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Palmiere v. Forte

Decided: June 1, 1970.

ARNOLD L. PALMIERE, ANTHONY J. LA SALA, FRANK A. LA SALA, ANTHONY COMO AND JOHN COMO, PLAINTIFFS-APPELLANTS AND CROSS-RESPONDENTS,
v.
MICHAEL FORTE AND FRANK B. CARBONE, DEFENDANTS-RESPONDENTS AND CROSS-APPELLANTS, AND NICOLA CARONA, TREET INDUSTRIES, INC., A DELAWARE CORPORATION, TECHNICAL MARKETING ASSOCIATES, A PENNSYLVANIA CORPORATION, AND RAYMOND E. LIBERATI, DEFENDANTS



For modification and remandment -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. Opposed -- None.

Per Curiam

[56 NJ Page 157] Plaintiffs ("the La Sala group") sought money damages based on the falsity of an express representation made in a written agreement providing for their investment in a business enterprise, defendant Treet Industries, Inc. ("Treet"), owned by the defendants Forte, Carbone and Carona ("the Treet stockholders"). The trial court, sitting without a jury, found for the defendants. On plaintiffs' appeal, the Appellate Division divided, in an unreported opinion. The majority reversed and remanded for a new trial. The dissenting member agreed there should be a reversal, but felt no new trial was required because plaintiffs were entitled to judgment by reason of the misrepresentation of a material fact. Plaintiffs appealed to this court by reason of the dissent and urge the adoption of the view taken in the dissenting opinion. Defendants Forte and Carbone cross-appealed, contending that the trial court was correct in its disposition. We agree with the dissenting judge.*fn1

The factual and legal situation is fundamentally a simple one, although unnecessarily complicated and confused at the trial level. There was little or no dispute as to the pertinent facts, although not found completely or with entire clarity by the trial judge. Supplementing and clarifying those found by him pursuant to our constitutional grant of necessary original jurisdiction (Const. 1947, Art. VI, ยง V, par. 3; R. 2:10-5), the essential facts follow.

Defendants, Forte, Carbone and Carona were the sole stockholders of Treet. All also were engaged in other businesses. Forte, the major investor, and Carbone, a New York lawyer, were residents of that state. Carona lived in New Jersey. The company was engaged in the manufacture of a soft drink additive called "Dari-Treet" at a small leased plant in Lodi, New Jersey. The equipment used in the process had been rented by Forte individually. The company had engaged defendant Technical Marketing Associates, the principal of which was defendant Liberati, based in Pittsburgh, to handle the promotion, marketing and sale of the product.

In the summer of 1966 the business was in serious financial difficulties, owing a large amount of money to creditors and on loans by the stockholders. Operations had been shut down for lack of orders. Sometime in September Liberati advised the Treet stockholders that he had an order for 13,000 cases of the product from chain stores and supermarkets in the Chicago area which required very prompt filling by delivery to a warehouse in that city in order to coincide with planned advertising and other promotional projects. The stockholders were unwilling to invest more money or time in the business which would be necessary to resume production and fill the order. Carona sought out his neighbor, plaintiff Palmiere, and told him about the situation, including the order and the importance of speedy action. Apparently the suggestion was that Palmiere solicit some friends to invest in the enterprise and take over management and control. As a result, Palmiere, his attorney plaintiff Anthony La Sala,

and the other plaintiffs comprising the La Sala group, became interested on the strength of the asserted order.

The upshot was that a few days later Anthony La Sala prepared a proposed agreement and, with plaintiff Frank La Sala, met with the Treet stockholders in New York on September 24, 1966 to negotiate its final form. The existence of the order was repeated at the conference, but no writing to support it was produced. Although the record is not entirely clear, it would appear that the Treet stockholders had not at the time received any writing concerning it. It is plain enough, however, that they honestly believed that Liberati had obtained a bona fide order for 13,000 cases. There is some testimony to the effect that the Treet group suggested to the La Salas that they verify its existence, but that testimony is immaterial in view of the express provisions of the agreement to be mentioned. The final form of the agreement was settled and it was executed on that day by the corporation, the Treet stockholders and the two La Salas. Palmiere signed it in New Jersey a day or two later.*fn2

The agreement commenced with the following recitals, which are the crux of the case:

"Whereas Treet Industries Inc. is experiencing serious financial difficulties; and

"Whereas Treet Industries Inc. and the Treet Stockholders have represented to the La Sala Group that Treet Industries Inc. has received an order for immediate delivery of no less than 13,000 cases of its product, 'Dari-Treet'; and

"Whereas, the Treet stockholders have made certain other representations to the La Sala Group regarding the financial status of Treet Industries Inc., ...


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