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Morton v. 4 Orchard Land Trust

June 09, 2004

FREDERICK A. MORTON, JR., PLAINTIFF-APPELLANT,
v.
4 ORCHARD LAND TRUST, DEFENDANT-RESPONDENT.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 362 N.J. Super. 190 (2003).

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

This appeal concerns whether the parties entered into a contract for the sale of real property.

Plaintiff Frederick A. Morton, Jr., engaged the services of a realtor to assist him in purchasing a house. The Trustees of defendant 4 Orchard Land Trust listed a home for sale. On July 24, 2001, the realtor contacted the Trustees and arranged for Morton to view the property. After touring the property, Morton authorized the realtor to submit an offer. On July 31, the realtor forwarded to defendant a signed broker-prepared real estate contract signed by the realtor and Morton. Because of competition for the property, on August 1, Morton increased his bid and submitted the change on the same broker-prepared contract forwarded the day before. That contract represented that it was the sole agreement between the parties"who sign it" and that there were no representations made by the parties other than those set forth in the agreement. The contract included a standard attorney review clause, which stated in part that the contract would be legally binding three days after delivery of the signed contract to the buyer and seller unless the attorney for the buyer or seller disapproved it. The clause required that the attorney disapproving the contract notify the realtor and the other party named within the three-day period, and that delivery of the notice of disapproval must be accomplished by certified mail, by telegram, or by personal delivery.

On August 2, the Trustees informed Morton's realtor that the offer was accepted and that his attorney would receive an attorney review letter that day. Later that day, defendant's attorney sent a letter to Morton's attorney stating that the contract was acceptable providing that certain changes were made. The letter asked that Morton's attorney review the proposed modifications with Morton and to inform him if they were acceptable. The letter stated further that if the attorney did not receive a response by August 6, he would assume that the modifications were acceptable and the attorney review period concluded. That same day, the realtor informed Morton and his attorney's law partner that the offer had been accepted. The realtor also spoke with the Trustees and requested a copy of the real estate contract signed by defendant. The Trustees replied that they would take care of that later. Neither Morton nor any of his representatives ever received a contract signed by defendant.

Modifications to the contract were proposed by defendant's attorney on August 3rd that, in part, required Morton to accept the responsibility for removing an occupant of the property. Those modifications also required Morton's approval. Later that day, however, defendant's attorney sent a letter to Morton's attorney stating that, pursuant to the contract of sale, his client was exercising the option to declare the transaction null and void. Although a copy of the letter was purportedly sent to the realtor, she denied ever receiving it. On August 5, Morton learned from his attorney that the defendant had disavowed the contract. Morton's attorney asserted that the letter of withdrawal was without effect because it did not comply with the contract's attorney review clause, which required that the letter be delivered to the realtor by certified mail, telegram or personal delivery. Although Morton attempted immediately to accept the prior proposed modifications, defendant's attorney maintained that there was no pending transaction between the Trustees and Morton for the sale of the property.

Morton filed a complaint seeking specific performance of the contract and a temporary restraining order prohibiting the Trustees from selling the property pending a hearing. The trial court denied the issuance of a temporary restraining order, but required the Trustees to show cause why they should not be prevented from selling the property to another party. Morton then filed a notice of lis pendens to protect his purported interest in the property. Defendant filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted and to discharge the lis pendens. Following a hearing, the Chancery Court treated defendant's motion as a motion for summary judgment, and then granted summary judgment and discharged the lis pendens. The court stayed its judgment pending appeal, but by then the property had been sold to another party.

The Appellate Division upheld the grant of summary judgment in favor of defendant, finding that the parties never had entered into an agreement because defendant never signed the broker-prepared real estate contract. The panel rejected Morton's claim that an oral contract had been formed, concluding that the parties intended to be bound only by a formal written contract, not by an oral agreement.

HELD

Under the circumstances of this case, the parties did not enter into either a written contract or an oral contract for the sale of the property.

1. Before the recent amendments to the New Jersey Statute of Frauds, L. 1995, c. 360, the law of this State for centuries required that an agreement for the sale of an interest in land had to be reduced to writing. In 1996, the Legislature enacted N.J.S.A. 25:1-13, which, for the first time, permitted enforcement of an oral agreement to sell an interest in real estate. The statute states that an agreement to transfer an interest in real estate is not enforceable unless 1) the agreement is in writing and signed by the party against whom enforcement is sought; or 2) there is established by clear and convincing evidence a description of the property sufficient to identify it, the nature of the interest to be transferred and the identity of the transferor and the transferee. In its commentary on the proposed N.J.S.A. 25:1-13b, the New Jersey Law Revision Commission explained that the focus of inquiry should be whether an agreement has been made between the parties by which they intend to be bound. When an agreement has not been reduced to writing, a high standard of proof must be met to establish that intent. Any purported oral agreement as well as its essential terms must be proven by clear and convincing evidence. The circumstances surrounding the transaction, the nature of the transaction, the relationship between the parties, and their contemporaneous statements and prior dealings, if any, all are relevant to a determination whether the parties made an agreement by which they intended to be bound. (Pp. 8 -- 11).

2. Here, the Court cannot find the existence of a contract even in the deferential light in which it must view the facts as presented by Morton. From the inception of the dealings between the parties, beginning with the broker-prepared contract, to the final flurry of letters between the attorneys, it is clear that Morton and defendant intended to be bound only by a written contract. Under the terms of the broker-prepared agreement, the contract was binding only on"parties who sign it," and the signed contract had to be delivered to the parties. The realtor and Morton signed the contract, but defendant did not. The realtor contemplated that defendant would forward to her a signed copy to consummate the deal. (Pp. 11 -- 15).

3. Even by the most indulgent standard, the Court does not believe that a reasonable trier of fact could accept the claim that the parties agreed to be bound by an oral contract based on the August 2 conversation between Morton's realtor and the Trustees. According to the realtor, the Trustees stated that they accepted Morton's offer in the brokerprepared contract and that defendant's attorney would forward a letter to Morton's attorney that day. The letter received by Morton's attorney was not an unqualified acceptance of the offer, but rather a counteroffer. The Trustees' few words of general acceptance followed immediately by a letter from defendant's attorney making a counterproposal is hardly suggestive of a course that would end in a mere verbal agreement. Moreover, the next day, defendant's attorney forwarded a second letter placing yet a further condition on the sale of the property. That same day, defendant's attorney withdrew the offer before Morton issued a response. (Pp. 15 -- 16).

4. The method of notification by defendant's attorney was not governed by the attorney review clause because defendant never signed the broker-prepared agreement or manifested any intent to be bound by it. A written contract is formed when there is a meeting of the minds between the parties evidenced by a written offer and an unconditional, written acceptance. Here, there was none. Additionally, the letters from defendant's attorney did not form a written agreement because a counteroffer only ripens into a valid contract if accepted prior to revocation. (Pp. 16 to 17).

5. There is no compelling proof that defendant manifested an intent to enter into an oral agreement for the sale of the property. In this case, a binding, oral agreement is not suggested by the circumstances surrounding the negotiations, or by the relationship of the parties, or by the parties' contemporaneous statements and past dealings. After viewing the evidence in the light most favorable to Morton, there was neither a written nor an oral contract for the sale of the property. (Pp. 17 -- 18).

The judgment of the Appellate Division is AFFIRMED.

CHIEF JUSTICE PORITZ and JUSTICES LONG, VERNIERO, LaVECCHIA, ZAZZALI, and WALLACE join in JUSTICE ALBIN's OPINION.

The opinion of the court was delivered by: ...


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