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Mutual Savings Fund Harmonia v. Gunne

Decided: January 23, 1933.


On defendant's appeal from the Supreme Court.

For the appellant, George B. Bailey.

For the respondent, Samuel Koestler.


The opinion of the court was delivered by

PARKER, J. The suit is against the maker of a bond for $60,000 secured by mortgage, for a deficiency arising out of a sale in foreclosure of the mortgaged premises, the price realized being insufficient to satisfy the decree. The two principal defenses interposed, both of which were overruled, were, first, that the plaintiff could not have judgment, because of having begun the action before filing a notice of lis pendens as required by the statute of 1907 (Pamph. L., p. 563; Comp. Stat., p. 3423); and secondly, that the defendant, who prior to the foreclosure had conveyed the mortgaged premises to a third party, was nevertheless a necessary party to the foreclosure suit as one entitled to redeem, and

had not been made a party nor served with notice of the foreclosure and knew nothing about it until after the sale, and hence had no opportunity to question the amount due on the bond nor to bid at the sale or to procure others to bid, and that the property was knocked down for a nominal bid of $1,000. The second defense just stated, with others depending thereon, was struck out as sham or frivolous, and the first reserved for jury trial.

As to the first defense, the parties stipulated the evidential facts and submitted the issue without jury to Judge Cleary, who found contrary to defendant's claim, and judgment for plaintiff was accordingly entered.

The essential question relative to the first defense is, when was the suit begun in contemplation of law?

The act of 1907 is a supplement to the act of 1880 entitled "An act concerning proceedings on bonds and mortgages given for the same indebtedness and the foreclosure and sale of mortgaged premises thereunder." Pamph. L., p. 255; Comp. Stat., p. 3420. Section 1 of the supplement of 1907 provides that "no judgment shall be entered * * * in any action on said bond (i.e., a bond secured by mortgage) unless * * * prior to the beginning of such action * * * there shall be filed in the office of * * * the register of deeds and mortgages of the county * * * a written notice of the proposed action, setting forth," &c.

The required notice was filed in this case, and there is no question of its regularity as to form and substance. The sole point made is that it was not filed "prior to the beginning of the action."

The essential facts are as follows: The summons and complaint, as well as the notice of lis pendens, were drawn by Samuel Koestler, bear date June 30th, 1930, and were delivered together to George Schmidt, Jr., to sign as attorney of record, the notice to be filed, and the summons and complaint then to be handed to the sheriff for service. With them was delivered a letter from Koestler, also dated June 30th, instructing Schmidt to sign the papers, but before delivering the summons and complaint to the sheriff, to

file in the register's office the "notice of proposed suit." Schmidt signed as desired, and gave the papers to a young woman clerk in his office "with instructions to file the notice in the office of the register of the county of Essex and to deliver the summons and complaint with copy, to the sheriff of Essex county for service upon the defendant, but at the same time he gave her specific instructions that the summons and complaint aforesaid should not be delivered to the sheriff until after she had filed the aforesaid notice in the office of said register of deeds of Essex county. That said Josephine L. Benker then left the said office of George Schmidt, Jr., Esquire, provided by him with money to pay the necessary filing fees of the register and the service fees of the sheriff, and proceeded to the hall of records in the city of Newark, at which place she first went to the office of the register of deeds of Essex county with the notice of said suit about to be instituted as above entitled, and delivered said notice to the said register for filing and paid the charge for same and same was stamped having been received on July 2d, 1930, at twelve-one P.M., and thereafter said Josephine Benker went to the office of the sheriff of Essex county at the court house in Newark, New Jersey, and delivered to said sheriff for service upon defendant the original summons and complaint together with a copy thereof and paid the sheriff the service fees demanded and said sheriff stamped same as received July 2d, 1930, at twelve-eight P.M., and the same was then served upon defendant on July 10th, 1930." The foregoing is the language of the stipulation.

It is argued that the date inserted in the summons (June 30th) is controlling evidence that suit was begun on that day; but this, we think, may shortly be disposed of. Section 47 of the Practice act of 1903 (Comp. Stat., p. 4065) provides in part: Every process shall bear date on the day on which the same shall be issued, and the date shall be prima facie evidence that it was issued on that day, but such date may be disproved whenever the same shall come in question; if any person shall antedate any process, he shall forfeit $100 to the party aggrieved and also be liable to him for all

damages which he may sustain thereby." It is intimated in the brief that the true date may be shown only to prevent fraud; but we do not so read the statute, which is broad enough to cover all forms of mistake, oversight, &c. There is a penalty for antedating, but that is all. See Morris Canal, &c., Co. v. Mitchell, 31 N.J.L. (at p. 102). The same rule obtained at common law. Wambaugh v. Schenck, 2 Id. (Penn.) *229; Allen v. Smith, 12 Id. 159, 166. The date may be disproved, but the right to disprove is not limited to any particular party. We see no merit in this point.

The stipulation does not state when the papers were handed to Schmidt, but he seems to have signed them at once and handed them to his clerk with the instructions just mentioned. She "then" left his office and went to Newark and gave the notice to the register who stamped it as received July 2d, twelve-one P.M. The natural and obvious inference is that all this took place on the morning of July 2d, though this seems immaterial, for even if it took the clerk two days to get to Newark we shall see that the result is the same.

We come, then, to the serious question in the case: Was the action begun in contemplation of law, before or after the filing of the notice?

Our important cases bearing on the "beginning of an action are Whitaker v. Turnbull, 18 N.J.L. 172; Updike v. TenBroeck, 32 Id. 105; McCracken v. Richardson, 46 Id. 50; Lynch v. New York, Lake Erie, &c., Railroad Co., 57 Id. 4; County v. Pacific Coast Borax Co., 67 Id. 48; affirmed, 68 Id. 273, and Wilson v. Clear, 85 Id. 474.

In Whitaker v. Turnbull, the statute of limitations was invoked. It appeared that plaintiff's attorney had drawn and sealed the summons in time, and with it called on defendant and asked him to sign an appearance thereto. Defendant asked a little time, and there was some delay which resulted in appearance being signed after the statute had run. The rule laid down by the trial court, and approved by the Supreme Court, was that when the writ is issued out of the office of the clerk, or of the attorney acting as agent of the clerk, "in good faith, for the purpose of being served

or proceeded on, and that purpose is not afterwards abandoned, it is for all material purposes the commencement of the suit." The Chief Justice pointed out that the defendant had notice that the suit had been commenced. "In fact, the writ was on its way to the sheriff * * * and would have been delivered to him, if the defendant had not stipulated," &c. (page 175).

We may properly stress at this point the two features of the rule, one of which is that there must be a purpose to serve the writ; and the other, that such purpose may be abandoned.

The case of Updike v. TenBroeck, 32 N.J.L. 105, went to the limit in avoiding the bar of the statute of limitations. There was a vigorous dissent by Mr. Justice Elmer, at the time, and the case was later severely criticized by Chief Justice Beasley, as will presently be seen. The opinion is long, and we content ourselves with pointing out that (on page 110) the right to abandon the writ is recognized, and the court holds that it was not abandoned. There follows, on the next page, a differentiation of some outside cases, mostly of New York, which will presently be examined. As to these, the opinion points out, most pertinently to the present case, that those decisions "are chiefly, if not all, where the writ was obtained preparatory to a cause of action, and its use was depending upon a certain state of facts, existing or not when it was used, going to the right of the action. In these cases the courts held the suit as commenced not until the writ was actually used, and after the cause of action had become fixed." (Italics ours.) The cases there cited are as follows: Visscher v. Gansevoort, 18 Johns. 496; Bronson et al. v. Earl, 17 Johns. 63; Ross v. Luther, 4 Cowen 158; Boughten v. Bruce, 20 Wend. 234; Burdick v. Green, 18 Johns. 20; Seaver v. Lincoln, 21 Pick. 267.

The next case in chronological order is McCracken v. Richardson, 46 N.J.L. 50. Action on two notes: The statute of limitations as to one ran out February 12th, as to the other on February 24th. Summons tested February 10th, ...

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