On appeal from the Superior Court of New Jersey, Law Division, Passaic County.
Crane, Milmed and King. The opinion of the court was delivered by King, J.A.D.
Plaintiff, a manufacturer of clothing, brought this suit against defendant Richard A. Hajjar Agency, a real estate broker, and defendant, Lawrence Rubin, its affiliated agent. Plaintiff alleged that defendants acted as its broker in the rental of a property at 1095 Ringwood Avenue, Wanaque, Passaic County. The property was located in a commercial zone and had been used previously as a supermarket. Shortly after plaintiff commenced its clothing manufacturing operation on August 1, 1977, it was told to stop production because manufacturing was not a permitted use of the property. After production was closed down, plaintiff claimed damage because orders could not be met.
The parties stipulated at trial that defendant Rubin was an agent of the Hajjar Agency and that he violated his professional duty to plaintiff by negotiating for a rental property at which plaintiff's contemplated activity, clothing manufacturing, as expressed in the lease which Rubin drew, was illegal. The question for the trial judge, sitting without a jury, was the extent of
plaintiff's entitlement to damages. The trial judge found defendants liable for the loss of the full income on four contracts which he found Rubin's negligence prevented plaintiff from completing and entered judgment in the amount of $58,900, which sum also included defendants' $300 broker's fee to plaintiff.
On the appeal appellants contend that the loss of income from interruption of manufacturing was not a proper element of damages because it was not within the fair contemplation of the parties at the time the brokerage contract was consummated. Defendants also argue that the verdict was against the weight of the evidence and that plaintiff failed to mitigate damages.
We recite the facts as we infer them to have been found by the trial judge. In early July 1977 plaintiff's principal, Karrell, who had 28 years' experience in the trade, and plaintiff's fashion designer Chaoui called the Hajjar Agency and spoke to defendant Rubin about renting space for plaintiff's clothing manufacturing operation. Rubin took them to an empty supermarket on Ringwood Avenue in Wanaque which they agreed to rent for $300 a month. On July 27 a handwritten lease prepared by Rubin on an Hajjar Agency form was executed. The lease commenced on August 1 for three months, thereafter to continue month-to-month. Plaintiff paid defendants' broker's fee of $300 and the first month's rental upon execution of the lease.
On July 28 plaintiff installed four sewing machines, a cutting table, an electric scissors and six mannequins, and commenced operation. About 12 days thereafter the building inspector came to the premises and directed plaintiff's personnel to cease operations because of a violation of the local land use ordinance. When this happened Rubin assured Karrell and Chaoui that he knew the mayor and that everything would be all right. Karrell testified that Rubin called back three days later and said that work could be resumed. Plaintiff did resume operations but on August 24 the building inspector returned and again ordered it to cease. Work stopped and was never resumed. Shortly thereafter plaintiff vacated the premises.
The damage issue focused on four purchase orders, evidence of which was presented as follows:
(1) The Magnificiant Two Boutique, Inc., of Newark: This order was dated August 1, 1977 with a specified delivery date of August 25, 1977. The order was for suits, 24 small, 24 medium and 24 large at $60 each; for coats, 36 small, 36 medium and 48 large at $75 each; a total of $13,320.
(2) Fashion Express, Newark: This order was dated August 1, 1977 and the specified delivery date is August 20, 1977. The order was for suits, 24 small, 24 medium, and 24 large, at $60 each; for coats, 48 small, 48 medium and 48 large, at $75 each; a total of $15,120.
(3) The Cockeyed Parrott, Roslindale, Massachusetts: The order was for 250 coats at $75 apiece with a delivery date of August 23; a total of $18,750.
(4) Kairallo Trousseau Shop, Magnolia, Massachusetts: The order was for 150 coats at $75 apiece to be delivered by August 31; a total of $11,250.
These deadlines keyed into the Fall line which opens right after Labor Day. Neither Rubin, nor any other representative of the Hajjar Agency, were at any time told of the size of these purchase orders or of the delivery deadlines.
Plaintiff presented evidence that about $8,300 was spent on materials (wool, cashmere, thread, buttons, etc.) to fill these orders. Another $4,000 was spent on machinery, furniture and travel and miscellaneous expenses.
At the time plaintiff was forced to cease operations, all of the material had been cut and the garments were partially sewn, but none had been completed for shipment. Plaintiff's principals allegedly still retain the garments. Karrell testified that when operations ceased on August 24 it was impossible to find other jobbers to complete the ...