This is a contested foreclosure case. The note and mortgage were signed by defendant Annie L. Carriell on February 16, 1960. On their face they indicate a loan of $1,575. The property described in the mortgage is at 136 Badger Avenue, Newark. Mrs. Carriell held legal title to 136 Badger Avenue when the mortgage was signed. She also held legal title to property at 148 Badger Avenue.
Sometime after the making of the mortgage defendant Philip Mitchell brought suit in the Essex County District Court against Mrs. Carriell. He alleged that she was indebted to him, and in due course a judgment was entered against her in his favor for approximately $300. Then he docketed his judgment in the County Court and had execution issued and a levy made upon Mrs. Carriell's interest in 136 Badger Avenue and her interest in 148 Badger Avenue. A sheriff's sale followed, at which Mitchell's bid of $200 was the only one made. The sheriff's deed delivered to him is dated July 27, 1962, but was not recorded until July 19, 1963, about three months after the present foreclosure suit was started. The sheriff's deed to Mitchell is, however, alleged in the foreclosure complaint, and by cross-claim Mrs. Carriell seeks to have it set aside. She also contends that plaintiff is not entitled to equitable relief because the mortgage in question is tainted with fraud and is usurious; and she has pleaded, among many defenses, the doctrine of unclean hands.
The transaction which produced the mortgage was arranged by defendant Mitchell. He had taken many would-be borrowers to the mortgagee, a man who called himself Frank Taylor. This was the fourth mortgage transaction with Taylor which Mitchell had arranged for the "benefit" of Mrs. Carriell. Mitchell was admitted to the New Jersey bar in 1923 when his name was Philip Gaudiosi. He was subsequently disbarred and has never been reinstated. His relationships with Taylor and with Mrs. Carriell began after his disbarment.
Taylor, the mortgagee, died on June 21, 1961. Plaintiff is his widow. She claims ownership of the mortgage by virtue of the fact that it is included among 26 mortgages described in an assignment to her from her husband, executed and acknowledged in March 1961. This assignment was found among Taylor's papers at the time of his death and was then recorded on June 23, 1961. It is significant in relation to matters to be discussed later that the recording was done by Philip Mitchell, an indication of his close relationship with the Taylors in connection with mortgage matters.
Although there is a question as to whether the assignment was delivered before Taylor died, that need not be resolved here. Plaintiff is also Taylor's executrix and there was an amendment during trial which brought her into the case in that capacity. She holds the note and mortgage either by assignment or as executrix.
Mitchell took almost complete charge of the loan transaction in February 1960. He prepared the note and mortgage. He had them executed by Mrs. Carriell. In spite of his disbarment he had a commission as a notary public and he took her acknowledgment on the mortgage. He searched the title. He recorded the mortgage. He obtained a check in the face amount of the mortgage, namely $1,575, had it endorsed by Mrs. Carriell, and then had it cashed.
At the trial Mitchell testified with much circumstantial detail about meeting Mrs. Carriell at a branch of the National Newark & Essex Banking Company in East Orange where she signed the note and mortgage and probably an affidavit of
title. He said she then gave the papers back to him and he put them in his brief case. He told her that he had to run the title down to date and no mortgage money could be turned over until that was done; that he would not be ready until the following day. He went on to say that she pleaded with him for some immediate cash because of her need. He responded by making out a check of his own to her order for $200. He could not recall where he was when he wrote the check but said he probably drove her to his bank so that she could cash the check. There was produced a check for $200 dated February 16, drawn upon the account of Philip Mitchell at the North Newark office of the National State Bank. It bears the endorsement of Mrs. Carriell as well as a bank stamp indicating that it was paid by the National State Bank on the 16th.
At the same session of the court Mitchell related that he again met Mrs. Carriell at the National Newark & Essex Bank in East Orange the next day, February 17, at which time he presented her with the Taylor check for $1,575. She cashed the check, paid Mitchell's "fee" of $250, and put the rest of the money in her purse, he said. Of this $250, $100 was for the placement of the mortgage, and $150 was for taking care of the "papers." He went on to testify that Mrs. Carriell then decided she would like to have a check for $1,000 instead of having so much cash on hand. She gave Mitchell that amount of cash and he gave her his own check for $1,000. A check for that amount was produced. On its face it bears the date of February 17, 1960, but the bank stamp on the reverse side bears the date of February 16, 1960. Payment on that check was stopped by Mitchell. He testified that he gave the stop order when he remembered belatedly about the $200 which he had advanced to Mrs. Carriell only the day before and realized that it should have been repaid to him out of the cash which she received when the Taylor check was cashed on February 17. When Mrs. Carriell protested his stopping payment, Mitchell replaced the dishonored check on February 26, 1960 with another check payable to Mrs. Carriell
in the amount of $900. He said she claimed a $100 credit on other matters, and thus sought to explain why the ...