Sunset Beach Amusement Corp. v. Belk
Decision Date | 08 February 1960 |
Docket Number | No. A--54,A--54 |
Citation | 158 A.2d 35,31 N.J. 445 |
Parties | SUNSET BEACH AMUSEMENT CORPORATION, a corporation of the State of New Jersey, and Olympia Amusement Corporation, a corporation of the State of New Jersey, Plaintiffs- Appellants and Cross-Respondents, v. Marvin L. BELK, Joseph Varbalow and Joseph Varbalow Realty Company, a corporation of the State of New Jersey, Defendants-Respondents and Cross-Appellants, and West Jersey Title and Guaranty Company, a corporation of the State of New Jersey, Defendant-Respondent. |
Court | New Jersey Supreme Court |
W. Louis Bossle, Camden, for plaintiffs-appellants and cross-respondents (Blaine E. Capehart, Camden, attorney; W. Louis Bossle, Camden, of counsel).
Louis B. LeDuc, Camden, for defendants-respondents and cross-appellants.
The opinion of the court was delivered by
Plaintiffs sued for specific performance of a contract for the sale of their amusement park. The trial court found for them and against the buyer, Marvin L. Belk, and his corporate nominee, Joseph Varbalow Realty Company. Their victory, plaintiffs urge, was hollow, since the judgment runs against defendants who presumably cannot pay and fails to reach moneys escrowed for the payment of the purchase price. The trial court determined those moneys belonged to defendant Joseph Varbalow individually and had not been finally committed in the transaction. Plaintiffs seek a reversal of the judgment for Varbalow. Defendants cross-appeal, contending that under the contract plaintiffs were required to accept the initial deposit in lieu of any right to enforce the contract.
Varbalow sought to acquire the amusement park for his son, a sophomore in college, and for his son-in-law, Belk, then unemployed. He planned to furnish the necessary funds. On June 30, 1958 a contract of sale was executed with Belk as buyer. The agreed price was $250,000, with an initial deposit of $25,000 to be held by West Jersey Title and Guaranty Company, the balance to be paid at final settlement. By its terms the buyer was entitled to take possession on July 1 and he did.
On August 15 the parties met at the title company to close the transaction. All adjustments were agreed upon and the usual statement of settlement was signed by the sellers and by Varbalow as attorney for the buyer. The deed to the nominee was placed with the title company. Treasurer's checks for the balance of $225,000 were already in its hands. Several matters remained to be cleaned up and they were noted as follows at the foot of the settlement statement:
None of the matters so reserved was expected to present a problem. One, however, resulted in some delay. Exception No. 2 in the report of title read:
The buyer had not obtained a survey prior to the date of settlement, and when thereafter he did, encroachments upon public streets were revealed. Apparently they were 'paper' streets. At any rate, the difficulty was resolved expeditiously and prior to the trial of this matter, the streets being vacated by the municipality. Schultz v. Pollock, 102 N.J.Eq. 157, 139 A. 902 (Ch.1928), affirmed on opinion below 104 N.J.Eq. 205, 144 A. 920 (E. & A.1929); Paradiso v. Mazejy, 3 N.J. 110, 69 A.2d 15 (1949). Belk was notified promptly and he relayed the information to Varbalow. Time was not of the essence, and it is clear that plaintiffs were in a position to perform fully on November 10, the date the streets were vacated. The title company undoubtedly would have transmitted the deed and disbursed the funds, Cooper v. Bergton, 18 N.J.Super. 272, 277, 87 A.2d 358 (App.Div.1952), but for the circumstance that Varbalow had failed to release a hold he claimed upon the treasurer's checks.
The complaint was filed on October 8, 1958, in advance of the vacation of the streets. Plaintiffs correctly apprehended that a suit would be necessary. They had learned that Varbalow had not endorsed the treasurer's checks. Moreover, shortly after the settlement meeting of August 15, Varbalow asserted the physical condition of the structures had been misrepresented and pressed for an abatement of $25,000 in the purchase price. There was no basis for Varbalow's demand. The trial court so found, and its finding is not questioned before us. Despite the institution of suit, Belk and his corporate nominee continued to operate the park. On December 29, 1958 they tendered a return of possession, which plaintiffs refused. Defendants continued in possession--they say to protect the subject matter--until February 2, 1959, when upon plaintiffs' application a custodial receiver was appointed to continue the operation Pendente lite.
It is more convenient to start with the cross-appeal.
It revolves about paragraph 15 of the contract which reads:
'If the sellers are in a position to, and actually can tender a deed or deeds, and a bill of sale or bills of sale, and discharge all of the obligations undertaken by the sellers in this agreement and, in the event of the buyer not making final settlement in accordance with the terms of this agreement, the payment or payments made on account, sellers shall keep the deposit as liquidated damages for failure of the buyer to settle without further liability on the part of the buyer to make settlement, or without any further right on the part of the seller to institute any suit either in a law court for damages, or in a Superior Court, Chancery Division, for specific performance against the buyer.'
The parties agree that under this provision the buyer could elect either to perform or to pay the deposit of $25,000 as liquidated damages. See Cohen v. Cohn, 102 N.J.Eq. 245, 140 A. 319 (E. & A.1928); In re Tatnall, 102 N.J.Eq. 445, 141 A. 174 (Ch.1928), affirmed on opinion below 104 N.J.Eq. 486, 146 A. 918 (E. & A.1929); Porter v. Williams, 93 N.J.Eq. 88, 114 A. 790 (Ch.1921), affirmed on opinion below 93 N.J.Eq. 505, 116 A. 926 (E. & A.1922); Hamilton v. Memorial Hospital, 16 N.J.Super. 405, 84 A.2d 660 (Ch.Div.1951); Nolan v. Kirchner, 98 N.J.Eq. 452, 131 A. 104 (Ch.1925). Defendants insist the buyer could choose to lose the deposit at any time up to the actual transmittal of the deed and purchase moneys by the title company to the respective parties despite the buyer's initial decision to perform and the settlement meeting held for that purpose. The sellers, on the other hand, maintain that the buyer had to elect between performance and payment and that an election to perform was final. See Restatement of Contracts (1932), § 325(2); 5 Corbin on Contracts (1951), § 1079, p. 382; Brown v. Norcross, 59 N.J.Eq. 427, 432, 45 A. 605 (Ch.1900). Further, sellers urge, the buyer did in fact make final settlement within the fair meaning of the phrase 'in the event of the buyer not making final settlement in accordance with the terms of this agreement,' and hence the die was cast upon the most generous view of the covenant that may be accorded the buyer. With this we agree, and hence we need not consider whether an election to perform would without more have barred a later decision to pay damages. We are satisfied the trial court properly found for plaintiffs and ordered completion of the settlement.
The meeting of August 15 was a rather typical final closing. The executory contract of sale was consummated subject to some loose ends which the parties conceived to be too minor to warrant postponement of the event. What remained to be done or cleared related to the sellers' performance and not to the buyer's, and the sellers disposed of the stipulated items prior to the buyer's attempt to reverse the election to perform. As defendants themselves stated in their pretrial memorandum, 'The parties endorsed on the settlement sheet their mutual agreement to consummate on condition, among others, that plaintiffs would remove title exception No. 2 requiring a survey disclosing lines and physical conditions, the buyer on its part waiving certain other exceptions raised by the Title Company.' The contract of sale was thus superseded Pro tanto by the agreement for the deposit in escrow of the deed and the moneys. Neither the seller nor the buyer could unilaterally rescind the arrangement, Mecray v. Goldman, 102 N.J.Eq. 559, 142 A. 9 (Ch.1928), affirmed on opinion below 105 N.J.Eq. 583, 147 A. 911 (E. & A.1929); Cooper v. Bergton, supra (18 N.J.Super. 272, 87 A.2d 358), in the absence of an express stipulation permitting it. The settlement agreement contained no option to pay damages, and for the obvious reason that none was intended.
A brief resume shows the parties considered a final settlement to have been made on August 15.
Belk exercised his right to designate a nominee (the corporate defendant) pursuant to paragraph 4 of the contract of sale, which reads:
'Buyer reserves the right at time of final settlement to accept title or designate what person or corporation shall accept title in his place, in which event the sellers hereby agree to convey to such nominee of buyer, with title company approval.'
The deed and bills of sale accordingly ran to the nominee. Defendants curiously urge a 'novation' thereby occurred, substituting the...
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