Merchants & Traders Developing Co. v. Mercer Realty Co.

The opinion of the court was delivered by Black, J. The suit in this case was brought to recover damages for a breach of contract. The trial resulted in the direction of a verdict by the trial court in favor of the plaintiff for $1,495.46, with interest from May 5th, 1922. *443 This ruling of the trial court was challenged at the time, which is one of the grounds of appeal. A summarized statement of the facts from which the action arose is as follows: On December 9th, 1919, the plaintiff entered into a written agreement with the defendant through its agent to purchase certain lands therein described, part of which were located in the city of Plainfield, fronting on Plainfield avenue. The agreement for sale contained this provision or covenant: “The party of the first part [Ú e., the defendant in this suit] represents and agrees that all the improvements now on said premises have been paid for in full and that there are no assessments pending at the present time against said premises.” A warranty deed pursuant to said agreement was given to the plaintiff on the 1st day of April, 1920. Subsequently, on April 21st, 1920, the plaintiff conveyed the property to J. ,7. Schwartz, 'Inc., by a deed containing a covenant of general warranty like the covenant contained in the deed from the defendant to the plaintiff. At the time of making the agreement sued on, viz., December 9th, 1919, Plainfield avenue, which was one of the streets upon which the property fronted, had been permanently paved by the city of Plainfield, hut the improvement had not been paid for. Subsequently, under an ordinance passed and approved May 2d, 1919, an assessment was made upon the property for this improvement, which was filed October 17th, 1921, and the report was confirmed by the common council March Gth, 1922, the amount of which was $1,495.46, the amount sued for and for which the verdict was directed. At this time J. J. Schwartz, Ine., was the record title holder of the property. The first contention of the defendant is, that all the provisions of the agreement with relation to the condition of the property were merged in the deed, and that, therefore, no suit would lie upon the contract itself. The plaintiff, on the other hand, contends that this provision in the contract of sale was an independent and collateral one, not embodied *444 in or merged in the deed. An inspection of the deed shows that it deals with and asserts that the property is free and ■clear and unencumbered from taxes, assessments and encumbrances, then existing on the property. But there is no •claim now that there was then an assessment pending at the time of the malting of the deed, the statement being that the improvements had been paid for. The agreement that nil improvements on the premises had been paid for in full •and that there were no assessments pending against the same, was independent of, and collateral to, the deed. In this situation there was no merger, because covenants in an executory contract independent and collateral to the deed given in pursuance thereof are exceptions to the rule of merger. Long v. Hartwell, 34 N. J. L. 116, 122; 18 C. J. 271, § 231; 27 Rul. Cas. L. 532, §§ 264, 265; 13 Cyc. 616. This case is distinguished from such cases as Davis v. Clark, 47 N. J. L. 338; Blum v. Parsons Mfg. Co., 80 Id. 390, 397; Goldsmith v. Meyer, 94 Id. 40, and brings the case within the scope of the rule applied in cases like Crane v. Reutschler, 88 Id. 560; affirmed, 89 Id. 710; Durkin v. Cobleigh, 156 Mass. 108. Hence, we conclude that the action will lie and it was not error for the trial court to refuse the motion to nonsuit or direct a verdict in favor of the defendant. The defendant also challenges the ruling of the trial court in assessing the damages at $1,495.46, on the ground that the plaintiff,had not sustained any money loss at the time the case was tried. There existed against it only a contingent liability; that is, a liability to answer over to J. J. Schwartz, Inc., the record title holder of the property, in ■case J. J. Schwartz, Inc., was compelled to pay the assessment, which it might or might not be compelled to do, ■depending upon whether the assessment was valid or not. Apparently, J. J. Schwartz, Inc., has made no claim against the plaintiff, and, until it does, the amount of the plaintiff’s liability to it would seem to be uncertain. The direction of a verdict was proper, but how can it be said that the plaintiff -at the time the suit was brought had sustained anything raiOTe than nominal damages? *445 The rule to be applied in this situation is that stated by Chief Justice Ewing in the ease of Stewart v. Drake, 9 N. J. L. 139, when he says: “If there be a subsisting mortgage at the time of the conveyance the grantee, * * * under a covenant against encumbrances, may recover damages, because there is a breach; but they shall be nominal only, where he remains undisturbed and has paid nothing to the mortgagee, for the encumbrance may be removed by the grantor, or he may be compelled by the mortgagee to discharge it, or the grantee may otherwise remain forever unaffected by it. If the grantee has extinguished the encumbrance he shall then recover in damages the amount paid to extinguish it, if fair and reasonable, with interest, and in some cases, where an action on account of the encumbrance has been brought against it, the costs also of such action.” This court in the case of Gerbert v. Trustees, 59 N. J. L. 160, 180, declares Stewart v. Drake, 9 Id. 139, to have established the settled law of the state in this regard and adds: “This rule has been so long recognized in our jurisprudence that it cannot now be subverted.” We think, therefore, that the verdict should have been directed for nominal damages only, and to that extent, the judgment should be reversed and a, venire de novo awarded as to damages only. The only question with respect to which the decision is found to be wrong is the measure of damages, the new trial being limited thereto. The case falls within the provisions of the Practice act (1st Supp. Comp. Stat. of N. J., p. 1224, rules 131, 132; Pamph. L. 1912, p. 397, §§ 72, 73), as applied in Young v. Society, &c., 91 N. J. L. 310, and Queen v. Jennings, 93 Id. 353, 359. The judgment is reversed and a venire de novo awarded, but limited to the question of damages only.