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Earlin v. Mors

Decided: January 17, 1949.


On appeal from the former Supreme Court.

For affirmance: Chief Justice Vanderbilt, and Justices Case Heher, Oliphant, Burling and Ackerson. For reversal: None. The opinion of the court was delivered by Burling, J. Justices Heher and Oliphant concur in result.


This is an appeal from a judgment of the former Supreme Court for the defendant based upon a directed verdict in his favor. The complaint demanded judgment for the amount of earnest money and the search fees incurred by the plaintiff incident to the examination of title to land referred to in a contract of sale of real estate.

In passing upon a motion for a directed verdict the evidence will not be weighed. A party against whom the motion is made is entitled to all the evidence in his favor and to have all legitimate inferences drawn therefrom regarded as true. When fair minded men may honestly differ as to the conclusion to be reached on that evidence, controverted or uncontroverted, the case must be submitted to the jury.

Giving due effect to this rule, we proceed to the facts: At the trial evidence was presented from which the following facts stand undisputed. On June 28, 1946, plaintiff agreed to purchase from defendants certain lands and premises in Livingston, Essex County. The written agreement of sale called for settlement on August 1, 1946 and acknowledged receipt of $500 paid as earnest money. Another $800 was paid by plaintiff the following day. On July 10, 1946, plaintiff's attorney wrote to the broker who had negotiated the sale and represented

both parties and informed him that plaintiff had elected to "rescind" the contract for the reason that plaintiff was unable to raise the necessary funds. On July 16, 1946 defendant's attorney notified plaintiff that defendants would be prepared to close title at the office of the broker on the date specified in the agreement of sale and fixed the hour at 10 A.M. The letter further stated that title must close on the specified day as defendants were leaving for California the next day. On August 1, 1946 the date set for settlement defendants appeared in the broker's office. There was no appearance of or for the plaintiff.

On August 23, 1946 the present counsel for plaintiff addressed a letter to defendants' attorney wherein he set forth seven alleged defects in title and concluded with the following statement: "Under the circumstances, my client has elected to rescind the contract and does herewith make demand upon your clients for the return of the deposit of $1300.00 plus search fees and costs of $250.00 additional." It developed upon cross examination that the search upon which these objections were based was made between August 6, 1946 and August 10, 1946. On August 19, 1946, defendants executed an agreement of sale of the premises in question to one Siegel who entered into possession on or about August 24, 1946 and settlement was had between these parties on November 22, 1946.

Upon the conclusion of the case the defendant moved for a directed verdict which the Court granted.

The letter of July 10, 1946 was an unqualified statement by the plaintiff that he did not intend to perform the contract. This statement was ignored by the defendant who elected to consider the contract still in effect. At law, the day fixed in the contract is of the essence. Pietsch v. Stirling Home Buildings, 97 N.J.L. 451 (Sup. Ct. 1922) affirmed 98 N.J.L. 569 (E. & A. 1923). Moreover even where time for performance of a contract is not of the essence, one party may by notice make it so. Wyatt v. Bergen, 98 N.J. Eq. 502 (Ch. 1924) affirmed 98 N.J. Eq. 738 (E. & A. 1924), Williston, Contracts, Sec. 852 at page 2388. After defendant's letter of July 16, 1946, the time fixed by the contract, August 1, 1926, was unquestionably of the essence. When at that time the plaintiff failed to

comply, it was he who breached the contract. At that time he could not have based his refusal to perform upon the alleged defects in the title for he was ignorant thereof, the search not being commenced until six days thereafter. The only permissible inference to be drawn from the facts is that plaintiff failed to perform due to his admitted inability to obtain the purchase money.

It is a settled rule that financial inability to perform a contract does not excuse a party from its obligation. Lincoln Bus Company v. Jersey Mutual Casualty Insurance Co., et al., 112 N.J. Eq. 527, 528 (Ch. 1933); Huyler's v. Ritz-Carlton &c. Co., 1 N.J. Misc. 64 (Sup. Ct. 1923); Hopper v. Hopper, 16 N.J. Eq. 147 (Ch. 1863); Williston, Contracts, Sec. 1932, page 541 a. Therefore the plaintiff was in the position of having failed to perform his agreement for an inadequate reason. A consideration of the significance of the commencement of a title search, six days after the date of settlement and nearly a month after the effort on the part of plaintiff to evade his contractual duties leads inexorably to the conclusion that the search was ordered by way of an afterthought for his own delinquency, with the hope it would disclose objections to the title and had no relation in fact to the breach. The plaintiff attempts to infer knowledge on the part of the defendants of the alleged defects in the title from the evidence of Siegel, the eventual purchaser of the property, who testified that defendants had advised him to have a title search on the property. From this meager statement the plaintiff infers that defendants knew they possessed an unmarketable title. It is a matter of common knowledge that titles are searched ...

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