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Flood v. Caro Corp.

Decided: April 18, 1994.

JOSEPH FLOOD, T/A JOSEPH E. FLOOD REALTORS, PLAINTIFF-RESPONDENT,
v.
CARO CORPORATION, A N.J. CORPORATION, DEFENDANT-APPELLANT. JOSEPH FLOOD, T/A JOSEPH E. FLOOD REALTORS, PLAINTIFF-APPELLANT, V. CARO CORPORATION, A NEW JERSEY CORPORATION, DEFENDANT-RESPONDENT.



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

Before Judges R.s. Cohen, D'Annunzio and Wallace.

Cohen

COHEN, R.S., J.A.D.

Two appeals arise out of plaintiff's action for a broker's commission on the sale of twenty-five condominium apartments from defendant Caro Corporation ("Caro") to Seton Hall University. After a bench trial, judgment was entered for plaintiff against Caro for $126,250 plus interest of $24,229.35, for a total of $150,479.35. Caro appealed; we affirm. The second appeal was taken by plaintiff from the denial of his application for an order to levy execution on an asset which Caro had transferred in a transaction which plaintiff alleged was fraudulent and thus voidable. On that appeal, we reverse and remand.

First, as to the commission dispute. Caro's principal argument is that the evidence did not support the judgment in plaintiff's favor. Not so. There was ample credible evidence in the record demonstrating that Caro agreed to pay plaintiff a five percent commission if he produced a buyer, and that plaintiff pursued and ultimately procured Seton Hall, a party not only ready, willing and able to buy, but which ultimately bought the property. See Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528, 551, 236 A.2d 843 (1967); Kuhn v. Spatial Design, Inc., 245 N.J. Super. 378, 388-89, 585 A.2d 967 (App. Div. 1991). It is of no consequence that plaintiff produced a sale of the twenty-five apartments in bulk instead of one at a time. There was nothing in Caro's engagement to pay a commission which excluded such a sale. It is similarly of no consequence whether plaintiff's commission was earned during an exclusive or an open listing of the property. It had to be one or the other, and in either event, the commission was earned.

It is true, as Caro points out, that the trial Judge's letter opinion contains errors of fact. Our own review of the record satisfies us, however, that the errors were peripheral, and not involved in the Judge's findings of consequential facts, and thus do not affect the soundness of the judgment.

Caro also argues that the court erred by including the cost of modifying the apartments in the purchase price when calculating plaintiff's five percent commission. We disagree. The Caro-Seton Hall contract called for a "purchase price" of $2,525,000. Of that amount, $2,300,000 was attributed to "real estate" and $225,000 to "construction." Several witnesses testified that the apartments were not finished when they were shown to Seton Hall officials and when the contract was signed. Seton Hall's Plant and Project Manager testified that $80,000 to $90,000 of the $225,000 was the cost for modification the units for student use, and that the rest was for completion of the units, which would have been required for any buyer. The fact that Seton Hall could have engaged another contractor to finish the job is immaterial. Plaintiff was not retained to sell an unfinished building, and surely could not have sold unfinished units to individual unit buyers. The Judge correctly included the construction cost as part of the purchase price in calculating plaintiff's commission.

Plaintiff's appeal challenges the denial of his post-judgment application to set aside Caro's assignment of a mortgage which apparently was Caro's only asset after the closing with Seton Hall. The goal of the application was to direct the mortgage proceeds toward execution of plaintiff's judgment, which had been partially satisfied out of escrowed closing proceeds. Supplementary proceedings pursuant to R. 4:59-1(e) had revealed that, at the closing of the sale to Seton Hall, part of the purchase price was satisfied by the execution of a mortgage to Caro for $500,000, payable $100,000 per year for five years, and that the mortgage had been assigned and was at least ostensibly out of the reach of an executing judgment creditor.

Plaintiff moved to declare the assignment of the mortgage a fraudulent transfer, and to order Seton Hall to satisfy plaintiff's judgment out of the next annual payment. The Judge denied the motion with the following terse explanation:

The opinion did not deal with any of the significant and controlling provisions of the Uniform Fraudulent Transfer Act. N.J.S.A. 25:2-20 to -34.

The factual record before us is sparse. It appears that the property on which the apartments were built was owned by Mr. and Mrs. Farro. They transferred it in 1987 to Caro, a corporation which they apparently formed to develop the property, and they accepted in payment a note and mortgage for $500,000. The mortgage was recorded in February 1987. Caro agreed to sell the apartments to Seton Hall on July 11, 1990. The contract provided that $500,000 of the $2,525,000 purchase price was to be paid in five equal yearly installments on a note secured by a mortgage. On July 16, 1990, plaintiff started suit for his commission, in part to tie up the proceeds of the sale to Seton Hall.

By an unrecorded assignment dated August 28, 1990, the day of the closing of the sale to Seton Hall, Caro transferred to the Farros its interest in the debt due from Seton Hall. On October 28, 1991, despite the prior transfer to the Farros, Caro assigned the mortgage to Brounell-Kramer-Waldor-Kane Agency ("BKWK") supposedly to satisfy obligations for insurance premiums due from Caro and also from Onorato Construction, Inc., and Ora Realty, Inc, both of which were also Farro family entities.

The insufficiency of this scenario to decide the case becomes apparent from a review of the applicable statutory law.

In 1988, New Jersey adopted the Uniform Fraudulent Transfer Act ("the Act"), N.J.S.A. 25:2-20 to -34, to replace the Uniform Fraudulent Conveyance Law, which had been in effect since 1919.*fn1 New Jersey's version of the Act is substantially the same as the uniform statute. In the years since it was promulgated by the Commissioners ...


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