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National Newark & Essex Bank v. Housing Authority

Decided: March 23, 1978.

NATIONAL NEWARK & ESSEX BANK, ET AL., PLAINTIFFS-APPELLANTS,
v.
HOUSING AUTHORITY OF THE CITY OF NEWARK, DEFENDANT-RESPONDENT, AND NEWARK INDUSTRIAL DEVELOPMENT CORPORATION, ET AL., DEFENDANTS



For reversal and remandment -- Chief Justice Hughes, Justices Sullivan, Pashman, Clifford, Schreiber and Handler and Judge Conford. For affirmance -- None. The opinion of the court was delivered by Sullivan, J.

Sullivan

Plaintiffs real estate brokers*fn1 sued to recover commissions allegedly due on the sale of lands by defendant Newark Housing Authority of the City of Newark (Housing Authority) to defendant Ideal Toy Corporation (Ideal). Also sued by plaintiffs were the City of Newark and the Newark Industrial Development Corporation (NIDC). Defendant Housing Authority cross-claimed against Ideal, the City of Newark and NIDC for indemnification should it be held liable for the commissions. At the conclusion of a non-jury trial plaintiffs' claims against Ideal, the City of Newark and NIDC were dismissed, as were defendant Housing Authority's cross-claims against these same defendants for indemnification.

Thereafter, the trial court, by letter opinion, dismissed the suit against defendant Housing Authority basically on the ground that, at best, plaintiffs' claim for a broker's commission was barred by the second paragraph of Section 9 of the Statute of Frauds, N.J.S.A. 25:1-9. This provision states that a broker selling real estate pursuant to an oral agreement with the owner, who actually effects such sale before the oral agreement is repudiated or terminated by the owner, may recover the amount of commission on such sale, if the broker shall, within five days after the making of the oral agreement and prior to the sale, serve upon the owner a notice in writing setting forth the terms of the oral agreement and the rate or amount of commission to be paid.

The court held that letters written by plaintiffs to the Housing Authority on March 1, 1967, March 14, 1968 and February 9, 1970 reminding the Housing Authority of their status as brokers and their right to a commission (the contract of sale between the Housing Authority and a subsidiary of Ideal Toy was entered into on August 12, 1970) did not satisfy the statutory requirements.

Plaintiffs' contention that the Statute of Frauds was inapplicable because the Housing Authority was not the owner of the property at the time, was rejected by the court since the record showed that a sizable portion of the land had already been acquired by the Housing Authority in 1965 and 1966.

Plaintiffs filed an appeal from the judgment in favor of the Housing Authority. (They did not appeal from the dismissals as to the other defendants.) The Housing Authority filed a separate appeal from the dismissal of its cross-claim for indemnification against these other defendants. The two appeals were consolidated for argument by the Appellate Division which affirmed the ruling in favor of the Housing Authority essentially for the reasons given by the trial court. Plaintiffs' additional claim that the Housing Authority by its conduct was estopped from asserting the Statute of Frauds as a defense was found to be without any factual basis. Since it upheld the trial court's dismissal of plaintiffs' claim against the Housing Authority, the Appellate Division did not reach the issues presented by the Housing Authority's appeal. Plaintiffs filed a Petition for Certification which this Court granted. 72 N.J. 467 (1976).

For reasons hereinafter set forth, we conclude that plaintiffs' claim is not limited to an oral agreement between broker and seller so that the second paragraph of Section 9 of the Statute of Frauds, relied on by the trial court in dismissing plaintiffs' claim, is inapplicable. Instead, we find that plaintiffs' proofs substantially satisfied the requirements of the first paragraph of Section 9 that plaintiffs' authority

to act as brokers be in writing signed by the Housing Authority or its authorized agent, which writing shall set forth the rate of commission. Plaintiffs therefore, are entitled to judgment against the Housing Authority for commissions due on the sale in question.

The relevant portions of Section 9 of the Statute of Frauds, N.J.S.A. 25:1-9, provide:

Except as herein otherwise provided, no broker or real estate agent selling or exchanging real estate for or on account of the owner shall be entitled to any commission for such sale or exchange, unless his authority therefor is in writing, signed by the owner or his authorized agent, or unless such authority is recognized in a writing or memorandum, signed by the owner or his authorized agent, either before or after such sale or exchange has been effected, and, in either case, the rate of commission on the dollar or the amount of the commission shall have been stated therein.

Any broker or real estate agent selling or exchanging real estate pursuant to an oral agreement with the owner of such real estate, who shall actually effect such sale or exchange before such oral agreement shall have been repudiated or terminated by the owner in writing as hereinafter provided, may recover from such owner the amount of commission on such sale or exchange, if the broker or agent shall, within five days after the making of the oral agreement and prior to the actual sale or exchange of such real estate, serve upon the owner a notice in writing, setting forth the terms of the oral agreement and stating the rate or amount of ...


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