On appeal from the Superior Court, Chancery Division.
For affirmance in part and reversal in part -- Chief Justice Weintraub, and Justices Burling, Jacobs, Francis, Proctor and Schettino. Opposed -- None. The opinion of the court was delivered by Weintraub, C.J.
Plaintiffs sued for specific performance of a contract for the sale of their amusement park. The trial court found for them and against the buyer, Marvin L. Belk, and his corporate nominee, Joseph Varbalow Realty Company. Their victory, plaintiffs urge, was hollow, since the judgment runs against defendants who presumably cannot pay and fails to reach moneys escrowed for the payment of the purchase price. The trial court determined those moneys belonged to defendant Joseph Varbalow individually and had not been finally committed in the transaction. Plaintiffs seek a reversal of the judgment for Varbalow. Defendants cross-appeal, contending that under the contract plaintiffs were required to accept the initial deposit in lieu of any right to enforce the contract.
Varbalow sought to acquire the amusement park for his son, a sophomore in college, and for his son-in-law, Belk, then unemployed. He planned to furnish the necessary funds. On June 30, 1958 a contract of sale was executed with Belk as buyer. The agreed price was $250,000, with an initial deposit of $25,000 to be held by West Jersey Title and Guaranty Company, the balance to be paid at final settlement.
By its terms the buyer was entitled to take possession on July 1 and he did.
On August 15 the parties met at the title company to close the transaction. All adjustments were agreed upon and the usual statement of settlement was signed by the sellers and by Varbalow as attorney for the buyer. The deed to the nominee was placed with the title company. Treasurer's checks for the balance of $225,000 were already in its hands. Several matters remained to be cleaned up and they were noted as follows at the foot of the settlement statement:
"The undersigned parties agree that completion of this settlement shall be conditional upon the removal of Exceptions Nos. 2 from the Report of Title by the persons properly responsible therefor & new Agreement as to restraint of trade to be signed by M. D. Borrelli. Delay in completion of settlement will require adjustment of interest charges to date of distribution. Title Policy to be issued subject to Exceptions Nos. 4 as to last 1/4 1958 tax -- 6 -- 9 -- 10 -- 11 -- 12 -- 13 -- 16 -- as shown on said report. Also lease signed Vincent Borrelli et ux shows no interest in land known as lot No. 32 Lakeview Heights."
None of the matters so reserved was expected to present a problem. One, however, resulted in some delay. Exception No. 2 in the report of title read:
"2. Any variation in location of lines, or dimensions or any state of facts which an accurate survey approved by this Company would disclose, or which are visible, or are known to the Insured."
The buyer had not obtained a survey prior to the date of settlement, and when thereafter he did, encroachments upon public streets were revealed. Apparently they were "paper" streets. At any rate, the difficulty was resolved expeditiously and prior to the trial of this matter, the streets being vacated by the municipality. Schultz v. Pollock, 102 N.J. Eq. 157 (Ch. 1928), affirmed on opinion below 104 N.J. Eq. 205 (E. & A. 1929); Paradiso v. Mazejy, 3 N.J. 110 (1949). Belk was notified promptly and he relayed the information to Varbalow. Time was not of the essence, and it is clear
that plaintiffs were in a position to perform fully on November 10, the date the streets were vacated. The title company undoubtedly would have transmitted the deed and disbursed the funds, Cooper v. Bergton, 18 N.J. Super. 272, 277 (App. Div. 1952), but for the circumstance that Varbalow had failed to release a hold he claimed upon the treasurer's checks.
The complaint was filed on October 8, 1958, in advance of the vacation of the streets. Plaintiffs correctly apprehended that a suit would be necessary. They had learned that Varbalow had not endorsed the treasurer's checks. Moreover, shortly after the settlement meeting of August 15, Varbalow asserted the physical condition of the structures had been misrepresented and pressed for an abatement of $25,000 in the purchase price. There was no basis for Varbalow's demand. The trial court so found, and its finding is not questioned before us. Despite the institution of suit, Belk and his corporate nominee continued to operate the park. On December 29, 1958 they tendered a return of possession, which plaintiffs refused. Defendants continued in possession -- they say to protect the subject matter -- until February 2, 1959, when upon plaintiffs' application a custodial receiver was appointed to continue the operation pendente lite.
It is more convenient to start with the cross-appeal.
It revolves about paragraph 15 of the contract which reads:
"If the sellers are in a position to, and actually can tender a deed or deeds, and a bill of sale or bills of sale, and discharge all of the obligations undertaken by the sellers in this agreement and, in the event of the buyer not making final settlement in accordance with the terms of this agreement, the payment or payments made on account, sellers shall keep the deposit as liquidated damages for failure of the buyer to settle without further liability on the part of the buyer to make settlement, or without any further right on the part of the seller to ...