Conford, Freund and Haneman. The opinion of the court was delivered by Haneman, J.A.D.
Plaintiffs brought suit on December 19, 1957 to recover $2,900, the amount of a deposit paid to defendants under an agreement to purchase realty, and attendant legal expenses, upon the allegation that defendants failed to make final settlement as required by said agreement. Defendants alleged a breach by plaintiffs and counterclaimed for damage for their loss of bargain as established by a later sale of the premises. After a trial without a jury, judgment was entered for plaintiffs and defendants' counterclaim was dismissed.
On September 16, 1957 defendants entered into a written contract for the sale to plaintiffs of a dwelling situate in
the Township of Springfield. The agreement of sale required, inter alia , the payment of a deposit of $2,900. There was no provision for the forfeiture of said deposit upon the failure of plaintiffs to comply with the terms of the agreement as liquidated damages. Final closing was set for December 2, 1957. Time was not made of the essence.
The contract provided, inter alia:
"* * * [T]he said seller, will well and sufficiently convey to the said Purchaser, his heirs, successors and assigns, by warranty deed free from all encumbrance except as hereinafter specified, on or before the Second day of December next ensuing date hereof, * * *. (Emphasis supplied.)
In the event the party of the first part shall be unable to make conveyance to the party of the second part in accordance with this contract because of any objection to or defect in the title to the premises herewith described, which they are unable or unwilling to remove they shall be required to repay to the purchaser the deposit paid herewith, and thereupon the rights and liabilities of the parties hereto pursuant to this agreement shall terminate.
Conveyance is to be made subject to existing restrictions of record, if any, which have been complied with; subject to the effect, if any, of municipal zoning laws. (Emphasis supplied.)
9. National Newark & Essex Banking Company, Newark, N.J., hereinafter referred to as the 'Bank,' is the owner and holder of a bond of Donald T. Jones and Frances C. Jones, h/w, for a loan in the original principal amount of $18,000.00 at 5% for 20 years dated July 31, 1956 secured by a first mortgage of said Donald T. Jones and Frances C. Jones, h/w, of even date therewith covering the above premises, recorded in the office of the Register of Deeds for Union County, New Jersey, in Book 2144, page 450.
The mortgage provides that the indebtedness secured thereby shall become due and payable forthwith at the option of the Bank in case of the conveyance of the mortgage premises.
The mortgage premises shall be conveyed to Russell S. Bertrand and Esther S. Bertrand, h/w, of South Orange, N.J., hereinafter referred to as the purchasers pursuant to the within agreement of sale.
The purchasers hereby agree: 1. To make application forthwith to the Bank to waive its aforementioned right under the terms of said mortgage by reason of such conveyance. 2. To permit the purchasers to pay the balance of the principal of said bond in the amount of $17,276.87 with interest thereon at the rate of 5%
per annum from and after payment due December 1, 1957, by continuing the payment of the regular monthly installments of principal and interest on said loan on the first day of each successive month beginning as of January 1, 1958 in the amount of $118.80 for the remainder of the loan term in accordance with the provisions of said bond and mortgage. 3. To release Donald T. Jones and Frances C. Jones, h/w, from any and all liability on the bond simultaneous with the conveyance of said premises and the assumption of the bonded indebtedness by the purchasers, effective December 1, 1957.
Consent by the Bank to modify the terms of the bond and mortgage as above set forth shall be evidenced by notification in writing to be received by the parties hereto not later than October 1, 1957, addressed c/o Harry J. Stevens, Inc., 242 Millburn Avenue, Millburn, N.J.
Upon notification, purchasers shall execute assumption agreement when, as and if requested by the Bank."
On November 26, 1957 counsel for plaintiffs advised counsel for defendants that they would "not be in a position" to make final settlement on December 2, 1957. The stated reason for the inability to so settle was plaintiffs' lack of sufficient funds to make the final payment. Defendants' counsel, by letter, thereupon set December 16, 1957 as the date for final settlement and stated that "time was of the essence." Plaintiffs, their counsel, the defendant Donald T. Jones, and defendants' counsel were present at the time and place appointed for final closing. Frances C. Jones, wife of Donald, was not present because of her pregnant condition. Plaintiffs had in their possession a cashier's check in sufficient amount to pay the balance of the purchase price. During the closing proceedings, plaintiffs' attorney produced for the first time a form of bond from plaintiffs to the bank, conditioned upon an assumption and payment of the mortgage by plaintiffs, and a "Three Party Agreement" between the bank, plaintiffs and defendants, relieving defendants of any ...