or could he have erected two dwellings on the lots in the residential zone and factories on the other lots? Or was any agreement on his part fully executed when he built 'approximately fifty' houses? We have not been furnished with the slightest indication of the answers to these questions.

In construing a restrictive covenant, we often look to the circumstances under which it was created, for covenants are to be read in the light of those circumstances. Meaney v. Stork, 80 N.J.Eq. 60, 65, 83 A. 492 (Ch.1912), affirmed 81 N.J.Eq. 210, 86 A. 398 (E. & A.1913); Mannion v. Greenbrook Hotel, Inc., 138 N.J.Eq. 518, 521, 48 A.2d 888 (E. & A.1946); Riverton Country Club v. Thomas, 141 N.J.Eq. 435, 440, 58 A.2d 89 (Ch.1948), affirmed 1 N.J. 508, 64 A.2d 347 (1948); Restatement, Property, § 527. But here we do not know what those circumstances were. We do know that at the time of the deed from the borough to Zerman there was a housing shortage in the State, 'an acute public' emergency.' L.1946, p. 1351, N.J.S.A. 55:14G--1. We may speculate (if it is a matter of any interest) whether the borough offered Zerman some inducement in return for his personal covenant to proceed within a reasonable time, or whether he gave this covenant in a spirit of benevolence and without receiving any consideration for it. But we are not clearing up doubts with these speculations.

The above stated questions cannot be satisfactorily answered. On the other hand, they cannot be brushed aside with any confidence. All we can say is that Zerman's successors in title are put on notice of some agreement, we know not what, with respect to the erection of houses on the premises. A title is not marketable if the public records place a purchaser on notice of questions as to matters lying outside the records, where the matters are not easily establishable and the questions may reasonably be expected to expose him to the hazard of litigation. Rutherford Land & Improvement Co. v. Sanntrock, 44 A. 938, 939 (Ch.1899) affirmed 60 N.J.Eq. 471, 46 A. 648 (E. & A.1900); Fahy v. Cavanagh, 59 N.J.Eq. 278, 283, 44 A. 154 (Ch.1900); Deseumeur v. Rondel, 76 N.J.Eq. 394, 402, 74 A. 703 (Ch.1909); Sulk v. Tumulty, 77 N.J.Eq. 97, 98, 75 A. 757 (Ch.1910); Lampros v. Tenore, 142 N.J.Eq. 293, 296, 60 A.2d 80 (Ch.1948).

Defendant's principal contention is that Zerman's covenant is personal--that is (as we understand the contention), that it does not bind Zerman's successors in title. Hendlin v. Fairmount Construction Co., 8 N.J.Super. 310, 72 A.2d 541 (Ch.Div.1950), is cited. But the argument seems to overlook the general rule (subject to exceptions) that in equity a restrictive covenant made by a grantor with his grantee as to the use of land binds the grantee's successors in title who take with notice, even though at law it is, or at one time was, deemed to be personal. Riverton Country Club v. Thomas, 141 N.J.Eq. 435, 446, 447, 58 A.2d 89 (Ch.1948), affirmed 1 N.J. 508, 64 A.2d 347 (1948); Van Doren v. Robinson, 16 N.J.Eq. 256, 261 (Ch.1863); Brewer v. Marshall and Cheeseman, 19 N.J.Eq. 537, 544 (E. & A.1868).

Perhaps defendant's point is that the covenant before us does not indicate an intention on the part of the borough and Zerman to bind Zerman's successors in title. If there was no such intention, the burden of the covenant will not run. Restatement, Property, §§ 531, 539h. Note the discussion in Tiffany, Real Property (3rd ed.), § 862. It becomes pertinent, then, to inquire whether the purpose of the parties to the covenant was merely to create a temporary situation involving only Zerman, and not his successors. Or was it the purpose of these parties, or an inherent part of it, to have the land devoted to residential uses, thus creating a status having some degree of permanency? Restatement, Property, § 531d. It matters not that the parties omitted the word 'assigns,' or some equivalent word, in the covenant--that is, failed to bind Zerman 'and his assigns'; such an omission does not prevent the burden of the covenant from running. Conover v. Smith, 17 N.J.Eq. 51, 56 (Ch.1864), criticizing one of the resolutions in Spencer's Case, 5 Co. 16a, 77 Eng.Rep. 72 (K.B.1583), on which defendant relies; 2 Am.L.Prop., § 9.25; 14 Am.Jur. 499, 500. See ...