Before GOODRICH, McLAUGHLIN and HASTIE, Circuit Judges.
McLAUGHLIN, Circuit Judge.
Appellant entered into a written contract with appellees to purchase real estate. He intended erecting a truck terminal and leasing it to Boyce Motor Lines, Inc., an I.C.C. common carrier. Appellees, owners of the land, claiming appellant did not, in the terms of the agreement, diligently try to obtain the right to operate a truck terminal on the premises, retained appellant's five thousand dollar deposit as liquidated damages. The district court upheld that position in this suit for return of the deposit.
The action was originally started in the New Jersey Superior Court. Plaintiff-appellant is a resident of New York State. Defendants-appellees are residents of California. The case was removed to the district court by reason of the diversity of citizenship.
Appellant is the president and principal stockholder of Boyce Motor Lines, Inc., a New York corporation engaged in the trucking business and authorized to do business in New Jersey. In January 1952, the company, desiring to expand its New Jersey facilities, authorized Boyce to acquire a Bergen County, New Jersey site for a new truck terminal with the idea that Boyce erect such terminal and lease it to the corporation.Early that same month, Boyce talked the matter over with Stanley Atkins, a real estate agent. He, acting for Boyce, entered into negotiations for the purchase of the property here involved with James E. Hanson of Alexander Summer Co., the real estate firm having the premises for sale on behalf of appellees, the owners. There were considerable preliminary discussions over the terms of the proposed contract of sale and at least two tentative drafts drawn. Atkins turned over to Hanson a deposit check of $5,000 which Hanson in a letter to appellees dated June 19, 1952, mentions as having forwarded them on March 3, 1952. Attorneys for both parties came into the picture prior to the contract being executed. The lawyer representing appellees was and still is Town Counsel of the Township of South Hackensack. Boyce was expressly not interested in buying the site unless he could obtain the Township's approval to the operation of the truck terminal business contemplated. Prior to this time, as appears in the record, a Boyce, Inc. truck carrying carbon bisulphide had exploded and burned in the Holland Tunnel. With this in mind on April 18, 1952 the Boyce attorney sent Mr. Chandless, representing the owners, a list of chemicals which would be handled by Boyce, Inc. through its proposed South Hackensack Terminal. Carbon bisulphide was specifically noted as one of these. That letter concluded by saying:
"With this information, perhaps you may be able to learn the reaction of the City officials and advise me. I would require that my client be protected in some way against interference by the Township authorities in connection with the handling of the chemicals of the nature contained in the enclosed letter.
"Awaiting your reply, I remain"
A clause to cover the situation was suggested by Mr. Chandless. This conditioned the agreement "* * * upon the ability of the Purchaser to obtain the necessary permits in accordance with the ordinances of the Township of South Hackensack for the construction upon and use of said premises as a truck terminal to comprise and consist substantially of the following: To be built in accordance with the Building Code and other ordinances of the Township in relation to the construction of buildings; it being the obligation hereunder of the Purchaser to make such applications and to take such other steps as may be required to secure such permits."
On May 6, 1952, Mr. Chandless wrote the Boyce attorney as follows:
"I have received from Barrett & Hilp executed copy of revised agreement covering South Hackensack property.
"Since forwarding this to Barrett & Hilp and its return to me executed, I have received from your secretary revision of pages 5 and 6 so that the last three paragraphs on page 6 would appear in their proper sequence after the second paragraph on page 5.
"I will be in a position to make this change on the executed copy by initialling the transposition. Will you please forward me a copy executed by your client and we can exchange the same."
He concluded his letter by saying:
"I have arranged with the Township Clerk of South Hackensack for a meeting of the Board of Adjustment in order to conduct a public hearing on the grant of a permit to operate the truck terminal in accordance with the I.C.C. rights outlined in the contract. This subject appeared confusing to the Clerk but I am furnishing him with a copy of the 4 clauses of the contract dealing with the subject, together with copy of letter of Boyce Motor Lines, Inc. to you, dated April 14, 1952. This should explain just what we had in mind. I will advise you as to date of the hearing and feel that you should make arrangements to appear at that time."
On the same date, May 6, 1952, Mr. Chandless, as Township Attorney, wrote the Township Clerk, John Melillo, saying:
"At the last meeting of the Township Committee, it was determined to refer to the Board of Adjustment the question of the proposed use of the Barrett & Hilp property. The attorney of the proposed purchaser sends me a copy of letter which he received from his client, dated April 14, 1952, which deals with the nature of their business. His accompanying letter of April 18th mentions the fact that they also handle carbon bisulphite (stet)."
He set out the terms of the agreement between the parties, the understanding that Boyce, Inc. was an I.C.C. carrier and required "* * * to transport any and all merchandise submitted to it, except dangerous explosives; that said Boyce Motor Lines, Inc. in the course of its business transports numerous chemicals and chemical derivatives some of which are inflammable depending upon flash point." He quoted the clause that "* * * this agreement is also expressly conditioned upon the ability of the Purchaser to obtain from the Board of Adjustment of the Township of South Hackensack, after public hearing in accordance with the statute, a permit to operate said truck terminal in accordance with its I.C.C. rights as above outlined."
Mr. Chandless further quoted directly from the agreement of sale to describe the proposed construction of the terminal, the nature of the building and the materials going into it. That read:
"A loading platform having poured concrete walls and reinforced platform 60 feet in width by 100 feet in length enclosed with overhead doors and a roof. Attached to said loading platform a 2-story office and dormitory building 30 feet in depth by 60 feet in width. The basement of said building to be used for heating equipment and storage; the ground floor for office space, and the second floor for sleeping accommodations for drivers. The property will also be improved with sufficient macadam paving to accommodate the business of the truck terminal, to be built in accordance with the Building Code and other ordinances of the Township in relation to the construction of buildings."
Finally he instructed the Clerk as follows:
"Will you please arrange for the Board of Adjustment to fix a date for a hearing. This date should be fixed sufficiently in advance so that we can have the attorney of the prospective purchaser on hand, as well as to allow time to give notice to adjacent property owners."
By not later than May 16, 1952 Boyce had executed a copy of the contract which was turned over to Mr. Chandless.
The agreement as executed was "expressly conditioned upon the ability of the Purchaser to obtain the necessary permits in accordance with the ordinances of the Township of South Hackensack for the construction upon and use of said premises as a truck terminal * * *." The contemplated building was described and "to be built in accordance with the Building Code and other ordinances of the Township in relation to the construction of buildings. Purchaser agrees, however, to use all due diligence to do everything required to obtain said permit to construct such truck terminal and that his efforts in that behalf must be completed prior to May 1, 1952. Failure to use such due diligence and to complete said efforts by said date shall be deemed a default hereunder. On the other hand, if Purchaser uses such due diligence and is unable to obtain the required permits by said date, then this agreement shall be null and void and there shall be no obligation as above set forth, except that the Seller shall return the deposit but shall not be responsible for title or any other expenses of Purchaser."
The agreement tied into the above condition the understanding that Boyce would lease the terminal to Boyce Motor Lines, Inc., an I.C.C. common carrier. It specified that Boyce Motor Lines "is required to transport any and all merchandise submitted to it, except dangerous explosives; that said Boyce Motor Lines, Inc., in the course of its business transports numerous chemicals and chemical derivatives some of which are inflammable depending upon flash point." The contract also provided: "It is further understood and agreed that this agreement is also expressly conditioned upon the ability of the Purchaser to obtain from the Board of Adjustment of the Township of South Hackensack, after public hearing in accordance with the statute, a permit to operate said truck terminal in accordance with its I.C.C. rights as above outlined."
The district judge did not find when the agreement was completely executed by the parties. As seen above this occurred sometime after May 6, 1952 and by May 16, 1952. In addition to the letter of Mr. Chandless of May 6, 1952, he, testifying at the trial, stated that the contract had not been signed by Boyce at the time he sent that letter.
It is uncontradicted that there was no change in the May 1 date in the contract as the time when appellant's efforts to obtain Township permission must be completed, because of the representations of appellees' attorney that he did not wish to be forced to redraw the agreement and send it back to appellees in California for re-execution.
It is not denied that Architect William Neumann, Jr. was asked on behalf of appellant to prepare plans for the truck terminal in April 1952 and that he did so in May 1952. These are dated May 6, 1952. The plans Mr. Neumann made are called sketch plans. He explained that "When there is a Board of Adjustment, or a zoning matter pending we do not go to the trouble or expense, or put an owner to the expense of preparing a complete set of plans. We prepared what we call a complete outline sketch, which shows the authorities the type of building, size of building, and what it is going to be used for, for submission. Then after the hearing, if the plan has been approved, then complete plans are filed and prepared and filed with the building department, which meets with their requirement, which show everything in detail, size of beams, columns and everything else." He testified this was the customary practice in the State of New Jersey. The plot plan was made afterwards and bears the date May 19, 1952. The latter was prepared for the township building department. Neumann testified that the furnishing of that sort of plan is "the requirement ...