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Timestamp: 2016-12-08 00:08:07
Document Index: 155606816

Matched Legal Cases: ['§ 44', '§ 44', '§ 44', '§ 45', '§ 44', '§ 45', '§ 188', '§ 45', '§ 188', '§ 141', '§ 845', '§ 250']

| Oldfield v. Stoeco Homes Inc.
Oldfield v. Stoeco Homes Inc.
WINIFRED C. OLDFIELD, ET VIR., PLAINTIFFS-APPELLANTS,v.STOECO HOMES, INC., ET AL., DEFENDANTS-RESPONDENTS
For affirmance -- Chief Justice Weintraub, and Justices Wachenfeld, Burling, Jacobs, Francis and Proctor. For reversal -- None. The opinion of the court was delivered by Burling, J.
[26 NJ Page 249]
The facts are not in dispute and have been stipulated by the parties. This stipulation, together with the exhibits and the additional testimony of three witnesses, the mayor of Ocean City, a city commissioner and a corporate officer (secretary) and stockholder of Stoeco comprise the evidence in the case. [26 NJ Page 250]
In 1951 Ocean City held title to a large number of lots of undeveloped land in a low lying area of the city. The locale of the lots is roughly divisible into two large segments, with Bay Avenue forming a dividing line between east and west. The western segment, in which the city owned several hundred lots, extends from Bay Avenue on the east to the bay thorofare on the west and from 18th Street on the north to 24th Street on the south. The eastern segment, in which the city owned some 653 lots, is bounded by Bay Avenue on the west, Haven Avenue on the east, 20th Street on the north and 34th Street on the south. It is the lots in the eastern segment which are the subject matter of this litigation.
After receiving minimum bids for the two groups of lots, Ocean City advertised both tracts of land for public sale on February 14, 1951, setting forth in the advertisement various terms and conditions with which the vendee was to comply. At the sale Stoeco was the only and therefore the [26 NJ Page 251]
highest bidder for both the eastern and western groups of lots, bidding $10,525 for the former and $100,000 for the latter. The sales were duly confirmed by two resolutions of the municipality dated February 16, 1951, and final settlement was made on both sales on June 29, 1951. Throughout the sales were treated as separate transactions and no question is raised in this case concerning Stoeco's performance of the conditions imposed by the deeds to the lots on the western side.
Some of the blocks did not contain all the lots making up the block, so that in order to complete its holdings Stoeco purchased between February and November of 1951, 137 lots from various individuals for a total price of $20,020. Shortly after settlement Stoeco entered into a contract with [26 NJ Page 252]
the Hill Dredging Company to hydraulically fill the two areas purchased by Stoeco. With materials dredged from two new lagoons on the west side, the Dredging Company between September and December of 1951 filled hydraulically a large portion of the west side and a small portion of the east side. At this stage serious difficulties were encountered by Stoeco in the performance of its undertakings. Stoeco's original scheme contemplated that five lagoons located on the west side should be dredged and the materials removed would be employed to fill the eastern side of Bay Avenue. It quickly became apparent however that the material dredged from the lagoons was not of sufficient quality to be used as fill; it contained too high a quantity of mud and silt. In fact, Stoeco was compelled to acquire an island from a private source to use as a spill area in order to dispose of the substandard substances dredged from the lagoons. These unfavorable dredging conditions, not originally contemplated, created serious engineering and financial problems for Stoeco.
The general import of the resolution was that Stoeco was to be given until December 31, 1954 to complete the filling and grading of all lots purchased between Bay and Haven Avenues and 20th and 24th Streets. The resolution further provided that Stoeco was to fill to city grade all the lots in the area retained by the city, and that Stoeco was to execute and deliver a deed to be held in escrow on the conditions set forth in the resolution. [26 NJ Page 253]
The deed concluded:
Ocean City, by December 31, 1954, accepted the filling of the area between Bay and Haven Avenues and 20th and 24th Streets as substantially completed. On December 30, 1954, Ocean City passed the second of the disputed resolutions, again following the procedures as to publication of notice, public hearing and passage provided by N.J.S.A. 40:60-51.2 and N.J.S.A. 40:60-51.5. This resolution extended the time for performance of the original conditions of the sale as to land between 24th and 30th Streets until January 1, 1958, and as to the lots between 30th and 34th Streets until January 1, 1960. The resolution further provided for destruction of the deed executed by Stoeco under the 1953 resolution and required that Stoeco execute and deliver two new deeds to be held in escrow by the city clerk on the terms and conditions set forth. [26 NJ Page 254]
Plaintiffs were present at the commissioners' meeting of December 30, 1954, when the second resolution was adopted, and voiced their objections. Some time later, on October 3, 1955, plaintiffs instituted the instant in lieu proceeding attacking the two resolutions and seeking a forfeiture of all the lands to Ocean City for failure to comply with the original one year time limitation.
The legal issues projected by the pleadings and pre-trial order were: (1) whether the deed from Ocean City to Stoeco created an estate in fee simple subject to a condition subsequent or an estate subject to a limitation (a fee simple determinable, Restatement, Property, § 44 (1936)); (2) whether the resolutions extending the time for performance were without consideration and void because in violation of N.J. Const. 1947, Art. VIII, Sec. III, par. 3, which provides:
First, we consider the issue relating to the nature of the estate created. It is said that a fee simple determinable differs from a fee simple subject to a condition subsequent in that, in the former, upon the happening of the stated event the estate " ipso facto " or "automatically" reverts to the grantor or his heirs, while in the latter the grantor must take some affirmative action to divest the [26 NJ Page 255]
grantee of his estate. Board of Chosen Freeholders of the County of Cumberland v. Buck, 79 N.J. Eq. 472 (Ch. 1912); Carpender v. City of New Brunswick, 135 N.J. Eq. 397 (Ch. 1944); Restatement, Property, §§ 44, 45 (1936). The interest remaining in the grantee in a fee simple determinable has been denominated a possibility of reverter, Restatement, Property, §§ 44, 154, while the interest remaining in the grantee of a fee simple subject to a condition subsequent, i.e., the right to re-enter upon the happening of prescribed contingency, has been denominated a power of termination. Restatement, Property, §§ 45, 155.
It is further alleged that a fee simple determinable estate is more onerous than an estate in fee simple subject to condition subsequent in that in the defenses of waiver and estoppel which are applicable to the latter are unavailing in the former. But cf. Dunham, "Possibility of Reverter and Powers of Termination -- Fraternal or Identical Twins ?," 20 U. Chicago L. Rev. 215 (1952); McDougal and Haber, Property, Wealth, Land, 286 (1948). We can assume, without deciding the point, that such a distinction exists between the two estates, for the reason that, as will be hereafter developed, the estate created in the instant case was one subject to a condition subsequent.
While language is the primary guide for the ascertainment of whether a given deed attempts to condition or [26 NJ Page 256]
limit an estate, still it is the instrument as a whole, and not a particular phrase aborted from the context which provides the basis for the attainment of our ultimate task which is to effectuate the intention of the parties. The particular words, upon which are predicated the right, or lack of it, to a forfeiture are often emphasized. Thus, it has been said that such words as "so long as," "until" or "during," followed by words of reverter, are appropriate to create a fee simple determinable, whereas such words as "upon condition that" or "provided that" are usual indicators of an estate upon condition subsequent. Board of Chosen Freeholders of the County of Cumberland v. Buck, supra; Carpender v. City of New Brunswick, supra; Restatement, Property, § 44, comment (l); § 45, comment (j) (1936). But that particular forms of expression standing alone and without resort to the purpose of the instrument in question are not determinative is at once apparent to a discerning surveyor of the case authorities. A comparison of the language utilized with the constructional result reached in the New Jersey cases demonstrates this proposition. In Cornelius v. Ivins, 26 N.J.L. 376 (Sup. Ct. 1857), the following language was construed as a condition subsequent:
While in Pamrapau Corporation v. City of Bayonne, 126 N.J. Eq. 479 (Ch. 1939), motion denied 126 N.J. Eq. 478 (Ch. 1939), affirmed 127 N.J. Eq. 340 (E. & A. 1940), [26 NJ Page 257]
motions denied 129 N.J. Eq. 3 (Ch. 1941), affirmed 129 N.J. Eq. 586 (E. & A. 1941) and 130 N.J. Eq. 240 (E. & A. 1941) the following language was construed as a special limitation:
The ancient land law imputed a thaumaturgic quality to language. See Reichard v. Chicago, B. & Q.R. Co., 231 Iowa 563, 1 N.W. 2 d 721, at page 727 (Sup. Ct. 1942); Board of Education, City of Wapakoneta v. Unknown Heirs, Ohio Com. Pl., 128 N.E. 2 d 534 (C.P. 1954), affirmed 99 Ohio App. 463, 134 N.E. 2 d 872, 877 (Ct. App. 1955). If the judicial eye in scanning the instrument chanced upon a pet phrase the inquiry was ended without resorting to the arduous effort of reconciling evident inconsistencies therein. The universal touchstone today is the intention of the parties to the instrument creating the interest in land.
If the four corners of the deed provide a coherent expression of the parties' intent, we need search no further, but if an ambiguity or a reasonable doubt appears from a perusal of the particular symbols of expression our horizons must be broadened to encompass the circumstances surrounding the transaction. Sergi v. Carew, 18 N.J. Super. 307 (Ch. Div. 1952); Riverton Country Club v. Thomas, 141 N.J. Eq. 435 (Ch. 1948), affirmed 1 N.J. 508 (1948). Cf. City of Passaic v. State, 33 N.J. Super. 37 (App. Div. 1954). To the foregoing must be added certain constructional biases developed in a hierarchical fashion and predicated upon the proposition that the law abhors a forfeiture. Thus, if the choice is between a condition subsequent and a restrictive covenant, the former is preferred. Woodruff v. Woodruff, 44 N.J. Eq. 349 (Ch. 1888); 2 Powell, Real [26 NJ Page 258]
Property, § 188. And where the choice is between an estate in fee simple determinable and an estate on condition subsequent, the latter is preferred. Restatement, Property, § 45, comment (m); 2 Powell, supra, § 188; 26 C.J.S. Deeds § 141.
Before proceeding to a determination of this question, however, it is well to keep in mind what condition in the deed was violated. The plaintiffs treat the condition as to the grading and filling within one year as a single condition. Thus, they contend that since by June 1952 the grading and filling was not complied with, the city, even if the clause be construed as a condition subsequent, had a right to re-enter and terminate the estate. This power of termination for breach of a condition subsequent is in New Jersey an assignable and hence a saleable property [26 NJ Page 259]
interest. Southard v. Central R. Co. of New Jersey, 26 N.J.L. 13 (Sup. Ct. 1856); Bouvier v. Baltimore and N.Y. Railway Co., 67 N.J.L. 281 (E. & A. 1902); Riverton Country Club v. Thomas, supra; R.S. 46:3-7. They therefore conclude that to extend the time for performance was in essence to donate a valuable property right to Stoeco without consideration. N.J. Const. 1947, Art. VIII, Sec. III, par. 3. But the fault in analysis is that the language imposing the duty upon the municipality is in reality two conditions and not one. First Stoeco was to fill and grade according to specifications the various lots and secondly, they were to do it within one year. It is this latter condition which was modified by the city. There is a distinction recognized in the cases between a waiver of the time for performance and a waiver of the performance itself. Kampman v. Kampman, 98 Ark. 328, 135 S.W. 905 (Sup. Ct. 1911); Firth v. Los Angeles Pacific Land Co., 28 Cal. App. 399, 152 P. 935 (App. Ct. 1915); Chalker v. Chalker, 1 Conn. 79, 6 Am. Dec. 206 (1814); Plummer v. Worthington, 321 Ill. 450, 152 N.E. 133 (Sup. Ct. 1926); Ludlow v. New York & H.R. Co., 12 Barb. 440 (1852); Duryee v. Mayor, etc., of City of New York, 96 N.Y. 477 (Ct. App. 1884); Sanderson v. Dee, 67 Okla. 72, 168 P. 1001 (Sup. Ct. 1917); Annotation, "Condition Subsequent-Waiver-Estoppel," 39 A.L.R. 2 d 1116, at p. 1132. It may be that had the municipality waived the performance such action would be violative of the constitutional proscriptions. But that question is not before us. All the municipality did was to modify the original time for performance.
To hold that the condition as to time was so essential to the scheme of the parties that to violate it by a day would result in an immediate and automatic forfeiture of the estate is to distort beyond recognition what the parties intended. There is no indication that time was of the [26 NJ Page 260]
essence of the agreement. Ocean City was to receive two substantial considerations by this agreement. First, the 226 lots owned and retained by it were to be filled and graded, and hence their value greatly enhanced. Secondly, and perhaps more important, a large tract of land, hitherto the breeding place for mosquitos, was to be developed for productive use. Indeed, an initial quid pro quo has already been received in the erection of 23 dwelling units in the area. No immediacy or sense of urgency in relation to the time within which this development was to take place is apparent. It may be fairly inferred that the one-year limitation was originally put in because Stoeco conceived that the fill from the drained lagoons on the west side would be of sufficient quantity and quality that the task could easily be completed within one year. But, as is often the case, difficulties were encountered with the plan, and at last it had to be discarded in favor of alternative and more expensive methods of grading and filling than was originally contemplated. In light of this impediment, the parties renegotiated for the time in which performance was to be made. To say that the parties intended a forfeiture irrespective of future contingencies impeding the original scheme is to ignore and refuse legal efficacy to the following language previously referred to in the resolutions and deed:
A certain amount of flexibility is inherent among such large scale undertakings as the one under consideration. We might add here that the more one probes into the essence of this arrangement the more it becomes apparent that although deeds were utilized as the devices to accomplish the ultimate desired results, the transaction bears a closer resemblance to the law of contract than of real property. Cf. 3 Williston on Contracts, § 845; Restatement, Contracts, §§ 250, 276. [26 NJ Page 261]
It is our conclusion that the parties contemplated that the estate created was not to expire automatically at the end of a year and that therefore it is one subject to a condition subsequent.
" R.S. 40:60-26 provides that municipalities may impose conditions and restrictions on the use to be made of lands sold by it 'in the manner and to the same extent as any other vendor of real estate'. Implicit in this power to impose restrictions is the necessarily related power of altering, relaxing or waiving such restrictions. * * * Conditions change and policies must be revised in the interest of the public good. If such covenants must remain perpetually rigid and unchangeable and the municipality completely [26 NJ Page 262]
paralyzed with respect to a needed change, considerable property will be so encumbered and circumscribed as to interfere with the public good."
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