On appeal from Superior Court, Chancery Division.
For affirmance -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Burling, Jacobs and Brennan. For reversal -- None. The opinion of the court was delivered by Burling, J.
[20 NJ Page 528] The sole issue here was raised by the cross-claimants seeking to have a certain deed executed by Mahwah Realty Co., Inc., declared a mortgage. From a determination adverse to this contention in the Superior Court, Chancery
Division, an appeal was taken to the Superior Court, Appellate Division, which we certified prior to a review in that court.
The disposition of this cause does not involve any novel or intricate legal principles. It is a factual dispute, and like all cases of similar complexion the court desires to have an abiding conviction that all facets of the case have been fully and truthfully disclosed, especially when an attorney is involved as one of the parties to a business proposition.
A review of the record, briefs, and an evaluation of the attitudes displayed at the oral argument, leaves us without that comfort and we are obliged to dispose of the case upon the material at hand.
The Mahwah Realty Company is a New Jersey corporation, wholly owned or controlled by Michael Clemens and his wife Jean Allegro Clemens, also known as Jean Allegro. Of the ten outstanding shares Michael Clemens owns four, his wife, five, and the latter's sister holds one qualifying share. In 1953 Mahwah had one asset -- a 43-acre tract of land in Mahwah, Bergen County, New Jersey. The property was heavily encumbered and the Clemens were in dire financial straits. In March of 1953 the Clemens, acting for Mahwah, entered an oral agreement with Ralph and Millie Rogo for the sale of the property. The transfer was conditional upon a required payment of $20,000 within ten days. The Rogos failed to comply with the condition and the agreement was never consummated.
Still in need of funds to assuage their creditors, the Clemens sought assistance from David Cohn, an attorney and member of the New Jersey Bar. Cohn had been their attorney on previous matters. The 43-acre tract owned by Mahwah Realty Company was the lever in obtaining the desired financial assistance. Whether Cohn arranged to purchase the property in question or loan money to the Clemens taking a mortgage on the property as security is the ultimate controversy presented. At any rate, in April 1953 an option contract was executed for a consideration of $5,000. Cohn's son-in-law, Allen Weintraub, was named as optionee. If the
option was exercised within 35 days of the date thereof the $5,000 was to be credited upon an agreed purchase price of $23,000.
The option was exercised, for on May 15, 1953 title was closed and a deed, absolute on its face, was executed and delivered by Mahwah to Weintraub. Considerable ambiguity is shed upon the intention of the parties at the closing by a letter agreement written three days later by David Cohn at the instance of Michael Clemens and signed by both:
"On behalf of Allen Weintraub, I agree that the deed of conveyance made by Mahwah Realty Co. Inc., was conveyed to him subject to the following terms:
1. Mr. Weintraub is to receive from you, upon resale, first -- payment of the funds representing the consideration mentioned in the deed, namely $19,800.00 ...