[104 NJSuper Page 355] This action was instituted to foreclose a second mortgage on apartment property located in the
Borough of Matawan, County of Monmouth. The matter is before the court on final hearing.
The mortgage in the amount of $112,500 was executed October 30, 1967 by defendant 365 Park Avenue Corp. to plaintiff as security for a note of the same date. Thereafter the property was conveyed by 365 Park Avenue Corp. to defendant's Myron Rutkin, Sylvia Rosenberg, Lillian Brill Kurtin, Howard Straus and Irving Werner, partners trading as Balmoral Arms (mortgagor). Defendants Harry Brown, Paul Rosenberg, Burton L. Eichler and Harris R. Silver are joined as holders of a third mortgage. Defendants Bernard D. Barnett and Edward Elman are joined as assignees of the mortgage sought to be foreclosed, they having refused to join as plaintiffs. The assignment of the mortgage was made as collateral security for the payment to Barnett and Elman by plaintiff of a note in the amount of $56,250.
Under the terms of the mortgage, interest was to be paid at the rate of 6% monthly for the first five years and at the rate of 6-1/4% monthly during the balance of the mortgage. There was no provision for amortization during the term of the mortgage, the entire principal sum becoming due June 1, 1977. The mortgage contained an acceleration clause for a 15-day default in the payment of interest.
Under date of March 1, 1968, the date of the assignment of the mortgage to Barnett and Elman, plaintiff's attorney wrote to the attorney for the mortgagor as follows:
"Please be advised that Balmoral Arms has this day assigned the above mortgage which is recorded in Book 2680 Page 651 in the amount of $112,500.00 to Mr. Bernard D. Barnett and Edward Elman.
The March 1st interest payment of $562.50 should be sent to Balmoral Arms c/o Allan Steinman, 275 Garfield Avenue, Oakhurst, N.J. Interest payment due April 1, 1968 and thereafter should be forwarded in favor of the above named parties, c/o Elman and Ornstein, 295 Madison Avenue, New York, N.Y. 10017."
Prior to March 1, 1968 all payments of interest had been made by regular mail. Plaintiff's president testified that the
interest payment due March 1, 1968 was not received. By letter dated March 22, 1968 plaintiff's attorney advised the mortgagor's attorney that plaintiff exercised its option to accelerate the mortgage and demanded payment of the principal amount due plus accrued interest.
On March 4, 1968 the managing agent of the mortgagor, whose office was in Newark, drew check No. 1013 to the order of plaintiff and mailed it regular mail to the address specified in the March 1, 1968 letter. 275 Garfield Avenue, Oakhurst, New Jersey, is the home of plaintiff's president. That check was never presented for payment nor was the envelope, which had a return address, returned to the sender. Upon receipt of the March 22, 1968 letter a replacement check (check No. 1033) was drawn to plaintiff's order and promptly sent. On March 29 that check was returned by the attorney for plaintiff with a statement that this action was being instituted. During the month of March there were more than sufficient funds in the mortgagor's account for the payment of check No. 1013. The good faith of the mortgagor is evidenced by the prompt sending of the replacement check.
It is admitted that there are two payments of interest due to plaintiff, the first payment being the one due March 1. The April payment was made by the mortgagor to Barnett and Elman. In May, however, plaintiff made the payment to Barnett and Elman, as a result of which the May check sent by the mortgagor was ...