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Housing Authority v. Warrick

Decided: April 4, 1968.


Conford, Collester and Labrecque. The opinion of the court was delivered by Conford, S.j.a.d.


The Warricks and the Cleary relatives are contestants over a fund of $12,000 deposited in court by the Housing Authority of the City of East Orange in satisfaction of a written agreement between itself as optionee-purchaser and the Warricks and Cleary, together, as "seller," for acquisition of a residence property in East Orange. The deposit was made in the course of condemnation proceedings necessitated by the unavailability of a long-missing sister of Cleary who had a one-eighth interest in the title. Cleary claims that the Warricks forfeited their interest in the property by default under an earlier installment-contract sale of the property entered into with them by Cleary (purportedly "single," but actually for himself and his relatives who shared title with him), as seller. Following a hearing on counter-motions to withdraw the fund on deposit, the Law Division agreed with that contention and ordered distribution of the moneys free from any participation by the Warricks. We conclude this was error.

On December 22, 1960 Cleary entered into the installment-contract sale agreement with the Warricks which, although inartistically and ambiguously drawn (on a standard real estate contract form with typed-in addenda), was in substance to the following effect. The sale price was fixed at $11,000, payable $100 per month beginning in December

1960 until "payment of $3,000 upon said indebtedness," whereupon the purchasers had the option of then paying the principal balance "and obtaining a deed" or continuing the $100 monthly payments until $4,200 was paid and then paying the balance (put in terms of -- "it will then become the duty of the purchasers to obtain a mortgage of $6,800 for the unpaid balance"). The first reference in the instrument to the $100 payments describes them as "for the use and occupation" of the premises, the agreement specifying that the premises were to be occupied by the purchasers as a dwelling. The purchasers were also to pay taxes and water charges and obtain liability and fire insurance in favor of the sellers.

It is obvious that the real intention of the agreement was that the purchasers' payments represented not merely the value of use and occupation but partly compensation for the fee, the balance of the $11,000 price for the latter to be paid when $3,000 or $4,200 (at the purchasers' option) had been paid in the form of the $100 monthly installments.

The agreement recited that the purchasers' failure to pay any of the monthly installments of $100 or the other periodic charges should be considered a default of the contract, that thereupon all payments theretofore made would be regarded as for use and occupation, the contract be considered terminated and the purchasers would vacate on 30 days notice.

It is thus seen that by May 1964 (or within a reasonable time thereafter) the absolute obligation of purchasers to have met a $6,800 purchase-price balance ($11,000 less $4,200 in monthly payments) would have matured in the normal course.

It is clear from the record that from time to time the Warricks would fall behind in their payments and would more or less catch up after grants of extensions by Cleary, who apparently found this course more advantageous than declaring a default at any time prior to May 1964.

In 1963 or early 1964 the Housing Authority of East Orange (a public agency with power of condemnation) became

interested in the property and offered Mr. Warrick $10,200 for it. He refused and demanded $12,000, to which the Housing Authority ultimately acceded. On April 27, 1964 the Warricks and Cleary signed, as "seller," in the presence of the same witness, a mimeographed "Offer For Sale of Land," prepared by the Housing Authority, giving it a 90-day irrevocable option (and thereafter until terminated by sellers) to purchase the property for $12,000. This was formally accepted by the Authority May 4, 1964. Under the offer, closing was to take place not more than 60 days after acceptance, the sellers to give a general warranty deed conveying a "good and marketable fee simple title." The Authority reserved the right, after acceptance, in lieu of completing the purchase, to acquire the property by condemnation, in which event it was agreed that the $12,000 price would be taken to be the fair market value of and just compensation for the property.

Ultimately such condemnation was instituted, apparently because of the outstanding title interest of Cleary's sister. An award of $12,000 was entered in the condemnation and the money paid into court. This proceeding arises ...

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