The plaintiff herein has filed a complaint in the nature of an interpleader, alleging the following facts:
The defendants Gralia entered into an agreement with the defendants Kurmis and Malinauskas for the sale to the latter of a certain parcel of real estate situate in the Borough of National Park, County of Gloucester and State of New
Jersey. Under the terms of said agreement there was deposited with the plaintiff the sum of $3,400 in escrow, to be paid to the Gralias upon final settlement and closing. On the date set for final settlement the defendants Kurmis and Malinauskas presented themselves at the appointed place and tendered the balance of the purchase price. However, they refused to accept title, since the Commonwealth Title Company of Philadelphia, Pa., would not insure the title as marketable and free and clear of all encumbrances, and since the title was not so marketable and free and clear of all encumbrances as was required by the agreement of sale.
The agreement of sale provided as follows:
"4. Title to be delivered for the property shall be marketable title and such as will be insured by a reputable title company at regular rates and shall be free and clear of all encumbrances."
It is admitted by all parties hereto that the property was subject to two sets of restrictive covenants contained in deeds (1) of John D. Phillips to National Park Association, and (2) of National Park Association to Clement L. Burtnett, both of which deeds are in the Gralia chain of title. Without reciting the express terms of the restrictive covenants in detail, a brief summary thereof will suffice for present purposes. They provide: (1) a prohibition against the use of the property for certain specified purposes, (2) set-back restrictions, (3) that the property shall be subject to a tax or assessment to carry out future sanitary requirements, (4) a prohibition against any business being conducted on Sunday, and (5) that the property shall be under and subject to whatever express conditions, restrictions and regulations "may hereafter from time to time be made by the said party of the first part hereto, for carrying out and enforcing the above conditions and restrictions, and the rules and regulations necessary to insure the original intention and purpose of the party of the first part in founding and maintaining a Christian resort."
The defendants Gralia seek to obtain the funds held by plaintiff as a forfeit under their agreement of sale, alleging a breach by the other defendants for failure to pay the balance of the purchase price at the time provided in said agreement, and defendants Kurmis and Malinauskas seek to obtain said funds, alleging a breach of the agreement by the Gralias for failure to deliver title in accordance with said agreement.
The primary question is, therefore, whether the defendants Kurmis and Malinauskas were within their rights in rejecting the proffered deed.
The agreement called for a title which should be "marketable" and "free and clear ...