On appeal from the Superior Court, Chancery Division.
For affirmance -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For reversal -- None. The opinion of the court was delivered by Wachenfeld, J.
[3 NJ Page 112] This is an appeal from the Superior Court, Chancery Division, certified here on our motion.
On September 20, 1948, the parties entered into a contract whereby the appellant agreed to purchase and the respondents to sell certain real estate in the City of Passaic. The contract provided title would close November 1, 1948, and that the deed should be delivered and received at the offices of Corbin & Corbin, respondents' attorneys, in Passaic. The purchase price was $25,000, of which $1,000 was to be paid on execution of the contract, $4,000 on delivery of the deed and the remaining $20,000 secured by bond and mortgage. The agreement further provided:
"The conveyance of the above described premises will be made subject to state and municipal requirements relating to land and buildings, their construction and use and violations thereof, if any; subject to restrictions of record, if any; subject to such state of facts as an accurate survey and inspection of the premises would disclose and subject to the rights of existing tenancies."
Because a title search was not completed by November 1st, the day set for the closing, appellant requested additional time. It was granted but only on condition that he pay an additional $500 deposit on the purchase price and waive a condition in the contract making the sale contingent upon a certain use of the property being allowed. The additional deposit was paid, the condition referred to waived and a supplemental agreement entered into on November 8th extending the closing date to December 1st and again stipulating the Passaic offices of respondents' attorneys as the place where it was to occur.
Having discovered that a second mortgage on the property, made in 1925, had not been cancelled of record, respondents were not ready to convey on December 1st. No demand for performance was made on that date and no action taken in the matter until the end of the month when, by letter, appellant's attorney asked for the return of the deposit money. On January 7, 1949, another letter followed from the attorney stating time was of the essence of the contract, demanding that title be closed on January 21st at his office in Paterson, New Jersey, by delivery of "a deed free and clear of all encumbrances," and stating further that the appellant would
expect to receive a cancellation or satisfaction of all encumbrances of record.
In the meantime, respondents, in order to clear title to the property, filed a complaint pursuant to R.S. 2:66-1 et seq., in the Superior Court, Chancery Division, to cancel the outstanding second mortgage which, according to affidavits filed in the court below, had been satisfied but not cancelled of record. The bond and mortgage had been assigned in 1932 to Gladys G. Quick as trustee for two corporations which were the beneficial owners and she was named as defendant in the action. The corporations were not joined as parties defendant. On January 21st, the closing date set in the letter, this action had not been concluded and respondents were not prepared to close title. Gladys Quick did not file an answer and, pursuant to an order of the Chancery Division, the mortgage was cancelled of record on January 25th.
Appellant belatedly decided not to go through with the contract and on January 26th a complaint was filed to compel him to purchase. He counterclaimed for the amount of the deposit money, damages and costs, asserting he was justified in his refusal to perform the contract because (1) time was made of the essence of the contract by the supplemental memorandum of November 8th which extended the closing date or, in any event, by the letter of January 7th setting a new closing date for January 21st, and (2) there was not a marketable title since the beneficial owners of the uncancelled mortgage the two corporations for which Gladys Quick held the mortgage as trustee, were not joined as parties defendant to the action for cancellation. The court below found for the respondents and ordered specific performance of the contract, with modification as to the date for closing title.
The first inquiry is whether or not time was made of the essence of the contract by the supplementary agreement of November 8th. Where time is not specifically made of the essence, the intention of the parties to make it so must be clearly spelled out either by an examination of all the ...