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Western Savings Fund Society of Philadelphia v. Goodman

Decided: October 17, 1968.


Horn, J.s.c.


The issue before me deals with the priorities of judgment creditors in surplus funds arising from a sheriff's sale resulting from a mortgage foreclosure. R.R. 4:82-4 provides that an application may be made for surplus moneys in foreclosure actions at any time after the sale, and may be heard by the court on motion or notice to all defendants whose claims are not directed in the mortgage foreclosure execution to be paid out of the proceeds of the sale. All of the claimants to the fund are holders of judgments which were liens upon the lands covered by the foreclosed mortgage.

The facts are not in dispute. If they were, findings of fact would be required. R.R. 4:44-4; Paterson Stove Repair Co. v. Ritzer, 123 N.J.L. 145 (Sup Ct. 1939); Van Dine v. Sussex, 5 N.J. Misc. 1066, 139 A. 342 (Sup. Ct. 1927). On May 14, 1968 final judgment in the foreclosure action was entered, and on May 20, 1968 a writ of execution was issued out of this court commanding the sheriff of Cape May County to sell lands and premises of defendant Goodman in order to satisfy the amount due to plaintiff on its mortgage, and in case more money should be raised by such sale than would be sufficient so to do, then to deposit the surplus money with the clerk of this court.

On July 2, 1968 the sheriff sold said land pursuant to the writ and deposited with the clerk of this court the sum of $1,913.35 as the surplus money arising from such sale.

None of the judgment creditors issued execution upon their respective judgments except J. J. Hone, a corporation, (Hone) as hereinafter related.

Since the sum total of the judgments recorded before Hone's would exhaust the surplus fund, Hone will receive no payment from the fund unless it is entitled to the priority of payment claimed by it in this proceeding.

Orders to show cause why distribution of the fund in court should not be made were issued in July 1968 and served upon the parties in interest. However, due to an objection to the sale made by the purchaser, no disposition of the applications was made. The objection was settled and the disposition of the objection was evidenced by an order entered on August 7, 1968.

On September 9, 1968 a petition was filed by New Jersey Bell Telephone Co., one of the judgment creditors, for distribution of the surplus moneys, and an order to show cause based upon said petition was issued on the same date, directing all judgment creditors, including Hone, to show cause "why an order should not be made directing the withdrawal and payment of the surplus moneys deposited with the Clerk of the Court." On September 16, 1968 copies of the petition and order to show cause were mailed to each judgment creditor and interested party, including Hone, pursuant to the terms of said order.

Subsequently another judgment creditor served notice of motion upon each of the others for the same purpose of obtaining an order determining the priorities and directing distribution. Both the order to show cause and the motion were made returnable October 4, 1968.

On said return day Hone requested the court to direct that its judgment be paid in full because, allegedly, its judgment lien was entitled to priority as against the lien of all other judgments. Hone had docketed its judgment in the Superior Court (from the County Court) on September 24, 1968. On the same date it had caused execution to be issued to the sheriff of Mercer County with direction to levy upon

the fund on deposit with the clerk of the court. The levy was made on October 2, 1968, just two days before the return day of the respective applications.

It cannot be disputed that all of the activity recited above with respect to the Hone judgment, from the time of the docketing of the judgment in the Superior Court to the time the levy was made, was precipitated by the realization that ordinarily there were insufficient funds on deposit with the clerk to apply toward the Hone judgment. None of this activity took place until after service of the order to show cause issued upon the application of the New Jersey Bell Telephone Company.

Hone relies upon Vineland Savings & Loan Ass'n v. Felmey, 12 N.J. Super. 384 (Ch. Div. 1951) as support for its claim of priority. In that case Judge (now Justice) Haneman had before him an application for surplus moneys which also arose from a sale held in a mortgage foreclosure on June 21, 1950. He dealt with the issue of the relative priority of the liens of two judgment creditors. One of them, Corn Exchange National Bank and Trust Co. (Corn Exchange), was joined as a party defendant by reason of a judgment which had been docketed in the office of the clerk of the county on August 18, 1949. Subsequently this judgment was assigned to the United States of America.

The judgment of the other creditor, Millville National Bank (Millville), was docketed in the County Court on June 22, 1950 and in ...

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