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State v. Pearson

Decided: February 2, 1956.


Clapp, Jayne and Francis. The opinion of the court was delivered by Francis, J.A.D.


The defendants, husband and wife, were convicted on both counts of an indictment which charged them with obtaining money by false pretenses in violation of N.J.S. 2 A:111-1, and the misappropriation of funds paid to them for the purpose of erecting a house, contrary to N.J.S. 2 A:102-10. They seek a reversal on the ground that there should have been an acquittal on their motion at the close of the State's proof. Errors in the charge of the court to the jury and in the admission and rejection of evidence are also alleged.

N.J.S. 2 A:111-1 provides:

"Any person who, knowingly or designedly, with intent to cheat or defraud any other person, obtains any money, * * * by means of false promises, statements, representations, tokens, writings or pretenses, is guilty of a misdemeanor."

N.J.S. 2 A:102-10 said, at the time of the offense in question:

"All moneys received by a contractor from the owner or mortgagee of real estate for the purpose of having a building erected, constructed * * * are trust funds in the hands of the contractor to be applied to the amount of all claims due or to become due and owing from the contractor to all persons furnishing labor or materials to him for the erection, construction * * * of the building * * *,

and any other reasonable and necessary charge in connection therewith. Any contractor or any officer, director or agent of the contractor, who pays or consents to the appropriation of such funds for any other purpose prior to the payment of all claims and charges for the payment of which the funds constitute a trust fund, is guilty of a misdemeanor."

On July 27, 1953 Robert E. Wirsching and Mildred L. Wirsching, his wife, executed an agreement to purchase a certain lot in the Township of Wantage, Sussex County, New Jersey, from the defendants trading as The Lake Neepaulin Company. The price was $1,700, payable $100 immediately, and the balance in 32 installments of $50 each, the first becoming due on August 27, 1953. Strangely, there is no mention in the writing as to the intervals at which the subsequent installments were to be paid. The parties seemed to have regarded the obligation as a monthly one. In any event, the matter is of no particular significance in the case.

On November 19, 1953 the Wirschings made a second contract with the Pearson Construction Company, a New Jersey corporation, for the erection of a home on the lot referred to. The price was fixed at $7,828, to be paid $2,312 on signing the agreement, and the balance at the option of the contractor in equal monthly payments evidenced by a promissory note or by the assumption of a purchase money mortgage. This contract was signed by Pearson Construction Company, William Wallace Pearson, president, and by Isabel Pearson. There was no designation after her name, although she was the secretary of the company. The corporate seal was not affixed.

The State does not contend that Pearson Construction Company was not a corporation. But the second count of the indictment incorrectly alleges that the building contract was made with and the down payment given to the defendants as individuals doing business under the name of Pearson Construction Company.

The proof of the State disclosed that the balance due was to be met by a purchase money mortgage to be assumed by the Wirschings. A little over a month after the consummation

of this agreement, William Pearson wrote them saying that it superseded some of the provisions of the land purchase agreement as far as payments were concerned. He informed them that in view of the substantial payment already made, no further installments on the lot need be remitted until the house was completed, at which time the mortgage would be assumed. He told them, also, that an application for their mortgage had been submitted to the Howard Savings Institution of Newark, which would look into their credit status within a week or ten days. And he said that if the bank did not complete its investigation within that period, the building work would proceed so as to insure delivery no later than June 1, 1954.

Shortly before the actual signing of the construction contract, but during the negotiations, Pearson did the excavation work for the cellar of the house. The State's principal witness, Robert E. Wirsching, said Pearson told him that it would expedite the building, particularly as the frost would come soon and prevent operations. Wirsching expressed the belief that the work was performed to influence the signing of the contract.

During the negotiations Wirsching was advised that materials and equipment for the construction work were available and stored in a barn, apparently at the nearby lake. He took Pearson's word for it. Materials were never ...

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