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Kislak Co. v. Byham

Decided: December 12, 1988.

THE KISLAK COMPANY, INC. PLAINTIFF-APPELLANT AND CROSS-RESPONDENT,
v.
RICHARD B. BYHAM AND CATHERINE BYHAM, JOINTLY AND SEVERALLY, DEFENDANTS-RESPONDENTS AND CROSS-APPELLANTS



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

J. H. Coleman and Havey. The opinion of the Court was delivered by Havey, J.A.D.

Havey

Plaintiff Kislak Company, Inc. (Kislak) appeals from a judgment entered after a bench trial dismissing its complaint against defendants Richard and Catherine Byham. Kislak, a real estate broker, produced a buyer for property defendants had listed with Kislak. The property was owned by Byham Enterprises, Inc. (Byham Enterprises), of which defendants were stockholders. The trial judge dismissed the complaint, concluding that since defendants were not the title owners of the property, no commission was due.

On appeal, Kislak contends that: (1) a commission is due because it produced a ready, willing and able buyer; (2) an individual who signs a listing agreement personally may be held liable for a commission for the sale of property which he does not own; (3) there was no mutual mistake in fact in the execution of the listing agreement, and (4) Byham Enterprises' "nominal ownership" of the property should be disregarded in determining defendants' liability to pay the commission.

Defendants cross-appeal from the dismissal of their counterclaim in which they alleged Kislak violated the Plain Language Act, N.J.S.A. 56:12-1, et seq.

On Kislak's appeal we reverse and remand for further proceedings. We conclude that defendants were personally liable for any commission due Kislak. The matter is remanded for a determination by the trial judge as to whether Kislak produced a ready, willing and able buyer under terms acceptable to the seller. On defendants' cross-appeal, we affirm the judgment dismissing their counterclaim.

On March 15, 1982, Kislak entered into an exclusive listing agreement with defendants to sell an apartment complex in Berlin, New Jersey, known as Winding Way Apartments. The listing agreement ran from March 15 to July 15, 1982. The sales price was fixed at $600,000 and defendants agreed to take back a ten-year second mortgage for $243,000 at interest rates increasing from 10% to 14% over the ten-year term. On April 16, 1982 the parties amended the listing agreement, reducing the asking price to $595,000 and the cash payment from $125,000 to $110,000. Under the amended listing, defendants agreed to take back a $253,000 second mortgage for a ten-year period with the "manner of payment to be negotiated but in no event more than as stated in exclusive [listing] agreement dated March 15, 1982."

Kislak presented defendants with an offer to purchase dated May 5, 1982 from F.G. & R. Holdings, Inc. (F.G. & R.). The offer price was $595,000 with F.G. & R. assuming the first mortgage of approximately $232,000 and seller taking back a $253,000 second mortgage on the terms set forth in the March 15, 1982 listing. F.G. & R. gave a $2,000 deposit, with $108,000 cash due at closing which was tentatively scheduled for July 1, 1982.

On May 20, 1982 defendants' attorney notified Kislak that no commission was due because the property was wholly owned by Byham Enterprises, and the corporation had never authorized defendants to sell the property. The attorney informed Kislak that Byham "repudiates any listing, or sale involving the Winding Way Apartments." He advised Kislak that defendants

"either forgot or did not realize that the corporation owned the property instead of them as individuals."

Byham Enterprises had taken title to the property in question in 1978. At that time Frank Schmidt, Catherine Byham's father, owned 79% of the corporate stock and Catherine owned 21% of the stock. Richard and Catherine were president and secretary-treasurer of the corporation respectively. On August 2, 1980, Frank died, leaving by ...


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