Clapp, Hall and Hegarty. The opinion of the court was delivered by Clapp, S.j.a.d.
Plaintiff entered into a contract with the defendant for the purchase of three vacant lots in the Borough of Maywood, N.J., paying $500 down on account of the purchase price. Under the terms of the contract, defendant was to refund to him the $500, together with search and legal fees not exceeding $125, in the event it could not give a "marketable title." In this action -- so far as we need concern ourselves with it -- plaintiff sues for the recovery of the $625. Judgment went against him below, and he appeals.
The three lots were part of a tract, 1100' x 600', comprising 44 lots, 28 of them in the borough's residential zone and 16, including the three sold, in one of its light industry zones. The borough conveyed the tract to Milton E. Zerman by deed dated December 16, 1947 and included in the deed the following covenant, which is the source of this litigation:
"The grantee herein agrees to commence the erection of dwellings on said premises, the construction cost of which shall be not less than $6000.00, within a reasonable time after delivery of this Deed."
Zerman then conveyed the tract to a corporation of which he was president, and it erected on 38 of the 44 lots (we are informed) "approximately fifty" one-family dwellings, including nine in the light industry zone. Three of the remaining lots were thereafter conveyed to the defendant, and they constitute the lots sold to the plaintiff.
The case comes before us on an agreed statement under R.R. 1:6-2, approved by the trial Judge, indicating that the central question below, as settled at the pretrial conference, was whether defendant's title was marketable. More particularly, the question was whether Zerman's agreement, above quoted, created a restrictive covenant which would be binding upon his successors in title so as to constitute a breach of the contract to give a marketable title.
Defendant argues that the plaintiff cannot complain of this alleged restriction because, as stated in a printed clause of the contract between them, the conveyance to the
plaintiff was to be made "subject to existing restrictions of record, if any." However in another clause, which was typewritten into the contract, the parties declared it to be their understanding and agreement that --
"the above mentioned land is zoned for light industry. In the event that it is not, then the contract shall be declared null and void * * *."
This latter clause, read with surrounding circumstances, plainly indicates that plaintiff wanted to acquire the land only if it could be used for light industry. In fact, as defendant knew at the time of the making of the contract, plaintiff was buying the land in order to erect a factory on it for his own business. The printed words must yield insofar as they conflict with the underlying purpose of the parties, disclosed in the typewritten words, to convey property for industrial use; they are to be read as requiring the plaintiff to take title subject to restrictions of record other than those designed to exclude light industry.
This brings us to the principal issue in the case, namely, whether the title to the three lots was marketable for the purposes of light industry. A title is marketable only if there is a reasonable certainty that it will not be called into question, so as to subject the purchaser to the hazard of litigation. La Salle v. La Pointe , 14 N.J. 476, 479-481 (1954); Simpson v. Klipstein , 89 N.J. Eq. 543, 545 (E. & A. 1918). However, a title is not rendered unmarketable merely because a purchaser may be subjected to litigation which has no rational justification. Smith v. Reidy , 92 N.J. Eq. 586, 592 (Ch. 1921).
Can we say, then, that it is reasonably certain that if the three lots were to be used for industrial purposes, the title would not be subject to any rational ...