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Zaremba v. Konopka

Decided: March 17, 1967.


Matthews, J.s.c.


Defendants are owners of real property commonly known and designated as 487 Palisades Avenue, Jersey City. On or about January 6, 1965 they engaged the services of one Mary V. Wourms, a licensed real estate broker of this State, as agent to sell their property. They executed a written authorization for Mrs. Wourms to act as agent, granting, among other things, the right to act solely and exclusively as agent for a period of six months. A copy of this authorization was introduced at trial.

On or about April 10, 1965 the agent introduced plaintiffs as prospective purchasers for the property. On that date, after some negotiation, defendants executed a contract of sale drawn by the agent, under which they agreed to sell the premises in question to plaintiffs for the sum of $25,500. Although at trial there was some dispute as to whether defendant Andrew Konopka signed the agreement, it was conceded that it should be considered binding on him. On April 12, two days later, the agent presented the contract to plaintiffs for their signature. They executed the contract and at the same time deposited a check in the amount of $2,475 with the agent as the balance of the down-payment, $25 having been advanced before execution. The agent, at her own suggestion, retained the deposit in view of the condition expressed in the contract which stated:

"Subject to purchasers obtaining above mortgage ($20,500 -- 20 years at 6%). All deposits to be returned in event above mortgage is not obtained. The purchasers hereby authorize Mary V. Wourms, to

turn over to the Owners the Deposit monies herewith to be held in escrow by Mary V. Wourms."

Although rather inartfully expressed, it is clear that the contract was contingent upon the procurement of a mortgage commitment in the amount of $20,500. Subsequently, on or about September 20, 1965, a commitment for a mortgage in the amount of $18,000 was issued to plaintiffs, who upon receipt of same waived the condition set forth in the contract to the extent that it required a commitment in the amount of $20,500. Plaintiffs thereupon notified defendants of their intention with respect to the contingency and their readiness to close title.

After being notified of the satisfaction of the contingency, defendants requested the real estate agent to turn over the deposit monies. In response to this request, the agent delivered a check drawn on her account, which when deposited by defendants was returned for insufficient funds. They thereupon informed the agent of the deficiency and demanded payment of the deposit. After the passage of approximately one month, the agent came to defendants' home and replaced the returned check with a check drawn by a third party who was represented to be friendly to her. Upon deposit of this check, it also was returned for insufficient funds. Thereafter, plaintiffs made time of the essence of said contract, fixing December 16, 1965 at 3 P.M. and the office of an attorney-at-law as the time and place of closing. Plaintiffs appeared, prepared to close, but defendants failed to appear.

Plaintiffs contend that they are presently willing and able to effect the closing, but demand credit against the purchase price for the deposit. Defendants, too, contend that they are ready, willing and able to close title, but demand that an amount equal to the embezzled deposit be paid to them. The real estate agent is presently under indictment by the County of Hudson and is concededly judgment-proof.

I have heard the testimony of those principally involved in this transaction, other than the agent. Without question,

none of them was aware of the activities of Mary V. Wourms, and both must be regarded as innocents in this transaction. Because of this conclusion, based upon observation of the parties who testified and consideration of their testimony, I regard this matter as one to be disposed of solely upon legal principles.

Evidence submitted at the trial tends to establish that the funds given by plaintiffs to the real estate agent were never deposited in any bank account known to have existed in the agent's name. A review of the transcripts of such bank accounts presented at trial not only leads to this conclusion but also to the conclusion that at no time during the period April 12, 1965 through October 30, 1965 did any of the agent's accounts, individually or in the aggregate, contain a sum equal to the amount of $2,475. Plaintiffs contend that since Mrs. Wourms was the agent of defendants, they, as principals, must bear the loss of the embezzled deposit. On the other hand, defendants contend that the agent must be regarded as an escrowee, holding the deposit for the benefit of both parties; that the title to the escrow fund at the time of the deposit and until the resolution of the contingency must be regarded as having been in ...

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