The opinion of the court was delivered by: MADDEN
This is an action for specific performance of a contract for the sale of real estate wherein the United States of America as vendor seeks to compel the defendant Ferdinand W. Roebling, III as vendee to perform his contract to purchase certain lands situate in the Borough of Mantoloking, Ocean County, New Jersey.
Litigation was instituted by the plaintiff when the defendant refused to accept the plaintiff's proffer of conveyance on the ground that the plaintiff's title was unmarketable. Albeit the defendant strenuously resists the primary relief sought by the plaintiff and counterclaims for rescision of the contract together with the return of his deposit with interest, the defendant is ready, able and willing to consummate the contract in the event this Court determines that the plaintiff's title is marketable.
An agreed stipulation of facts has been filed in this matter and the case is submitted to the Court for decision upon the pleadings, exhibits and respective briefs of counsel. Essentially, the facts are as follows:
On or about May 13, 1879, pursuant to a statute enacted by Congress on March 3, 1875, 18 Stat. 371, authorizing the Secretary of the Treasury of the United States to acquire the right to use and occupy sites for life-saving or life-boat stations, houses of refuge, and sites for pier-head beacons, the plaintiff obtained a deed to the property in question from the owner, Deborah Herbert, and her husband, Jacob B. Herbert. For a number of succeeding years, the property was used and occupied by the plaintiff as a site for a life-saving or life-boat station, the Mantoloking Coast Guard Station having been established thereon. On or before July 27, 1956, acting through the General Services Administration, the plaintiff advertised said property for a sealed bid sale pursuant to the provisions of the Federal Property Administrative Services Act of 1949 (40 U.S.C. § 484) and issued invitations for bids for the purchase of all the plaintiff's right, title and interest in the property.
On August 27, 1956, in response to the invitation to bid and in accordance with the terms and conditions thereof, the defendant submitted a bid in the amount of $21,600.00 and tendered the sum of $2,160.00 as his deposit for the purchase of said property. Shortly thereafter, on or about August 30, 1956, the defendant's bid was accepted by the General Services Administration on behalf of the plaintiff and the defendant was so notified.
Subsequently, on or about September 1, 1956, the defendant was informed by another bidder, William R. Wesson, that the plaintiff did not own the fee to the property in question, that the title to the property was encumbered by a possible reversionary interest, and that his father's estate was the owner of a one-third reversionary interest. As a result of receiving this information, the defendant ordered an immediate title examination from the New Jersey Realty Title Insurance Company. The Report of Title substantially confirmed the information disclosed to the defendant and a copy of the Report was forwarded to the Assistant Regional Counsel of the General Services Administration.
At the same time, the attention of Assistant Regional Counsel was directed to a letter of K. S. Harrison, Chief Counsel of the United States Coast Guard, dated October 1, 1947, which was uncovered at the time of the title examination. This letter indicated that the plaintiff had not acquired a marketable title to the property and that the usual procedure for disposition of such property when no longer needed for Coast Guard purposes was by formal declaration of abandonment of all right, title and interest acquired by the United States in its deed.
On October 17, 1956, in reply to the notification of the alleged defect in the plaintiff's title, Assistant Regional Counsel rejected the objection made to the plaintiff's title in the Report of Title and advised the defendant that the form of the deed used in acquiring the property in 1879 was sufficient to convey to the plaintiff a fee simple title. Then, by letter dated February 13, 1957, the defendant was notified of a date for settlement and advised that in the event the defendant failed to appear and close title, the plaintiff would take appropriate legal action. On February 19, 1957, the defendant notified Assistant Regional Counsel that he would not accept a deed to the property nor pay the balance of the consideration because the title was unmarketable, having reverted to the heirs of the plaintiff's grantor, Deborah Herbert, upon the abandoned use of the property as a Coast Guard site. In the same letter the plaintiff was notified that the defendant rescinded his bid and demanded the return of his deposit retained by the plaintiff unless the claims of the reversionary heirs were eliminated. Thereafter, no action was taken by either party until the institution of this litigation by the plaintiff.
An examination of local authority with reference to applicable law induces the Court to concur in the observation made by Judge Price in Gaub v. Nassau Homes, Inc., 53 N.J.Super. 209, at page 217, 147 A.2d 73, at page 78 (A.D., 1958):
"The courts have employed various expressions to indicate the standard which should be applied in determining whether in a particular action for specific performance a defendant's challenge of a plaintiff's title is sufficiently serious and basic to enable such defendant to resist successfully an action to compel him to accept the conveyance."
To attempt to indulge in an exhaustive review of such authority in this opinion would be superfluous expatiation, for in the opinion in the Gaub case, Judge Price carefully reviewed the leading local cases on point and concluded:
"Although, as has been seen, the courts have used various expressions to state their conclusions, they all result in the enunciation of substantially the same basic principles. They hold that a defendant will not be compelled to take a conveyance if it be reasonably probable that he will be exposed to litigation thereafter, or if it seems reasonable to believe that subsequently he will be obliged to institute an affirmative action to quiet the title or otherwise. Not every possible litigation to which such a defendant might be subjected is deemed a 'hazard' sufficient to deny a plaintiff the relief he seeks. Such prospective action must have some substance. A challenge by a prospective grantee based on 'remote, hypothetical or unfounded doubts concerning the title' is not such a claim against marketability as can be recognized. * * *" (p. 223, 147 A.2d p. 81.)
Suffice it to state that the courts have declined to grant specific performance in such instances where the defendant's objection to the plaintiff's title presents: a question of marketability reasonably debatable in court, in point of law or equity; a question too doubtful to be settled without litigation; a question not settled by previous authorities; or a question on which another judge might come to a different conclusion as might be indicated by reported decisions.