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Berg Agency v. Sleepworld-Willingboro Inc.

Decided: October 2, 1975.


Lynch, Ackerman and Larner. The opinion of the court was delivered by Larner, J.A.D.


Arthur Bressman, trading as Lindweiss Associates, was the owner of a vacant commercial building in Woodbridge, New Jersey, known as the Whitney Building. In an effort to rent the same he communicated with various real estate brokers, including the plaintiff Berg Agency.

Mr. Faria of the Berg Agency was contacted by Seymour Lustig, a principal in several companies operating retail furniture outlets, for the purpose of locating a site for his business, and on or about May 9 Faria brought him to the Whitney Building. Lustig evinced an interest in leasing the same, although he balked at the owner's demand of an annual

rental of $60,000. He did, however, suggest to Faria that he would consider a deal at a rental of $48,000 a year.

As a consequence Faria arranged a meeting between Bressman and Lustig at Lustig's office which took place on May 10. At that meeting the parties negotiated various terms of the lease, orally agreeing to most of them. Faria took notes on the various items discussed, but the meeting ended on a negative note when Bressman refused to accept as a tenant a corporation to be formed solely for this operation. He insisted that he would not enter into a lease with a shell corporation and would only consider the deal if other active corporations owned by Lustig would execute the lease.

After this conference Faria had prepared at his office a memorandum dated May 10, 1972, which incorporated the areas of agreement and returned with this document to Lustig. The latter was anxious to tie up the property at his suggested rental figure of $48,000. At the urging of Faria, Lustig signed the May 10 letter changing the corporate name of the proposed lessee to Sleepworld-Willingboro, Inc. and also submitted a check in the sum of $1,000 with a legend thereon, "Binder for Route #9, Fords, Woodbridge Township, N.J."

The next day Faria returned to Lustig and advised him that Bressman insisted on the undertaking by several of the Sleepworld corporations operated by him before he would entertain the proposition. Lustig stated that if that was the only way to get the building he would have to accede to Bressman's request. As a consequence Lustig, through his secretary, modified the May 10 letter, including three of his corporations as parties and adding other provisions for expansion of the facilities in the future, and making further revisions in some of the other terms in accord with Bressman's wishes as communicated by Faria. He read this document dated May 11, 1972 and signed it in the presence of Faria, who then added his signature as a witness.

Armed with this document executed by Lustig, Faria arranged to meet with Bressman that very night. Bressman reviewed this revised document and also signed it in the presence of Faria.

The following morning Lustig called Faria, advising him that he had changed his mind and that he did not consider himself bound since from his viewpoint the letter was but a preliminary proposal. This was followed by a stop payment order on the check and a letter from Lustig's attorney stating his position.

The Berg Agency sued defendant corporations for the commissions of which it was deprived because of the alleged failure by them to perform the contract of May 11, 1972. Bressman sued for his out-of-pocket losses incurred because of said breach. Defendants asserted that the May 11 letter was not a binding contract and that their actions in withdrawing from the transaction were therefore not wrongful so as to impose liability to either plaintiff.

The case was heard by the trial judge without a jury. In evaluating the written exhibits and the oral testimony of the parties involved, and assessing the same from a standpoint of credibility and the sophistication and experience of the individuals involved, the judge concluded that the parties intended to be bound by the May 11 document despite the fact that they contemplated a more formal lease. The rescission by defendants, through Lustig, without good cause, was held to be ...

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