Petrella, J.c.c., Temporarily Assigned.
This action poses a question of first impression in this State concerning the effect of material misrepresentations upon a contract for indemnification. The dispute arose out of a letter whereby defendant Gabriel Realty, promised "to defend and hold harmless" plaintiffs Huck Co., Inc. and certain individuals trading as Saxon Company, successor to A.W.H. Co.
The December 16, 1963 letter reads:
We appreciate this opportunity to be of service to you in the matter of your purchase of the Glenwal Building and land in Montvale, New Jersey. We acknowledge your letter stating that you will pay our commission of $12,500 upon closing of title.
We also acknowledge the statements of Mr. Tom McCormack and William Schlessinger of your company wherein they state that at no time did one Arthur Augustensen represent to them that the Glenwal Building was for sale.
Under these circumstances, we undertake and agree to defend and hold harmless you and your company and the A.W.H. Co. against any claims that may be made for commission from this sale by Arthur Augustensen.
The statements of Messrs. McCormack and Schlessinger also appeared in a notarized letter dated December 17, 1963 which stated:
Mr. Arthur K. Augustensen showed us land in several areas in September, 1963. At no time did he offer for sale or lease the Glenwal Company, Inc.'s building on Glenview Road, Montvale, New Jersey, nor did he state that this building was available for sale or lease.
Subsequently Augustensen, a broker interested in the Montvale transaction, brought suit and was awarded judgment of $15,000 in compensatory damages for wrongful interference with his prospective opportunity to earn a commission. Plaintiffs herein, after an unsuccessful appeal,*fn1 satisfied the judgment by paying $16,140.61, which included interest and costs. They then demanded indemnification from defendant for that amount, plus reasonable attorneys' fees for the trial and appeal.
Defendant denies liability, counterclaiming for attorneys' fees based upon plaintiffs' alleged false swearing and misrepresentations. The facts were largely stipulated, with the exception of the Appellate Division decision in the Augustensen case, docket number A-507-68, which contained a judicial resolution of some of the facts at issue in the instant action.
The Appellate Division decision affirmed the factual determinations of the trial court which found that Augustensen had shown Huck's representatives the property in question before Huck engaged Gabriel Realty as its broker. In so ...