Conford, Freund and Kilkenny. The opinion of the court was delivered by Freund, J.A.D.
[66 NJSuper Page 257] Plaintiffs instituted this action for return of a $5,000 land sale contract deposit and incidental damages. The Chancery Division judge, upon examining the contract and hearing the parties' proofs, determined that plaintiffs had wrongfully refused to consummate the transaction set forth in the instrument and were therefore not entitled to a return of their entire deposit; however, because of a specific clause in the document limiting the purchasers' forfeiture of deposit to $3,400, judgment was entered in plaintiffs' favor in the amount of $1,600. Plaintiffs
appeal from so much of the judgment as denied them recovery in excess of $1,600.
By agreement dated March 20, 1959 the Asplunds contracted to purchase from the Marjohn Corporation, a developer, a plot of land and one-family dwelling to be erected thereon, located in Mountain Lakes. Closing was set for September 1, 1959. The $1,000 original down payment by the purchasers was supplemented at the contract signing by an additional deposit of $4,000. The balance of the $34,292 purchase price was to be paid upon delivery of the deed. The parties jointly agreed to attempt to obtain a mortgage for the Asplunds, and established August 1, 1959 as the deadline for the securing of such financing. Their efforts and obligations in this regard were embodied in paragraph 4 of the contract, providing in pertinent part that:
"4. Seller agrees to use his best efforts to procure for Purchaser, and Purchaser agrees to apply to lending institutions designated by Seller for, a conventional purchase money mortgage loan on said premises in the amount of $27,000.00, payable with interest at the rate of 5 1/2% per annum over a term of thirty years or longer. Purchaser agrees to submit such financial information and to execute all documents which may be required to obtain such a purchase money mortgage loan and to accept said loan when the commitment therefore is issued by the lending institution. If no lending institution shall have issued a firm commitment for such a mortgage loan by August 1, 1959, then at the option of either Seller or Purchaser this Agreement shall become null and void."
The heart of the present appeal is the question of whether the mortgage commitment contingency, as set forth above, was satisfied on or prior to August 1, 1959. If it was, then plaintiffs were not justified in treating the contract as null and void and refusing to proceed with the transfer of title.
Plaintiffs' contentions focus on two asserted deficiencies in defendant's effort to secure a mortgage commitment complying with the terms of paragraph 4, namely: (1) failure to obtain a "firm commitment"; and (2) failure to obtain a commitment from a "lending institution," within the contractual meaning of that term.
The first of these assertions is premised on an exchange of correspondence in late July and early August of 1959. It is clear that up to the last week in July no commitment had been obtained which conformed to the contract or was nonetheless satisfactory to plaintiffs. One proposal, in June, was rejected because of an attached rider which would have increased the cost to the Asplunds by more than $3,000; another, discussed in mid-July, would have required Mr. Asplund to purchase life insurance at an annual expense of $700 and was therefore likewise unacceptable; a third offer, considered and refused during the latter part of July, would have entailed a $25,000 commitment supplemented by a direct one-year loan of $2,000 to plaintiffs by defendant.
On July 27, 1959 Marjohn received a letter "commitment," dated July 24, 1959, in the desired amount, term, and interest rate from one "North American Investment Associates, Inc.," signed by "Michael Pal, Vice-Pres." Written acceptance of the offer was immediately sent to North American by Marjohn, and on the same day a registered letter was dispatched by Gerald B. Graham, Marjohn's president, to Mr. Asplund, advising him that the specified commitment "has been obtained by this office," but not indicating from whom. During the next several days Graham had a number of telephone conversations with Asplund. The latter testified that he was told by Graham that Marjohn did not have a firm commitment in accordance with the contract. Graham's version of the conversation was that Asplund seemed uncertain as to whether a conforming commitment had in fact been obtained or whether Graham's registered letter was merely a restatement of one of the prior offers, already rejected. To resolve the uncertainty, Graham dispatched another letter, dated July 31, 1959, advising Asplund that "another" qualifying commitment had been obtained. In line with his version of his telephone conversations with Asplund, Graham explained on the witness stand that both of his letters to Asplund had referred to one and the same commitment -- that from North American.
Asplund, meanwhile, also wrote to Graham on July 31, 1959, requesting that the latter notify plaintiffs' attorney of "the complete terms of the commitment, (a copy of the written commitment would be appreciated) * * *." This letter went unanswered, although, according to Graham, he repeatedly invited plaintiffs by telephone to appear at his offices to inspect the commitment papers. Plaintiffs' attorney wrote to Marjohn on August 7, as follows:
Woodland of Mountain Lakes
Mountain Lakes, New Jersey
ATTENTION: Mr. Gerald B. Graham, ...