For reversal and remandment -- Chief Justice Hughes and Justices Pashman, Clifford, Schreiber and Handler. For affirmance -- None. The opinion of the court was delivered by Pashman, J.
At issue is the correctness of a Superior Court, Chancery Division holding that a prospective buyer may unilaterally withdraw from an agreement for the purchase of an aircraft made with the statutory receiver of its insolvent corporate owner. The lower court's action was based on its perception of the effect of a contingency clause in the agreement purporting to make the buyer's offer to purchase non-binding until approved by the court supervising the receivership proceedings. If such a unilateral withdrawal is impermissible, the question remains whether in the present factual context the judge abused his discretion by permitting withdrawal by the purchaser rather than confirming the purchase agreement and insisting on the buyer's performance according to the terms thereof.
The history of this aircraft is voluminous and confusing. Our concern with the aircraft, a Boeing 707 jet specially modified to serve as an executive-type corporate plane, stems from its connection with Fairfield General Corporation (Fairfield General). Fairfield General, a former interest of financier Robert Vesco, is in liquidation pursuant to N.J.S.A. 14A:14-1 et seq. John J. McLaughlin is the duly appointed receiver of the corporation. Fairfield Aviation Corporation is a wholly-owned subsidiary of Fairfield General. The record owner of the aircraft was Skyways Leasing Corporation (Skyways), a wholly-owned subsidiary of Fairfield Aviation Corporation and therefore a sub-subsidiary of Fairfield General. Pan American World Airways (Pan Am) held a first mortgage on the airplane.
In December 1973 Air Inter-Sales Co., Ltd. (Air Inter-Sales), a Bahamanian corporation, agreed to purchase the Boeing 707 from Skyways for $1,500,000. Approval of the sale had to be secured from the United States District Court for the Southern District of New York because that court was supervising the operation of International Controls Corp. (I.C.C.), another Vesco interest which was a former parent corporation of Fairfield General. I.C.C. had been given an economic interest in the Fairfield General receivership in settlement of a suit against Skyways concerning the lease of the aircraft in question. The sale to Air-Inter-Sales was by means of a conditional sales contract in which Skyways retained title. Cancillieres, S.A., a Panamanian corporation (Cancillieres), financed Air Inter-Sales with respect to the above transaction. Cancillieres allegedly received an assignment of all Air Inter-Sales' rights and interests in the plane as security for repayment of the debt.
As of March 1, 1974, Air Inter-Sales had defaulted both with respect to payments owed Skyways and with respect to its mortgage from Cancillieres. Cancillieres seized the aircraft and removed it to Panama. Air Inter-Sales and Cancillieres subsequently resolved their default problem. Meanwhile, back in New Jersey, the receiver of Fairfield General indicated to the Chancery Judge that he would be able to get lawful possession of the aircraft provided the court would authorize an advance payment on a lien claim held by a former employee of the various Fairfield General Corporations who had been the jet's pilot in the past. The judge issued an order on May 7, 1974 authorizing the receiver to advance $10,000 on the lien. The pilot subsequently flew the aircraft to Newark International Airport where it was impounded under court order.
Even though title to the aircraft was held by a wholly-owned sub-subsidiary, the court considered it to be a receivership asset of Fairfield General. Accordingly, the court directed the receiver to attempt to sell the aircraft. In mid-January 1975 the receiver met with Cal Strouse, an aircraft
broker, and Vernon Presley, father and agent of defendant Elvis Presley. It was agreed that Presley would purchase the airplane for $1,500,000 upon the terms and conditions set forth in an agreement drawn by Presley's Tennessee attorneys. A $75,000 deposit was delivered to the receiver. The seller of the aircraft was described in the agreement as the "Fairfield General Corporation Creditors" and Elvis Presley was designated as the purchaser. The agreement was signed by Vernon Presley pursuant to a power of attorney. On January 31, 1975 the receiver formally accepted the contract. Pan Am was amenable to the transaction as the agreed-upon amount of its chattel mortgage on the plane (some $725,000) was to be satisfied out of the proceeds of the sale. The provisions of the sales agreement pertinent to this appeal follow:
TITLE. SELLER warrants that if said aircraft is sold and transferred to PURCHASER pursuant to this agreement, said aircraft will be free and clear of all liens, encumbrances and other liabilities as of the moment of transfer.
Contingency. It is understood and agreed to by the parties hereto that final sale and transfer of this aircraft is subject to the approval*fn1 of the Court referred to above and that notwithstanding anything to the contrary herein, the provisions herein shall not be binding upon the parties until said final Court approval has been secured.
The receiver obtained an order to show cause returnable February 13, 1975 requiring all interested parties to show cause why the aircraft should not be sold in accordance with the January agreement. The court insisted that the order to show cause contain a provision specifying that any bids in multiples of $100,000 above the Presley bid could be considered by the court on the return date. On February 5, 1975 the receiver was contacted by Presley's Tennessee counsel
in regard to a telegram the latter had received from the Republic of Panama, allegedly from Cancillieres, advising of an outstanding claim against the aircraft. On advice of the receiver, Presley obtained New Jersey counsel to protect his interests in the upcoming judicial proceeding.
On the February 13, 1975 return date, Presley's New Jersey counsel sought to "withdraw" the Presley offer, asserting the alleged inability of the receiver to deliver clear title as the reason for withdrawal. A lack of information concerning the Cancillieres claim made it impossible for the court to rule at that time on the alleged breach of the receiver's contractual warranty of title. The hearing was terminated with the court's suggestion that counsel try to effect a settlement which would include a compromise of the alleged Cancillieres claim. Counsel for Presley did not object to this suggestion and was more than an interested observer during the ensuing two weeks while negotiations for such a settlement took place.
On February 28, 1975, the adjourned return date, Presley's counsel announced that unless the transaction was consummated by 3 P.M. on that day, Presley was withdrawing his offer. Counsel for the various parties were unable to firmly agree on any sum which would satisfy Air Inter-Sales and Cancillieres because counsel for Air Inter-Sales could not reach his clients and obtain the appropriate authorization on such short notice. The receiver thereupon filed a petition against Presley, which the court deemed a complaint, in which he sought to compel Presley to proceed with the purchase or, in the alternative, to pay damages. Presley immediately moved for summary judgment dismissing the complaint.
Soon thereafter, on March 6, Cancillieres and Air Inter-Sales allegedly reached a settlement of their differences. Cancillieres agreed that a portion of the proceeds of the contemplated sale, the sum of $325,000, which Air Inter-Sales was willing to accept in settlement for its lien on the aircraft, would be the sole object of any liens asserted by
Cancillieres with respect to the aircraft. Thus, assuming the validity of this agreement, Presley would no longer have had any legitimate reason for concern that the aircraft might be subject to seizure at any number of foreign airports. Affidavits obtained from the attorneys for these two organizations attested to the settlement. Nevertheless, Presley persisted in his claim that the offer had been withdrawn.
On April 18, 1975 the court initially ruled on the claims made by Presley in support of his motion for summary judgment. The court held that a proper construction of the sales agreement was that it was irrevocable until the court ruled as to approval. Thus, the dispositive question was whether the receiver could deliver satisfactory title as called for by the agreement. The judge observed that Presley could not be subjected to an interminable court proceeding to resolve the title issue, as his offer was conditional on the court's ruling upon it within a reasonable period of time. He then held that a reasonable period of time had not expired and suggested that further court proceedings be held with dispatch to determine whether the receiver could comply with the warranty of title called for by the agreement. Presley's motion for summary judgment was denied.
Presley subsequently moved for reconsideration of the court's denial of his motion for summary judgment on the receiver's complaint. On May 2, 1975, the return date of the motion for reconsideration, both parties assured the court that there were no disputed issues of fact. Presley conceded that if on February 13, 1975 the receivership had been extended to encompass the two Fairfield General subsidiaries (Fairfield Aviation and Skyways) and if Cancillieres, Air Inter-Sales and Pan Am, as creditors of Fairfield General, had joined in the conveyance, clear title would have been conveyed. The court had been apprised of the purported agreement of Air Inter-Sales and Cancillieres with the receiver that their claims would be satisfied solely from the proceeds of the plane's sale. Presley's major contention was that the contingency clause in the agreement, see ante at
404, gave him an absolute right of withdrawal until the actual time of confirmation of the agreement by the court. In support of that proposition, he cited New York Football Giants, Inc. v. Los Angeles Chargers Football Club, Inc., 291 F.2d 471 (5 Cir. 1961), Detroit [ Lion ] Football Co. v. Robinson, 186 F. Supp. 933 (D.C. La. 1960) aff'd 283 F.2d 657 (5 Cir. 1960), and Los Angeles Rams Football Club v. Cannon, 185 F. Supp. 717 (D.C. Cal. 1960). The latter two cases held that executed contracts which by their express terms were not to be valid and binding until approved by the Commissioner of the National Football League did not bind the athletes who "jumped" to the American Football League prior to such approval. In opposition, the receiver claimed that the entire agreement had to be examined, not the contingency clause alone. He asserted that consideration of the document as a whole indicated that it was a binding agreement, subject to confirmation by the court.
In his letter opinion of May 7, 1975, the judge reversed his previous determination and granted Presley's motion for summary judgment. He observed that the issue of clear title had been satisfactorily resolved and was thus out of the case. Nevertheless, he found the "football cases" to be persuasive as to the meaning of the contingency clause. The judge felt that Presley did not intend his offer to be binding until actually approved by the court. Under those circumstances, he held that a court could not recast the clear wording of the contract in order to make it conform to the general rule pertaining to purchase offers made to a receiver subject to its approval. The court held that Presley had a right to withdraw his offer prior to confirmation and that his withdrawal was not arbitrary, given his reasonable apprehension as to the existence of outstanding claims to the aircraft. The subsequent resolution of the claims could not revive the offer in the absence of Presley's consent.
The receiver moved for reconsideration of the court's reconsideration and presented an affidavit by the broker who had arranged the deal, Cal Strouse, to show that the intent
of the parties was to make the offer irrevocable. At the hearing on June 6, 1975, the judge refused to consider this alleged fact issue, stating that at the May 2 hearing the receiver had assured him that no such issues existed. A final order granting Presley's motion for summary judgment was signed by the court on June 17, 1975. On motion by the receiver, the court on June 20, 1975 issued an order permitting the surrender of the aircraft to Pan Am to allow its sale in satisfaction of Pan Am's chattel mortgage. I.C.C. moved for a stay of the order releasing the plane as it feared that in the event of a reversal of the court's ruling Presley could claim that there was no aircraft which could be tendered to him. The judge denied the stay on July 1, 1975, observing that Presley could make no such claim since his attorney had informed the judge that Presley had already purchased another airplane.*fn2 Thus, monetary damages would be in order in the event of a reversal.
Both I.C.C. and the receiver appealed to the Appellate Division, which consolidated the two appeals. The Appellate Division affirmed the Chancery Division in an unreported per curiam decision on July 2, 1976, expressing its essential agreement with the conclusions of the judge. It found implicit in his reasoning the belief that the contingency clause had been relied upon by Presley and further found his determination not to confirm to be within his discretion.*fn3 We granted both I.C.C.'s and the receiver's petitions for certification on November 9, 1976. 72 N.J. 464 (1976). On defendant's motion, pursuant to R. 4:34-1(b), Vernon E.
Presley, executor under the last will and testament of the late Elvis Presley, was ...