Security Aluminum Window Mfg. Corp. v. Lehman Associates, Inc.

Decision Date06 January 1970
Citation260 A.2d 248,108 N.J.Super. 137
PartiesSECURITY ALUMINUM WINDOW MANUFACTURING CORP., Plaintiff-Respondent and Cross-Appellant, v. LEHMAN ASSOCIATES, INC. and Mark M. Gale, Defendants-Appellants and Cross-Respondents.
CourtNew Jersey Superior Court — Appellate Division

Melville J. Berlow, East Orange, for appellants and cross-respondents.

Michael A. Querques, Orange, for respondent and cross-appellant (Querques, Isles & Weissbard, Orange, attorneys. Harvey Weissbard and Daniel E. Isles, Orange, of counsel and on the brief).


The opinion of the court was delivered by


Defendants Lehman Associates, Inc. (herein Lehman or broker) and Mark Gale (herein Gale or salesman) appeal from a judgment of the Chancery Division awarding $4950 in compensatory damages to plaintiff Security Aluminum Window Manufacturing Corporation (herein Security). Security cross-appeals, contending that the trial court erred in failing to award punitive damages against defendants.

In the fall of 1966 Security was in dire financial difficulties; bankruptcy seemed imminent. Stephen Azierski, president of the company, sought to alleviate the problem by either selling or leasing certain corporate property located on Mt. Pleasant Avenue in Newark. To that end an exclusive listing agreement, stating 'The sale price shall be $65,000.00, or any other price which the undersigned agrees to accept,' was entered into with Lehman, a licensed real estate broker of the State of New Jersey. Negotiations were handled by Gale, Lehman's agent and salesman.

In December of that year Gale informed Azierski that there was a tight market for industrial real estate in the Newark area and advised him of an offer of $25,000 from one Sam Minkowitz. Azierski rejected the offer because it was insufficient and would not cover outstanding corporate obligations.

Security had vacated the property and, while driving by one day during February 1967, Azierski noticed the salesman showing three men around the premises. Upon inquiry Gale told him that the men were in the 'letter' business and he would contact Azierski if an offer were forthcoming. About the third week of February, one of the tenants in the building called Azierski and informed him that a Mr. Johnston had been on the premises introducing himself as the new owner. Azierski immediately called Gale and asked about Johnston and whether there had been any favorable developments. Gale replied in the negative and, with regard to Johnston, stated, 'Oh, some kook, don't even think about it.'

On March 1, 1967 Gale telephoned Azierski and told him that Minkowitz was losing interest in the property and, if he did not accept the offer, he might be unable to find a buyer. What Gale failed to inform Azierski, however, was that Minkowitz was a good friend of Gale's of 40 years' standing; that Mr. Johnston of the Johnston Letter Company had offered $44,000 for the property, which was rejected as insufficient, and that on February 28, 1967 Johnston increased his offer to $50,000 and tendered a deposit of $500.

Azierski, in a financial squeeze having just received service of process in a foreclosure proceeding, reluctantly agreed to accept Minkowitz' offer of $25,000. Gale took an agreement of sale to Azierski's home and the latter once more questioned the salesman as to whether Minkowitz might bid a little higher. When Gale responded 'no,' Azierski signed the contract dated March 2, 1967.

Meanwhile Johnston, who was never informed by Gale as to the identity of the property owner, was disturbed about the delaying tactics of Gale. After conferring with counsel, Johnston concluded that there was 'something fishy going on,' and he ascertained that Security was the owner of the property. Johnston then, about the middle of March, called Azierski to find out what was holding up the sale and, at that time, Azierski learned of the $50,000 offer that had been made in February.

Security expeditiously instituted proceedings in the Chancery Division against Lehman, Gale and Minkowitz seeking injunctive relief as well as compensatory and punitive damages. It also finalized negotiations with Johnston direct for a sale of the property at $44,000. By mutual agreement the purchase price was later reduced to $43,000 and title was closed in June 1967.

Defendants Lehman and Gale filed an answer and a counterclaim for commissions allegedly due as a result of the Minkowitz contract, commissions on any sale by Security to Johnston and for damages against Azierski for malicious interference with the proposed sale by Minkowitz to Johnston. In addition, Lehman and Gale sought a temporary restraining order precluding Minkowitz from canceling his agreement with Security. Ultimately, Security paid Minkowitz $1,000 for a cancelation of his contract and, by pretrial order, the action of plaintiff against Minkowitz was voluntarily dismissed with prejudice.

The trial court found and determined that plaintiff was entitled to compensatory damages and computed the amount thereof by taking the $6,000 difference between the Johnston offer of $50,000 and the contract price of $44,000 and subtracting therefrom $1,050, representing sundry repairs (to the boiler, sprinklers and plumbing system) required to be made by the seller according to the terms of the original offer. There is support in the record for this finding and conclusion, and it should not be disturbed. Plaintiff is entitled to compensation for every loss or injury directly or proximately resulting from defendants' wrongful acts. 'An injured person is entitled to be made whole.' Patusco v. Prince Macaroni, Inc., 50 N.J. 365, 368, 235 A.2d 465, 466 (1967); Cf. 525 Main Street Corp. v. Eagle Roofing Co., 34 N.J. 251, 254, 168 A.2d 33 (1961). See generally 22 Am.Jur.2d, Damages 'IV. Measure and Elements of Compensatory Damages,' § 45, at 71--72 (1965).

We proceed now to consider the plaintiff's claim for 'punitive' damages, a term interchangeably known as 'exemplary' damages. Generally, they have been awarded only '(w)here the defendant's wrongdoing has been intentional and deliberate, and has the character of outrage frequently associated with crime.' See Prosser, Torts (3d ed. 1964), § 2, at 9. A plaintiff is given these awards 'over and above the full compensation for his injuries, for the purpose of punishing the defendant, of teaching him not to do it again, and of deterring others from following his example.' Ibid. See McCormick, Damages, § 77, at 275 (1935).

This court in Winkler v. Hartford Acc. and Indem. Co., 66 N.J.Super. 22, 29, 168 A.2d 418, 422 (App.Div.), certif. den. 34 N.J. 581, 170 A.2d 544 (1961), said that '(e)xemplary damages are allowed to punish the wrongdoer for a willful act and to vindicate the rights of a party in substitution for personal revenge, thus safeguarding the public peace.' Accord, LaBruno v. Lawrence, 64 N.J.Super. 570, 575, 166 A.2d 822, 824 (App.Div.1960), certif. den. 34 N.J. 323, 168 A.2d 694 (1961), where the grounds for punitive damages were summarized: '(1) actual malice, which is nothing more or less than intentional wrongdoing--an evilminded act; or (2) an act accompanied by a wanton and wilful disregard of the rights of another.' See generally 22 Am.Jur.2d Damages, § 237, at 323 (1965); Prosser, Torts, Supra. Also, Note, 'Exemplary Damages in the Law of Torts,' 70 Harv.L.Rev. 517 (1957).

In Brown v. Coates, 102 U.S.App.D.C. 300, 253 F.2d 36, 67 A.L.R.2d 943 (D.C. Cir. 1958), homeowners sued a real estate broker to recover damages for alleged fraud. The Court of Appeals held that the evidence sustained the findings that the broker induced plaintiffs to enter into a contract for the exchange of their old house for a new one with the resultant effect that they received no money for the equity in their old house, and that the broker was guilty of a breach of trust. The judgment of $7059 compensatory damages and $7500 punitive damages was affirmed. Circuit Judge Burger (now Chief Justice of the United States Supreme Court), writing for the court, pointed out that the federal judiciary has repeatedly recognized the propriety of allowing punitive damages in a civil case as a punishment for, and as a deterrent of, various forms of wrongful behavior. The following language in his opinion is significantly applicable to the facts presently under review:

* * * The types of behavior that courts have considered sufficiently 'wrongful' so as to warrant the assesment of punitive damages, have varied greatly. Usually the defendants' actions have been labeled 'wilful,' or 'malicious' or 'reckless' or 'wanton' or 'outrageous.'

We need not adopt any single, particular formula in upholding an award of punitive damages against a faithless agent. * * * (O)nce it has been shown that one trained and experienced holds himself out to the public as worthy to be trusted for hire to perform services for others, and those so invited do place their trust and confidence, and that trust is intentionally and consciously disregarded, and exploited for unwarranted gain, community protection, as well as that of the victim, warrants the imposition of punitive damages. * * * Punitive damages are particularly apt in such circumstances because they both punish the wrongdoer, and offer the wronged a greater incentive to bring derelicts to justice a process which can subject the victim to considerable expense and trouble. (253 F.2d, at 40)

See Annotation, 'Right of principal to recover punitive damages for agents' or brokers' breach of duty,' 67 A.L.R.2d 952 (1959). Cf. Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968).

A California case, Bate v. Marsteller, 232 Cal.App.2d 605, 43 Cal.Rptr. 149 (D.Ct.App.1965), involved a somewhat analogous situation. There plaintiffs-vendors were awarded compensatory damages of $14,000 together...

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