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Sutton v. Lienau

Decided: March 31, 1988.

ILA SUTTON, PLAINTIFF-RESPONDENT,
v.
GORDON LIENAU, DEFENDANT-APPELLANT



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

O'Brien, Havey and Stern. The opinion of the court was delivered by Stern, J.A.D.

Stern

Defendant appeals from a portion of a final judgment confirming the entry of summary judgment dismissing defendant's counterclaim for specific performance of an option to purchase real property. Judgment was entered for plaintiff because the option was held unenforceable under the statute of frauds, N.J.S.A. 25:1-5 et seq. We now hold that a series of writings, including a memorandum signed by an authorized agent of the person against whom enforcement of the agreement is being sought, may satisfy the statute. Accordingly, we reverse and remand for further proceedings.

On or about October 31, 1981, Willard Sutton, plaintiff's late husband (Sutton),*fn1 entered into a written lease (as landlord) with defendant (as tenant) for real property located at 2204 Stanley Terrace, Union, New Jersey. The lease was for a five-year term commencing on November 1, 1981 and was executed with other documents related to the sale of Sutton's business to defendant. The lease also contained an "option to purchase" the premises in paragraph 34 contained in a rider to the lease. On December 31, 1984, defendant exercised the option by forwarding to the firm of the attorney who drew the lease, as trustee, monies sufficient to invoke the option. By letter dated January 8, 1985, the attorney, Alfred R. Kinney, wrote to plaintiff and advised her of her obligation to convey the property to defendant, but she refused to do so. Thereafter,

defendant demanded a judgment for specific performance or, in the alternative, damages, in a counterclaim to plaintiff's complaint filed in an action related to another aspect of the transaction.

The lease and the rider were executed in the presence of Kinney, who was Sutton's attorney and the scrivener of both documents.

Paragraph 34 of the two-paragraph rider was initially signed in the following form:

RIDER

34th: The tenant shall have an option to purchase the real property covered by this lease, together with any right of way which may also be assignable or transferable, during the term of this lease or any extension thereof, for the sum of $during the first five years of the lease or at a sum to be arrived at by the average of three appraisals during the second five years of the term if renewed. During said renewal the sale price shall be established by each party obtaining an appraiser, and the two appraisers picking a third, the average of the three appraisals shall be the established purchase price for exercise of the option to purchase.

[s] Gordon Lienau, Tenant

[s] Willard Sutton, Landlord

It is not disputed that Sutton and defendant deliberately left the option purchase price "blank." According to defendant, "Sutton didn't know what the buildings were worth," and he and Sutton "agreed to leave the purchase price, contained in Paragraph 34 of the Rider, blank only until [Sutton] had the property appraised and until he [Sutton] determined a price." Defendant "trusted" Sutton and was willing to accept "whatever" option purchase price Sutton decided to insert in the rider. He stated in depositions that he "kn[e]w it would be fair."

Kinney arranged for an appraisal of the land and buildings, and on November 5, 1981, an appraiser inspected the property. On November 6, 1981, a written appraisal was sent to Kinney.

The property was appraised for a total market value of $110,000. On November 17, 1981, Kinney sent a letter to Sutton, with a copy to defendant, which read as follows:

Re: Speed Trucking & Rigging

Dear Mr. Sutton:

Please find enclosed herewith a photocopy of an appraisal made for me by Leonard J. Zehnbauer. Please issue a check payable to Mr. Zehnbauer in the amount of $50.00 to cover the bill and forward it directly to Mr. Zehnbauer in the enclosed envelope.

I have also forwarded a copy of it to Mr. Lienau so that he can review it as well. If the two of you can agree on a figure, we can insert the figure in the lease and ...


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