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Kaplan v. Sleep E Hollow Motel Co.

Decided: November 24, 1970.

SYDNEY KAPLAN AND HYMAN F. KAPLAN, PLAINTIFFS-RESPONDENTS,
v.
SLEEP E HOLLOW MOTEL CO., A LIMITED PARTNERSHIP, ET ALS., DEFENDANTS-APPELLANTS, AND SUPERIOR INVESTMENTS, INC., INTERVENOR-RESPONDENT



Goldmann, Leonard and Mountain. The opinion of the court was delivered by Goldmann, P.J.A.D.

Goldmann

Defendant in foreclosure, Sleep E Hollow Motel Co. (Motel), applied to the Chancery Division for an order vacating the sheriff's sale and allowing it to redeem the property by payment of the mortgage, interest, fees and costs in full, on the grounds that "the sale was unconscionable and that the defendant was prevented from attending the said sale through misunderstanding and mistake and that the sale price for said premises was inadequate." On October 27, 1969 the Chancery judge entered an order dismissing the objections, confirming the sale and directing the sheriff to deliver a deed, but not before November 1, 1969. This appeal followed, accompanied by a motion that we stay the order. We denied the stay and directed the sheriff to immediately execute and deliver a proper deed upon receipt of the foreclosure sale bid price.

Motel, a limited partnership, executed a $300,000 real and chattel mortgage to plaintiffs Sydney and Hyman Kaplan on August 31, 1962. The mortgage being in default, plaintiffs instituted foreclosure proceedings on May 14, 1969 and moved for the appointment of an operating receiver. The

parties then entered into a stipulation and consent order whereby defendants agreed to pay the three quarters of taxes past due, the amount owing under a financing statement held by the Ewing Bank and Trust Company (some $9,500 and interest), the judgment held by the Rug Mart (about $20,000) and under which the sheriff had levied on certain Motel personal property, all overdue mortgage instalments plus interest, and a $1,500 fee to plaintiffs' attorney. Defendants consented to the appointment of plaintiff Sydney Kaplan as operating receiver to take charge of the assets of defendant World Wide Realty Associates, Inc., t/a Sleep E Hollow Motel Co. It was agreed that the mentioned payments were to be made no later than June 12, 1969; otherwise, Kaplan was authorized to enter into possession of the premises immediately as operating receiver. The stipulated payments were not made, with the result that final judgment in foreclosure was entered July 10, 1969. A writ of execution issued in due course to the Sheriff of Mercer County, who then proceeded to make his levy and advertise the sale of the premises to be held September 3, 1969.

On September 3, 1969 defendants orally applied to Judge Kingfield, then attending the Judicial Conference, for an adjournment. Based upon the representations of defendant Eoute, general partner of Motel, and his counsel, and also on Eoute's affidavit, the judge adjourned the sale until September 17. Eoute's affidavit stated that he had been making efforts to refinance the mortgage; that International Funding and Insurance Associates had granted Motel a mortgage commitment, which was not consummated; and that "I have now arranged for the refinancing of this mortgage by Republic Motel Corporation of America, 1328 Shunk Street, Philadelphia, Pennsylvania who plan to take over an assignment of Plaintiff's mortgage and to pay off Plaintiff in full * * *." Continuing, Eoute requested an adjournment of the sheriff's sale for at least one week and preferably two weeks to complete the refinancing.

Moreover, on September 2, 1969 Motel's counsel had written the sheriff confirming the request he had made for a one-week postponement of the scheduled September 3 sale, "for the reason that John A. Eoute, one of the general partners of the defendant company, has arranged for the purchase of the mortgage to satisfy the claims of the plaintiffs."

On September 17, 1969 a further application for adjournment was made to Chancery Division Judge Fritz, based on affidavits of defendant Eoute and his counsel. Eoute stated that Republic Motel Corporation of America was definitely planning to purchase the mortgage and pay the foreclosure judgment in full, but its attorney, Barton Banks, said he needed about ten days to complete all details. Counsel's affidavit was to the same effect and requested a two-week adjournment. At the argument on adjournment defendants' attorney told Judge Fritz that "I have verified that it is a valid commitment. There is a contract." Banks had told him they would need ten days to finalize the matter. Judge Fritz granted a three-week adjournment of the sale to October 8, 1969, stating that "I am attaching the admonition of counsel [for plaintiffs] that there shall be no further adjournment. * * * It will take a clear and convincing demonstration of extraordinary and exigent circumstances for the defendants to obtain any relief beyond this."

The sheriff's sale took place on October 8, 1969, the premises being sold to Peter J. Bonanni, assignor of respondent Superior Investments, Inc., for $266,248.80. This was $100 higher than plaintiffs' bid, which was in the full amount due on the mortgage, interest, taxed costs and sheriff's fees. Although other persons had attended the sale, neither defendants nor anyone on their behalf was present.

Before the sheriff could execute and deliver his deed, defendants filed a notice of motion on October 20, 1969, returnable October 24, to set the sale aside and allow redemption. Plaintiffs' attorney moved ex parte to accelerate the hearing,

since the sheriff had set October 22 as the date for delivering his deed. Judge Fritz denied acceleration and put the matter down for argument on October 24, stating, "I will entertain no motion for an adjournment short of the death of counsel." Plaintiffs' attorney insisted that he would have to have a certified check in full on the 24th. Defendants' attorney assured ...


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