On certification to the Superior Court, Appellate Division.
For reversal -- Chief Justice Wilentz and Justice Handler, Pollock and O'Hern. For affirmance -- Justices Clifford, Garibaldi and Stein. The opinion of the Court was delivered by Pollock, J. Clifford, Garibaldi and Stein, JJ., dissenting.
This case arises out of an agreement by a developer to pay a commission to a real estate broker for procuring a lease with the State of New Jersey (the State) for a new office building. The narrow question is whether the agreement violates N.J.S.A. 52:34-15, which proscribes retaining persons on a commission basis "except bona fide employees or bona fide established commercial or selling agencies maintained by the contractor for the purpose of securing business * * *." The jury found, in answer to a specific interrogatory, that the broker had not been maintained by the owner, and returned a verdict for the State. In an unreported decision, the Appellate Division reversed and remanded for a new trial.
We granted the State's petition for certification, 99 N.J. 165 (1984), to determine whether the statutory requirement that the broker be "maintained by the contractor" was satisfied. We now find that the broker was not "maintained by" the developer, and, hence, that his commission violates N.J.S.A. 52:34-15. Accordingly, we reverse the judgment of the Appellate Division and reinstate the judgment entered on the jury verdict.
In 1954, Samuel J. Plumeri retired after twenty years' employment in the State Treasurer's Office and joined the family real estate business as a salesman. A lifelong resident of Trenton, he has been active for many years in local political and business affairs. At present, he is the president of plaintiff, Samuel J. Plumeri Realty Company, Inc.
The defendants include Capital Place Urban Renewal Associates, Inc. (Capital Place) and the State. Capital Place owns an office building located in downtown Trenton, two blocks from the State Capitol, and known generally as Capital Plaza Tower I (Capital Plaza). The State is the principal tenant in Capital Plaza.
Plumeri first learned of the possible development of Capital Plaza through news accounts in the 1960's. During this same period, Trenton retained the consulting firm of Gladstone Associates to study the development of the project. The "Gladstone Report," published in July 1971, concluded that if the project was to succeed, substantial office facilities would be required and that the State must be a principal tenant. Even before the release of the report, Plumeri met with another broker, Alvin H. Singer, to discuss the possibility of finding a developer. Also before the release of the report, Plumeri met with State Treasurer Joseph McCrane in an attempt to interest the State in leasing space in the project.
Plumeri was unsuccessful, however, in finding a developer until November 1971, when he met Eugene M. Grant, an experienced real estate developer, as well as a licensed lawyer and real estate broker in New York. Acting as an independent broker, Plumeri undertook to interest Grant in the project as a potential developer. Grant inspected the site with Plumeri, and on January 11, 1972 wrote to the Director of the Trenton Department of Planning and Development, expressing an interest in the project.
In February 1972, Plumeri introduced Grant at a meeting of the Mayor and Trenton City Council. Grant explained his proposal, and the following month, the City Council gave to Grant and Capital Place an exclusive four-month option to develop the site.
From the outset, Grant realized that for the project to succeed, the State must be the principal tenant, and he relied on Plumeri for access to the appropriate State officials. Accordingly,
Plumeri introduced Grant to James O'Connor, the Director of the State Division of Purchase and Property, which is part of the Department of the Treasury. This meeting, in turn, led to another meeting between Grant and McCrane. As a result of those meetings, O'Connor gave Grant a written commitment on September 21, 1972 that the State would lease office space in Grant's proposed building. Negotiations on the lease began that same month and continued late into 1973, when they ceased because of the forthcoming change from the Cahill to the Byrne administration.
On June 5, 1973, eighteen months after Plumeri first became involved with Grant, he and Capital Place entered into an agreement under which Plumeri would receive $346,666.65 as a commission on rents that Capital Place was to receive from the State. The agreement specifically provided that Plumeri's commission was contingent on the State leasing and commencing to pay rent for approximately 100,000 square feet of office space in Capital Plaza.
In early 1974, Grant renewed negotiations with the new administration, but Plumeri did not attend these sessions. After several negotiating sessions, the possibility of the payment of a commission to Plumeri was raised. Deputy State Treasurer Clifford Goldman, who took an active role in the negotiations, questioned Plumeri's right to a commission. On March 22, 1974, the then-Director of the Division of Purchase and Property, Frank M. Papale, Jr., wrote to Capital Place enclosing a proposed lease for Capital Plaza. In the letter, the Director explained that he had reduced the rent from $7.50 to $7.36 per square foot by eliminating Plumeri's commission, which appeared "to be violative of the provisions set forth in N.J.S.A. 52:34-15."
Five days later, at a March 27, 1974 meeting with State officials, Grant explained Plumeri's role, stating: "I wouldn't waste my time knocking on ...