Opinion
Decided October 20th, 1930.
On appeal from a decree of the court of chancery advised by Advisory Master Eugene Stevenson, who filed the following conclusions:
"This suit is brought by the complainant, the West Heights Realty Corporation, to enforce a contract in writing made on the 9th day of March, 1920. Both sides admit that the date stated at the commencement of the contract (1919) is a mistake, and that in fact the contract was made on March 9th, 1920. By this contract the defendant agreed to make a lease to the complainant of the property above mentioned, for the term of three years, to commence on the 1st day of April, 1920.
"The contract was drawn by the defendant's son, a young man who finished a few weeks later a four-years' course of legal instruction in a well-known law school, and who was admitted to practice law in New Jersey in December, 1920. This young man was sworn as a witness and examined and cross-examined at length, and proved himself to be an adroit, astute young lawyer, who, while he was receiving his legal education, had considerable experience in contracts pertaining to real estate in which his father, the defendant, was interested. The defendant, it may be noted at this point, was a large holder of real estate and was engaged in constructing and managing large apartment houses in Jersey City.
"The stenographer's record of the testimony and the proceeding before me is contained in three hundred and eighty-eight typewritten pages. There is a great deal of contradictory evidence. I shall not undertake to minutely discuss this mass of evidence and point out in detail all its peculiar features. For present purposes it will be sufficient to state the conclusions which I have reached with such explanation and comment as may occur to me. In case of an appeal the printed appeal book may be furnished to me and thereupon this memorandum, with or without revision, will be filed and the same can be printed separately for the use of appellate court.
"On March 9th, 1920, the complainant, represented by its president, Mr. Sol Lewine, and its secretary, Mr. Jacob Granat, had a meeting with the defendant, Mr. Adelman, for the negotiation of a contract for a lease of the premises in question. Mr. Solomon Silverfelt, the real estate agent who had brought the parties together, and the defendant's son, the young law student above referred to, were also present during a part if not practically the whole of the negotiation. Some other persons from time to time came into the room where the negotiation was going on, and are alleged to have casually heard something of what the parties were saying, in which they, the outsiders, had no interest.
"The negotiation lasted for about nine hours and resulted at about nine o'clock at night in the execution of this formal written contract, drawn and typewritten by Mr. Adelman, Jr. According to legal form and precedents this contract was technically complete. It begins in the usual manner, stating the parties and their residences, and sets forth in legal language the agreement of the parties.
"The complainant had no counsel. Mr. Adelman, Jr., the young law student, inserted in the contract exceedingly strong provisions in favor of the lessor, his father, making him in respect to the most important matters, such as repairs, default,c., a judge in his own cause to the extent which the law permits in such cases.
"The contract occupies two and one-half pages of typewriting with the lines close together in what is called `single space,' and contains seventeen paragraphs. Not only is the property described and the rental ($24,700 per annum), and the mode of payment prescribed, but there are minute provisions which the lease is to contain in regard to taxes, repair of the interior and exterior of the building `satisfactory to the party of the first part,' about which matter `his judgment shall be binding;' payment of water, coal, gas and electric repairs; violations of the city, state and national regulations with a provision in case of failure for the termination of the lease. The contract also provides that the lessor (the defendant) should pay the interest on the mortgages on the premises, and pay taxes up to the sum of $5,000, and also pay for fire and rent insurances and public liability insurance, and that the lessee should pay all other insurances. The party of the second part, the lessee, is required to return the property to the lessor `in the very same condition and repair as it is now on the date of lease,' and the contract provides that the `party of the first part [the defendant] shall be the judge of such condition of repair, and only the party of the first part shall judge.'
"The party of the second part, the lessee, was required to return with the building all screens in good repair for all windows, and awnings for certain specified windows, such awnings to be in good repair.
"Provision is made that failure of the lessees to pay the agreed rental on the 15th day of the month, and the allowance of one day's grace to the 16th, `shall constitute a forfeiture of the rights' of the lessee, and that thereupon the lessor `shall take possession of the premises free of any rights' of the lessee.
"All doubtful covenants, c., were to be construed in favor of the lessor.
"The lessee was to pay for all coal in the cellars as of April 1st, 1920.
"The foregoing statement of the contents of the contract indicates how carefully and minutely the provisions of the lease were considered and provided for.
"The two paragraphs of the contract which are most important in this case come at the end of the instrument divided only by a provision in regard to assignment and subletting and are as follows:
"`Any further provisions, clauses, agreements to be made in addition to the above mentioned and later to be agreed upon, shall be incorporated in addition to the provisions herein contained in a lease to be made in the office of Gaede Gaede, 91 Washington street, Hoboken, N.J., not later than March 25th, 1920.
* * * * * * *"`The party of the second part to insure faithful performance of all the covenants to be contained in the lease shall deposit with the party of the first part the sum of four thousand one hundred and twenty-five dollars ($4,125), from which is to be deducted the consideration of this agreement five hundred dollars ($500). And the said security shall be held by the party of the first part to insure faithful performance of the party of the second part during the full term of the lease, and the party of the second part shall apply the last two months' rent as the return of the said security. The deposit is to draw interest at six per cent. during the term it is held, payable semi-annually.'
"Mr. Adelman, Jr., put his initials on the margin of each of the three sheets of this contract and at the end wrote with a pen the words, `Consisting of three [3] sheets.'
"In my judgment this instrument on its face is a complete enforceable contract at law and in equity.
"The answer sets up as the first defense the statute of frauds. The complainant, however, is not undertaking to enforce a parole contract pertaining to real estate, or a written contract plus additional oral provisions; the bill is filed to enforce this written contract executed by the defendant, Mr. Adelman, Sr., under his hand and seal, and executed by the West Heights Realty Corporation by Sol Lewine, president, the corporate seal not being attached, presumably being unattainable when the contract was signed at night at a place remote from the office of the complainant.
"The defense of the statute of frauds plainly is unavailable to the defendant. The only question is whether this instrument is a valid written contract which a court of equity will specifically enforce.
"The second defense is that the contract is too uncertain for enforcement by specific performance. In my judgment what has been and will be set forth herein will show that this defense is without merit — that the contract is certain and enforceable in equity in a suit for specific performance.
"The third defense is that the contract `contemplated that before any lease or agreement should be in fact executed there should be a further agreement between the parties, and terms to be inserted in said lease were to be agreed upon; that no such terms were agreed upon in writing as required by the statute of frauds, and no completed agreement in writing or a memorandum of which is in writing has been made between the parties.'
"This defense according to the argument of counsel for the defendant, is based upon the first of the two paragraphs near the end of the contract set forth above. It is argued that this paragraph of the contract provided that in addition to the numerous minute provisions contained therein the parties were to agree thereafter upon very important provisions, about which, as the result demonstrates, they would be extremely liable to disagree. This construction of the clause under consideration of course emasculates the whole contract and renders it unenforceable either at law or in equity. The result would be that these men met and negotiated for nine hours continuously, had their agreement in regard to the lease, so far as they had reached any, not merely noted down for reference upon a further conference for the continuation of the negotiation, but put in the form of a solemn agreement in writing executed by them, and that all this labor was a nullity — that either party by failure to agree upon other terms to be discussed in the later proposed conference would have the absolute power to render null and void all that had taken so much time to negotiate and embody in a written contract.
"Such a construction in my judgment should be avoided if a meaning which would not invalidate the whole agreement can be fairly ascertained and placed upon the language in question. These men were not children, or men or women inexperienced in business. Both the complainant and the defendant were in the real estate business — particularly the business of erecting and renting large apartment houses of the character of Haddon Hall. We certainly ought not to impute to this clever, well-educated young lawyer, who had already had unusual experience in large real estate transactions on behalf of his father, the intention at the end of this elaborate instrument to insert a provision under the terms of which either party would manifestly have the right to render the contract void and all the labor of the nine hours of negotion vain. It is not, however, the meaning in the mind of Mr. Adelman, Jr., but the meaning of the words of this contract with which we have to deal.
"Without further discussion of the language of this clause I may state my conclusion that the clause taken in connection with the provision of the first page that `the lease is to contain among its provisions the following:' c., amounts merely to this:
"This contract provides for the foregoing matters which are to be inserted in the lease, and the parties agree that any further provisions which may be made in addition to those which are specified, and which later may be agreed upon `shall be incorporated in addition to the provisions herein contained' in the lease provided for in this contract, and which is to be made in the office of Gaede Gaede, 91 Washington St., Hoboken, N.J., not later than March 25th, 1920.
"It may be agreed that the construction which I have placed upon the clause in question deprives it of legal force. In large numbers of cases contracts, including contracts drawn by fair lawyers, contain clauses which express the desires, wishes or intentions of the parties, but which have no legal or equitable force. It is better to construe a single clause in an elaborate and extensive contract as an inoperative but harmless provision than to give the clause a construction which renders the whole contract voidable at the option of either party, thus depriving the entire instrument of all finality and legal force. But it should not be conceded that the clause in question had in fact no function, was destitute of legal validity and force. It was a distinct agreement between the parties that neither in the future would claim that there had been any `provision' or agreement affecting their respective rights as lessor and lessee, which was not `incorporated' in the lease. The parties said, in effect: "All `the provisions, clauses, agreements' contained in this contract and in any additional provisions, clauses and agreements which we may hereafter before execution of the lease, negotiate and agree upon must be incorporated in the lease." If it be conceded that this statement was legally of no value to either party, the moral force of it I think is plain. It may be noted that if either party after the lease was made should undertake to set up that there was a subsequent oral modification of the contract which was not recognized in the lease, he would be confronted by his own agreement in writing that any subsequent alteration of or addition to the terms of the letting should be embodied in the lease. The clause in question compelled each party to see that the lease contained the provisions set forth in the contract, and also any subsequent provisions which might be orally agreed upon whether with or without a new consideration.
"It may be noted that the astute counsel for the defendant in his brief takes the position that inasmuch as the contract is incomplete, and contracts of this character are required to be in writing by the statute of frauds, `no right can be based upon it either in law or in equity.' Although this position is taken not exactly with reference to the particular defense now under discussion, it seems to amount to a plain declaration that the entire contract was invalid in law and in equity; was a vain form and that neither party acquired any rights of any kind under it. As stated above, the complainants are not seeking to enforce any parole contract. The statute of frauds has no application to their case. They bring their suit to enforce this particular written contract according to its terms, and the only question is whether under the correct construction of this clause pertaining to any possible additional agreements the whole instrument must be adjudged to show in its face that it was not a complete contract and hence incapable of enforcement at law or in equity according to its terms. The complainant has no concern with possible future additional agreements to be incorporated in the lease except so far as the evidence of what was said and done in regard to that matter constitutes evidence of fraud or mistake. The answer, as we shall see, does not pretend to set up as a defense any fraud or any mistake.
"The fourth defense, or what I suppose the pleader intended to set up as a separate defense, is found in the fourth paragraph of the answer which alleges that at the time the contract was executed `it was represented by the complainant to the defendant that a bond would be given by the complainant to secure the performance of any contract which was to be made as a result of the said instrument in writing, and that the bond so to be given was to be a bond of a bonding company, and that in addition to the giving of said bond two months' rent should be paid in advance;' that defendant refused to consider any proposition `without a bond being given which would secure defendant for the performance of the entire contract; that it was represented to the defendant that the details with respect to said bond would be subsequently agreed upon, and that it would be better to get the other matters out of the way first; that as a result the other matters were discussed and an instrument in writing signed by the defendant, but at no time did defendant waive the giving of the said bond.'
"The answer then sets up what was said at certain conferences between the parties after the contract had been executed and after the defendant had demanded a bond of a surety company for $75,000, to insure the return of the property in as good condition as it was in at the date of the lease; and the refusal of the complainant to give such a bond.
"The answer in the fifth paragraph, evidently in connection with the last defense above mentioned, alleges that on March 25th, 1920, there was a meeting of the parties in which the matter of the lease was discussed `and that at said conference it was then and there conceded that under the terms of the said written instrument there were provisions and clauses to be agreed upon between the parties, and that such provisions, c., were not in fact agreed upon orally or in writing.'
"The allegation in regard to what was `conceded' stands absolutely without proof of any kind. The subject-matter of the contract — this large apartment building with sixty-four apartments containing two hundred and ninety-three or two hundred and ninety-four rooms, was of such a character that the complainant in order to get the full value of its lease had to take possession seven days after the date of this meeting at which its officers undoubtedly made an effort to effect settlement. No doubt the complainant would have been willing to alter its contract in some respects in favor of the defendant, and so its representatives expressed themselves, if the defendant would recede from his unjust demand that they should give a surety bond for $75,000 which the evidence indicates no surety company in the country would give them, and the annual premium for which, according to common experience, would be a large annual sum. Any definite statement of fact made by the parties to this suit subsequent to the execution of the contract, would be competent evidence on certain matters against the party making the settlement. How far such statements would bear upon the construction of a written contract we need not pause to inquire. There was no concession made by the complainant in regard to the meaning of the contract if such concession made by the officers of the complainant would bind it. It would be strange, indeed, if the officers of the complainant, these experienced dealers in real estate, in the letting and management of apartment houses, would not have been willing to endeavor to placate the defendant, however unjust his demand may have been, in order to get the fruits of their contract and get possession of Haddon Hall on the 1st of April, 1920.
"It will be observed that Mr. Adelman, Jr., drew the contract in such form that the money deposited was security not only for rent but for the performance of all the covenants in the lease on the part of the complainant. If Mr. Adelman, Sr., had succeeded in getting a deposit of ten or twelve thousand dollars, the amount of five or six months' rent, the money as well as the bond would have stood as security for the return of the property in good repair.
"The testimony of the witnesses, Messrs. Cohen and Schwartzberg, who were put upon the stand to corroborate the testimony of the Adelmans in regard to the bond, in my judgment is unreliable and it will be unsafe to attribute much weight to it. These witnesses a year or a year and a half after they say they overheard a small part of a negotiation, in which they had no interest whatever, undertake to testify that they heard the statement made in various forms to the effect that the complainant was to give a bond.
"Mr. Schwartzberg, whose attention was called to the matter for the first time about two years after, as he alleged, he overheard the conversation of the parties, testified that in connection with the talk about returning the property in good condition it was said that the complainant would `have to give bond to Mr. Adelman.' The credibility of Mr. Schwartzberg's testimony, or the accuracy of his memory, is certainly impaired by the fact that when he was asked on cross-examination for how much the bond was to be, he replied that he did not remember how much; that he could not tell `because it is so long ago.' Upon being interrogated further how much was mentioned he replied: `I think it was something like thirty thousand. Whether the rent was thirty thousand or the bond thirty thousand I don't know that. I know they talked about thirty thousand but I could not hear the rest.' A little later Mr. Schwartzberg testified that he thought that the question was asked: `How much the bond is going to be,' and upon being asked further whether he was sure of that he replied: `Yes, I am sure.' Still later, he testified that in the conversation between Mr. Lewine and Mr. Schwartzberg, about which he had been testifying, Mr. Lewine `probably asked' what the bond was to be for; and immediately being asked whether Mr. Lewine asked the question he answered: `He asked it, yes; he probably asked the question.' And in a few minutes in answer to another question he said positively: `He did ask him but I don't remember how much the figure was.' Being further pressed as to whether any figure was stated this witness answered: `No, there was no figure mentioned; maybe he did but I don't remember that.' Then comes the following:
"` Q. Did they answer this question? A. I didn't hear it because I have nothing to do with this here thing and I wasn't interested.'
"The testimony of this witness to the effect that he heard the word `bond' used is certainly weakened by the manner in which he gives his testimony, and the various phrases which he employs to describe the same thing. The defendant, Mr. Adelman, Sr., states positively that while at the start he demanded a bond and stated that he would not `go into the negotiation' unless the complainant agreed `distinctly' to `give a bond,' the amount of the proposed bond was not suggested but was left to be `threshed out.'
"Noting Mr. Cohen's first statement to the effect that Mr. Adelman, Sr., first stated that the complainant would have `to secure' the lease or the contract or the return of the property, it may be at least surmised in favor of the honesty of these two witnesses that they heard the talk about the deposit which should be held for three years at six per cent. as a security for the performance of the contract. It distinctly appears that the parties to this contract negotiated in regard to the amount of money measured by the monthly rental which should be deposited as security. It certainly is not improbable that after the year and a half or two years from the date when Messrs. Cohen and Schwartzberg casually overheard a conversation in which they had no interest, these men should accept the suggestion of Mr. Adelman, Jr., that a bond had been talked about and believe that the `security' which was the subject of negotiation was referred to as a bond. It does not appear that either of these witnesses knew that the form of the security, which was beyond all question the subject of negotiation, was a deposit of cash.
"The testimony of Mr. Granat and Mr. Lewine, the officers of the complainant company, who negotiated the contract, and the agent, Mr. Silverfelt, directly and positively contradicts the testimony of defendant and his witnesses. These witnesses for the complainant repeatedly and positively allege that nothing was said during any negotiation prior to the execution of the contract, about a bond being given. Their testimony accords exactly with the contract as framed by Mr. Adelman, Jr.
"The truth in regard to this mass of contradictory evidence I think is very distinctly indicated by the testimony of Mr. John E. Dippel, a member of the bar of this state of good standing, whose testimony stands without impeachment. Mr. Dippel had been counsel for the complainant, but had nothing to do with the negotiation or the execution of the contract. When the defendant a day or two after the contract was executed made his demand for a bond for $75,000, Mr. Dippel, who knew all the parties, undertook to call with Mr. Granat and Mr. Lewine at Mr. Adelman, Sr.'s, house to see whether he could not effect a settlement so as to avoid litigation. Failing in his attempt and in a further attempt on March 29th, in Mr. Lane's office in Newark, he thought that the litigation on behalf of his clients should be handled by a more experienced court lawyer than himself, and accordingly turned the case over to Mr. Lichtenstein, who acted from the start as solicitor and counsel for the complainant. Mr. Dippel, therefore, stands as an intelligent witness who was paying careful attention to all that was said and done, but who retired from the affair altogether and has no interest and has had no interest in the suit.
"Mr. Dippel testifies that when the parties met in Mr. Adelman, Sr.'s, apartment the question of a bond arose and Mr. Granat said that it was impossible to get a bond for security on a leasehold. Mr. Dippel was asked who suggested the bond and he replied that Mr. Adelman was the one who talked about the bond. In response to the question, `what did he say?' Mr. Dippel replied:
"`He said since entering into this contract that it dawned on him that the property might be damaged and that these people might take a whole lot of profit out of the property, and that he would be the loser in the end, and he wanted the bond as security for the rent and to secure him against a possible breakdown of the boiler and the disappearance of some iceboxes, c.'
"Mr. Dippel further testified that Mr. Adelman said that he wanted a bond for $75,000 and that Messrs. Granat and Lewine immediately stated that they would not consider the proposition at all.
"`They said that was not any part of their agreement in the first place, and in the second place, no surety company would give such a bond; but that they were willing to give any additional sum in cash above the $4,000 that they had agreed to in the original agreement.'
"No settlement was reached at this conference, and after the failure to effect settlement at the conference in Mr. Lane's office on March 29th this suit was brought.
"In Mr. Adelman's statement which Mr. Dippel swears positively he heard, and to which naturally his mind would from time to time recur during the pendency of this suit, we find a plain admission by Mr. Adelman, Sr., that the liability of his property to damage during the term had `dawned' upon his mind `since entering into this contract.' and the conjunction of the two propositions in regard to the liability to damage and the necessity of a very large bond, indicates that the desirability of a bond `dawned' upon Mr. Adelman's mind at the same time that the liability to damage to be covered by the bond `dawned' upon that mind. Mr. Adelman, Sr., may also have reflected that his original demand for cash security amounting to ten or twelve thousand dollars, had been reduced to the $4,125 mentioned in the contract. Because Mr. Adelman, Sr., thought of something within twenty-four hours after he had executed the contract which would have led him to demand an important provision to be inserted in the contract for his protection, constitutes no ground on his part for an attack upon the contract.
"It is a most significant fact that while Mr. Dippel's testimony was given as a part of the complainant's case before any witness for the defendant was sworn and Mr. Adelman, Sr., heard Mr. Dippel's statement, when he (Mr. Adelman, Sr.,) gave his testimony he did not undertake to contradict Mr. Dippel or to make any explanation of the remark which Mr. Dippel said he made. Mr. Dippel's testimony stands entirely without contradiction.
"Mr. Adelman, Jr., having given his principal deposition first, which was followed by the only deposition given by the defendant, Mr. Adelman, Jr., was recalled and asked `whether at the time Mr. Dippel' was at the Adelman residence `you said to him, or Mr. Samuel Adelman, your father, said to him, or words to this effect, "since entering into this contract it has dawned upon me,"', c., fully describing the statement of Mr. Adelman, Sr., which Mr. Dippel testified he made. The answer of Mr. Adelman, Jr., and subsequent testimony are as follows:
"`No, sir, that is not a fact. I did not say that; never mentioned it dawned upon me.
Q. Mr. Adelman, the question was whether your father made that statement A. He said whether I or my father.
Q. Did either of you make any such statement? A. I know I didn't make it and I know I did not hear my father make that statement.'
"There is certainly ground for suspicion that Mr. Adelman, Jr., was disingenuous and evasive in giving this testimony. When he was pinned down to the question whether his father made the statement he testifies that he `did not hear' him make the statement. Mr. Adelman, Jr., was present during the whole interview, unquestionably an attentive and interested observer and listener. He is shrewd enough not to say that he did not remember whether his father made a statement so injurious to his cause and to the testimony of his father, himself and his father's other witnesses. Probably he did not wish to have his testimony flatly contradict that of Mr. Dippel. He therefore escapes such contradiction, and also escapes making the highly improbable statement that he did not remember this part of the conversation, if he had to admit that he heard it, by denying that he heard it.
"The extraordinary estimation by Mr. Adelman, Sr., of the possible damage to this apartment building from the bursting of pipes in winter, and other damage from defaults of the complainant in taking care in other respects of the leased property amounting to $100,000 or even one-half of the value of the whole property, suggests the surmise that Mr. Adelman, Sr., was not sincere in the representation which he made. He brought no expert witness to testify as to the extent of the destruction of the interior of this building by the bursting of pipes, c. To ordinary minds, unaided by impartial statements from experts, Mr. Adelman, Sr.'s, estimate of damage to his building is so remote and visionary as to appear preposterous. Mr. Adelman almost at the beginning of his deposition on his own behalf gave his account of the initiation of the negotiation with the complainant. He says that he stated to Mr. Granat, who opened the negotiation on behalf of the complainant:
"`My time is very limited. Before we take up the matter I want time, I would like to know whether you will excuse me. I don't know anything about your company. Now, in this building are very costly fixtures, that is, electrical fixtures, and there are costly fixtures in the vestibules, very costly showers in the bathrooms, gas engines, refrigerators, clothesdriers and three separate appliances for the steam heating as well as three separate appliances for hot water. How would you secure me and guarantee that at the end of the lease it would be in the same condition — turn it over to me as it was before when they were taking it?'
"Then followed, according to the witness, talk about a bond from a bonding company. Is it possible that Mr. Adelman, Sr., is telling the truth when he represents that the liability to damage to the costly fixtures which he enumerated was in his mind before the negotiation was opened, and that it first dawned on his mind that he should have a large bond after the contract had been made? Which time was he telling the truth? The probable answer to the question is that we can safely stand upon the testimony of the complainant's witnesses to the effect that there was nothing said about a bond at the opening of the negotiation or during the course thereof, and that Mr. Adelman, Sr., did not at the start contemplate as possible enormous damage to his valuable fixtures,c.
"Accepting Mr. Dippel's clear account of Mr. Adelman's statement after the contract was made, and when without conference with the complainant he bluntly demanded a bond for $75,000, which he must have supposed the complainant could not give, and the demand for which if rightly made would discharge him from the contract, the view seems to become possible that the whole story which Mr. Adelman, Sr., tells as to the opening of the negotiations is pure fiction, that the story of the defendant's witnesses to the effect that nothing was said about a bond, and consequently nothing about any possible enormous liability to damage, is correct; that Mr. Adelman, Sr., repented of his contract and looked forward to the collection of the large increased rental of the building which almost immediately took place, and that he (Mr. Adelman, Sr.) resorted to a subterfuge to get discharged from the contract which he perceived he had unwisely entered into.
"If the construction which I have above given to the clause of this contract in question is correct, the defendants are in the position of setting up a parole agreement or understanding in order to render the written contract incomplete. It would seem to be a dangerous thing to allow parties who have entered into a written contract, complete in all its parts, to destroy it by rendering it incomplete by parole evidence that when the contract was made the parties agreed that some other important terms should be subsequently negotiated and incorporated in the contract. No authority has been cited to sustain such an attack upon a written contract complete in all respects as it reads — valid and enforceable on its face.
"If such a defense to a written contract is allowable in any court in this state, it certainly is safe to say that the fatal fact that the apparently complete written contract was accompanied by a collateral oral agreement which rendered the written contract incomplete and unenforceable, certainly should be proved practically to a demonstration in accordance with the principle hereinafter referred to in connection with the defense of mistake.
"A careful examination of the whole testimony bearing upon the question now in hand, indicates to my mind distinctly that the weight of evidence is in favor of the proposition that this contract is entirely silent in regard to giving a bond because the giving of a bond was not referred to during the negotiations at any time, or at any rate was never agreed to — the deposit agreed upon being intended as the security to the defendant for the full performance of all the covenants on the part of the lessee to be expressed in the lease precisely as the contract provides.
"The later defenses set up in the answer, the defense of laches, and that the object of the contract on the part of the complainant was to get possession of Haddon Hall, raise the rents of the tenants and go into the business of `profiteering in rents' against public policy and to the injury of the defendant who would be liable to have his taxes largely raised in view of the increased income, c, do not, I think, call for consideration. It is sufficient to say that the bill was filed within three months after it was apparent that no lease would be made in accordance with the contract unless a bond for $75,000 was given.
"No evidence was produced to show that the situation when the bill was filed was different in any respect from the situation at the time the contract was made, or at the time when the bond for $75,000 was demanded. The defendant has not shown that he was in any way disadvantaged in respect of his defense or otherwise by reason of the delay in filing the bill which delay was negligible when compared with the duration of the suit. The defense based on the alleged intention of the complainant to profiteer in rents stands absolutely without proof and I do not think it was pressed. As to the suggestion in the answer of injury to the complainant if rentals were increased, c., of course that is incidental to any such contract. If, as for all that appears was the case, the rentals were properly subject to increase, c., the complainant cannot be made to surrender its rights under this contract because the defendant did not think of the possible consequence of the lease when the contract was made.
"The defense that the provision for a bond was omitted from the contract by mistake — an oversight on the part of Mr. Adelman, Jr., in neglecting to follow a memorandum which he had jotted down while the negotiation was proceeding the different points which were agreed upon, and which he was to embody in the typewritten contract which he afterwards prepared — is, I think, sufficiently disposed of by pointing out that no such defense is set up in the answer and that such defense is absolutely inconsistent with the allegations of the answer.
"The answer alleges as a part of perhaps the principal defense which it undertakes to set up, that at the time of the execution of the contract the complainant `represented' to the defendant that a bond would be given by a bonding company, and that `the details with respect to said bond would subsequently be agreed upon.' Nowhere in the defendant's testimony does he state or even intimate that he thought that the contract which he signed contained a provision for a bond. His whole testimony, if it does not directly state, implies that the matter of the bond was not to be determined in the contract, but was reserved for future negotiation and settlement.
"It is conceded by the defendant and his son, his principal witness, in their testimony that no amount of the bond was fixed, but these witnesses wish the court to understand that these competent experienced real estate dealers agreed that a bond was to be given, but whether it was to be for one dollar or one hundred thousand dollars was left open for subsequent agreement.
"Certainly this intelligent young man, practically a lawyer at the time, must have had some idea what the effect would have been of inserting in this instrument a provision that a bond should be given without stating what the amount of the bond should be. If there had been any talk about a bond being given at or before the time of the execution of the contract, it is manifest that unless the amount of the bond was agreed upon a provision that a bond should be given would not only be vain and even mischievous but would render the contract incomplete and imperil if not destroy its entire validity.
"Mr. Adelman, Jr., does not state what clause was in his mind in regard to giving a bond, which clause he omitted from the contract by mistake. Did he intend merely to provide that a bond, or a surety company bond, should be given by the lessee to secure the return of the leased property at the end of the term? He admits, as the defendant admits, that the amount of the bond was left undetermined in the negotiation, and was reserved for future consideration after the execution of the contract and before the execution of the lease. If such was the form of the agreement contemplated by Mr. Adelman, Jr., it would seem that he was sufficiently clever and learned in the law to see that such a bare agreement might be deemed fully performed if the complainant, the lessee, should tender a bond for $100.
"Did Mr. Adelman, Jr., contemplate that the clause should provide for the bond in an amount to be agreed upon after the instrument which he was drawing was executed and before the lease was made? May we suppose that Mr. Adelman, Jr., was not sufficiently intelligent and qualified for the sort of legal work in which he was engaged to enable him to perceive the vice of such an agreement — an agreement to agree?
"It should be observed that the mistake, which Mr. Adelman, Jr., alleges he made in omitting this clause in regard to a bond from the contract appears from his own testimony and that of his father, the defendant, to have been a mistake in the mind of Mr. Adelman, Jr., only. The father, the defendant, does not pretend that he likewise was under this mistake — that he supposed that the provision for a bond of some sort and in some shape was incorporated in the contract when he signed it. Hence, we have a suggested defense based on a mistake made not by any party who executed the contract but by the scrivener who drew the contract — the mistake consisting of the accidental omission from the contract of a provision, not which any contracting party desired to have inserted and thought was inserted, but a provision which the scrivener thought would be advantageous to one of the parties for whom he was acting and which he forgot to insert in the contract.
"The testimony of the two Messrs. Adelman in regard to what they thought this formal contract amounted to, greatly affects the force and value of their testimony. They say that they did not regard the instrument as a contract but only as a receipt or as a `binder.' How there can be a binder which binds no one who executes it Mr. Adelman, Sr., did not explain. At one point Mr. Adelman, Sr., testifies that he thought the instrument was `merely an agreement' and that he understood that a `binder' was `a contract to make a lease.' Mr. Adelman, Jr., went so far as to say that he had reserved the right to put anything in the contract without the consent of the complainant, provided he thought that it was reasonable.
"The foregoing discussion of the testimony of the defendant and the witnesses called on his behalf, although much longer than I had anticipated, imperfectly sets forth the numerous inconsistencies which abound in that mass of testimony. It would be impossible to make a complete and minute examination of all the unsatisfactory, vague, contradictory and improbable statements which appear in the testimony which these witnesses give, without greatly extending this already too lengthy opinion.
"Conceding that a mistake on the part of the defendant in which the complainant did not share, might afford a sufficient ground in equity for the denial of the remedy of specific performance, as laid down by Professor Pomeroy:
"`The evidence must be of the clearest and most convincing nature; the burden of proof is on the plaintiff and he must prove his case beyond a reasonable doubt.' 2 Pom. Eq. Jur. ( 3d ed.) § 862; Ibid. 860; Stockbridge Iron Co. v. Hudson River Iron Co., 102 Mass. 45.
"If under the circumstances of this case a mistake in the mind of Mr. Adelman, Jr., who was not a party to the contract, as to the giving of a bond, can afford a defense to this action for specific performance against Mr. Adelman, Sr., in my judgment the proof is entirely inadequate to establish the fact of such a mistake in the mind of Mr. Adelman, Jr. He alone testifies that he made a mistake; his testimony stands without corroboration and a careful study of his whole deposition supports, I think, the view that his statements are entirely unreliable.
"My conclusion is that the complainant is entitled to a decree. More than two-thirds of the term (three years) having elapsed before the cause was submitted for decision it is evident that the only practical remedy under present conditions is a decree for an accounting. The nature and extent of the accounting about which matters counsel have not been heard, will be determined on settlement of the decree."
Messrs. Lichtenstein, Schwartz Friedenberg, for the respondent.
Mr. Merritt Lane, for the appellant.
The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Advisory Master Stevenson.
For affirmance — THE CHIEF-JUSTICE, TRENCHARD, CAMPBELL, LLOYD, CASE, BODINE, DALY, DONGES, VAN BUSKIRK, McGLENNON, KAYS, HETFIELD, DEAR, WELLS, JJ. 14.
For reversal — None.