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Friendly Consumer Discount Co. v. Foell

Decided: March 12, 1956.

FRIENDLY CONSUMER DISCOUNT CO., PLAINTIFF-APPELLANT,
v.
CHARLES R. FOELL AND FREDDY E. FOELL, DEFENDANTS-RESPONDENTS



Clapp, Jayne and Francis. The opinion of the court was delivered by Clapp, S.j.a.d.

Clapp

[39 NJSuper Page 412] Plaintiff, a Pennsylvania corporation, secured a judgment by confession in the Burlington County Court on defendants' bond and warrant of attorney. The

court, however, on defendants' motion vacated the judgment, and plaintiff appeals. The principal question is whether a judgment taken by confession may be entered on an unmatured indebtedness.

On February 23, 1955 plaintiff made a loan to defendants in the face amount of $2,160, which actually netted defendants $1,758 in cash after deducting certain charges and a discount on account of interest. On that day defendants signed a bond in plaintiff's favor in the penal sum of $4,320, conditioned to pay $2,160 one day after date. The bond contains this covenant:

"It is covenanted and agreed that in the event it should be necessary to take any proceedings to enforce judgment on this bond that an attorney fee of 15% of the amount of the just debt hereinbefore set forth shall be included in the amount due upon this bond and judgment shall be entered therefor with such principal debt."

At the same time defendants signed a warrant of attorney, embodied in a separate instrument, empowering plaintiff's counsel or any attorney of a court of law in New Jersey to confess judgment on the breach of the condition stated in the bond. Also at the same time defendants executed a chattel mortgage on a 1954 Pontiac, chattels of like nature and household goods, all by way of security for the loan. According to the mortgage, the loan is payable in 30 installments of $72 each (total $2,160), the first on April 6, 1955, the second 30 days thereafter, and so on, with a charge at the rate of 18% a year on the amount in arrears. The mortgage contains a statement that it is further secured by the mortgagors' "judgment note * * * of even date, containing a confession of judgment" (as above stated, there was a bond and warrant -- no judgment note).

Concededly there has been no default in the payment of any installment. Nevertheless on March 4, 1955, nine days after the making of the loan and three weeks before the first installment became due, the above mentioned judgment by confession was signed. The judgment was in the amount of $2,484, calculated as follows:

Cash received on loan $1,758.00

Discount of 5% calculated on $2,160, the full face

amount of the loan for three years; we are not

informed how the plaintiff arrived at the rate of

5%, nor why a 3 year period was taken (there were

30 installments, one payable every 30 days over a

period of a little less than 2 1/2 years) 324.00

(If 5% interest had been calculated on the unpaid

balances as they would have existed at the close of

each 30 day period, had all installments been paid

as they became due, the interest would have come

to much less.)

Attorney's fee amounting to 15% of full face amount

of the loan, $2,160 324.00

Amount advanced by plaintiff for life insurance, not

provided for in bond, warrant or chattel mortgage ...


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