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Kislak Co. v. Geldzahler

Decided: December 19, 1985.


Newman, J.s.c.


[210 NJSuper Page 258] Plaintiff seeks to compel defendant to pay a commission on real estate sold while allegedly under an exclusive sale agreement. The issue presented to this court, not yet addressed in New Jersey, is whether breach of a referral provision of an exclusive right to sell agreement entitles the listing broker to the commission stipulated in the agreement. The pertinent facts found during this nonjury trial are as follows. Plaintiff, Kislak Company, Inc. (Kislak), is a New Jersey corporation engaged in the sale of real estate and is licensed by the state of New Jersey as a broker to engage in this business. Linda Stiles is a licensed real estate salesperson employed by Kislak. Defendant, Seymour Geldzahler, an experienced real estate owner and developer, was approached by Stiles who obtained from Geldzahler an exclusive authorization (agreement I) to sell defendant's property known as Warren Village on October 8, 1982. This authorization provided that for a period of three months Kislak had the exclusive authority to sell the property

with a commission of $50,000 to be paid to plaintiff upon the successful completion of the sale of the property. This exclusive agreement contained no express prohibition on the advertisement of the property. Other pertinent provisions of the agreement read:

The undersigned agrees to refer to you all inquiries received regarding the purchase of said property, whether from real estate brokers, prospective purchasers or others.

Your commission shall also be considered earned in the event said property is sold or exchanged or contracted to be sold or exchanged by anyone during the term of the exclusive hereunder.

This exclusive agreement was extended for a period of one month until February 9, 1983 (agreement II). The same agreement was extended again with an expiration date of February 28, 1983 (agreement III).

On February 28, 1983, a new exclusive agreement (agreement IV) was executed which varied the terms of agreements I, II, and III. Specifically, agreement IV made the $50,000 commission payable in two parts: $25,000 at closing and $25,000 payable 12 months after closing. The February 28, 1983 agreement also contained the following language:

Your authorization is tied to our agreement with Howard Burch dated February 15, 1983 only.

Agreement IV was valid for two months, up to and including May 1, 1983, and contained the same requirement of referral by Geldzahler of all inquiries received regarding Warren Village to Kislak.

Within the framework of the four agreements, Kislak undertook activities to market the property. After the execution of agreement I, Stiles obtained an offer of $1,100,000 from Arthur Cirkhus on November 13, 1982 which was presented to Geldzahler. Geldzahler refused this offer as too low. On December 23, 1982, Stiles presented defendant with an offer from Peter Geltman which was rejected; again, the offer was determined by Geldzahler to be too low.

On January 30, 1983, Stiles published an advertisement of the property in the Star Ledger. Although the agreement contained no prohibition on advertising the property, Geldzahler objected to advertisement of the property. His request not to advertise Warren Village was subsequently honored. After the advertisement, Stiles continued to market the property and obtained an offer from Birchland Associates on February 8, 1983. Geldzahler rejected Birchland's first offer of $1,101,000 as too low. On February 15, 1983, Stiles obtained another offer from Birchland of $1,151,000 which defendant conditionally accepted. Geldzahler had his attorney prepare the contracts which were delivered to Birchland. Birchland's attorney requested changes which he inserted in a rider and transmitted to Geldzahler's attorney. On March 24, 1983, a meeting was held to resolve the contract differences between Geldzahler and Birchland. The principal conflict concerned a prohibition of condominium conversion of the Warren Village insisted upon by Geldzahler because he was marketing condominiums on an adjacent property. Birchland refused to agree to such a prohibition, and the proposed deal was terminated.

At some time prior to February 28, 1983, while agreement III was in effect, Geldzahler was contacted by Mr. Gupka of Endoc Realty with whom he had prior contacts. Gupka informed Geldzahler that he had a buyer interested in Warren Village. Geldzahler told Gupka that he had a written exclusive agreement with Kislak which expired on February 28, 1983. Geldzahler further instructed Gupka to wait to present the offer until after February 28, 1983, the date on which the exclusive agreement with Kislak was to end. Geldzahler did not inform Kislak of this inquiry or his contact with Gupka. Gupka did present this offer on March 1, 1983 but Geldzahler did not inform Kislak of this offer.

On March 5, 1983, Stiles produced another offer from W.V. Associates which agreed to the prohibition against condominium conversion. Geldzahler stated to Stiles that he would deal only with ...

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