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Lo v. Tel-Air Communications Inc.

Decided: March 26, 1985.


On appeal from Superior Court of New Jersey, Law Division, Sussex County.

McElroy, Dreier and Shebell. The opinion of the court was delivered by Dreier, J.A.D.


[200 NJSuper Page 63] The parties have cross appealed from a Law Division judge, entered on a jury verdict, finding defendant liable to plaintiff*fn1 in the amount of $20,000 and plaintiff liable to

defendant for $9,550. This verdict was molded by the trial judge into a judgment for plaintiff in the amount of $10,450 plus interest.

By a contract dated October 16, 1974, defendant Tel-Air Communications, Inc. (Tel-Air) agreed to purchase from The Aeroflex Communication Systems, Inc. (Aeroflex Communications) "all of the assets of [Aeroflex Communications] used in connection with the radio common carrier operation of Station KEC-924." These assets included the General Electric base transmitter, two consoles, General Electric control and repeater facilities, and associated mobile units. Implicit in the agreement also was the transfer of the good will of the seller, since the buyer agreed to continue to render 24-hour service to all existing subscribers. The sales contract also required the assignment by Aeroflex Communications of the FCC radio license to operate the business of transmitting radio signals for mobile telephones and paging systems. The purchase price of $35,000 was payable $5,000 at the time the contract was signed (held in escrow until the closing), $10,000 payable within two years of the closing, and $20,000 to be paid "no later than three (3) years of the closing."

As part of this contract the seller agreed to provide access to the transmitter as follows:

Seller hereby agrees to provide free and reasonable access to Buyer to the existing authorized transmitter locations, towers, and facilities of Station KEC-924, twenty-four (24) hours a day, every day of the year, for the purpose of inspecting, supervising, maintaining, and repairing equipment of Station KEC-924 situated on the premises.

The transmitting tower was located on premises owned by Aeroflex Corporation, a separate corporation, also wholly owned by Aeroflex Communication's principal, Frederick Hussey. Mr. Hussey died in the spring of 1977 and was succeeded

by his widow, Nell P. Hussey, as President of both corporations.

For the first few years after the transfer there does not appear to have been any access problem. Neither of the Aeroflex corporations made any charge for, nor did Tel-Air offer to pay, any expenses, such as those for heating and electrical service for the maintenance of the building at the base of the tower or for the use of the tower itself.

In May 1977, Tel-Air's principal, George Stites, was called to a meeting attended by Mrs. Hussey, her attorney and the manager of the airfield located on the Aeroflex Property. During this meeting the Aeroflex attorney told Mr. Stites that he did not think that the October 1974 contract would stand up in court and that "he was going to have his associate research it and come back [to Stites] with a decision as to what they felt about the contract." Stites testified, however, that thereafter he never heard from the attorney or Mrs. Hussey concerning this point. His right of access was neither blocked nor questioned by Aeroflex.

On December 27, 1977, Tel-Air's attorney wrote to Mrs. Hussey and noted that the final $20,000 to be paid under the contract was to come due in January 1978. Since a question had been raised as to the validity of the access agreement, the attorney stated that he would hold the $20,000 in escrow until the problem was resolved. He requested "a right-of-way in recordable form granting access to the transmitter as it is presently located pursuant to the terms of paragraph 2 of the contract."

The next communication was a letter from Aeroflex Corporation's attorney, dated April 13, 1978, informing defendant's attorney that Aeroflex had contracted to sell its property and that neither Aeroflex nor the proposed buyer was prepared to make any binding commitment as to the interpretation of the Tel-Air contract. A demand was made for the $20,000 due under the contract, stating that the payment of the $20,000 was

not dependent upon the resolution of the ingress, egress and maintenance issue, which itself "may be subject to a judicial interpretation." Later that year, in September 1978, Stites commenced inquiries concerning the leasing of other tower facilities.

Plaintiff purchased the Aeroflex Corporation property of approximately 854 acres for $2,000,000 on November 29, 1978. The purchase agreement, in paragraph 7(A), noted that Tel-Air's attorneys were holding $20,000 in escrow and that plaintiff was to pay Aeroflex Corporation an additional $20,000, plus interest, and Aeroflex would assign to plaintiff "all of its right and interest in and to the deposit."*fn2

On November 20, 1978, Tel-Air's negotiation with the owner of another tower ripened into a contract to lease that tower for ten years, commencing November 30, 1978. Tel-Air immediately commenced its renovation of the new tower at an alleged cost of $17,140. This sum included renovation costs of $9,903.50, painting charges of $2,350, replacement charges for two antennas (which could not be removed ...

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