APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY - TRENTON.
Gibbons, Garth and Higginbotham, Circuit Judges.
Hansford Properties, Inc. appeals from a summary judgment awarding a $15,661.78 brokerage commission to Feist & Feist Realty Corp. (Feist Realty). The judgment provides for interest on that amount since the date of its entry. Feist Realty cross-appeals the judgment, contending that the court should have awarded pre-judgment interest from the date the commission should have been paid. We hold that as a matter of law Feist Realty was not entitled to the commission, and reverse the summary judgment. That disposition moots the cross-appeal.
Feist & Feist, a New Jersey corporation and a licensed real estate broker, and Hansford Properties, Inc., entered into a contract on April 4, 1974, designating Feist & Feist "sole and exclusive agent to lease and sell the property located at 2 Service Boulevard, Linden, New Jersey . . . at a price of $315,000, or lease at an annual rental of $2.00 per square foot net to Hansford Properties. . . ." Hansford Properties agreed to pay Feist and Feist "a commission of five per cent (5%) of the sales price, or five per cent (5%) of the total gross aggregate rentals for the original term of the lease, and on any options, extensions or renewals thereof." The agreement provided further:
Should said premises be sold to a tenant procured by Feist & Feist, then, and in that event, Feist & Feist shall be paid a brokerage commission equal to five percent (5%) of the sales price, less such commission as may already have been paid on any unexpired term of the lease.
On July 1, 1974, Feist & Feist procured Jay Cee Laboratories, Inc. as a tenant for the Linden property for ten years at a gross rental of $218,000. The lease to Jay Cee grants the tenant an option to purchase at any time prior to July 31, 1984 at a price of $275,000 plus increases in proportion to increases in the consumer price index.
Pursuant to the terms of the agency agreement Feist & Feist was paid a commission of 5% of the gross rental of $218,000. In December of 1980, Ellis Merkl, the chairman of the Board of Jay Cee, notified Hansford that Jay Cee intended to purchase the property for $375,000. Under the lease's formula for determining the option price it would have been $459,342.62, but after discussions between Hansford and Jay Cee the price apparently was lowered. Jay Cee's offer to purchase was conditioned, however, on its obtaining financing through the New Jersey Economic Development Authority. The lease provides that if the option is exercised, the closing will occur within sixty days. Several postponements in the closing date occurred, because Jay Cee was unable to obtain financing from the New Jersey Economic Development Authority. The extended closing date was not met, and Hansford considered the option terminated.
Thereafter Mr. Merkl sought to have Hansford convey the leasehold premises to Ellis F. Merkl and Marie E. Merkl, Trustees under a 1975 trust for the benefit of their children; the Trust to pay $100,000 on closing and execute a $275,000 purchase money mortgage. In June of 1981 a conveyance from Hansford to the trustees was made on these terms. Two days prior to the closing, Carlyle W. Crane, Esq., counsel for the Merkls, informed the general counsel for Hansford that there was "a possible real estate commission due upon the closing." (Affidavit of J. Thomas Lane, para. 10). This possibility was raised, apparently, because Feist & Feist had been notified of Jay Cee's earlier intention to exercise the option. The closing statement, which had already been prepared, was amended to include the language:
Commission payable to Feist & Feist by Seller, to be paid by Seller outside the closing.
On June 16, Feist & Feist learned that a closing had taken place, and sent a letter to Hansford claiming an additional commission in the amount of $15,661.78.*fn1 In July of 1981 Feist Realty succeeded to the business of Feist & Feist, and became the assignee of the claim. Hansford refused to pay the claim, and in April 1982 Feist Realty commenced suit in the Superior Court of New Jersey.
The suit was removed to the district court because of diversity of citizenship. Both parties moved for summary judgment. The affidavits in support of those motions estabish the foregoing facts and are not in dispute. So far as appears in the moving papers Jay ...