Oldfield v. Stoeco Homes, Inc. - 26 N.J. 246, 139 A.2d 291 (1958)

Rule:

While language is the primary guide for the ascertainment of whether a given deed attempts to condition or 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 the court's ultimate task which is to effectuate the intention of the parties.

Facts:

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. What little there is in the record concerning the western segment indicates that, although it was below grade and required fill, it was generally higher and necessitated less fill in order to raise the grade to the existent levels in the remainder of the city than the eastern segment. It was also situated nearer the bay and conceded to be commercially more valuable. The eastern tract consisted largely of mosquito breeding swamp and meadow lands with salt ponds interspersed and required extensive filling and grading before the land could be utilized for residential or other productive uses.

Stoeco was desirous of acquiring the lots owned by the city in the western segment, and as part of a general plan of redevelopment it conceived of the idea of acquiring the lots owned by the city in the eastern segment also. Ocean City, recognizing that an extensive redevelopment of these swampy areas would benefit the community, indicated its willingness to sell the lots, with the exception of 226 lots in the eastern tract which it desired to retain. 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 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. While the deed from Ocean City to Stoeco contained various conditions and restrictions, the core provisions around which this dispute centers provided that Stoeco was required to fill and grade not only the lots sold to them by the city, but also the lots retained by the city. It was also required to comply with its obligations one year after the Deed was finalized, or in June 1952.

Shortly after settlement Stoeco entered into a contract with 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 was not able to complete the substantial portion of filling and grading by the deadline. Ocean City, more interested in redevelopment than declaring a default, passed a resolution on February 20, 1953 to change and modify the terms and conditions of the sale of land, allowing Stoeco until 1954 to finish filling and grading a first set of lots. This Stoeco was able to substantially do. Thereafter, Ocean City passed another resolution granting Stoeco an extension for a second set of lots until 1958, and the last set of lots to complete the undertaking until 1960. 

Plaintiffs, residents and taxpayers, objected to the second resolution and thereafter instituted the instant 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 court below held that the nature of the defeasible estate created was one in fee simple, subject to a condition subsequent; that the resolutions were neither unconstitutional nor ultra vires, and that the proceeding was barred on all the grounds advanced.

Issue:

Was the limitation as to time a condition subsequent which could be waived by Ocean City?

Answer:

Yes.

Conclusion:

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 was to distort beyond recognition what the parties intended. There was no indication that time was of the 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: "The City of Ocean City reserves the right to change or modify any restriction, condition or other requirements hereby imposed in a manner agreeable to or as permitted by law." A certain amount of flexibility was inherent among such large scale undertakings as the one under consideration. Additionally, the more one probed 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. In sum, 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.