This is a suit to quiet title to real property. The facts are not in dispute.
On July 1, 1926, one Julia Slater, a widow, sold the property with which we are concerned to Samuel Finger and William Enowitz and as part of the consideration took back a purchase money mortgage in the amount of $7,000. The bond and mortgage payable on July 1, 1931, required the payment semi-annually of interest at the rate of six per cent per annum. The mortgage was duly recorded.
Julia Slater died November 5, 1931, leaving a will which was admitted to probate. There was an appeal from the order for probate of the will and on March 12, 1934, it was set aside. For the duration of the will contest the defendant bank served as administrator pendente lite. On May 4, 1934, Lillian Brant was appointed administratrix of the estate of Julia Slater.
On December 4, 1935, the Bergen County Orphans' Court signed an order revoking the letters of administration therefore granted to Lillian Brant and directing that she be removed as administratrix. And by the same order the defendant,
Bergenfield National Bank & Trust Company was appointed substituted administrator.
The fees for the removal proceeding and the appointment of the defendant as substituted administrator were not paid. The papers were placed in the Surrogate's vault and neither filed nor indexed. On January 13, 1939, the bank's attorney paid the Surrogate's fees. The orders were then filed and letters of substitutionary administration were issued to the defendant under the date of January 13, 1939.
In the meantime, the taxes being in default, the property was sold by the Borough for the delinquent taxes. The tax sale certificate in the amount of $3,329 was purchased by a corporation known as Lawrence Investment Company. A bill to foreclose the tax certificate was filed on April 6, 1936, and a final decree was entered on June 24, 1936. In the foreclosure proceeding Lillian Brant was made a party defendant as administratrix of Julia Slater. She was served with process and upon her failure to answer judgment by default was taken against her. As a result of several mesne conveyances, the plaintiff became seized of the title to the property in December, 1939.
In 1940 plaintiff erected a store building upon the property at a cost of $20,000. Prior to the commencement of building operations plaintiff discussed the possibility of a mortgage loan on the property with the president and cashier of the defendant bank. The bank officials failed to mention the Slater mortgage during the discussion. For reasons which do not appear, the loan did not materialize.
Some years later, presumably in connection with a title examination resulting from a loan application, the situation outlined above was disclosed. After fruitless negotiations between the parties this litigation was started.
It is conceded that no payments of interest or principal were ever made upon the mortgage. It was carried on the books of the bank at a valuation of $1. The ledger sheet contained the statement: "Property in hands of Borough for non-payment of taxes." And until this ...