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536 Broad Street Corp. v. Valco Mortgage Co.

Decided: September 19, 1949.


Grimshaw, J.s.c.


This matter has been in active litigation since 1942. On a number of occasions both the trial and appellate courts have had it under consideration and all phases of it have been thoroughly aired. The cause is now before me upon a petition for review based on newly discovered evidence and fraud.

The evidence offered as newly discovered is a check of the Valco Mortgage Company dated October 11, 1938, drawn to the order of Rachel Barnet and endorsed by Rachel Barnet and Gaetano Belfatto, her attorney. Also offered is a copy of the 1938 income tax return of the Broad Street Corporation, filed in October, 1940, and signed by Vincent Belfatto. This return had attached to it a rider which brought into question the validity of the mortgage around which this litigation revolves. And, lastly, there was submitted for consideration an unfiled bill of complaint drawn by Gaetano Belfatto and discussed by him with his attorney in January, 1939. In this bill of complaint the validity of the mortgage was attacked.

It has long been settled that after the time for appeal has expired, a judgment may not be reopened except for the admission of newly discovered evidence or because of the existence of some special equity that would give the court the discretionary power to make the order. Watkinson v. Watkinson , 68 N.J. Eq. 632. Before the newly discovered evidence may be considered, there must be a showing that by the exercise of all due diligence the evidence could not have been made available at the trial. The evidence must be more

than merely cumulative. And if its sole purpose is to discredit the testimony of an adversary it will not be sufficient to sustain the petition. In re Roberson , 95 N.J. Eq. 672. The evidence must be of such a compelling nature as to give rise to the belief that had it been offered at the trial, a different judgment would have resulted. Traphagen v. Voorhees , 45 N.J. Eq. 41. The special equities, the existence of which will justify the reopening of a judgment are errors of law upon the face of the judgment, fraud or some new matter discovered after the judgment was signed. Watkinson v. Watkinson, supra.

While examining the record for the purpose of determining whether the proffered testimony meets the required test, it is difficult to resist the temptation to substitute one's own judgment for that of the trial judge. The fact that I might have arrived at conclusions different from those he reached is not relevant. My sole duty is to determine in the light of the record and of the decisions whether the original judgment may now be reopened.

A brief review of some of the facts becomes necessary at this point. The mortgage about which this litigation is concerned, is in the amount of $150,000, and covers the building in Newark owned by the plaintiff, Broad Street Corporation. It was held originally by one Tillie O. Barnet, who sold it to the defendant, Valco Mortgage Co., a corporation controlled by the defendant, Warren, for the sum of $55,000. The validity of the transfer to Valco Mortgage Co. was challenged on the ground that Mr. Warren, as counsel for Broad Street Corporation, had taken an improper advantage of his client. After extended hearings, the Vice-Chancellor who heard the case determined that "the defendant, Warren, obtained the Tillie O. Barnet mortgage by the improper use of confidential information and in violation of a duty which he owed to the Broad Street Corporation as its attorney." 536 Broad Street Corp. v. Valco Mortgage Co., et al. , 135 N.J. Eq. 361.

In substance, the defense was that Broad Street Corporation knew of the purchase of the mortgage at a discount by

Valco Mortgage Co.; acquiesced in the purchase and agreed to pay the mortgage in full as consideration for an agreement by Mr. Warren to render legal services for Broad Street Corporation without further compensation. It was charged that since Warren performed legal services in pursuance of the contract, Broad Street Corporation was estopped from seeking a cancellation of the mortgage. And it was further argued that the delay in bringing the action from 1938 to 1942, during which time both Fred Barnet and Rachel Barnet had died, constituted laches on the part of Broad Street Corporation.

The Vice-Chancellor found that no contract existed between Mr. Warren and Broad Street Corporation. He found, further, that "acquiescence, such as will raise an estoppel, presupposes full knowledge, or in the alternative, circumstances which may fairly be said to put one on notice. The proofs here fail to establish that Broad had notice, actual or constructive." And he concluded that Broad Street Corporation was not guilty of laches.

Gaetano Belfatto and Vincent Belfatto, his son, both lawyers and relatives of Rachel Barnet, became connected with the affairs of Broad Street Corporation in 1938, originally as attorneys for Fred and Rachel Barnet. In 1939, Vincent Belfatto was elected president of the plaintiff corporation. During the course of the trial, it became important on the issues of estoppel and laches, to determine when the Belfattos first learned of Warren's connection with Valco Mortgage Co. and of the details of the mortgage purchase. Gaetano Belfatto did not testify. Whether he was dead at the time of the trial or died later, does not appear. Vincent Belfatto took the stand and was rather vague as to when he first learned of Warren's association with Valco Mortgage Co. Vincent Belfatto's recollection was that it was in 1939. During cross-examination Belfatto was shown letters from Warren to Fred Barnet of which ...

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