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Borough of Brooklawn v. Brooklawn Housing Corp.

Decided: September 18, 1942.

BOROUGH OF BROOKLAWN, ASSIGNEE OF THE UNITED STATES OF AMERICA, PLAINTIFF-APPELLANT,
v.
BROOKLAWN HOUSING CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY, MICHAEL R. GROSS AND WILLIAM OKIN, DEFENDANTS-APPELLEES



On appeal from a judgment of the Supreme Court.

For the plaintiff-appellant, Wilfred B. Wolcott.

For the defendants-appellees, Louis B. LeDuc.

Wells

The opinion of the court was delivered by

WELLS, J. This is an appeal from a judgment entered in the New Jersey Supreme Court, Camden County, in favor of the defendants, Brooklawn Housing Corporation (hereafter called the Housing Corporation) and Michael R. Gross and William Okin, and against the plaintiff, Borough of Brooklawn (hereafter called the Borough).

On November 4th, 1931, the United States Shipping Board (hereafter called the Shipping Board), an agency of the United States of America, entered into an agreement with the Housing Corporation for the sale of certain tracts of land and premises and assignments of certain mortgages on tracts of land

and premises located in the Borough of Brooklawn, Camden County. For the purchase of these tracts of land and premises and mortgages, the Housing Corporation agreed to pay $227,500, with $25,000 "as a good faith deposit" and the balance at times as specified by the agreement.

This contract also provided that the Housing Corporation did "guarantee the payment to the Borough of Brooklawn, within the period of one year from the date of this contract, of any and all taxes, assessments for public improvements, and water service or water rent charges, with interest, penalties and costs and any and all charges thereon, now assessed, levied or charged against the properties covered by the bonds and mortgages * * * or which may be assessed, levied or charged against the same at any time prior to the delivery of the assignment or assignments of a bond or bonds and a mortgage or mortgages described * * *. Provided that this paragraph shall not apply to any taxes, assessments or water rents that are not a lien upon the property covered by the mortgage assigned, at the time of such assignment."

On August 16th, 1932, the agreement was extended for a further period, in consideration of which the defendants Gross and Okin guaranteed faithful performance by the Housing Corporation.

Prior to the commencement of the present action the Borough brought suit against the Housing Corporation and the individual defendants, based on the agreement above cited. The theory of that action was that the Borough was a third party beneficiary to the contract and entitled to sue thereon in its own name to recover unpaid taxes on certain of the mortgaged premises although it was not a party to the contract in question. Judge Palmer, sitting as a Supreme Court Commissioner, ordered a nonsuit to be entered in that suit on two grounds; first because the Borough was not a third party beneficiary within the meaning of the law permitting suit by such a party, and secondly, because a suit for the collection of taxes could not be maintained ex contractu but only by following the prescribed statutory procedure. This

court, on appeal, sustained the nonsuit on the first ground, not passing on the second. Borough of Brooklawn v. Brooklawn Housing ...


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