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Fidelity Union Trust Co. v. Chausmer

Decided: April 29, 1938.

FIDELITY UNION TRUST COMPANY, A CORPORATION OF THE STATE OF NEW JERSEY, AS TRUSTEE APPOINTED BY THE COURT OF CHANCERY BY AN ORDER DATED APRIL 29TH, 1935, MADE "IN THE MATTER OF PROCEEDINGS UNDER THE MORTGAGE GUARANTY CORPORATIONS' REHABILITATION ACT AFFECTING THE FIDELITY UNION TITLE AND MORTGAGE GUARANTY COMPANY" RE MORTGAGE INVESTMENT NO. M-67854, PLAINTIFF-RESPONDENT,
v.
BELLA CHAUSMER, WIDOW, DEFENDANT-APPELLANT



On appeal from the Supreme Court.

For the defendant-appellant, Joseph Zemel.

For the plaintiff-respondent, Hood, Lafferty & Campbell (Richard C. Plumer, of counsel; Edward J. Brown, on the brief).

Trenchard

The opinion of the court was delivered by

TRENCHARD, J. This is an appeal from a judgment of the Supreme Court entered in favor of the plaintiff after the Circuit Court judge, sitting as Supreme Court commissioner, struck out defendant's answer.

The suit was to recover a deficiency on a mortgage debt after foreclosure and confirmation of sale. The main defense sought to be raised in this suit was that there had been a failure to make certain month to month tenants in the premises in question (known as 67-71 Springfield avenue, Newark), defendants in the foreclosure action, and that therefore the right to an action at law for the deficiency was lost, citing American-Italian Building and Loan Association v. Liotta, 117 N.J.L. 467.

There was no denial of the failure to make some of the tenants parties. The facts are that a decree was entered in the foreclosure suit adjudging that the sum of $82,487.26 was due to the complainant upon the bond and mortgage and directing a sale. At the sale the property was bid in by the complainant in foreclosure for the sum of $100. The defendant objected to the confirmation of the sale upon the ground of inadequacy of the sale price, and petitioned the Court of Chancery to fix the fair market value of the premises. Testimony was taken and the court found the value of the mortgaged premises to be $55,000. There were municipal liens superior to the mortgage in the sum of $11,906.26 against the property; so it was ordered that a decree for the difference of $43,093.74 be given upon the debt as a condition to confirmation. This was done by the complainant and the present suit commenced.

The defendant's answer averred no knowledge or information as to those portions of the complaint which set out the proceedings in the Court of Chancery. This portion of the answer was sham and was properly struck out, and that action was made a ground of appeal; but since it is not argued here, either orally or on brief, it is considered to have been abandoned and waived. Cleaves v. Yeskel, 104 N.J.L. 497.

Moreover, where, as here, a motion is made to strike an answer or a portion thereof because it is sham or frivolous, or both, the affidavit legally and sufficiently challenging such pleading must be contradicted or rebutted by an answering affidavit or affidavits, so as to raise a dispute as to the facts or law, or both; otherwise the pleading will be struck. Pehle v. Saddle River Township, 119 N.J.L. 156. Here there was no sufficient answering affidavit.

The answer set up three separate defenses. The first raised the principal question here involved, namely, the effect of the failure to make certain tenants parties to the foreclosure. The second was to the effect that certain tenancies entered into by the rent receiver, appointed at the insistence of the plaintiff, had not been cut out by the sale. The third set up that the notice of intention to commence the suit was defective in that it failed to set forth the place of record of a certain extension agreement which concerned the mortgage in question.

As to the first separate defense the plaintiff's position is that the conduct of the defendant in seeking the aid of the Court of Chancery to reduce the deficiency was such as to be a bar to the denial of her liability for deficiency. Several reasons are urged in support of plaintiff's position in that respect, among others, the ground of equitable estoppel. Since we think, for reasons presently to be stated, that the conduct of the defendant has been such as to work an estoppel, it is unnecessary to consider the other reasons.

That the conduct of the defendant has been such as to work an estoppel seems clear. The fact that some of the tenants were not made parties was known to her before she took steps in the Court of Chancery to have the value of the property [120 NJL Page 211] determined and credited. With this knowledge, in her petition and affidavit in that court she said, "the said sum of $100 bid by the complainant is unconscionably low and if the said sale should be confirmed, your petitioner would be subject to be sued by the complainant for deficiency arising by reason of said sale, and that such a suit on the part of the complainant for the full amount of the deficiency would be contrary to equity and good conscience." Acting upon these representations the Court of Chancery granted her relief, and then because the relief did not go to the extent that she desired, namely, a finding that the value of the property exceeded the decree, she now attempts to say that she is not liable for deficiency. This is in effect a denial of the position she took in Chancery to invoke that court's jurisdiction. When objecting to the confirmation of the sale the defendant made no reference to the failure of the plaintiff to join alleged tenants as parties to the foreclosure in order to cut their rights. Nothing in her depositions on objections to confirmation of sale suggests that the value of the premises was reduced by reason of any existing tenancies. It is therefore assumed that the fair market value of the mortgaged premises was determined by the Court of Chancery without cognizance of the tenancies in the property. Such was likewise the case in Stratford Building and Loan Association v. Wagner, 122 N.J. Eq. 452, where it was held that the value fixed by the court and credited on the bond was the whole fair market value of the premises and not the market value reduced by existing tenancies; and where it was further held that a mortgage debtor who has obtained from the court credit for full value of the mortgaged property, ...


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