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Rose v. Bernhardt

Decided: February 2, 1931.


On appeal from the Hudson County Circuit Court.

For the appellants, Burke, Sheridan & Hourigan (John W. Ockford, of counsel).

For the respondent, Seclow & Nessanbaum (Alexander Seclow, of counsel).


The opinion of the court was delivered by

DALY, J. Judgment was entered upon a verdict in the Hudson County Circuit Court in favor of the plaintiff, Julius A. Rose, against the defendants Ralph Bernhardt, Jacob Weisberg and Irene Court, Incorporated, a corporation, for the fraudulent and unlawful conversion of rents belonging to the plaintiff.

The individual defendants, Bernhardt and Weinberg, have taken an appeal upon the contention that the trial judge should have directed a nonsuit in that there was no fraudulent and unlawful conversion of rents either on the part of the corporation or on their part. The corporate defendant does not appeal.

On June 27th, 1927, Irene Court, Incorporated, executed a $30,000 second mortgage to the plaintiff, Julius A. Rose, which by its terms became due September 27th, 1927, and which covered apartment house property in West New York, Hudson county, New Jersey. At the same time, Irene Court, Incorporated, executed an assignment of rents under which plaintiff was assigned a one-half share of the gross rents for the term of three months -- the term of the mortgage, the same to be applied to the principal and interest of the mortgage; and, in the event the mortgage was not paid in full on its due date -- September 27th, 1927, then there further was assigned to the plaintiff the total gross rents of the mortgaged premises beyond the due date until such time as the mortgage should be paid in full.

Bernhardt was the president of the Irene Court, Incorporated, and Weisberg was its secretary and treasurer; they engaged one Milstein to make the actual collection of the rents, and Milstein paid the same into the corporation through Bernhardt. One-half of the rentals for July, August and September was paid to the plaintiff as required by the assignment. The mortgage was not paid on its due date. Rent to the amount of $1,423.60 was collected by Milstein for the month of October; paid over by him directly to Bernhardt; deposited by Bernhardt to the corporation account and used by the corporation for the payment of its debts.

Rose was entitled to the total of the October rents according to the terms of the assignment.

It is admitted that sometime during the month of September, and before the due date of the mortgage, an interview took place between the plaintiff and Bernhardt and Weisberg relative to refinancing this property, at which interview the plaintiff expressed his willingness to assist in the refinancing by continuing his mortgage provided a reduction of $10,000 was made thereon. The plaintiff, Rose, asserts that at this meeting he notified Bernhardt and Weisberg that he, himself, intended to collect the October rents to which he was entitled under the assignment, and they requested him to allow them to continue the collection of the rentals in the way that had been followed as to the prior collections, and that if they did not succeed in their endeavor to refinance the property they would deliver the October rent so collected to him. To this he consented. The defendants, Bernhardt and Weisberg, denied this to the extent of asserting that the plaintiff agreed that they should continue the collection of the rents and urged that the same be applied by them to the upkeep and maintenance of the property during the time of the endeavor to refinance the property. Weisberg, alone, went further than this in asserting that the plaintiff specifically authorized the use of the October rents for the payment of debts of the corporation other than debts necessary to its maintenance and upkeep during the month of October.

Upon the motion for nonsuit for Bernhardt and Weisberg, the attorney for defendants contended there was no evidence of a fraudulent and unlawful conversion, and, that, even though there might be a claim of such against the Irene Court, Incorporated, Bernhardt and Weisberg were entitled to the nonsuit "as there was nothing to show that they had converted any of these moneys for their own purpose, or any other purpose, fraudulently." The trial judge denied this motion holding that from all the evidence in the ...

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