Plaintiffs instituted this action seeking to foreclose a mortgage given to them by defendants Gower covering real estate situated in the Borough of Oakland, Bergen County, commonly known and designated as Lots 16A and 16B in Block 3608, on a filed map known as Ramapo Mountain Lakes Section 3, to secure a bond in the principal amount of $2,800 due and payable on June 19, 1962. The mortgage was dated January 19, 1962 and was recorded January 25, 1962 in the office of the Bergen County Clerk. There is no dispute but that at the time this mortgage was given, the mortgagors did not have title to the property covered by it, and further, that they did not acquire title to the same until June 1, 1962 by a deed which was recorded on June 14, 1962.
After acquiring title to the premises in question as aforementioned, defendants Gower gave a construction mortgage to defendant New Jersey Mortgage and Title Company (New Jersey Mortgage) to secure a bond given by them in the principal amount of $13,500. This mortgage was dated August 24, 1962, and was recorded on September 4, 1962 in the office of the Bergen County Clerk. At the time that the mortgage was given to New Jersey Mortgage, a binder of title insurance was issued by New Jersey Realty Title Insurance Company, insuring the principal amount to be advanced under the mortgage. That binder contained a reference to the mortgage given to plaintiffs herein, with the notation "to be
cancelled." The attorney issuing the binder on behalf of the applicant, New Jersey Mortgage, was the same person who drew and attended to the execution and recording of the mortgage given to plaintiffs herein. It is not disputed that defendant New Jersey Mortgage had actual notice of the existence of plaintiffs' mortgage. See R.S. 46:17-3.1.
Thereafter, both of the mortgages mentioned came into default. On or about March 9, 1964 plaintiffs commenced the instant action by filing a complaint with the clerk of the court. On March 10, 1964 a notice of lis pendens was filed with the Clerk of Bergen County, and the filing was noted on the margin of the recorded mortgage. In its complaint plaintiffs joined New Jersey Mortgage, which was duly served with process. New Jersey Mortgage filed an answer through present counsel wherein it contested both the validity and priority of plaintiffs' mortgage.
On April 22, 1964 defendant New Jersey Mortgage instituted an action in this court under Docket F 3249-63, seeking to foreclose its mortgage on subject premises. A lis pendens was filed on April 29, 1964. In that proceeding New Jersey Mortgage was represented by counsel other than counsel appearing in this cause. The complaint filed in the subsequent action joined plaintiffs in this proceeding as a defendant therein, and set forth an allegation that the mortgage given to them was null and void in that defendants Gower were not the owners of the premises covered by the mortgage at the time the same was given. Although served with process, and despite the allegations that any interest claim or any lien of plaintiffs to the premises in question was subject to the lien of the mortgage of New Jersey Mortgage, plaintiffs herein failed to file an answer or any appearance in the subsequent action. Default was entered on June 19, 1964. Final judgment of foreclosure was entered and execution issued to the Sheriff of Bergen County. Following public advertisement, the mortgaged premises were struck off and sold by the sheriff on September 21, 1964. New Jersey Mortgage purchased the premises at the sale. Subsequently, the premises were purchased
by defendant Midland Park Lumber & Supply Co. Inc., a mechanic's lienor, and thereafter sold to third parties. No contention is advanced that either of the subsequent purchasers had notice of the existence of the mortgage of plaintiffs herein, except as contained in the complaints for foreclosure. It should also be mentioned that because of the operation of certain objective administrative procedures in the Bergen vicinage of this court, the complaint in the instant action was referred to me for disposition, while the complaint in the action instituted by New Jersey Mortgage was referred to the Chancery Division judge sitting in Hackensack.
The validity of plaintiffs' mortgage cannot be disputed. See Den ex dem. Wyckoff v. Gardner, 20 N.J.L. 556 (Sup. Ct. 1846); Morris v. Glaser, 106 N.J. Eq. 570 (Ch. 1929); Tully v. Taylor, 84 N.J. Eq. 459 (E. & A. 1915). Nor can it be disputed, disregarding the novel question presented here, that the actual notice given to defendant New Jersey Mortgage of the existence of plaintiffs' mortgage was sufficient to give plaintiffs priority to the subsequent mortgage given to defendant New Jersey Mortgage. R.S. 46:17-3.1, supra; Willink v. Morris Canal & Banking Co., 4 N.J. Eq. 377 (Ch. 1843); Essex County National Bank v. Harrison, 57 N.J. Eq. 91 (Ch. 1898).
Defendant New Jersey Mortgage argues that since the questions of the validity and priority as between the respective mortgages of plaintiff herein and that of defendant were placed directly in issue in the second foreclosure suit instituted by New Jersey Mortgage, the determination and final judgment in that action cannot now be disturbed under the doctrine of collateral estoppel. In addition, they contend that the judgment in Docket F 3249-63 must be accepted as res judicata in these proceedings, since the instant plaintiffs were joined as defendants and the subject matter of the action therein concluded was identical to the issue presently before this court. They argue that since these plaintiffs stood by in silence, it would be inequitable now to permit them to object in any manner to the final judgment obtained by defendant
New Jersey Mortgage. See City of Trenton v. Howell, 132 N.J. ...