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Zeliff v. Sabatino

Decided: July 28, 1953.

DAVID ZELIFF, PLAINTIFF-RESPONDENT,
v.
ALFONSO SABATINO, FILOMENA SABATINO AND A. ALBERT URDANG, DEFENDANTS-APPELLANTS



Goldmann, Smalley and Schettino. Goldmann, J.A.D.

Goldmann

Defendants appeal from a judgment of $4,200 and costs entered upon a jury verdict in plaintiff's favor. The action was one for damages allegedly resulting from a written representation made by defendants in connection with the sale of real property, later determined to be false.

In July 1950 plaintiff became interested in purchasing a four-story brick building on Main Street, East Orange, owned by defendants Sabatino and consisting of four stores and 25 apartments. He was shown through the premises by a salesman for defendant Urdang, a licensed real estate broker representing the owners. Urdang then furnished plaintiff with an analysis of the annual income and expenses for the building, one of the expense items being the figure of $1,771.08 representing the cost of fuel oil for the period from February 1, 1949 to February 1, 1950. The sale price finally agreed upon was $71,750.

During the course of the negotiations plaintiff several times expressed to defendants the importance of the accuracy of the income and expense figures -- above all he wanted a safe investment and a sure income. Defendants assured him the figures were correct. On August 8, 1950 the parties executed a formal contract among whose provisions was the following:

"It is hereby represented by the sellers * * * that the oil bills for fuel from February 1st, 1949 to February 1st, 1950 amounted to $1,771.08 * * *."

This language was inserted at the insistence of plaintiff and his attorney.

When title was closed on October 5, 1950, defendants delivered the usual affidavit of title which, among other things, recited:

"Deponents further state that, by the acceptance of the deed and the closing of title, the representations contained in the contract shall remain effective between the parties, with the exception of a stipulation as to the attaining of a new mortgage."

Before executing this affidavit defendants were reminded of the fact that the contract contained certain representations as to expenses and that they were to be bound by them notwithstanding the closing of title and delivery of the deed.

During March 1951 plaintiff found that he was spending more for fuel oil than he had reason to expect in light of defendants' representations. Upon investigation he discovered that the bills for fuel oil delivered during the test period from February 1, 1949 to February 1, 1950 totalled $2,148.20, or $377.12 more than the figure represented. In view of a half cent per gallon discount allowed defendants by the oil dealer, the differential figure was actually $282.74. Plaintiff then instituted suit based upon defendants' fraudulent representations as to fuel costs. The action was commenced by attachment. John Sabatino was not served with process and was therefore not a party at the time of the trial.

Plaintiff testified that after examining the submitted income and expenditure figures he calculated the rate of return on the price originally asked for the property, $73,500, would be 6.7%; on the actual sale price of $71,750 it would be 6.9%. His expert witness Linnett, a realtor-appraiser whose qualifications were not challenged, testified that in paying $71,750 for property of the type involved, a return of 6.7% or 6.9% on the investment was reasonable. Linnett further testified that a reduction in net income of $282.74 -- the fuel cost discrepancy -- would result in a loss to the buyer of $4,220 if capitalized at 6.7%, or of $4,097.67 if capitalized at 6.9%.

Defendants' attempted explanation of the discrepancy in the fuel oil figure was that although oil had been delivered in January 1950, the last month of the test period, bills were not presented until after February 1, 1950, so that the payment then made had not been included in ...


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