Joseph J. Murphy Realty, Inc. v. Shervan

• Decision Date: 23 May 1978
• Citation: 388 A.2d 990,159 N.J.Super. 546
• Parties: JOSEPH J. MURPHY REALTY, INC., Plaintiff-Appellant, v. Marvin J. SHERVAN, Louise S. Shervan, his wife, Defendants-Respondents, and Ruth G. Stagg, Individually and as Administratrix of the Estate of James C.Stagg, Jr., deceased, Defendant.
• Court: New Jersey Superior Court — Appellate Division

Page 546

159 N.J.Super. 546

388 A.2d 990

JOSEPH J. MURPHY REALTY, INC., Plaintiff-Appellant, v.Marvin J. SHERVAN, Louise S. Shervan, his wife, Defendants-Respondents and Ruth G. Stagg, Individually and as Administratrix of the Estate of James C.Stagg, Jr., deceased, Defendant.

Superior Court of New Jersey,Appellate Division.

Submitted May 9, 1978.

Decided May 23, 1978.

Ferro, Lamb & Kern, Ridgewood, for plaintiff-appellant(Nancy C. Ferro, Ridgewood, on the brief).

Robert J. Berman, River Edge, for defendants-respondentsMarvin J. Shervan and Louise S. Shervan.

Before Judges HALPERN, LARNER and KING.

The opinion of the court was delivered by

LARNER, J. A. D.

This litigation involves claims arising out of the failure of a purchaser to consummate a contract to purchase a private home.The broker, Joseph J. Murphy Realty, Inc.(Murphy), brought an action against the seller Stagg and the purchasers Marvin J. Shervan and Louise S. Shervan, his wife (Shervan), to recover its commission of $7,500.Stagg sued Shervan on an $11,000 note which Shervan had delivered in connection with the purchase.And Shervan counterclaimed against Murphy alleging fraud in inducing Shervan to enter into the contract to purchase the Stagg home and seeking damages measured by any judgment recovered by Stagg against Shervan.

The trial judge granted summary judgment in favor of Stagg on Murphy's affirmative claim, and the case proceeded to trial by jury on the remaining issues among the parties.By way of answers to special interrogatories in the case of Murphy v. Shervan the jury found that defendant did not breach the contract with Stagg.In the case of Stagg v. Shervan the jury found that defendant had breached the purchase contract and assessed damages in the sum of $11,000.On the counterclaim of Shervan against Murphy the jury found that Murphy fraudulently induced Shervan to enter into the contract with Stagg and awarded damages in the sum of $11,000.Murphy's motion for a new trial was denied and judgments were entered in harmony with the jury's findings.

Only Murphy appeals, attacking the judgment in favor of Shervan on Murphy's affirmative commission claim and the damage award on Shervan's counterclaim.

In connection with the commission claim Murphy points to several trial occurrences as grounds for reversal.In view of the basis of our decision to affirm the judgment in favor of Shervan on this phase of the litigation, it is unnecessary to consider the arguments advanced by the appellant.

The evidence is clear and incontrovertible that Shervan's failure to consummate the purchase was in utter good faith and resulted only because of financial inability to close.As Shervan informed Murphy throughout the transaction, he could not provide the funds to consummate the purchase unless he was able to sell his own home a goal which was never fulfilled.

Under such circumstances, where there is no evidence of wrongful conduct on the part of the purchaser, he is not liable to the broker for failing to consummate the purchase contract.This conclusion was reached by the Supreme Court in Rothman Realty Corp. v. Bereck, 73 N.J. 590, 376 A.2d 902(1977), which also involved an action by a broker against the purchaser of a home.As noted by Justice Schreiber in that case:

To imply an obligation on the part of a buyer that he will pay the broker a commission, even though the buyer has acted in good faith with every intendment of acquiring the premises, but is unavoidably through no fault of his own prevented from consummating the purchase, is unquestionably contrary to the buyer's expectable understanding when he engages the broker.

In a sense there has been no wrongdoing or default by the buyer.* * * These cases recognize that liability should not be imposed on the seller where he acts in good faith and his inability to perform is not related to any wrongful act or misconduct on his part.To the same effect seeBlau v. Friedman, 26 N.J. 397, 140 A.2d 193(1958);Alexander Summer Co. v. Weil, 16 N.J.Super. 94, 83 A.2d 787(App.Div.1951).

The same rule should equitably be applied to the buyer.It must be remembered that the buyer has not entered into any written or formal agreement with the broker, but that the promise between the broker and the buyer has been implied by law.In these circumstances the "risk of such inability at that crucial time (the closing) must be treated as a normal incident of the brokerage business."Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. (528) at 552, 236 A.2d 843(at 601-602), 376 A.2d at 107.

Rothman Realty is controlling under the record facts herein and mandates that the judgment for Shervan on Murphy's commission claim is warranted as a matter of law.

We thus turn to the issue of the propriety of the judgment entered against Murphy on Shervan's counterclaim.This judgment was based upon a finding that Murphy's representative had made fraudulent misrepresentations to Shervan which induced him to enter into the purchase contract.The misrepresentations underlying Shervan's counterclaim consisted of oral statements by Murphy's representative pertaining to the salability of Shervan's home.The trial transcript reveals that Shervan on several occasions prior to the signing of the contract informed the...