Plaintiff Jan A. Brody (Brody) brought this action to rescind a real estate purchase contract and to recover the deposit which he had paid. In addition to naming the seller, Joseph Alfieri (Alfieri), as a defendant, Brody joined the New Jersey Real Estate Commission (Commission), seeking payment from the Real Estate Guaranty Fund (Fund) of any unpaid judgment against Alfieri, to whom a broker's license had been issued. See N.J.S.A. 45:15-34 et seq. Default judgment has been entered against Alfieri in the sum of $9,758, representing the deposit paid and incidental expenses incurred by Brody in preparing for closing. A writ of execution has been returned unsatisfied, and Brody now seeks an order directing the Fund to pay the amount of that judgment, together with counsel fees and costs. N.J.S.A. 45:15-37. The Commission denies liability of the Fund, asserting that (a) Alfieri was not a licensed broker at the times in question; (b) Alfieri's role in this transaction was as seller rather than as licensed broker, and (c) Brody has not yet exhausted other avenues of collection of the judgment.
The operative facts have been stipulated. In September 1979, interested in purchasing a condominium apartment at Harmon Cove in Secaucus, Brody telephoned Joseph Alfieri Realty in Secaucus, so listed in the telephone book; a recording device answered the call with the identification, "Joseph Alfieri Realty." Thereafter Alfieri returned Brody's call and told Brody he had only one condominium unit available for sale, which was his own. Those discussions did not proceed further.
In the last week of October 1979 Brody saw a newspaper advertisement describing a Harmon Cove condominium for sale; on calling the telephone number listed in the advertisement, Brody found himself again talking to Alfieri, who stated that the unit advertised was his own, the same one they had previously discussed. Several days later Brody went to the apartment,
where Alfieri resided, and the next day reached oral agreement with Alfieri as to the purchase.
On November 2 Brody gave Alfieri a $150 check payable to "Joseph Alfieri" as a deposit pending execution of the contract, and Alfieri signed a receipt on November 5 acknowledging that deposit. On November 7 the parties entered into a written contract for the sale and purchase of the unit for $90,000 and providing for a deposit of $9,000 "to be held by Seller's attorney until closing." The contract, prepared by Brody, a New Jersey attorney, included the following provision:
The parties hereby acknowledge that there is no real estate commission to be paid as a result of this transaction. In the event that such a commission has been earned as a result of this transaction, same shall be the responsibility of the Seller.
Alfieri had told Brody that he had not yet retained an attorney and accordingly Brody prepared a letter, delivered to Alfieri at the time of the execution of the contract on November 7, which stated:
If you have not yet retained an attorney to represent you in the matter, I will agree to depositing the check in your real estate brokers trust account to be held by you in trust as the broker in this matter pending closing.
Alfieri orally agreed to this arrangement and Brody thereupon delivered to him a check made payable to "Joseph Alfieri Realty Trust Account" for the balance of the deposit, $8,850. That check was endorsed "For Deposit, Joseph Alfieri Realty Account # 01-1014226," but was deposited on November 8 in the regular checking account of Joseph Alfieri Realty at Meadowlands National Bank. The entire balance of funds in that account was subsequently dissipated by Alfieri.
Unaware of any misapplication of the funds, Brody proceeded to conduct his title search; during the period that he was preparing to close he was in touch with Alfieri both by telephone at "Joseph Alfieri Realty" and by correspondence directed to the apartment. In January 1980 Brody received his title report, which disclosed that liens exceeding the $90,000 purchase price burdened the unit. Recognizing that the transaction was
at risk, Brody tried to contact Alfieri and learned that the deposit was not being held in escrow and was not available.
Brody filed this action on January 18, 1980 and effected service on Alfieri on January 28. Alfieri failed to answer and Brody entered default on February 21; following proof hearing, judgment was entered on April 1 against Alfieri in the amount of $9,758.
On April 10 the Clerk of the Superior Court issued a writ of execution, which was returned unsatisfied by the Sheriff of Hudson County on July 29. In the interim, on April 24, Alfieri was found murdered in his apartment. Brody has since presented his judgment to the qualified executrix under Alfieri's will; whether ...