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Ross v. Realty Abstract Co.

Decided: May 15, 1958.

MANUEL ROSS AND ISRAEL ROSS, CO-PARTNERS, TRADING AS ROSS PLUMBING AND HEATING CO., PLAINTIFFS-APPELLANTS,
v.
REALTY ABSTRACT COMPANY, A CORPORATION, AND WILBUR A. BARRETT, DEFENDANTS-RESPONDENTS



Goldmann, Freund and Conford. The opinion of the court was delivered by Conford, J.A.D.

Conford

The Camden County Court, sitting without a jury, found in favor of the defendants in an action wherein the corporate defendant was sought to be held on an agreement of guarantee, and the defendant Barrett, alternatively, for breach of implied warranty of authority to make the agreement on behalf of the corporation as its president and executive officer.

Plaintiffs are plumbing contractors. They had entered into contracts with M & J Home Company, builders, to

furnish plumbing installations in two groups of homes at Thompson Street, Camden, one being the 2900 block and the other the 2800 block. The contract for the 2900 block called for 19 installations at unit prices of $800 per house, payable in specified stages of the work at each house, full payment for each being due when plaintiffs had finished work thereon. By June 1954, plaintiffs were owed a net amount of about $1,500 for work on the 2900 block and consequently brought their work almost to a halt. There were then five houses to complete on that block. Very little work had been done by plaintiffs on the 2800 block.

Defendant Realty Abstract Company is a title company which had been engaged by the builder and the construction mortgagee to examine titles, arrange settlements on sales of the houses and disburse funds to contractors and materialmen after checking for and disposing of liens. Its compensation was in the form of title insurance premiums and title examination and settlement fees paid by purchasers of the completed homes. The defendant Barrett, its president, exercised general authority in these matters without consultation with other officers of the corporation or its board of directors. All of plaintiffs' receipts of payment on this work were disbursed to them by Barrett.

Plaintiff Manuel Ross testified that when he slowed down on the work in June 1954, Barrett phoned him and asked him to come in to discuss the matter. He did so and was asked why he was not finishing the job. He explained that he could not afford to put more capital into the job when he was not receiving current moneys due. Barrett then said that if he would finish the plumbing on both the 2800 and 2900 blocks, Realty Abstract would guarantee the payment of all moneys then due and to become due on the 2900 block. He agreed to do so. He testified that he would not have continued with the work on the 2900 block without the guarantee. A week later he signed an agreement in Barrett's office, pursuant to which he and other subcontractors agreed to subordinate any lien rights they might have or obtain in reference to work at the 2800 block to a construction

mortgage lien, provided that M & J Home Company would authorize Realty Abstract Company to withhold from it all moneys to be realized from settlements on sales of homes on the 2900 block and use such funds for the construction of the 2800 block houses.

On July 26, 1954, according to Ross, Barrett sent him a copy of the said agreement signed by the subcontractors, together with a transmittal letter on the letterhead of the corporate defendant and reading as follows:

"July 26, 1954

Ross Plumbing & ...


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