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Heinzer v. Summit Federal Savings & Loan Association

Decided: May 3, 1965.


Goldmann, Sullivan and Labrecque. The opinion of the court was delivered by Goldmann, S.j.a.d.


Plaintiff second mortgagee appeals from a Chancery Division summary judgment in favor of defendants Grambor in an action brought to set aside a judgment foreclosing the first mortgage, the ensuing foreclosure sale and subsequent conveyances.

The following factual background is derived from the pleadings, affidavits and plaintiff's deposition. Plaintiff is the owner of a restaurant known as Wally's Tavern in Watchung, N.J. His wife Estelle worked there, as did his son-in-law Hiram L. Walls, who was employed as a chef until the close of 1961. In August 1960 plaintiff loaned Walls $7,588.14 so that he might purchase a home. A few months later Walls and his wife gave plaintiff and his wife a second mortgage on their newly purchased dwelling as security for the loan. This mortgage was duly recorded. However, there was in existence at the time a properly recorded first mortgage which the Wallses had previously given to the Summit Federal Savings & Loan Association (Summit).

The Wallses fell behind in their payments on the first mortgage, with the result that Summit instituted a foreclosure action on September 8, 1961, naming as defendants the owners, plaintiff and his wife as second mortgagees, General Investment Corporation (General) and International Charge, Inc. On September 19, 1961 a special deputy sheriff served Mrs. Heinzer by personally handing her copies of the summons and complaint at Wally's Tavern. The deputy's return of service, insofar as it related to plaintiff, stated:

"September 19, 1961 I served copies of the within Summons and Complaint upon Walter S. Heinzer at his usual place of abode at c/o Wally's Tavern, Bonnie Burn Rd., Watchung, New Jersey, by leaving copies thereof with his wife a member of his family over the age of 14 years and informed her of the contents thereof."

According to plaintiff, his wife told him of the service the same day, and that she had called their then attorney, who instructed her to forward the papers to him and he would

take care of the matter. This was done within a day or two. Plaintiff admitted that his wife had shown him a copy of the summons and complaint; that he had looked at "just the front of it where it said that it was, I believe, a sheriff's sale and we were -- it was made out to Hiram Walls and his wife and ourselves as being the second mortgagor." He saw that he had been named defendant in the action. Plaintiff stated, "I * * * figured it was for the attorney to take care of."

According to plaintiff, he inquired of his attorney as to the status of the foreclosure action and was informed that he had called Summit and been told by an officer that Walls had promised to make a payment on the mortgage, and Summit was not going to take any action for the time being but would notify the attorney when and if it did. A month later plaintiff made further inquiry of his attorney, who told him he had heard nothing further about the matter. Plaintiff in his deposition stated that he had followed up the matter by calling Summit himself, and "they told me the same thing that they had told [his attorney]." He did not know the name of the person with whom he talked.

The only defendant who answered the foreclosure action was General. As a result, Summit moved for entry of default as to the remaining defendants pursuant to R.R. 4:56. Default was entered on January 25, 1962. Thereafter, final judgment by default was entered February 5, 1962, awarding Summit $16,095.22 and directing the sheriff to sell the property.

Prior to the holding of the foreclosure sale on April 18, 1962, Summit assigned its default judgment to defendant General, presumably in consideration of the balance due on its mortgage. General was the successful bidder at the sale, buying in the property for $100. It is not contended that the foreclosure sale was not regular in all respects, including proper notice by public advertisement. See N.J.S. 2A:61-1 et seq.; R.R. 4:83-2. Plaintiff admitted on deposition that he had learned of the sheriff's sale the same week, from a notice in a local newspaper and from speaking to a local

realtor. There were no objections filed to the confirmation of the ...

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