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Crescent Investment Co. v. Commissioner of Banking and Insurance

Decided: July 18, 1968.

CRESCENT INVESTMENT CO., A CORPORATION, PLAINTIFF,
v.
COMMISSIONER OF BANKING AND INSURANCE OF THE STATE OF NEW JERSEY, DEFENDANT



Wick, J.s.c.

Wick

This is a declaratory judgment action brought to determine the constitutionality of N.J.S.A. 17:11 A -1 et seq., more commonly known as The Secondary Mortgage Loan Act of 1965. The facts are as set forth below.

Plaintiff Crescent Investments Company was granted a license to do business pursuant to The Secondary Mortgage Loan Act of 1965, N.J.S.A. 17:11 A -1 et seq. (hereinafter referred to as the "act"). By virtue of its authority as a New Jersey licensee plaintiff entered into numerous secondary mortgage loans with certain homeowners. Following an investigation based upon charges made against plaintiff regarding its lending activities, Charles R. Howell, the commissioner of Banking and Insurance of this State, issued an order to show cause why plaintiff's secondary mortgage loan license should not be suspended, revoked or not renewed since it had violated the various provisions of the act and certain rules and regulations promulgated thereunder.

On the return date of the order to show cause the Deputy Attorney General appeared to present the evidence in support of the charges made in said order. After the State completed its case and before plaintiff presented its, plaintiff instituted the within action by way of verified complaint and order to show cause why the Commissioner should not be enjoined from further prosecuting his order to show cause and for a declaration that sections 11 and 29 of the act are unconstitutional. Plaintiff's order was issued and an interlocutory injunction was granted until such time as the court should

make a determination as to the constitutionality of these provisions.

The provisions toward which plaintiff specifically directs its attack are as follows:

N.J.S.A. 17:11 A -11:

"The commissioner may suspend, revoke or refuse to renew any license issued hereunder, * * * if he shall find that the licensee or any owner, director, officer, member, partner, stockholder, employee or agent of such licensee has:

(a) made any material misstatement in the application;

(b) committed any fraud, engaged in any dishonest activities, or misrepresented or failed to disclose any of the material particulars of any secondary mortgage loan transaction to any one entitled to such information;

(c) violated any of the provisions of this act * * *;

(d) otherwise demonstrated unworthiness * * *."

N.J.S.A. 17:11 A -29:

"No obligation arising out of a secondary mortgage loan shall be enforceable in the courts of this State unless such loan was negotiated and made in full ...


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