On certification to the Superior Court, Appellate Division, whose opinion is reported at 204 N.J. Super. 605 (1985).
For affirmance -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.
[104 NJ Page 581] We granted certification, 102 N.J. 397 (1986), primarily to consider whether, in the absence of an express contractual provision, the interest earned on a real estate deposit should be considered the property of the seller or buyer. The issue arises in the context of an agreement which specifically requires that
the deposit be held in an interest bearing trust account. We find that the special circumstances of this case do not call for resolution of the general issue.
As Justice Schreiber stated in Kearny PBA Local No. 21 v. Town of Kearny, 81 N.J. 208, 221 (1979),
[t]he polestar of construction of a contract is to discover the intention of the parties. * * * Any number of interpretative devices have been used to discover the parties' intent. These include consideration of the particular contractual provision, an overview of all the terms, the circumstances leading up to the formation of the contract, custom, usage, and the interpretation placed on the disputed provision by the parties' conduct. Several of these tools may be available in any given situation -- some leading to conflicting results. But the weighing and consideration in the last analysis should lead to what is considered to be the parties' understanding. Individual interpretative rules should be subordinated to that goal. See Ace Stone, Inc. v. Tp. of Wayne, 47 N.J. 431, 439 (1966), and cases cited. [citations omitted].
Applying those guiding principles here, we conclude that the trial court correctly held, after weighing and considering all the factors relevant to the parties' intent, in light of the parties' understanding of the contract, that the interest on the deposit be credited to the purchaser. In so holding, we do not reach the question of which party ordinarily is to receive credit for the interest earned on a realty deposit, held in trust, in the absence of an express contractual provision.
The facts and circumstances that sustain the result here are as follows. The defendant, Great Pacific Century Corp. (Great Pacific), is the developer and vendor of Century Tower, a 235-unit luxury, cooperative apartment complex in Fort Lee, New Jersey. Plaintiff, Samuel Jacobs, individually and on behalf of class members, is the purchaser of cooperative shares with accompanying proprietary lease.
On October 16, 1980, Jacobs signed a "Stock Purchase Agreement" pursuant to the "Offering Statement and Plan of Cooperative Organization" for the property and placed a deposit on a unit in Century Tower. At closing, he requested that the interest earned on the deposit from date of deposit to date of closing be credited toward the purchase price. Great Pacific refused. Jacobs proceeded with the closing "under protest."
He later instituted a class action suit on behalf of other Century Tower purchasers who were similarly situate in not having the interest earned on their deposits credited toward the purchase prices.
The provisions in the "Stock Purchase Agreement" and "Offering Statement" do not expressly state which party receives credit for interest earned when a sale is completed. Rather, the contract focuses on which party receives interest earned when there is a default or breach by either party. The purchaser obtains the deposit and interest earned if the seller defaults and the seller retains deposit and interest earned if the purchaser defaults. The only "non-default" provision in the "Stock Purchase Agreement" concerning deposit and interest earned thereon provides:
All monies received by the Seller on account of the Purchase Price shall be deposited in trust in an interest bearing account at Citibank, N.A., under the name "One Century City Special Account", until actually transferred to the Seller in connection with the closing under this Purchase Agreement. Such account will bear interest at the rate paid by Citibank, N.A. from time to time on ordinary deposits, which on the date of this Purchase Agreement is 5 1/4% per ...