On appeal from the Superior Court, Appellate Division.
For reversal -- Chief Justice Weintraub, and Justices Heher, Wachenfeld, Burling, Jacobs and Proctor. For affirmance -- None. The opinion of the court was delivered by Weintraub, C.J. Heher, J. (dissenting in part).
Plaintiff sued for specific performance of a contract for the sale of land. The parties met to close title but the closing failed when plaintiff claimed credits to which defendants would not agree. The trial court found the credits were not proper and that plaintiff was not entitled to specific performance upon payment in accordance with the court's view of the amount payable under the contract. The Appellate Division affirmed, 45 N.J. Super. 128 (1957), and we granted certification. 25 N.J. 44 (1957).
Defendant, Sebastian Ruta, owns a tract of land in Paramus. On April 12, 1955 he and his wife contracted with plaintiff's assignor to sell part for $17,500 and in the same instrument gave an option to purchase an additional tract for $22,500. Title was closed on the first parcel on June 28, 1955 and the option was at that time re-executed to permit separate recording.
The option provided for exercise by October 12, 1955 by registered mail, the date of closing to be "no later than thirty (30) days from and after the date of notification." The required notice was given on September 29, 1955 and the parties agreed on November 10, 1955 for closing.
The option provided it "is subject to a present lease and option to purchase granted by Ruta to Del-Ed, a corporation." The lease called for a monthly rent of $150 payable in advance on the first day of each month. It provided for payment of $900 to the landlords "as security for the performance of the terms and conditions herein contained," and "It is further understood that said deposit shall apply on the rent for the last six months of the term hereof."
The option was silent with respect to adjustments. Plaintiff claimed credit for the November rent, saying it was
ready to close in October, and the parties agreed to the figure of $100. Thereupon plaintiff's attorney prepared a closing statement showing also credits for $900, the deposit under the Del-Ed lease, and for $1,750, the sum payable by defendant to the broker, for which plaintiff produced an assignment to it. Defendant demurred and left the meeting.
In the absence of an agreement providing otherwise, rents which accrue before title passes belong to the vendor and rents thereafter accruing belong to the purchaser, without apportionment in either case. Moran v. Fifteenth Ward B. & L. Association, 131 N.J. Eq. 361 (Ch. 1942); 92 C.J.S. Vendor and Purchaser § 288, pp. 159-162; 32 Am. Jur., Landlord and Tenant, § 456, p. 374. Neither party challenges this rule, and accordingly plaintiff concedes it could not insist upon a credit for any part of the November rent. As to that adjustment, it relies upon the understanding reached at the closing, but the understanding having been tentative for the purpose of a closing that failed, plaintiff's obligation in this suit must be measured by the option agreement. The trial court and Appellate Division so concluded, and we agree.
But we have a different view with respect to the deposit of $900. Our cases hold that a deposit as security for performance of a lease constitutes a pledge between the immediate parties, and a grantee of the landlord is not chargeable with its return unless he expressly assumes liability or receives a credit for it against the purchase price. Kaufman v. Williams, 92 N.J.L. 182 (E. & A. 1918); Schmidig v. O'Baggy, 5 N.J. Misc. 554 (Sup. Ct. 1927); Cummings v. Freehold Trust Co., 118 N.J.L. 193 (E. & A. 1937); Partington v. Miller, 122 N.J.L. 388 (Sup. Ct. 1939); 52 C.J.S. Landlord and Tenant § 473, p. 224. If the deposit here ...