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Thermoid Co. v. Consolidated Products Co.

Decided: June 11, 1951.

THERMOID COMPANY, PLAINTIFF-RESPONDENT,
v.
CONSOLIDATED PRODUCTS COMPANY, INC., DEFENDANT-APPELLANT



On appeal from the Superior Court, Law 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 Vanderbilt, C.J.

Vanderbilt

This is an appeal from the judgment of the Law Division of the Superior Court in favor of the plaintiff in the sum of $3,091.49. The appeal, taken to the Appellate Division of the Superior Court, has been certified here on our own motion.

The plaintiff instituted this action to recover the cost of defending a suit instituted in California by Alumbaugh & Company for commissions on the sale of the plaintiff's California plant to the defendant. The basis of the suit was a letter dated April 27, 1946, in which the defendant agreed to save the plaintiff harmless from brokerage claims arising

out of the sale. In the complaint, however, the plaintiff alleged that the contract for the sale of the California plant had been executed on April 16, 1946. In due course the plaintiff moved for summary judgment and the defendant made a cross motion to dismiss the complaint on the ground that the promise of indemnity contained in the letter of April 27, 1946, was unenforceable for lack of consideration. Both motions were denied and the plaintiff was given leave to amend its complaint.

The plaintiff then filed an amended complaint, again alleging a contract of sale on April 16, 1946, but adding that there were two redrafts of this contract, both dated April 16, 1946, the latter of which, however, was delivered on May 2, 1946. The amended complaint differed further from the original complaint in alleging that the defendant specifically gave assurance to the plaintiff that Alumbaugh & Company was not the broker in the transaction; that the indemnity stated in the letter of April 27th was given verbally before April 16th; and that the execution at a later date of the contract of April 16, 1946, for the sale of the California plant was consideration for the letter of indemnity of April 27, 1946. To the amended complaint the defendant filed an answer admitting the existence of the letter of April 27th but denying the other facts alleged in the amended complaint. In addition, the defendant set up several separate defenses, among them that there was no consideration for the contract of indemnity, that liability for the payment of counsel fees and expenses was not within the terms of the indemnity agreement, and that the plaintiff could not prove the indemnity agreement without varying the terms of the April 16th contract for the sale of the California plant. Again motions were made by the plaintiff for summary judgment and by the defendant to dismiss the complaint. The trial court denied both motions and filed a memorandum opinion in which it held that the consideration for the letter of indemnity of April 27th was the execution on May 2, 1946, of the contract of sale in its amended form, that there was no doubt as to

the ability of the parties to enter into a separate agreement apart from the contract of sale, but that a factual question existed as to whether or not the indemnity agreement contemplated indemnification for attorney's fees and costs in defending a suit brought by the broker for commission, and that this factual question must be submitted to a jury for determination.

The parties then entered into a stipulation of facts and submitted the case to the court for determination without a jury. The stipulation set forth that the plaintiff had a plant in California for sale and entered into negotiations with the defendant for its sale between April 3, 1946, and April 16, 1946. The parties came to terms for the purchase of the plant for $400,000 on April 16, 1946, and an agreement in the form of a letter was signed by the parties and the defendant paid the plaintiff $50,000 on that date. On April 20th the plaintiff, through its counsel, sent a redraft of the contract to the defendant in the form of a letter in which certain changes were incorporated, the redraft still bearing the date of April 16, 1946. Thereafter the sales contract was again changed in slight degree at the plaintiff's request and was finally executed again by the parties on May 2, 1946, this final redraft likewise bearing the date of April 16, 1946. In the period between April 3rd and April 16th, 1946, when negotiations for the sale were in progress, the defendant assured the plaintiff that there was no broker involved in the transaction. The occasion for this assurance was that the plaintiff had received another offer for the property subject to a brokerage commission of about $25,000, which would also have netted the plaintiff $400,000 on the sale of its plant. On April 20, 1946, the defendant wrote to the plaintiff advising it that there was no broker involved in the transaction and that it would be glad to execute any affidavit required on the subject. The plaintiff rejected this letter as not setting forth what it desired and instead sent the defendant another letter requesting that it be signed and returned. On April 27th the president of the defendant corporation signed the

letter and returned it to the plaintiff. The body of the letter reads as follows:

"This will confirm our discussion pursuant to the conclusion arrived at under the terms of which we purchased your Los Angeles plant (acquired by you ...


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