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Madsco v. Sherwin

November 20, 2009


On appeal from the Superior Court of New Jersey, Law Division, Sussex County, L-281-03.

Per curiam.


Argued October 6, 2008

Before Judges Carchman, R. B. Coleman and Sabatino.

Following a bench trial in the Law Division, Sussex County, the court entered a judgment dated July 5, 2007 from which defendant Joseph L. Sherwin appeals and plaintiffs Helle A. Madsco and Pascal Maillach, as trustees for IMMOTRUST*fn1 , cross-appeal. That judgment granted plaintiff sole possession of the property at issue; it awarded IMMOTRUST $51,387.96 for Sherwin's use and occupancy; and it awarded Sherwin $133,801.51 as and for quantum meruit for improvements he made to the property. In the end, the judgment yielded a net recovery of $75,181.51 in favor of defendant Sherwin. Based on our careful review of the record, the arguments of the parties and the applicable law, we affirm in part and reverse in part. Although we affirm substantially for the reasons set forth in the written opinion issued by the trial judge filed on June 28, 2007, we reverse in part - reversing only to the extent the damage award to defendant for the value of his improvements exceeds the sum awarded to plaintiff for use and occupancy.

This action was commenced by a complaint filed by the trustees of IMMOTRUST seeking a declaration that the trust is entitled to possession of property in Hopatcong (the property), and demanding damages from defendant for use and occupancy. Defendant filed a counterclaim in which he sought specific performance of the agreement*fn2 , based upon his alleged tender of the purchase price of $92,500 in accordance with the provisions of the agreement.

Emile E. Gouiran, an attorney disbarred in New Jersey living in France, was the settlor of IMMOTRUST. Acting on behalf of the trust, Gouiran entered into negotiations with defendant, Joseph Sherwin, for the sale of the property from the trust to defendant. The house on the property had suffered significant damage as the result of a fire, a circumstance which made it more difficult for defendant to obtain regular financing. Thus, defendant made an initial offer of $85,000 for the property with the seller holding a mortgage of $63,750; however, as a result of negotiations that continued through early 1999, the parties eventually entered into an installment sales contract with a purchase price of $92,000. Although the installment contract is dated October 5, 1998, it is not clear when the contract was signed or returned to the United States.

Under the terms of the installment sales contract, a first installment of $6,000 was to be held in escrow by purchaser's attorney until the seller returned a signed contract to the attorney; a second installment of $16,250 was payable on or before February 15, 1999; and the balance of $70,250, plus interest, was payable in equal monthly installments of $550, first applied to interest and then to principal, until the entire remainder of the purchase price had been paid in full. In addition to the monthly installments, the first of which was due March 15, 1999, the purchaser was to be responsible for one twelfth of the annual charges for real estate taxes, water and sewage.

Although the purchaser was entitled to possession, the title to the property was to remain in the hands of the trust until such time as the purchaser had paid the purchase price in full. Among other remedies provided for the seller, the contract provided that if any payment was not received or any check dishonored or any tax assessments or insurance premiums were paid more than fifteen days after they were due, the seller was permitted to "take immediate possession of said real estate, and remove the purchaser or any other person therefrom without any notice or demand whatever, the necessity therefor being hereby waived; and in the event of such cancellation, all payments made by the purchaser shall be retained by the Seller, not as a penalty but as liquidated damages for the breach of this agreement."

As the trial court found, defendant encountered difficulty in making timely and full payments. Due to the alleged default by defendant, Gouiran sent a letter dated March 22, 2000, in which Gouiran declared the contract null and void and by which he sought to take immediate possession. Instead of following through with that declaration and assertion of the right to reclaim possession, the parties agreed to a reinstated contract, the terms of which were articulated in a letter dated April 18, 2000, from defendant's attorney to Gouiran. Under the reinstated contract, the principal due was $150,000. That sum was to be paid, with a built-in interest rate of nine and one-half percent per annum, in monthly installments of $1,261.28. Defendant was once again to be responsible for payment of one twelfth of the annual insurance, taxes and water charges related to the land. The first payment on this contract was due June 1, 2000. The late fee in this contract was increased from $50 to $250 per late payment.

Similar to a provision in the initial installment contract, the reinstated contract specified that "[i]f the amount due to be paid remain[ed] unpaid for a period of [thirty] or more days, then, in such event, the Reinstated Contract shall be deemed to be void and of no further force or effect, without the necessity for Seller to provide notice to Purchaser." All other terms of the installment contract were to be incorporated into the reinstatement contract.

Progress on the rehabilitation of the house continued, and although the trial judge was critical of certain of the proofs of both parties in the case - noting that the testimony of the expert offered by plaintiff to establish monthly rental values "being generous, was weak," and that defendant's expert witness regarding the value of improvements "lacked credibility" - the court was able to arrive at values that found support in the competent evidence in the record. To his detailed written opinion, the trial judge attached a statement of the assumptions and findings he utilized to arrive at the values reflected in the sums awarded in the final judgment.

On appeal, defendant contends that (1) there was fraud in the contract; (2) IMMOTRUST is not a valid trust and thus defendant could not have been in breach of contract; (3) he is entitled to quantum meruit damages without an offset; (4) the court improperly denied his motions to enforce settlement, for summary judgment and to appoint a new trustee; and (5) plaintiff waived its rights by accepting a payment by defendant. In its cross-appeal, plaintiff challenges defendant's inclusion of certain facts and documents in his appellate brief and appendix.

We start our review by noting that "we do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice[.]" Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of No. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)). See also Greenfield v. Dusseault, 60 N.J. Super. 436, 444 (App. Div.), aff'd o.b. 33 N.J. 78 (1960). The court also gives due regard to the ability of the factfinder to judge credibility. See Ferdinand v. Agric. Ins. Co. of Watertown, N.Y., 22 N.J. 482, 492 (1956). Where the lower court has made credibility determinations without specifically articulating detailed findings of credibility, the reasons for the determination may be inferred from the record, and the appellate court is not free to make its own independent determinations. ...

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