Goldmann, Freund and Conford. The opinion of the court was delivered by Freund, J.A.D.
[36 NJSuper Page 283] This is a contest for priority between a grantor seeking the enforcement of a lien for unpaid purchase price and the holder for value of a mortgage executed by the grantee subsequently recorded. The basis of the plaintiff's claim is that because the deeds recited the consideration as "one dollar and other good and valuable consideration" and no revenue stamps were attached, the mortgagee, although admittedly without knowledge of the unpaid purchase price, was under a duty to make inquiry and is chargeable with such notice as inquiry would have revealed. The primary question is whether there is such a duty on a
prospective mortgagee, and a secondary issue is the propriety of the entry of summary judgment on the affidavits submitted on behalf of the defendant mortgagee.
The plaintiffs were the owners in fee of a six-acre tract of unimproved land in the Township of Moorestown, Burlington County. By written agreement with the defendant Carol Building Company, dated July 23, 1951, they agreed to sell and the latter agreed to buy the entire tract of land for the sum of $12,750 to be paid in installments of $750 per lot as a dwelling house on each was completed. The contract provided as follows:
"7. The parties hereto covenant each with the other that this agreement shall not be recorded in any office of public record and all such offices of public record are hereby ordered and directed to refuse for recording this agreement if so presented."
The plaintiffs conveyed the lands to Carol Building Company by two deeds dated August 23, 1951 and recorded on August 30, 1951. Each of these deeds recited the consideration as follows:
"That for and in consideration of the sum of ONE DOLLAR AND OTHER GOOD AND VALUABLE CONSIDERATIONS, * * * lawful money of the United States of America well and truly paid by the said party of the second part to the said party of the first part, at and before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged."
Subsequently, the grantee secured from the defendant First Federal Savings and Loan Association of Hammonton, New Jersey, four construction mortgage loans, each in the amount of $8,000, each dated May 26, 1952 and recorded on July 7, 1952. The last advance on these mortgages made on May 8, 1953 brought the total advance on each to $6,100, or an aggregate of $24,400.
On August 17, 1953, more than two years after the date of the contract of sale and long after the recording of the defendant's mortgages and its advances of moneys thereon, the plaintiffs recorded their contract, notwithstanding their covenant not to do so.
On June 19, 1954 the plaintiffs instituted this action to enforce a vendor's lien for the entire purchase price which they claimed to be unpaid and they asserted priority over the defendant's mortgages. The defendant filed an answer denying knowledge or that it was charged with notice of the plaintiffs' lien, and asserting that any such lien is subsequent and subordinate to the lien and operation of its mortgages. Six months later, the defendant First Federal Savings and Loan Association of Hammonton, the mortgagee, moved for summary judgment based upon the affidavits of its vice-president and of the title officer of the Lawyers Title Insurance Corporation, both of whom had handled the mortgage transactions. The plaintiffs filed no answering affidavits, and, accordingly, the averments in the mortgagee's affidavits are uncontroverted. These establish that the mortgagee and its representatives had no notice or knowledge of the vendor's lien claimed by the plaintiffs; and also the sums advanced on the mortgages. On the motion for summary judgment the plaintiffs stated:
"Concededly if defendant enjoys the status of bona fide purchaser, its priority over plaintiffs is assured. Whether it enjoys this status is the question presented and is solely a question of law, there being no present dispute as to the facts."
Because of these undisputed facts, the narrow issue is whether a prospective bona fide mortgagee for value is under a duty to make any inquiry beyond the record where the deed recites the consideration as "One dollar and other good and valuable consideration," ...