On appeal from Superior Court, Law Division.
McGeehan, Colie and Eastwood. The opinion of the court was delivered by Colie, J.A.D.
This appeal is from a judgment of the Superior Court, Law Division, which dismissed a petition in the suit of Massari v. Einsiedler in the Law Division whereby Einsiedler sought to reform certain instruments and to compel the Massaris to accept payment of a judgment in accordance with the instruments as reformed and asking certain incidental relief, and which also dismissed the complaint filed by Einsiedler in the Chancery Division against the Massaris whereby he sought the same relief asked in the petition heretofore mentioned.
It is necessary to epitomize the prior steps in the litigation. As the parties appear sometimes in the role of plaintiff and sometimes as defendant, clarity will be served if they are described by name rather than by their status in the various suits.
The Massaris were owners of a business known as Accurate Bushing Co. which Einsiedler agreed to purchase for $364,000. A written sales agreement was executed and the business was turned over to Einsiedler who paid $194,586.65 and interest on the purchase price. Paragraph 3 of the sale agreement referred to a "security trust agreement" which dealt with the obligation of Einsiedler to use the proceeds from sale of stock of Accurate Bushing Co. stock to liquidate the unpaid balance of the purchase price. The balance being unpaid the Massaris brought suit in the Law Division demanding $170,584.26 and also a restraint against Einsiedler from disposing of any stock of Accurate Bushing Co. or its assets. Einsiedler answered admitting the amount due and setting up by way of defense that he had tendered certain shares of stock of Accurate Bushing Co. at their then book value in payment of the indebtedness in accordance with the terms of an alleged loan agreement. Without including all the legal steps taken, suffice it to say that a motion for summary judgment in favor of the Massaris was entered by the Law Division judge. Thereafter Einsiedler filed a petition and supplement thereto seeking to compel the Massaris to accept the aforementioned stock
at book value in reduction of the judgment debt. The Law Division dismissed the petitions and an appeal from that order and the summary judgment was taken. The Appellate Division affirmed. Massari v. Einsiedler , 3 N.J. Super. 40; cert. denied, 1 N.J. 604.
The opinion settles the law of the case in three particulars: First, that the Law Court considered the answer and the defense; second, that the defense in the answer based upon the "loan agreement" and which was also the basis of the petition and supplemental petition were one and the same; and, third, that the "loan agreement" was inadmissible in evidence to vary the terms of payment as set up in the "sale agreement."
Subsequent to denial of certification by the Supreme Court, the receiver, who had previously been appointed, fixed a date for sale of the Accurate Bushing Company stock which had been taken under execution. Before the date of the sale, Einsiedler filed a complaint in the Chancery Division seeking (1) to enjoin the receiver's sale, (2) to reform the "sale agreement" by incorporating therein that "the said loan agreement and security trust agreement to provide that if the purchaser (Einsiedler) shall make any breach or default under the terms thereof, or in the payment of the moneys payable thereunder, the sellers (Massaris) shall proceed only against the shares of stock of Accurate Bushing Company owned by the purchaser and shall accept in payment of the balance due, such number of shares of stock of Accurate Bushing Company as shall have a book value determined as of default equal to the balance due to the sellers." Reformation of the "loan agreement" and "security trust agreement" to conform to the tenor of the reformed "sale agreement" was also sought. The Chancery Division denied an injunction against the receiver's sale, "without prejudice, however to any application which the plaintiff may make to the Law Division." Thereafter Einsiedler sought the same relief in the Law Division and by subsequent amendment restitution and damages for breach of the contract as reformed. By consent all matters then
pending in the Law Division were consolidated. On motion of the Massaris the consolidated petition and complaint were dismissed as stated in the judgment under appeal.
Appellant's first argument for reversal is that the Massaris breached the agreement, not when the money judgment was entered but subsequent thereto when by levying upon the Accurate Bushing Company stock, they forced the sale to a third party. This argument rests upon the premise that the agreement between Einsiedler and the Massaris was (a) the sale agreement, (b) the security trust agreement and (c) the loan agreement. In the original suit of Massari v. Einsiedler the defendant sought by way of a petition filed after summary judgment had gone against him to compel the Massaris to accept shares of Accurate Bushing Company at book value in satisfaction of the judgment. The Appellate Division affirmed the dismissal of the petition upon the ground that the relief sought was based upon the terms of the Loan Agreement which was a unilateral document signed by Einsiedler alone and could not be admitted in evidence to vary the terms of the Sales Agreement which fixed the terms of payment between the parties thereto.
The significant fact is that Einsiedler at no time prior to denial of certification by the Supreme Court sought reformation. The facts upon which he subsequently based his asserted right for reformation when he filed a complaint in the Chancery Division in June, 1949, were in existence and known to him in 1946 when the sale of the business took place. The complaint in the suit of Massari v. Einsiedler was filed in September, 1948, and had Einsiedler then elected to do so, he might have sought reformation in that suit instead of waiting until June, 1949. The original law action of Massari v. Einsiedler was based upon the unpaid balance of the purchase price of the sale of the business. His answer set up defenses based upon the alleged "loan ...