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Old Falls Inc. v. Johnson

Decided: July 22, 1965.


Kilkenny, Sullivan and Lewis. The opinion of the court was delivered by Lewis, J.A.D.


This matter involves litigation arising out of a real estate transaction. Plaintiff's action in the Superior Court, Law Division, for breach of warranties contained in a general warranty deed, was dismissed at the close of the presentation of its proofs. The present appeal followed.

We shall narrate only such factual evidence as appears to us to be necessary to resolve the critical legal issues under consideration.

On November 29, 1957 plaintiff Old Falls, Inc. (hereinafter sometimes Old Falls) purchased from defendants Charles F. H. Johnson, Jr. and his wife (herein Johnsons), for a consideration of $45,000, a tract of "heavily wooded rural" land, approximately 38 acres, fronting Water Street in the Borough of New Shrewsbury, New Jersey. The instrument of conveyance contained the usual warranties and covenants, including:

"That the grantee shall have quiet possession of the said land free from all incumbrances:"


"That they [the grantors] will warrant generally the property hereby conveyed, except as hereinabove set forth."

The exception referred to, in pertinent part, reads:

"SUBJECT to rights, public and private, in roads, streets or avenues abutting the hereinabove described premises."

It is convincingly clear from the proofs that at the time of settlement neither the grantors nor the grantee were aware of or understood that there existed any public right-of-way or easement across the subject premises. It is likewise clear that there is in fact a sand road, single-car width, winding lengthwise across the westerly side of the property, extending from Water Street southward for the greater length of the tract to a point at the southerly end thereof, where said road forks in two directions, the southwest prong leading to the adjacent farm lands of Paula I. Osterman and the southeast prong leading to the adjacent farm lands of Anthony and Nora Monzo. Both branches of the road apparently extend to Murphy Road abutting the far side of said farms to the south. It is not contended that the right-of-way through the woods is an absolutely necessary means of ingress and egress to their farm lands.

The surveys produced at the time of settlement did not disclose the delineation of any roads, nor indicate the existence of any rights-of-way crossing the subject lands. There has never been a legal layout or dedication of the road; no filed plans reveal its existence, and the municipality has never repaired it or assumed responsibility for its maintenance.

Within a few months after closing title, and when plaintiff learned that the travelway through its woodlands was being traversed by Monzo and Osterman as a means of access to their respective farms, the company notified them to cease and desist from using the road. They refused to do so.

In the latter part of 1961 Old Falls filed a complaint in the Superior Court, Law Division, against the Johnsons, alleging that the Chancery Division, in an injunction proceeding instituted by it to prevent trespassing by the adjoining neighbors, had entered a final judgment, on March 10, 1961, wherein it determined that plaintiff "could not restrain or impede the said Paula I. Osterman and Anthony Monzo, or other members of the public from passing over or crossing the property of the plaintiff." It was further alleged that Old Falls purchased the subject property for subdividing and developing

and, by virtue of the existing public road across its land, it was rendered worthless for the use for which it was purchased and it has greatly depreciated in value. The complaint charged that the Johnsons violated the several covenants in the deed by which they conveyed the property and demanded damages and costs of suit. A trial of the cause by jury was requested.

Defendants by their answer asserted separate defenses and specifically claimed, inter alia, that the subject premises were "not encumbered by a public road or otherwise."

The trial court determined that the issues of liability and damages were severable. The liability question was considered first. It was tried on the theory that a public right-of-way easement existed across the lands described in the Johnson-Old Falls deed, constituting an encumbrance in violation of the grantors' covenant of possession free of encumbrances, and that plaintiff has been damaged as a result thereof.

After proffering the deed, certain surveys and documentary exhibits, plaintiff's counsel offered to place in evidence a certified copy of the aforesaid judgment of the Chancery Division, together with a copy of the judicial findings of fact and conclusions of law in that action, as binding upon defendants as to the location and the existence of the public road encumbering the lands which were sold to plaintiff. The trial court rejected the offer on the grounds that the Johnsons were not parties defendant in the Chancery proceedings and, accordingly, were not bound by the resultant judgment, notwithstanding their cooperation with plaintiff in its unsuccessful attempt to defeat the claim of the defendants therein that the general public had a prescriptive right of user.

Neither at that juncture of the trial, nor at any time before the Law Division, did plaintiff contend that the deed covenant for quiet enjoyment was breached by a nonpublic prescriptive use. The ensuing proofs of Old Falls were directed toward establishing a public road encumbrance upon its lands. Old Falls allegedly produced the same testimonial evidence upon which the Chancery Division had previously

found a public right-of-way to exist. Hostile witnesses were called, and their testimony was adduced to prove that the travelway through the company's woodlands was continuously used by the public for more than 20 years and that it was in fact apparent and visible.

Monzo was a key witness. After testifying as to the location of his property, south of the wooded acreage purchased by plaintiff, he said that the sand road through the woods "started during the wagon days," and he had used it since 1925. Also, there were three mail boxes at the entrance of the road at Water Street. The following excerpts from his testimony are particularly noteworthy:

Direct Examination

"Q. Since 1925 has that road ever been shut off to your use?

A. There has been an attempt to shut it off.

Q. What do you mean an attempt was made to shut it off?

A. They have been putting barricades up.

Q. What if anything did you do to the ...

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