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Cape May County Savings and Loan Association v. Sebastian

Decided: December 5, 1966.

CAPE MAY COUNTY SAVINGS AND LOAN ASSOCIATION, A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF,
v.
BETTY LOU SEBASTIAN, HEIR AT LAW AND NEXT OF KIN OF ANNA D. SEBASTIAN; EVELYN A. HALL, GENERAL GUARDIAN OF BETTY LOU SEBASTIAN; VIR-MAC CONSTRUCTION CO., A NEW JERSEY CORPORATION; CAMDEN TRUST COMPANY; AND UNITED STATES OF AMERICA, DEFENDANTS



Wick, J.s.c.

Wick

This matter comes before the court on an order to show cause issued by this court in April 1966. The case involves a petition for surplus monies deposited with the Clerk of the Superior Court and arising from a foreclosure sale in November 1965. The facts in the case are not disputed.

Plaintiff was the holder of a bond executed by Robert J. and Anna D. Sebastian and secured by a purchase money mortgage on certain lands and premises in Cape May County, New Jersey. The bond and mortgage were executed in April 1964. In December of the same year default occurred which led to the institution of foreclosure proceedings in May 1965. Pursuant to the statutes of New Jersey, which require that all parties having an interest in the property subject to foreclosure be joined, plaintiff initiated a search of the record title which disclosed a judgment in favor of the Camden

Trust Company against the mortgagors, which judgment was entered in November 1964 and subsequently assigned to the United States in January 1965. The United States recorded its assignment on March 15, 1965, more than two months prior to the start of foreclosure. Accordingly, the United States of America was made a party defendant to the foreclosure.

A final judgment was rendered in September 1965 and, as mentioned above, the property was sold at a sheriff's sale in November 1965 and resulted in a surplus of $350.44.

Plaintiff contends that it is entitled to $257.34 out of the surplus, $153.78 for reasonable attorney's fee and $103.56 for taxes advanced by plaintiff prior to foreclosure. Regarding the former claim, plaintiff relies on R.R. 4:55-7 (c) which states:

"No fee for legal services shall be allowed in the taxed costs or otherwise, except:

(c) In an action for the foreclosure of a mortgage. The allowance shall be calculated as follows: on all sums adjudged to be paid the plaintiff in such an action, amounting to $5,000 or less, at the rate of 3%, provided, however, that in any action a minimum fee of $75 shall be allowed; upon the excess over $5,000 and up to $10,000 at the rate of 1 1/2%; and upon the excess over $10,000 at the rate of 1%.

As regards the latter amount for advancement of taxes, plaintiff directs the attention of the court to several New Jersey cases which hold that a mortgagee who pays taxes on the mortgaged land in order to protect his security is entitled to be reimbursed and obtains a lien prior to the mortgage lien. South Amboy Trust Company v. McMichael Holdings, Inc., 141 N.J. Eq. 12 (Ch. 1948); Bluestone B. & L. Ass'n of West New York v. Glasser, 117 N.J. Eq. 392 (Ch. 1934); Farmer v. Ward, 75 N.J. Eq. 33 (Ch. 1908).

Defendant United States of America counters that its lien is a federal lien and as such federal law must be applied. Federal common law is to the effect that first in time is first in priority. Defendant also argues that for plaintiff to prevail

it must show that both of its claims were choate at or before the time when the ...


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