Schettino, Hall and Gaulkin. The opinion of the court was delivered by Schettino, J.A.D.
Appeal was taken by the defendants Architects Display Buildings, Inc., a corporation of New Jersey (hereafter referred to as "Architects") and Charles S. Cohan, individually, from a Superior Court, Chancery Division, summary judgment foreclosing two mortgages, one in the amount of $250,000 and the other $50,000.
Plaintiffs filed their complaint on January 6, 1958. Subsequently they moved, pursuant to R.R. 4:58-3, for summary
judgment upon the pleadings, an affidavit of plaintiff Joseph Feller, the depositions of the corporate defendant's president and certain exhibits marked in evidence on the taking of the depositions. By letter opinion dated March 10, 1958 the trial court granted plaintiffs' motion for summary judgment. Thereafter, on March 28, 1958 the corporate defendant filed a notice of motion seeking (a) the right to file an amended answer and counterclaim, (b) leave to reargue plaintiffs' motion for summary judgment, and, (c) leave to have defendant's president be made a party defendant as an individual. By order dated April 18, 1958 the trial court granted corporate defendant leave to file an amended answer and counterclaim, granted the defendant's president leave to become a party defendant limited solely for the purpose of protecting himself at any sheriff's sale in these proceedings, and granted leave to reargue the motion for summary judgment.
The trial court pointed out in its oral findings and opinion on April 25, 1958 that:
"This is an action filed by several mortgagees against a corporate defendant to foreclose two real estate mortgages. The mortgages are in default and the complaint asks that the court adjudicate that they are in default and to fix the amounts due on the mortgages and then provide for a sale of the underlying real estate which was mortgaged to secure the debt.
The defendant corporation has filed a defense by amended pleadings which seeks to set up in the main three legal defenses: (1) usury; (2) that the transaction was a violation of the Banking Act, and, (3) that there is a violation of the Real Estate Broker's Act."
In support of its amended answer and counterclaim, defendant Architects submitted three affidavits, as follows: (a) affidavit of its president, Charles S. Cohan, dated February 28, 1958; (b) affidavit of Charles S. Cohan, dated March 28, 1958, and (c) affidavit of Samuel D. Lewin, attorney and title searcher, dated March 28, 1958. No other proof was submitted or offered by Architects.
The facts are as follows: Architects had been constructing a building on premises located on Route 22, Mountainside,
New Jersey, and had completed about 70% of the work. In order to complete it, it sought mortgage loans from a man named Sturm. He offered to lend to Architects $250,000 in consideration for advance interest of $11,460 and a "service charge" of $28,540 which would leave a net of $210,000. Architects accepted the offer by a letter dated January 30, 1957 confirming the terms of the agreement. Pursuant to the terms, Architects on February 4, 1957 mortgaged its premises to Sturm for the sum of $250,000, due December 30, 1957. The mortgage secured Architects' promissory note of $250,000 to the order of Sturm. The mortgage provided that "In the event that said note and this mortgage are not paid on the due date the Mortgagor shall pay a service charge at the rate of 1/23 of 1% per day from the date of default to the date of actual payment." The mortgage also provided that "The within mortgage is given to secure advances to be made for the construction of a building on the mortgaged premises and to secure other charges, all in accordance with the terms of a commitment signed by the mortgagee and approved and accepted by the mortgagor; said commitment is dated January 30, 1957." The note incorporated all the terms of the mortgage. Payment of this note was personally guaranteed by Architects' president, Charles S. Cohan. Mr. Cohan, although not a lawyer, had studied for the bar.
On the same day all of Architects' stockholders, consisting of Charles S. Cohan, Florence B. Cohan, his wife, and Ethel Cohan, his sister, executed their consent to the execution of the mortgage and note and also executed a subordination of indebtedness to the loan of $250,000. By letter dated February 4, 1957 Architects also agreed that Sturm could assign to plaintiffs the original loan letter agreement dated January 30, 1957, the note, the mortgage and the assignment of a certain lease affecting the premises. On February 4, 1957 Sturm transferred to plaintiffs the mortgage and note. Architects ...