This controversy arises out of a public sale of municipal lands pursuant to N.J.S.A. 40A:12-13(a) by defendant Borough of Clementon to plaintiff Goodfellow Construction Co., Inc. (Goodfellow).
The parties perceived the primary question here raised to be whether or not a condition of the sale set forth in the advertisement soliciting bids and restricting the potential use of the property survives a municipal deed of conveyance which fails to refer to that condition at all. The trial judge held that it does and Goodfellow, the purchaser who brought this action in order to be relieved of the onus of the condition, appealed. It has apparently, however, escaped the attention of the parties both here and below that the condition which is the subject of this dispute is one which the aforecited public sale statute expressly prohibits. Since, however, the public interest is here involved and since the illegality of the condition is self-evident from this record, we have concluded that we should not ignore the real issue here even though the parties may have.
The cause of our concern becomes evident from a recitation of the facts, which are essentially undisputed. The Borough of Clementon apparently is the owner of a number of parcels of land scattered throughout the municipality. We gather from the record that the borough does not have a specifically formulated program by which it initiates the disposition of land which it does not require for public use. Rather, it makes its determination on an ad hoc basis initiated by the application of a prospective purchaser who expresses an interest in acquiring a particular parcel. That application is referred to the planning board (board) for its review. While we do not have the benefit here of any resolution or less formal communication from the board to the council, we understand from the trial testimony of the board's secretary that the procedure then followed by the
board is to make a decision as to whether or not the parcel is required for public use, whether it should be sold, and if so, whether the sale should be made pursuant to any special conditions. The board had long since, apparently, insisted, in respect of the sale of vacant residential land, on the uniform condition that construction of a house be commenced within a year from the date of the sale and completed within two years from the date of the sale. The board then reports its recommendation to the council, which, if it concurs, offers the land for public sale in accordance with N.J.S.A. 40A:12-13(a) upon adoption of an appropriate resolution. There is, of course, never any assurance that the applicant who initiated the process will in fact be the successful bidder at the public sale but only that he will have an opportunity to bid. We find that general procedure unexceptional and not in violation of the public sale statute.
The controversy here had its genesis, apparently, as the result of an urban renewal taking of the home of one Edward Starkus, who, in 1972, was a member of the council and the councilmanic member of the board. He desired to relocate within the borough and accordingly inspected the available residential offerings in town. Early in 1972 he apparently settled upon a vacant municipally-owned tract across the street from the home of the mayor. It is that tract which is the subject of this controversy. Located in a residential zone and subject to a minimum 75-foot frontage requirement, it consisted of two adjacent lots, one having a 50-foot frontage and the other having a frontage of 100 feet. Many of the residential lots in the immediate vicinity have greater than the minimum required frontage, including the mayor's, and it was apparently the intention of Starkus to use the two lots, with their combined 150-foot frontage, as a single consolidated parcel on which he intended to build his house. He thereupon followed the customary procedure, applying to the planning board in February 1972, but declining, because of the evident conflict of interest, to participate in its considerations. The board sent a favorable recommendation
to the council, which adopted a resolution, generally in accord with the statute, offering the two lots for public sale and containing, among other provisions, the condition that "The aforedescribed lands and premises shall be sold and developed as one tract." Notice of the public sale was duly advertised and the sale, which took place as scheduled early in March 1972, was attended by at least several bidders. The record does not disclose whether Starkus was one of the bidders, but we do know, of course, that it was plaintiff Goodfellow which submitted the highest bid, which was in due course accepted. Goodfellow is a local developer, building houses both on speculation and on custom order.
For reasons not explained in the record, the municipal deed was not delivered to plaintiff until October 1972. Plaintiff's president denies, however, having any advance information as to what recitations by way of condition, covenant or other wise would be therein contained. Nevertheless, in September 1972, prior to delivery of the deed, he took two independent steps preparatory to his development of the tract. He obtained a building permit for the construction of a single one-family residence to be located ten feet from the side line of the wider lot, thus providing the minimum required side yard, and he made application to the planning board for a minor subdivision, permitting him to add 25 feet from the side of the wider lot to the narrower lot, thus creating two fully conforming 75-front-foot lots. The Planning board considered the application twice, denying it the first time and referring it, the second time, to the council, which denied it. The denial by each body was based on the conclusion that grant of the subdivision application would constitute a violation of the "one tract development" condition of sale. In the meantime, the bargain and sale deed to the two lots was finally delivered to the plaintiff but, by what was represented below to be a scrivener's error by the municipal attorney, it contained no reference to that condition. Plaintiff, relying on the doctrine that all conditions of a contract of sale of real estate are merged into the
deed and claiming, therefore, that the silence of the deed resulted in the abrogation of the condition, commenced this action in lieu of prerogative writs seeking reversal of the municipality's actions in denying the minor subdivision. Prior to the commencement of the action plaintiff had completed construction of the house on the larger lot and sold the house and the larger lot only to a residential user, taking back an unrecorded deed for the 25 feet thereof required to make the smaller lot conforming. It is not suggested anywhere in this record to the contrary and we are, therefore, accordingly satisfied that the consideration paid by plaintiff's grantees was a full and fair consideration for the house on a 75-front foot lot. We are, therefore, satisfied that the interest of these grantees can be in no way adversely affected by our determinations here.
As we have heretofore noted, the trial judge dealt with the issues here presented in the context in which the controversy was presented, namely, as if it were one primarily implicating the equitable doctrine of merger by deed. His conclusion that there was no merger and that plaintiff continued bound by the "one tract development" condition was, in our view, well reasoned. In essence, the trial judge was correct in his conclusion that while acceptance of a deed is deemed prima facie to constitute full execution of a contract to convey, nevertheless survival of covenants is a question of the intent of the parties and the circumstances here could not permit of a finding that there was any intention that the condition in question not survive. See, e.g., Deerhurst Estates v. Meadow ...