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Heim v. Shore

Decided: December 29, 1959.


Wick, J.s.c.


[59 NJSuper Page 79] This action concerns an alleged oral agreement for the sale of lands. It was fixed by the pretrial order in several counts: specific performance or damages, rescission and reformation or damages, and damages for unjust enrichment. This court granted defendants' motion

to dismiss at the end of plaintiffs' case. The dismissal was affirmed on appeal except as to the issue of unjust enrichment. Heim v. Shore , 56 N.J. Super. 62 (App. Div. 1959).

Defendants have now presented their case. The defendant, Gertrude R. Saltzman, has denied in detail the various assertions by plaintiffs' witnesses that she had made an oral agreement or understanding with plaintiff Heim to convey the balance of the tract, and the assertions that she knew of and acquiesced in the construction. She testified that she did not learn of the construction of the two houses until October 24, 1956; that then she asked Heim what it meant; that he said he was in need of money and thought he could do business with her on more lots; that she told him to stop construction immediately. She testified that the first time she ever discussed the sale of the balance of the tract with defendants was at her office in December 1956, that no agreement was reached, and that defendants decided that they did not have sufficient funds to engage in further construction. Her testimony, which was completely credible, leads this court to the conclusion that there was never an oral understanding between Mrs. Saltzman and Heim and that she never, with knowledge of the construction, permitted it to be continued.

Even if there was an oral understanding or acquiescence, it does not appear that there would be any unjust enrichment here. To constitute such, there would have to be an enhancement in the value of the land. Damages in this situation are not judged by the value of the efforts and expenditures incurred by the plaintiff. It must be further found that such are a benefit to defendant. Heim v. Shore , 56 N.J. Super. 62, 75 (App. Div. 1959). In Meyers v. Canutt , 242 Iowa 692, 46 N.W. 2 d 72, 24 A.L.R. 2 d 1 (Sup. Ct. 1951), enhancement in value exceeded the cost of improvements, and the plaintiff was limited to cost. The court also cites an earlier case where cost exceeded enhancement and recovery was limited to enhancement. Iowa, then, takes the position that enhancement is not the rule, but

whichever is less is the measure of recovery. Of course, this rule would give the same result in the present case. However, this would not appear to be the rule adopted by the Appellate Division in our case, since the court said that the plaintiff is entitled at least "to the amount by which the market value of the lands is increased as a result of the improvements," citing Restatement, Restitution, sec. 40, comment (f), p. 161, and sec. 155, pp. 614-15. Section 40, comment (f) states:

"In accordance with the rule stated in Sec. 155, where a person rendering the services is alone at fault in causing the mistake, as well as where both parties are either faultless or equally at fault, restitution is limited to what the services are reasonably worth in view of the purposes of the recipient. If, however, the recipient of the services is more at fault than the giver, the measure of the restitution may be the reasonable value of the services rendered, irrespective of the value to the recipient (see Sec. 152 and Sec. 155)."

The "at least" qualification made by the court would refer to the situation where the recipient is more at fault, which is not the position taken here. The section 152 referred to deals with fraud, undue influence, and duress. In such situations "the measure of recovery for the benefit received by the other is the market value of such services irrespective of their benefit to the recipient." Section 155, pp. 614-15, is consistent with the above situations and deals with the situation where there is a voidable employment contract.

The court also speaks of the situation of an unenforceable agreement stating "the defendants have a duty to pay for whatever value they have received from plaintiffs' partial performance, regardless of * * * lack of good faith in permitting the services to be rendered [Citations]" 56 N.J. Super. 75. The citation to Williston is not helpful as it deals with employment contracts which is certainly not the case here. The citations to the A.L.R. and C.J.S. present the same difficulty. They obviously are not relevant here as the defendants never promised, nor did plaintiffs ever

expect, to be paid for their services. At any rate, the statement by the court seems to emphasize the value to defendants and not cost to plaintiffs.

The time when the valuation of the improvement is to be made is when the defendants acquired the use of them, for until then they would be of no benefit to defendants. Young v. Com'rs of Mahoning County , 53 F. 895 (Cir. Ct. 1892); Poynter v. Poynter , 206 Ky. 836, 268 S.W. 582 (Ct. App. 1925); McKenzie v. A.P. Cook Co. , 113 Mich. 452, 71 N.W. 868 (Sup. Ct. 1897); Dougherty v. White , 112 Neb. 675, 200 N.W. 884, 36 A.L.R. 425 (Sup. Ct. 1924); Pritchard v. Williams , 181 N.C. 46, 106 S.E. 144 (Sup. Ct. 1921); Howard v. Kirton , 144 S.C. 89, 142 S.E. 39 (Sup. Ct. 1928). These cases are collected in Annotation, 24 A.L.R. 2 d 11, sec. 17. Others are found there for the same proposition; assessment should be made when the owner of the land acquires the improvements. Others are found which indicate that, as a practical matter, assessment will be made of their present worth, that is, at the time of trial. There are three others noted in which the commencement of the action was chosen as the time. One case is cited and quoted in which it was held error to make valuation as of the time of trial. Two others are cited in which valuation was ...

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