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Four-G Corp. v. Ruta

Decided: May 19, 1959.

FOUR-G CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
SEBASTIAN RUTA AND VIRGINIA RUTA, DEFENDANTS-APPELLANTS AND CROSS-RESPONDENTS



Price, Sullivan and Foley. The opinion of the court was delivered by Foley, J.A.D.

Foley

This is an appeal from a judgment in money damages against defendants (referred to as "Ruta") and a cross-appeal by plaintiff (referred to as "Four-G") from that portion of the judgment denying it specific performance of a contract for the sale of lands. The case is not without history: Four-G Corporation v. Ruta , 25 N.J. 503 (1958); Id. , 45 N.J. Super. 128 (App. Div. 1957).

On June 28, 1955 Ruta gave Four-G an option expiring October 12, 1955 to purchase the premises in question subject to an existing lease and an option granted to Del-Ed, a corporation. The latter instrument fixed July 1, 1961 as the expiration date of the option and $22,500 as the purchase price. Four-G exercised its option but, at the closing on November 10, 1955, disagreement arose respecting matters not mentioned therein. These concerned the demands of Four-G that it share in rents, that $900 posted by Del-Ed as security for the performance of the lease be released to it, and that there be deducted from the purchase price the amount of the commissions claimed by a real estate broker in connection with the transaction. The refusal of defendants to accede to these demands effectuated a collapse of the transaction and a walkout by Ruta.

On December 2, 1955 Four-G filed a complaint for specific performance and on December 5, 1955 a lis pendens was placed on record. At the pretrial conference held ten months later Four-G was allowed to amend its claims by adding thereto:

"Plaintiff further contends that in the event that the court should find the proposed deductions were without merit that it is still entitled to receive the property on payment of the full contract price."

The trial court denied specific performance, holding that the demand for deductions constituted a deviation from the terms of the option.

Appeal was then taken to the Appellate Division which unanimously affirmed the trial court, holding that Four-G

was not entitled to the credits it claimed at the time of the closing and so, having refused to purchase the property unless allowed such credits, it had not tendered the purchase price in accordance with the agreement.

Certification to the Supreme Court followed. 25 N.J. 44. Prior to the hearing of the resultant appeal, Del-Ed exercised its option and Ruta conveyed to King Cone and Reiter, the assignees of Del-Ed. This fact, although known by respondents' counsel (who had attended the closing), was not communicated to the Supreme Court and, as a result, the court decided the case upon the assumption that title to the property was in the respondents. The court held that although two of the credits which Four-G had sought at the closing were not properly claimed, the "general offer to perform" set forth in the complaint was sufficient in the circumstances to entitle Four-G to specific performance upon payment of the agreed cash less the credit of $900 deposit under the lease and the tender of a bond and mortgage for the balance of the purchase price. The judgment of the Appellate Division was reversed and the cause remanded to the Chancery Division for proceedings in conformity with the opinion. 25 N.J. 503.

Thereafter, Ruta was permitted to amend the answer to include an additional affirmative defense to the effect that the assignees of Del-Ed had on June 13, 1957 exercised its option and purchased the property. When the matter came on for hearing in the Chancery Division, testimony was given by a title searcher that the deed from Ruta to King Cone and Reiter had been recorded on September 12, 1957. It further appeared that the instrument bore revenue stamps indicating a cash consideration of $14,000 and that it was subject to a mortgage in the sum of $7,500.

The trial court held that the conveyance was a complete bar to a decree of specific performance but awarded as damages to Four-G for breach of contract by Ruta the sum of rents which had accumulated between the date fixed for ...


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