For reversal and remandment -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall and Schettino. For affirmance -- None. The opinion of the Court was delivered by Francis, J. Weintraub, C.J., and Hall, J., concur in result.
The trial judge, sitting without a jury, held that plaintiff was a holder in due course of a note signed by defendants Anthony V. Angelini and Dolores H. Angelini and consequently in this action brought thereon was immune from certain defenses sought to be asserted by them. Therefore, he entered judgment against defendants in the amount of $5363.40 plus interest. The Appellate Division affirmed the judgment in an unreported opinion. We granted defendants' petition for certification. 57 N.J. 238 (1970).
On December 10, 1966, defendants Anthony and Dolores Angelini, husband and wife, entered into a contract with Lustro Aluminum Products, Inc. for certain repair work on their home at 689 Clark Ave., Ridgefield, N.J. It provided that Lustro, "a home repair contractor, duly licensed under the New Jersey Home Repair Financing Act, Chapter 41, Laws 1960," would
Supply & Install Gold Bond Plasticrylic Avocado Siding with Grey Sills & Trim. Apply Heavy Quilted Breather Foil on all wall areas around complete house. Corner posts to be green, all mullions to be fabricated in grey aluminum. Supply & install 2 anodized storm doors (Rear & Side Entrances). All overhangs & trim to be covered with special Marine Paint in grey color (as close as possible to Oxford grey trim).
This will include cleaning up job.
The cash price for the work was fixed at $3600 but the time payment price was $5363.40, payable in 84 monthly installments of $63.85 each. Payments were to commence "60 days after completion" of the work. The agreement provided also that the Angelinis would "execute a note and application for credit, and any other appropriate instrument for the purpose of financing * * *." On the same date as the contract, they did sign a note in the principal sum of $5363.40 promising to pay that amount to the order of
Lustro in equal consecutive monthly installments of $63.85 each "commencing February 19, 1967, with interest after maturity at the highest rate." According to defendants, at the time they signed the note it was not dated and the date of commencement of payment was not set forth. Anthony Angelini testified that he was told by Lustro's representative that the payments would not begin until he was completely satisfied with the job. The trial court found as a fact that when the note was executed it bore "no dates."
Plaintiff General Investment Corp. is a home improvement contract financier. It deals with 300 contractors and arranges approximately 1800 home improvement loans per year. Approximately 10% of its volume came from Lustro. General Investment's representative testified that the Angelini note was purchased for value from Lustro on the day of its alleged execution, December 19, 1966. It was endorsed without recourse, except that the endorser-contractor warranted as part of the endorsement that it "has furnished and installed all articles and materials and has fully completed all work which constitutes the consideration for which this note was executed and delivered by the maker." When the note was endorsed and delivered by Lustro plaintiff required the home improvement contract to accompany it. The two documents were separate pieces of paper but it was obvious from the contract form that they were interrelated parts of a single transaction. Plaintiff's agent read the contract before discounting the note, and he conceded, in any event, that his experience with the nature of Lustro's operation made him fully familiar with the terms of the contract and the note. Defendants' contract and note to his knowledge were in the form customarily used by Lustro. He said also that in cases involving home improvement notes one of the requisites of the transaction was to obtain a copy of the work contract. Having obtained it as part of the note-discounting event, both documents were kept as part of plaintiff's records. Thus, General Investment knew that under Lustro's method of operation the homeowner's obligation to
commence payments did not come into being until 60 days after the home improvements were completed. It had to know also by inescapable implication that "60 days after completion" were not just words, but that they meant after completion in a workmanlike manner.
When plaintiff's representative received the note and contract and discounted the note, he did not inquire of the Angelinis if the work had been completed prior to or on December 19, the ostensible execution date of the note, nor did he ask Lustro for a certificate of completion signed by defendants. See N.J.S.A. 17:16C-66, L. 1960, c. 41, § 5, which provides that "[n]o home repair contractor shall request or accept a certificate of completion signed by the owner prior to the actual completion of the work to be performed under the home repair contract." This quoted section is part of the Home Repair Financing Act of 1960 under which plaintiff knew Lustro was licensed to do business. N.J.S.A. 17:16C-93; 17:16C-77. If a request had been made by General Investment for a certificate of completion, it would have learned immediately that the work had not been completed. Instead plaintiff chose to accept the representation in the printed form of endorsement, appearing on the back of the note and above Lustro's signature, that the work had been "fully completed" in the 10 days between the contract date, December 10, 1966 and December 19, the ostensible but false date of execution of the note.
According to Anthony Angelini's undenied testimony, Lustro began work on his house on December 15. After working on that one day nothing further was done for several days. It never did complete the work and the part performance neither conformed to the contract nor met reasonable workmanlike standards. Ultimately Lustro became insolvent and, according to the Angelinis, the contract was never fulfilled.
The plaintiff's testimony is to the effect that when it discounted the note, the payment commencement date appeared therein as February ...