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Guaclides v. Kruse

Decided: April 27, 1961.

MARY GUACLIDES, PLAINTIFF-RESPONDENT,
v.
FRANCIS F. KRUSE, JR., DEFENDANT, AND FRANCIS F. KRUSE, JR., THIRD-PARTY PLAINTIFF-RESPONDENT, V. ALBERT SHOTMEYER, ET AL., PARTNERS, ETC., THIRD-PARTY DEFENDANTS-APPELLANTS, AND ELECTRA CRIEZIS, ETC., THIRD-PARTY DEFENDANT, AND THEODORE GUACLIDES, THIRD-PARTY DEFENDANT-RESPONDENT



Conford, Freund and Kilkenny. The opinion of the court was delivered by Kilkenny, J.A.D.

Kilkenny

These related specific performance actions were submitted to the Chancery Division on a written stipulation of the facts.

By written contract of March 26, 1959 the plaintiff agreed to buy and the defendant Kruse agreed to sell two tracts of contiguous land consisting of several lots in each tract, owned by Kruse and located in Englewood Cliffs, Bergen County, New Jersey. The purchase price was $110,000, a deposit of $5,000 was paid on account, and title closing was set for May 1, 1959. The conveyance was to be by bargain and sale deed, with covenant against grantor's acts, free from all encumbrances, but subject, inter alia , to the rights of tenants and occupants in possession under lease or otherwise.

The title did not close as scheduled. After execution of the agreement, the buyer discovered that Cliff Enterprises, Inc., a predecessor in title of the defendant Kruse and of which corporation he was the president, had entered into a written agreement on August 19, 1953, whereby there was granted to Farmers Oil Supply Co. (hereinafter "Farmers"), an option of first refusal or preemptive right to purchase lots 7, 8, 9 and 10 in block 9B on the assessment map of the Borough of Englewood Cliffs. These four lots were only a portion of the second tract embraced in the plaintiff's contract but upon them there was a gasoline service station. The agreement of August 19, 1953 was recorded in the Bergen County Clerk's Office on January 12, 1954, in Deed Book 3501, page 26.

Plaintiff filed her complaint in the Chancery Division, alleging the foregoing facts and stating that the said option of first refusal or preemptive right constituted a defect in title upon a portion of the premises which the defendant Kruse had contracted to sell to her. She asserted that she and the defendant Kruse were unable to agree on the amount of the abatement of purchase price by reason of the unmarketability of title to that portion of the premises burdened

with an option of first refusal. She asked the court to determine the amount of the abatement and to order specific performance as to so much of the premises as is marketable and capable of conveyance by the defendant Kruse. In supplementary counts she sought $50,000 in damages and a judgment obligating the defendant to deliver a deed to her to that portion of the premises allegedly unmarketable, after the expiration date of the option of first refusal, at such price as the court should determine.

Kruse answered and thereby offered a deed to the plaintiff for the entire curtilage upon payment of the full purchase price. He contended that the preemptive right in the agreement of August 19, 1953 was void and not binding, and set forth several other defenses not immediately pertinent, and counterclaimed for specific performance against the plaintiff for the full purchase without any abatement. The plaintiff answered the counterclaim, reasserting the unmarketability of title as to lots 7, 8, 9 and 10, as aforesaid.

The defendant Kruse filed a third-party complaint against Farmers and others, and therein, inter alia , sought a judgment determining that Farmers did not have a right of first refusal or preemptive right by reason of the agreement of August 19, 1953, and that any such right therein was now void and of no effect; and in the alternative that the court fix the amount to be paid by Farmers for a deed to the four lots upon which the gasoline service station was erected.

Albert Shotmeyer, Henry Shotmeyer and Robert A. Wales, partners trading as Farmers Oil and Supply Co., answered Kruse's third-party complaint and counterclaimed against him and the plaintiff in the main action for specific performance of the agreement of August 19, 1953, or in the alternative for damages for breach of contract; and also for a declaratory judgment that the four lots described in the agreement of August 19, 1953 were subject to a lien and encumbrance to the extent that they have a preemptive right and option to purchase the same.

The Chancery Division decided that Farmers did not have a preemptive right, or option of first refusal, covering the entire tract, but only as to the gasoline service station and the four lots on which it was located. It concluded that the option to purchase only a part of the entire tract made it inoperative against a contract for the sale of the entire tract, holding the option unenforceable in the instant case "since there is no price stipulated and no method provided for its ascertainment in view of the situation which exists here." The counterclaim of Farmers was dismissed and the Chancery Division entered a judgment for the specific performance of plaintiff's contract, without abatement. Farmers appeals from that judgment.

We must determine in limine the validity and present efficacy of the option of first refusal relied upon by Farmers, because the defendant Kruse contends that it is not legally binding. He argues that the agreement which granted it was without consideration to his predecessor in title, Cliff Enterprises, Inc., grantor of the option; that the said agreement has expired by its terms; that the said agreement was indefinite as to time, and more than a reasonable time has expired since the date thereof; that the agreement was incomplete, indefinite and uncertain in its terms, and fixed no price at which the sale may be made; that the right of first refusal cannot lawfully be exercised by its terms, because the agreement recites that "the property shall be first sold," and then offered to the persons claiming the right of first refusal; and that the said agreement is void under R.S. 25:1-5, the statute of frauds.

We find no merit in any of those assigned reasons. The option is contained in the tripartite written agreement of August 19, 1953, signed by Cliff Enterprises, Inc., as party of the first part, owner of the property; By John F. Palmer and William L. Palmer, partners trading as Englewood Cliffs Friendly Service Station, as party of the second part, tenants of the gasoline service station; and by Henry Shotmeyer, Albert Shotmeyer and Robert A. Wales, partners

trading as Farmers Oil and Supply Co., party of the third part, supplier of the consideration specified therein. Thus, the agreement expressly provides:

"In consideration of the party of the third part furnishing and erecting a large neon sign on the roof of the building situated on premises known as Lots 7, 8, 9 and 10 in Block 9B on the Assessment Map of the Borough of Englewood Cliffs, Bergen County, New Jersey, furnishing and installing four (4) new gas pumps on the premises, painting and lettering the building on said premises and removing the tree on the north side of the building, if necessary, and the sum of One Dollar ($1.00) and other good and valuable consideration, it is agreed as follows:"

That consideration obviously enured to the benefit of Cliff Enterprises, Inc., the landlord. But even if the benefit of the consideration flowed only to the tenant, the law is clear that one may bind himself by contract, even though some third person receives the benefit of the consideration. Coast National Bank v. Bloom , 113 N.J.L. 597, 602 (E. & A. 1934); Restatement, Contracts , ยง 75(2).

The option in the aforesaid agreement has not expired by its terms. Nor can it be justifiably said that the agreement was indefinite as to time, and more than a reasonable time has expired. The agreement provided:

"1. That the terms of an agreement entered into among the above parties, dated December 10, 1948, and recorded in the Bergen County Clerk's Office in Book 2932, page 118, shall be extended for an additional period of ten years ...


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