On appeal from the Supreme Court.
For the appellant, Abraham M. Herman.
For the respondent, Waugh, Torppey & Consodine (Alexander P. Waugh).
The opinion of the court was delivered by
BODINE, J. The appeal is from a judgment in favor of the plaintiff entered after the answer was struck.
We are concerned with the first cause of action which is predicated upon a promissory note due March 31st, 1941. The complaint, in addition to the usual allegation in an action to recover upon a protested note, alleges: "The plaintiff held as collateral security a second mortgage on premises located in the Borough of Verona, New Jersey, which mortgage was dated November 27th, 1931, and was recorded in Book Q-74 of Mortgages for Essex County page 204. * * * The plaintiff has credited defendant with the sum of $100, proceeds from the sale of the security hereinbefore mentioned."
A creditor holding security for a promissory note may, upon default, pursue his remedies at his pleasure. Polhemus v. Prudential Realty Corp., 74 N.J.L. 570. The defenses pleaded were as follows: "First Separate Defense: 1. Defendant says that at the time he became indebted to the
plaintiff he executed a bond and mortgage and notes as evidences of and security for said indebtedness. 2. He alleges that plaintiff had not foreclosed said mortgage prior to institution of this suit, contrary to statute in such case made and provided. Second Separate Defense: 1. Defendant says that the indebtedness referred to in the complaint filed herein was secured by a mortgage and that said mortgage has been paid and satisfied and the indebtedness alleged in the complaint filed herein is paid, satisfied and discharged."
It appears from the affidavit made by one of the bank officers -- the arrangement of which has been changed by us for clarity sake -- that: "On the 27th day of November, 1931, at plaintiff's request that security be given for moneys loaned" (the grammatical use would be lent) "defendant executed his bond and mortgage in the sum of $12,650, said mortgage being recorded in Book Q-74 of Mortgages of Essex County, pages 204, &c. Said mortgage was second and subject to the lien of a first mortgage in the sum of $4,500 held by May B. VanOrder. It was agreed between the plaintiff and defendant that the bond and mortgage would be canceled when the sums represented by the above mentioned note had been paid in full. * * * On December 30th, 1940, defendant made and delivered his note for the sum of $2,750 payable to the order of plaintiff three months from that date at the Verona Trust Company in Verona, N.J. * * * By deed dated March 10th, 1941 and recorded in Book D-98 of Deeds for Essex County, pages 283, &c., defendant conveyed property on which plaintiff held a second mortgage to May B. VanOrder, the first mortgagee. * * * On or about March 27th, 1941, the second mortgage held by plaintiff was receipted for cancellation, plaintiff receiving from May B. VanOrder, the first mortgagee, the sum of One Hundred ($100) Dollars as consideration for cancellation of said mortgage."
It is perfectly well settled, in this state, that when a note is secured by a bond and mortgage that the holder of the note may sue thereon without first foreclosing the mortgage. This is not a case where a bond and mortgage were given for the same debt. The bond and mortgage were security for a note
given much later. Gloucester City Trust Co. v. Goodfellow, 124 N.J.L. 118. The ...